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.

Start your day with The Independent, sign up for daily news emails
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree Group have been well esta...

Recruitment Genius: Call Centre Debt Collector - Multiple Roles

£21000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Guru Careers: Financial Director / FD / Senior Finance Manager

Up to 70k DOE: Guru Careers: We are seeking an experienced Financial Director ...

Recruitment Genius: Junior / Apprentice Sales Executives - OTE £50,000

£11000 - £50000 per annum: Recruitment Genius: This financial company offer ma...

Day In a Page

Turkey-Kurdish conflict: Obama's deal with Ankara is a betrayal of Syrian Kurds and may not even weaken Isis

US betrayal of old ally brings limited reward

Since the accord, the Turks have only waged war on Kurds while no US bomber has used Incirlik airbase, says Patrick Cockburn
VIPs gather for opening of second Suez Canal - but doubts linger over security

'A gift from Egypt to the rest of the world'

VIPs gather for opening of second Suez Canal - but is it really needed?
Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Jeremy Corbyn dresses abysmally. That's a great thing because it's genuine

Fashion editor, Alexander Fury, applauds a man who clearly has more important things on his mind
The male menopause and intimations of mortality

Aches, pains and an inkling of mortality

So the male menopause is real, they say, but what would the Victorians, 'old' at 30, think of that, asks DJ Taylor
Man Booker Prize 2015: Anna Smaill - How can I possibly be on the list with these writers I have idolised?

'How can I possibly be on the list with these writers I have idolised?'

Man Booker Prize nominee Anna Smaill on the rise of Kiwi lit
Bettany Hughes interview: The historian on how Socrates would have solved Greece's problems

Bettany Hughes interview

The historian on how Socrates would have solved Greece's problems
Art of the state: Pyongyang propaganda posters to be exhibited in China

Art of the state

Pyongyang propaganda posters to be exhibited in China
Mildreds and Vanilla Black have given vegetarian food a makeover in new cookbooks

Vegetarian food gets a makeover

Long-time vegetarian Holly Williams tries to recreate some of the inventive recipes in Mildreds and Vanilla Black's new cookbooks
The haunting of Shirley Jackson: Was the gothic author's life really as bleak as her fiction?

The haunting of Shirley Jackson

Was the gothic author's life really as bleak as her fiction?
Bill Granger recipes: Heading off on holiday? Try out our chef's seaside-inspired dishes...

Bill Granger's seaside-inspired recipes

These dishes are so easy to make, our chef is almost embarrassed to call them recipes
Ashes 2015: Tourists are limp, leaderless and distinctly UnAustralian

Tourists are limp, leaderless and distinctly UnAustralian

A woefully out-of-form Michael Clarke embodies his team's fragile Ashes campaign, says Michael Calvin
Blairites be warned, this could be the moment Labour turns into Syriza

Andrew Grice: Inside Westminster

Blairites be warned, this could be the moment Labour turns into Syriza
HMS Victory: The mystery of Britain's worst naval disaster is finally solved - 271 years later

The mystery of Britain's worst naval disaster is finally solved - 271 years later

Exclusive: David Keys reveals the research that finally explains why HMS Victory went down with the loss of 1,100 lives
Survivors of the Nagasaki atomic bomb attack: Japan must not abandon its post-war pacifism

'I saw people so injured you couldn't tell if they were dead or alive'

Nagasaki survivors on why Japan must not abandon its post-war pacifism
Jon Stewart: The voice of Democrats who felt Obama had failed to deliver on his 'Yes We Can' slogan, and the voter he tried hardest to keep onside

The voter Obama tried hardest to keep onside

Outgoing The Daily Show host, Jon Stewart, became the voice of Democrats who felt the President had failed to deliver on his ‘Yes We Can’ slogan. Tim Walker charts the ups and downs of their 10-year relationship on screen