Richard Lambert: Lord Turner has generated headlines about the wrong issues

Share
Related Topics

Lord Turner's analysis of what caused the credit catastrophe ... is the best there is. And the Turner Review of Financial Stability is regarded from Wall Street to Tokyo as a model from which other financial regulators must learn. Moreover, it's not his job to be a cheerleader for the City of London.

If the world's financial regulators had been more challenging and aggressive in the past decade, then the financial sector would be in a lot more healthy shape.

The trouble is, though, that the headlines Lord Turner has generated are about the wrong issues. There are only two questions that really matter in the banking market today, and they are not about bankers' pay and rations, or the social value of credit derivatives.

Instead, the right question to ask is: how do we get credit flowing properly through to the private sector, especially to small and medium sized enterprises? And what kind of shock absorbers do the banks need to have in place so that they can get off the taxpayers' back, and do what they are supposed to do in a competitive and open marketplace?

In a free society, it's not the job of a politician -or, for that matter, of a regulator – to argue that a particular form of activity is or is not of social value.

We badly need a sense of perspective about what the financial sector is, and how it works. It's not a walled garden, barricaded off in the City. Rather, over 70 per cent of the workforce is located outside London, generating output per head which is well above average and spreading decently paid jobs right across the UK.

Nor is it some bloated excrescence throwing the whole UK economy out of balance. It's true that the contribution of the sector as a whole to gross value added across the economy picked up in the years ahead of the recession. But on the most recent figures, the share still stood at no more than about eight per cent, which is roughly where it was in the late 1980s.

Expressed in a different way, total pay of financial services employees represents a bit less than four per cent of GDP. For comparison, the public sector equivalent is over 16 per cent. Which figure is too big?



Taken from a speech by the director general of the CBI at the CBI North East Annual Dinner in Gatehead last week

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Guru Careers: Software Developer / C# Developer

£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

Guru Careers: Software Developer

£35 - 40k + Benefits: Guru Careers: We are seeking a Software Developer (JavaS...

SThree: Trainee Recruitment Consultant / Resourcer

£18000 - £23000 per annum + Commission: SThree: As a Trainee Recruitment Consu...

Ashdown Group: UI Developer - (UI, HTML, CSS, JavaScript, AngularJS)

£25000 - £40000 per annum: Ashdown Group: UI Developer - (UI, JavaScript, HTML...

Day In a Page

Read Next
Yvette Cooper campaigning in London at the launch of Labour’s women’s manifesto  

I want the Labour Party to lead a revolution in family support

Yvette Cooper
Liz Kendall  

Labour leadership contest: 'Moderniser' is just a vague and overused label

Steve Richards
Abuse - and the hell that came afterwards

Abuse - and the hell that follows

James Rhodes on the extraordinary legal battle to publish his memoir
Why we need a 'tranquility map' of England, according to campaigners

It's oh so quiet!

The case for a 'tranquility map' of England
'Timeless fashion': It may be a paradox, but the industry loves it

'Timeless fashion'

It may be a paradox, but the industry loves it
If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

Could have done with Osama bin Laden staying alive?

Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
New exhibition celebrates the evolution of swimwear

Evolution of swimwear

From bathing dresses in the twenties to modern bikinis
Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

Sun, sex and an anthropological study

One academic’s summer of hell in Magaluf
From Shakespeare to Rising Damp... to Vicious

Frances de la Tour's 50-year triumph

'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
'That Whitsun, I was late getting away...'

Ian McMillan on the Whitsun Weddings

This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
Kathryn Williams explores the works and influences of Sylvia Plath in a new light

Songs from the bell jar

Kathryn Williams explores the works and influences of Sylvia Plath
How one man's day in high heels showed him that Cannes must change its 'no flats' policy

One man's day in high heels

...showed him that Cannes must change its 'flats' policy
Is a quiet crusade to reform executive pay bearing fruit?

Is a quiet crusade to reform executive pay bearing fruit?

Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
The King David Hotel gives precious work to Palestinians - unless peace talks are on

King David Hotel: Palestinians not included

The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
More people moving from Australia to New Zealand than in the other direction for first time in 24 years

End of the Aussie brain drain

More people moving from Australia to New Zealand than in the other direction for first time in 24 years
Meditation is touted as a cure for mental instability but can it actually be bad for you?

Can meditation be bad for you?

Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

Australia's first-ever Eurovision entrant

Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine