The Warden of All Souls tells Richard Lofthouse about his banking report and college life.
Tell me what you’re up to currently.
As Warden, I chair and oversee college business; we just elected two fellows by examination; all the usual committees, and I am a Delegate and chair the finance committee of Oxford University Press.
Am I right that you grabbed the headlines briefly for abolishing the one-word essay traditionally given to aspirant prize fellows?
Yes, surprisingly we did, some months after we had taken the decision. When I took the exam, the word was ‘conversion’, but I can’t remember what I wrote. It had ceased to help distinguish between candidates.
I believe that you still teach undergraduates?
Yes – Hilary term will see me delivering the ‘Introduction to Macroeconomics’ lecture course. It’s aimed at the core prelims curriculum for PPE’ists, and econ and management students. The lectures are open to anyone in the University.
Someone recently noted that whatever theory of economics prevails on Monday morning is almost certainly in the bin by Friday afternoon. So how will you deliver these lectures?
My aim will be to explain the established principles of the subject but with reference to what’s happening now.
This clash between reality and textbook knowledge makes me wonder where reflection ends and action begins. All Souls has a history of producing world-facing fellows – where do you see yourself in that?
Economics is like law. It lends itself to both theory and practice, with extensive public policy implications. I’ve never had a plan -- just tremendous luck in terms of what’s come along. I was a professor of economics at Oxford when in late 1997 I got a totally unexpected call asking whether I would be considered for the role of chief economist for the Bank of England. The University was extraordinarily generous in granting a leave of absence, so I didn’t have to resign the chair. I was head of the Office of Fair Trading 2000-2005. The then Vice-Chancellor, Colin Lucas, was again very generous about leave, but I gave my word that I would return to Oxford in October 2005, which I did.
And then the Vickers report on banking reform!
I was summoned to Number 11 Downing Street in June 2010, and George Osborne asked me, “Would I take it on?” I replied that “I’d be very happy to think about it,” mostly because I had to be clear that I would be able to fulfil consistently my college duties. The college was extremely understanding. Because the commission had 15 months from June, I was able to peak the workload in the two long vacs.
So what was the experience of amassing this report actually like?
It’s been fantastic. As well as the other four Commissioners there was a team of fourteen, a secretariat, and we worked in a very focused and compact manner. The atmosphere was very good, excellent in fact; it was an interesting time but also a very enjoyable one, despite that fact that we were charged with learning some of the lessons of this awful economic crisis.
Michael Skapinker wrote in the Financial Times – following a visit to the Occupy Wall Street site outside St Paul’s Cathedral – that the ring fencing [of retail operations from investment banking operations] that your report suggested “could be in different places for different banks and none of it will be implemented until 2019…Bankers have almost certainly won another battle.” As the original ring fence of the Glass-Steagall Act of 1933 was implemented in under a year, why the caution?
Our job was to make recommendations for long-term reform. It’s the job of the politicians to decide whether to act on them, and legislation, if that is what happens, takes time. We spoke of 2019 as the latest date for implementation because it is already the end-date for the international reform of bank capital. Picking an earlier end-date would have been arbitrary. If banks are forced to increase capital ratios very suddenly, one of the unintended consequences might be credit shrinkage to the detriment of the economy.
What do you think might happen with the current Eurozone sovereign debt crisis?
Anyone who is confident answering that reveals that they don’t actually know what they are talking about.
OK, but have a shot for fun…
Well, a way through might be found but there are large downside risks from Eurozone developments, and the potential for quite vicious spirals – for debt and default.
How does this affect All Souls?
Any institution that is predominantly self-funding from an endowment is exposed to the ups and downs of the markets. Part of the job is to manage those risks through diversification, allied to expenditure policies that sustainably maximise the academic value of what you’re doing. We’re steadily progressing our academic programmes. 2012 sees the appointment of three senior research fellows in philosophy, literature and history. We have just welcomed four new post-docs – in maths, physics, classics and philosophy. We intend to appoint more post-doctoral fellows. Another challenge is space. We are constrained in study accommodation for fellows and visiting fellows.
What breed is this fine hound running around?
Alfie is a miniature schnauzer, two years old.
Didn’t I see a ‘No Dogs’ sign in the porter’s lodge?
Oh, that doesn’t apply in the Warden’s Lodgings.
Are there any illicit cats in the college?
No, but there is also a Jack Russell and a black labrador in the college.
Does Alfie keep you on the level?
Family does that, and Alfie is great company, and a very good and discreet listener.