By Liz Stephens
The chair of the Financial Services Authority (FSA) has warned bankers he backs radical plans to tax banks to prevent excessive risk-taking and the bonus culture.
In a strong attack on the industry which runs contrary to the last decade of FSA policy, the peer described most of the City's activity as "socially useless".
His comments, published in an interview with Prospect, showed a stronger critique of bonuses than has previously been displayed publicly.
'All of our customers are international and we need those transport links to be as efficient and effective as possible'
Lord Turner advocated a tax on the millions of transactions which would reduce banks profits and the vast sums they are currently able to pay out in bonuses.
He said the tax would be "a nice sensible revenue source for funding global public goods".
Lord Turner also said that promoting London as a global financial centre was no longer one of his main concerns.
"The really fundamental question is whether the overall level of financial services pay is a consequence of the swollen financial sector which has resulted from oversimplistic financial deregulation."
Former Labour welfare minister Frank Field backed the proposals, saying: "It looks like Adair Turner has fired the starting gun on thinking more seriously about the City and what it is for and what kind of pay people should expect.
"When the City has largely made money by moving money around and not by making anything, it is clear the pay is out of kilter."
However Liberal Democrat Treasury spokesman Lord Oakeshott said Lord Turner's solutions were flawed.
"A Tobin tax is interesting but is unworkable without international agreement, which could take years and probably will never happen," he said.
[A tax on financial transactions was the brainchild of 1970s American economist James Tobin]
The FSA was criticised recently for watering down proposals to end excessive bonuses which incentivise risk-taking in the City.
The Tories plan to abolish the jurisdiction of the FSA if they win the next election.