Magazine article Public Finance

Eye on the Storm

Magazine article Public Finance

Eye on the Storm

Article excerpt

Things weren't meant to be like this. After his political career was brutally terminated in the 2015 election, Sir Vince Cable was supposed to shuffle off - along with the rest of the Liberal Democrat walking wounded - into the twilight zone of after-dinner speechifying and various private pursuits.

There's been a fair bit of that, of course. The former Strictly Come Dancing contender has had more time to indulge his passion for ballroom dancing. And, according to his wife Rachel, there's a novel about arms dealing in the pipeline.

But despite losing his high-profile coalition role as business secretary along with his Twickenham seat, Cable is still in frequent public demand, commentating on everything from the EU referendum and prospects for the economy, to Tata steel and the Panama Papers.

On the day we meet at his Twickenham semi, he's running late after a radio interview, and a TV crew is parked in his back garden, awaiting a soundbite on the chancellor's claim that Brexit will trigger a year-long recession. In the run-up to 23 June, he's "on message", he tells me, touring the studios on behalf of Remain. So just like the old days, eh?

Well, not exactly. For starters, there's no retinue of civil servants organising his diary; just Rachel, valiantly fielding the media inquiries. When we finally settle down to talk in the front room, he admits just how much he misses being in the thick of things - as the local MP for 18 years, and secretary of state for five. "Yes, I do miss that. It was very draining and demanding, but I felt we were doing a good job. A hell of a lot of stuff got done."

Despite the disastrous outcome for his party, Cable insists the coalition achieved a great deal and deplores the lack of a moderating influence on the current government. When he was running the Department for Business, Innovation & Skills, he claims, it was a countervailing force to the "institutionally arrogant" Treasury. However, under his successor, business secretary Sajid Javid, the department has "effectively been subsumed under the Treasury, making its power overweening and unhelpful".

As a cash management department, the Treasury is by definition very short termist, he says. "They don't have anybody thinking seriously about long-term economic trends, which is really what BIS's industrial strategy was all about." This lack of challenge means the economy is still "horribly unbalanced", argues Cable. "It's still very reliant on consumer spending, rising debt and a rising housing market, instead of high productivity and export based activities." And, in common with other western economies, the UK is fast running out of tools and levers with which to dig its way out of trouble.

Pumping up the housing market has created a "terrible situation," he adds. "It's a very bad policy error, very destabilising socially and economically."

He also believes George Osborne has stepped over the line when it comes to fiscal consolidation. "Of course you have to have fiscal discipline, and I was part of the austerity process. But I think it's gone too far. I think it's ideologically driven now."

Some of these distinctly off-message themes are rehearsed in Cable's newest book, After the Storm - a reprise of the arguments he raised before, during and after the 2008 crash, about the risks of over-reliance on financial markets and the need for a more growth-oriented economy. Cable's perspicacity at that time earned him his 'Saint Vince' sobriquet, plus a good few laughs at the expense of Mr Bean, aka the then prime minister Gordon Brown. It also enhanced his status in the eyes of many as the best chancellor we never had.

So he must deeply regret never getting his hands on that top Treasury job? "Yes, I do," he says emphatically. "That was probably my main frustration in the coalition. Although I was in a position to do good things at BIS, I wasn't in a position to have a major influence on central government economic policy. …

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