Dr Vince swings back to the 60s with his vision for BIS

Clegg will not want to lose Cable or see him fail as he is – for the moment- the key member of his praetorian guard in the coalition government. Clegg has precious few true believers in his parliamentary party and Cable is from the more idealistic ‘we can make a difference’ school of why the Lib Dems are propping up a Conservative government.

In Harold Wilson’s weary estimation, “whichever party is in office, the treasury is in power.” Such pessimism led him to create the Department of Economic Affairs (DEA) back in 1964 as a counterweight to the Treasury’s innate conservatism and to spearhead new approaches to growth. Rolling forward 46 years, it seems that business secretary, Vince Cable – a former Labour councillor under Wilson – is harking back to the swinging sixties as he surveys the economic challenges of 2010.

It’s clear from his speech at CASS Business School a few weeks ago that Cable has high hopes he can lead the department for business, innovation and skills (BIS) to become “the department for economic growth” pulling together supply side levers like universities, skills, business support, regulation, competition, science and research policy.

In Cable’s view the “mission” and “mandate” of his department “have changed radically”. This sounds suspiciously like the arguments used to create the DEA back in the 60s. Of course the agenda is a bit different this time around.

No more 5-year plans; Cable’s vision is a sort of economic ‘liberal interventionism’ (to recycle a Tony Blair-ism). Yes to markets and competition; but also a “tough line” on parts of the banking system “which have not served enterprise in this country as well as they could”. BIS under Cable is a sort of DEA redux.

On the face of it, this development is one progressives should welcome. Indeed, the creation of BIS as a sprawling supply side catch-all was the work of Cable’s predecessor, Lord Mandelson. But it is Cable who now seeks to realise its potential, aiming to make economic policy making a duopoly with the Treasury in future.

There is a strong rationale in having a rival centre of gravity promoting the needs of the real economy at the other side of Parliament Square. And Cable deserves a chance to challenge Treasury orthodoxy with a bit of Mr Wilson’s “creative friction”. He is also well positioned to act as a handbrake on Tory economic excess.

But what will his in-laws think? And with a bulging in-tray of tortuous economic woes, does the Coalition need potentially disastrous infighting right at the top of government? Cable counters by pledging his vision of BIS’s role is “complementary” to the Treasury’s.

For now, his colleagues appear sanguine enough. The early skirmish between Cable and Osborne over which of them will lead on banking reform saw the Chancellor emerge victorious. But the very concept of a Chancellor having to fight to defend his turf from a Cabinet colleague is indeed a sight to behold after the years of Gordon Brown’s unassailability.

Whether Cable is prepared to joust with George Osborne over the direction of broader economic policy remains to be seen. Whereas Mandelson was simpatico with the prime minister and the Government’s overall agenda, Vince Cable is not. He may indeed find his colleague, chief secretary Danny Alexander, will be the Lib Dem closest to the Coalition’s economic centre of gravity, despite Dr. Vince’s erudition in the dismal science.

But, as ever, economic wishful thinking is one thing; the hard politics of whether he will succeed in turning BIS into an economic powerhouse are quite another. It seems unfeasible that the Cameron/Osborne axis will allow such a potentially powerful institutional rival to grow up right under their noses. At the very least they risk a twin-track economic message developing, which would damage the credibility of economic policy making more generally. And they face the awkward problem of only being able to bring someone like Cable to heel indirectly, via his immediate ‘line manager’, Nick Clegg.

Clegg will not want to lose Cable or see him fail as he is – for the moment- the key member of his praetorian guard in the coalition government. Clegg has precious few true believers in his parliamentary party and Cable is from the more idealistic ‘we can make a difference’ school of why the Lib Dems are propping up a Conservative government, rather than the more brutally simplistic ‘we want to be ministers’ school. But if Cable cannot emerge as a change maker, then his failure will rub off onto Clegg and embolden those in his party who detest their role as Tory supplicants.

So neither the Tories nor Nick Clegg can afford for Vince to fail. For now. The crucial distinction is whether he ‘fails’ because he is frustrated by Treasury strong-arming, or whether through his own endeavours. If he’s stopped from realising his potential, he becomes a martyr. If he simply fails to shine, he becomes expendable. The next few months, as the spending review unfolds, will determine which; but for now at least he is a key block in the coalition’s game of political jenga.

So will he succeed? The historical parallels with the DEA are not happy ones. If neither George Brown’s pugnacious street fighting skills nor Anthony Crosland’s cool intellectual prowess managed to curb the Treasury’s monopoly on economic policy back in the 60s, then the omens do not look propitious for the already semi-detached business secretary.

But perhaps there is something simpler going on. As ever in politics, we cannot underestimate the power of self-delusion.  For an economic seer who wallows in a reputation for “predicting the recession”, perhaps Cable thinks this is his moment to alter Britain’s economic destiny once and for all. And perhaps that’s how he overcomes his broader doubts and justifies his continued involvement in the coalition.

But one thing is certain, as he dances his awkward tango with George Osborne over coming months, this ballroom dance champion will need all his much vaunted fancy footwork to stand a chance of realising his grand ambition.

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