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Lord Turner was formerly a Banker of sorts, currently Chair of the FSA but his background can be looked up here: http://en.wikipedia.org/wiki/Adair_Turner,_Baron_Turner_of_Ecchinswell

I had never heard of the man but ever since whatever work he did on UK Pensions, to my mind the man was a total prat who clearly didn’t grasp the basic and two fundamental problems with pension provision: Firstly, Pensions as an idea have to be “sold” to the individual and secondly, they have to be mandatory. After his latest outburst as Chairman of the FSA, it is clear that man should be wearing his underpants on his head, a pencil up each nostril being optional.

The Problem with GOATS

Obviously the reference to “GOATS” is about Gordon Brown’s “Government of All the Talents” which has proved to be a total hoot, has any one of these people worked out ? Were they ever listened to or were they just window dressing in a vain attempt by a doomed Prime Minister to shore himself up ?

To be fair, it is not totally their problem, it was also Gordon Brown’s because no one has realised that whilst “outside expertise” can be a Godsend for good Governance, the “advice” must be technical and specific to the subject in hand, it can never be or even border on “political”, it can only deal in hard facts.

To Illustrate the Problem

My view is that building two new super sized Aircraft Carriers is a total nonsense in terms of cost and military capability, it is a total fantasy project that will reduce the Royal Navy to about two ships only one of which will ever be at sea at any one time and will rely on the Americans to provide escort vessels when it does – total nuts.

Let us imagine that I was a GOAT asked to assess the Carrier Project and the above paragraph represents my summary to the Prime Minister of the day. Having provided the hard data on which a decision can be made, I must step back and shut up because that decision will be political.

The Americans expect us to buy some 80 odd Joint Strike Fighters to fly off these two ships at a likely cost of £100 million a copy and we have already funded some £2 billion in development funding. The political problems would be similar to those we are experiencing with our European partners on the Typhoon/EuroFighter with wanting to cut back our orders.

These ships will be built in Labour voting areas and it is likely that the Labour Government has slowed down the build programme deliberately to cause mischief for a Tory Government which will almost certainly need to cancel either them or the Trident replacement as part of a reduction in Public Spending.

The Use of Outside Advisers

I have nothing against using outside specialist advisers but the problem for Gordon Brown and the Labour Party generally is that their “role model” in the Alistair Campbell/Tony Blair relationship which has rather bent their compass, Campbell was given far too much power for an unelected official.

We may well have to look at formalising the role of unelected special advisers in Government as a part of reforming the House of Commons by creating a clear separation of powers between the Executive and the Legislature. However, essential to that and drawing upon the current Goat Cock-up of the Brown Government, it must be clear that unelected “specialist advisers” may never venture into “political decision making” or speaking outside of their chain of command, they are answerable to the Government that appoints them, there must never be a repeat of the Alistair Campbell situation and especially over the run up to the Iraq War.

Which Brings Me Back to Turner…

As Chairman of the Financial Services Authority, Turner feels that large parts of the City have grown too big and need to be cut down to size and if necessary by imposing new taxes such as “Tobin Taxes” on each transaction. In the 1970s an economist called James Tobin proposed specific taxes to curb speculation on the foreign exchange markets. I do not know that this idea had any success but clearly following Britain getting turfed out of the ERM, they didn’t work for us.

Besides which, applying a “transactional tax” in the UK would only drive those transactions to New York, Tokyo, Hong Kong and so on because we live in a global economy, the only obvious result would be the rapid destruction of London as a Financial Centre.

However and foolishly, Turner in talking to Prospect Magazine went even further in describing the City of London as having grown “beyond a socially reasonable size”, accounting for too much of national output and sucking in too many of Britain’s brightest graduates.

The language at this point is becoming emotive and in tone “political” which might just demonstrate that he is the wrong person for the job. Whether the FSA or any similar body, the Government of the day needs to appoint “insiders” or if you like “Poachers turned Gamekeepers”, people like Lord Turner clearly do not fit the bill, away with him I say !

Rebalancing the UK Economy

The real need within the UK lies in getting back to real wealth creation through industrial activities whether that lies in making things or recycling scrap materials. Rather than taxing transactions, a Government would do far better to offer tax incentives for investment in productive industries whether manufacturing, agriculture and so on.

It would seem that Lord Turner’s view on balancing the economy is to destroy the City of London and then we can all be poor together and the man has the nerve to draw his salary ?

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