Outlook: Banking review

IF THE Office of Fair Trading could find no good reason for investigating the banks, what chance does Don Cruickshank have of discovering anything seriously untoward, still less of coming up with any practical remedies. The luckless Mr Cruichshank, whose other day job is trying to persuade business to prepare for the millennium bug, was wheeled out yesterday to give an "update" on his Treasury inspired review of British banks - and very little he had to say about it too.

The OFT, it seems, was not convinced there was sufficient prima facie evidence of anti-competitive behaviour to merit a competition inquiry. John Bridgeman, felt uncomfortable enough ordering a Competition Authority probe of the supermarkets. With the banks, he put his foot down.

Which is how the whole thing ended up with Mr Cruickshank. Gordon Brown, the Chancellor, is convinced that the banking system is failing small business and failing the British economy, and he's determined to prove it. But if this investigation is not really about competition, what is it about? The line from the Treasury is that banking is an immensely important part of the economy - which is true enough - and, as such, it is vitally important to make sure that the sector works as efficiently as possible.

While this is a laudable enough objective, it is not obvious that Mr Cruickshank's review - which is starting to look in danger of descending into the type of theoretical mumbo jumbo that dogged the OFT supermarkets probe - is the most sensible way of going about things. For the time being, he's merely contributing to the banks' supposed inefficiency by taking up so much of their time.

None of this is to say that fostering competition is unimportant or that Britain's banks (or Britain's supermarkets) couldn't do a lot to improve customer service and cut charges. But as dull and as boring as it may sound, the best thing that the Treasury can do to give the fat and lazy parts of the UK economy a wake-up call is to get the macro-economy on track and let the market do the rest.

Stamping on flagrant competition abuses and ensuring that public policy does not distort entrepreneurial incentives obviously require government attention.

The seemingly endless reviews and consultations, the convoluted theoretical studies that this government appears so prone to are probably harmless enough in themselves, but it seems unlikely they are going to shed much light on the darkness. When it comes to encouraging business, any number of well intentioned reviews is no substitute for getting the macro-economy right, cutting red tape, and reducing corporate taxes.

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
News
news
Life and Style
Jack Cooksey goes for the grand unveiling - moments before dropping his new iPhone 6 on the floor
iphone launch
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
Liam Neeson said he wouldn't
tv

Liam Neeson's Downton dreams

Sport
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
football
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
Sport
A 'Sir Alex Feguson' tattoo
football

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear
tv

Thriller is set in the secret world of British espionage

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Audit Manager Central Functions

To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

Credit Risk Audit Manager

Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week