The contradictions of Vince Cable

Vince Cable received praise from certain quarters today for his speech attacking capitalism - yet his record tells a different story to his rhetoric.

Vince Cable certainly wasn’t put off by his critics in the right wing press about attacking the financial sector at he Liberal Democrat conference today. He stuck it to them, and he deserves kudos for having done so (see our post on Left Foot Forward earlier today).

But there is a huge chasm between what Dr Cable says, and what he actually does. For example, back in July he published a Green Paper boldly titled ‘Financing a private sector recovery’ – it promised much but delivered little. Today he repeated the trick.

On banks his line was:

“Make them safe and make them lend.”

He then went on to attack:

“… spivs and gamblers who did more harm to the British economy than Bob Crow could achieve in his wildest Trotskyite fantasies, while paying themselves outrageous bonuses underwritten by the taxpayer … there is much public anger about banks and it is well deserved.”

But his July green paper offered praise to banks for having improved their capital positions. The only sop to small businesses was a statement of the blindingly obvious that “businesses need finances for both working capital and investment purposes”.

Today, he again rightly stressed “the threat to recovery from a credit squeeze by banks on small businesses”.

Yet his speech contained no proposals to do either of these things. Bank lending to business continues to fall, not because of falling demand by businesses but because the banks have shut up shop. Meanwhile, banks continue to pay exorbitant bonuses. In June, the Bank of England’s (BoE) financial stability report stated that if major banks kept to 2008 bonus levels, they would generate an additional £10bn in capital that could sustain £50 billion of lending.

Yet Dr Cable had the nerve to say today that:

“The Chancellor and I have set out a range of sticks and carrots to get banks to support the real economy. Tough interventions will be needed if capital which could be used to support business lending is frittered away in bonuses and dividends.”

Nonsense. The green paper offered no tax incentives for banks to lend nor did it propose any increases to the funding and size of the enterprise finance guarantee or government loan guarantee schemes. It only focused on banks rebuilding their capital bases, which they have already done thanks to the monetary easing policy taken by the Bank of England.

He seemed, however, to acknowledge this when he said that “many firms say they are already being crippled by banks’ charges and restrictions”.

So while his speech sounded good, when examining the policies his department and the Treasury have taken so far – a small banking levy, a tiny increase in capital gains tax that the Budget book estimates will be worth £0.8bn per year, nothing to stimulate growth or demand – his rhetoric is desperately hollow.

His final remarks on the economy are the most revealing about the contradictions of Vince Cable the populist and Vince Cable the business secretary in a Tory-led coalition:

“Economic recovery will not happen automatically, by magic. Government has a key role. It has to sustain demand. That is basic Keynes.”

The sad truth is that Dr Cable preaches Keynes but backs coalition economic policies that, with a massive fiscal consolidation when the economy is still weak, would make the great man turn in his grave.

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11 Responses to “The contradictions of Vince Cable”

  1. Chris Horner

    RT @leftfootfwd: The contradictions of Vince Cable

  2. Ma

    RT @leftfootfwd: The contradictions of Vince Cable:

  3. Mihalis Santamas

    RT @leftfootfwd: The contradictions of Vince Cable:

  4. Keith Ruffles

    Vince Cable the anti-capitalist? Not according to his July green paper, he isn't…

  5. Climbing Frames Man

    Where were the actions? Nice speech and good thoughts but a bit light on actual proposals for doing something. Lets wait and see.

  6. Mr. Sensible

    Ben, good points well made.

    The truth is that Cable, in my view, was just playing to the Conference Hall in order to please delegates.

    He talks about getting tough on the banks, but the bank levy is small, and they have benefited from the cut in Corporation Tax.

    And as you say the CGT increase was small; the Lib Dems bottled it.

    And if he preaches Keynesian economics, why doesn’t he practice it? Cutting things like BSF, canceling the lone to Sheffield Forgemasters, cutting capital allowances to manufacturing, ETC, won’t exactly help the economy to grow or to be rebalanced.

    Cable gives a lot of rhetoric for the papers and for Lib Dem delegates, but government rhetoric is not matched by policy.

  7. Kevin Richards

    What are we to belive Vince with so many contradictions -RT @leftfootfwd: The contradictions of Vince Cable

  8. Kevin Richards

    What are we to believe Vince with so many contradictions -RT @leftfootfwd: The contradictions of Vince Cable

  9. Chris

    It is good to see someone highlighting some problems with capitalism but ultimately Cable is just playing to the conference hall and fuck all will actually happen. Cable has been almost entirely sidelined by Osborne and Clegg, they’re allowing him this little indulgence mainly to stimulate the collective LibDem clitoris but when the time comes his career will be sent to the glue factory.

    The progressives in the LibDem party are either clueless morons or crypto-tories, by U-turning so quickly and dramatically on their economic policies they will set back progressive politics by a generation. They should have entered into a confidence and supply pact, it would have given them far greater say over government policy and allowed them to pull the plug on the tories at any time. Instead they’ve locked themselves in, the only way to get out of which will be AV but Clegg seems to be intentionally trying to lose the referendum.

  10. Cameron cuts back on truth | Left Foot Forward

    […] but the Government’s July Green Paper ‘Financing a private sector recovery’ had very little detail on how they would achieve […]

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