Another mess, another report from Turner the intellectual troubleshooter

Chris Blackhurst
18 Mar 2009

Today sees the publication of the Turner report. If that has a familiar ring, then it should - in the last few years we've become used to learned studies produced by Lord Turner, or Adair Turner as he is better known.

We've had them on pensions, on climate change and now on the financial system. It's as if the Government, faced with a major dilemma, can't begin to think what to do and hands the whole lot over to Turner for dissection and reassembling.

Turner, 53, is chairman of the Financial Services Authority but he's also chaired the Committee on Climate Change, the Pensions Commission and the Low Pay Commission, and been director-general of the CBI.

"He's a phenomenon we don't have here," said a friend of his. "In France, he would be one of the énarques [graduates of the elite École Nationale d'Administration who occupy senior management positions in the government and civil service]. He's one of those super-clever people - an intellectual who is also a practical man of power."

This morning's document is typical Turner. It's a considered and thoughtful "kitchen-sink" analysis of the current crisis, coupled with a blueprint for how future such disasters can be avoided.

It's repeatedly said of Turner that he must be a Labour stooge, given the frequency with which he is consulted by senior ministers. However that's not so - his pensions recommendations were welcomed by Tony Blair but initially at least, furiously rejected by Brown.

And for an administration that has consistently tried to divert the blame for the credit crunch away from its policies, towards the greed of the banks, Turner's report is not entirely comfortable reading. He makes it plain: the failure was systemic.

The groundwork for today was laid at The Economist's Inaugural City Lecture given by Turner in January, and in his appearance before the Commons Treasury Select Committee.

In his highly praised Economist speech (it's widely regarded as the classic exposition of the disaster that has befallen the banks), he suggested that changes to the supervisory framework introduced by Brown as Chancellor did not help.

"Regulators were too focused on the institution-by-institution supervision of idiosyncratic risk, central banks too focused on monetary policy tightly defined - meeting inflation targets," he said. "In future, regulators need to be more willing to make judgments about the sustainability of whole business models and to take away the punch-bowl before the party gets out of hand."

To the MPs, the FSA chairman again went for Brown, saying clear "political" pressure was put on his organisation not to question the business models of banks such as Northern Rock, HBOS and Bradford and Bingley. In truth, as he is fond of joking, when accused of being in the Government's pocket: "Labour is the one major party I've never been a member of" (he was chairman of the Cambridge University Conservative Association and later joined the SDP - these days he says he is apolitical).

Brown and his colleagues aren't alone - the City also struggles with Turner. He's one of them but not really. Alongside the luxury saloons of Canary Wharf, his Toyota Prius parked in the reserved space outside the FSA headquarters cuts an incongruous sight.

He may have once worked at Chase and Merrill, but he isn't a banker. He's wealthy - he lives in Kensington with his Irish, Gaelic-speaking wife Orna Ni Chionna and their two children, and they have another house in Ecchinswell in rural Hampshire (he is Lord Turner of Ecchinswell). The money, though, appears not to matter - he's far more interested these days in sorting out the troubles of the world, rather than making more cash.

In the flesh, he's tall and lean, with a full head of wavy silver hair. His glasses give him a serious air but he possesses a warm, impish smile. He talks quickly, often making point after point in perfectly ordered sequence.

His father, a local government town planner, worked in a series of new towns from Crawley in Sussex to East Kilbride in Scotland, where the young Turner spent most of his childhood.

Jonathan is his first name, Adair his second (his mother Kathleen, who died when he was a student, picked Adair out of a book of Scottish names). He dropped Jonathan in favour of the more dashing Adair.

He's one of four children. The family had little money and lived in a council house. But Adair was bright, winning scholarships to Hutchesons Boys' Grammar School in Glasgow, and Glenalmond, the Scottish boarding school, and then to Cambridge.

His degree was meant to be in history but he added economics (one tutor was Mervyn King). He taught economics after university, then went to BP but found it dull and left after six months.

Chase didn't satisfy him either, and after three years he went to McKinsey. He stayed 13 years, although he got "a bit bored" after 10 and took over McKinsey's push to bring Western-style management consultancy to eastern Europe and the former Soviet Union.

He met Orna at McKinsey - she was a fellow partner - and it's clear the firm has never left him. He has that questioning manner typical of its alumni. He's also able to detach himself and view his environment objectively - hence, the FSA boss's ability to compile a report about the failings of his own industry.

At the CBI, he decided to work with, rather than automatically oppose, the new Labour government, to extract the best terms he could for his members. Some CBI members were unimpressed and nicknamed him "Red Adair", after the famous US oil troubleshooter.

He joined the FSA, he said, "one week after the Lehman's collapse. For three weeks after that, the markets seized up." It was, as he likes to say, "something of an extreme start."

His aim now, he said, is to ensure that "a lot of the focus must be on how we regulate, in a way that makes it very unlikely that governments and central banks will have to do this again."

There are no easy answers. "If you apply rules in London, why not elsewhere? If you apply rules to a bank, then everybody will go to a hedge fund - so are hedge funds included?"

Similarly, on pay, he understands the public anger but is paying bankers in shares guaranteed to work? "If people do something and get paid in a while - as opposed to now - with a load of stock, does that alter their behaviour?"

The collapse highlighted an inherent flaw. "Some things went missing. The Bank [of England] was focused on monetary policy and control of inflation; we were focused on case-by-case supervision. There wasn't enough joining up."

He can talk for hours like this. He admits to rather enjoying the economic drama. He doesn't relish the misery caused but it's given him plenty to think and write about. So much so that this can't be the end - there have got to be more Turner reports left in him.