Outside the banking sector and its critics, not everyone grasped the radicalism of Ed Miliband’s announcement a few weeks ago that the next Labour government will establish a network of regional banks. But this was policymaking at its best, signalling a commitment to radically reform the relationship between finance and the real economy and a determination to make Labour the party of small businesses across the nation. The British banking system is astonishingly uncompetitive: 89 per cent of all our businesses are dependent on the five major clearing banks. Yet over the last 30 years these banks have become disconnected from the needs of these businesses, seeking quick profits in the City and in the property markets rather than long term investments in the industries and regions outside the southeast. Duncan Weldon has calculated that, in the decade before the crisis, 84% of the money lent to British residents by British banks went into property and financial services.