Opinion: Vince for No.11 – for growth and investment

Coming after several weeks of self-inflicted damage, the news that the UK economy has gone back into recession risks further undermining public confidence in the Government’s ability to deal with the problems the country faces.

Nick Clegg says the principles of the coalition’s economic strategy remain sound – repairing the public finances, reforming the financial system and rebalancing the economy – and I agree. The problem is that we are only making progress on the first one of these principles under the Osborne-Alexander treasury team and we don’t have a clear vision for what’s next.

We need to change course, but that change must be accompanied by a change of leadership to show the coalition’s commitment to that new course.

The call should go out to Vince Cable to move in at No.11 Downing Street as the new Chancellor. Vince could be ably supported by Ken Clarke. This would be the coalition putting its best and most experienced economic brains to work on solving the country’s economic problems.

A re-shuffle with promotion for Vince Cable, if accompanied by the resignation of Jeremy Hunt, would also show the coalition distancing itself from its damaging association with the Murdochs.

Having secured a measure of financial stability we must now make progress on the key challenges of rebalancing the economy and generating growth. We must find a way of getting the banks lending and persuading many large private investors to slit open their cash-stuffed mattresses and start investing in the future.

Vince Cable has the insight, experience and imagination to make the necessary changes. He also has the respect of the business community. Ken Clarke has always been a pragmatist, he has been Chancellor before, and he knows how things work. This pair of economic heavyweights together could make a formidable partnership to put the economy back on track and in so doing, save the Liberal Democrats from political oblivion.

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9 Comments

  • iain brodie browne 30th Apr '12 - 1:02pm

    Hi Simon,
    You and Southport MP John Pugh are making a broadly similar point this morning-see John’s article over on Politics Home http://polho.me/IzkSbX Essentially we don’t believe that we can focus on only one economic/well being indicator. John writes:

    ‘There are at least three reasons why it would benefit the Coalition in current circumstances to have Vince Cable as Chancellor. He recognises the Coalition needs a clear industrial and financial strategy, he identifies the need to take a more aggressive approach with the banks and he is acutely sensitive to the downside risks of deficit reduction. He was also of course right about Murdoch. There is too a widespread,unmatched faith and confidence amongst the general public and in commercial circles in his ability in matters economic. He would be the people’s choice even if not first on the No10 dinner party list.’

    By implication this would mean Vince would join the Quad and that would be healthy for the coalition!

    PS Congratulations on your wedding!

  • I wonder, if the media had been supportive of the governments changes to tax/spend/benefit, instead of the constant griping, misrepresentation and distortion that we have experienced, would we have actually gone into recession again.? This his been a self-fulfilling prophesy, fuelled by the stupid utterances of politicians on the opposition benches who helped create the financial crisis in the first place. If they had been less arrogant and tribal back then, they might have heard what Vince was saying and changed course….

  • Alex Sabine 1st May '12 - 6:35pm

    I agree that Ken Clarke was one of the better recent Chancellors. But having held that high office, is it likely that he would accept the role of understudy to Vince Cable? Besides, I see no reason to replace or demote Danny Alexander, who seems to be doing a very capable job.

    I’m not sure Vince has the “widespread, unmatched faith and confidence…[of those] in commercial circles” that John Pugh ascribes to him, even if CBI chief John Cridland is a fan. The sobriquet of ‘Anti-Business Secretary’ may be exaggerated and unfair, but it does contain a germ of truth.

    If there is to be a business secretary at all – and Cable has argued convincingly in the past for his department to be scrapped – the case for it is presumably that business needs a champion at the Cabinet table to counterbalance the other influences on government thinking, which tend to be concerned with distributing rather than creating wealth.

    So it’s unfortunate that Vince’s weakness for crowd-pleasing rhetoric can often overcome his more cerebral, economically literate side; justified criticism of corporate abuses or anti-competitive behaviour shades too easily in his speeches into crude business-bashing.

    See for example: http://www.economist.com/node/17101223

    His enthusiasm for taking to the airwaves at every twist and turn in the fast-moving financial crisis, and his talent for communicating complex economic ideas in a simple and eloquent way, undoubtedly gave him a high profile and won him public acclaim.

    However the price of this hyperactivity was inconsistency and flip-flops on a lot of the big issues – as was cruelly exposed by Andrew Neil and Stephanie Flanders during the Daily Politics ‘Chancellors’ debate during the general election campaign.

    To take a few examples, he supported the Lloyds/HBOS merger only to admit shortly afterwards that it was a disaster.

    He initially opposed the Labour government’s fiscal stimulus (arguing for a revenue-neutral tax switch), then supported it but criticised the form it took (arguing for capital spending rather than a VAT cut), before eventually seeming to drop his criticism of the VAT cut.

    He argued in his September 2008 party conference speech (as the Lehman Brothers collapse was unfolding) that on no account should the Bank of England’s independence be compromised or the asset price bubble reflated, then within days called for a large cut in interest rates and supported QE.

    He argued that the vulnerability of sterling during the crisis highlighted the risks of being outside the euro, but later acknowledged that having an independent currency (and monetary policy) had been an important safety valve for the UK.

    It’s one thing to follow Keynes’s dictum and change your opinion when the facts change; a politician who does a U-turn is better than one who doggedly continues in the wrong direction. But for someone who basked in the image of being a soothsayer, his advice does seem to change rather too often to be useful to policy-makers…

  • “However the price of this hyperactivity was inconsistency and flip-flops on a lot of the big issues – as was cruelly exposed by Andrew Neil and Stephanie Flanders during the Daily Politics ‘Chancellors’ debate during the general election campaign.”

    Cruelly but not very accurately, to be fair to Cable.

  • Simon Holbrook 2nd May '12 - 8:31am

    Changing your plan when the facts on the ground change is a sign of strength not weakness. Keeping doing the same thing and hoping for a different result was Einstein’s definition of madness. It is not a flip-flop, but a change of emphasis and a rebalancing of policy that I advocate.

    We need a shift in economic policy. Austerity is a necessary policy but is not on its own a sufficient policy to rebuild the economy. Getting the banks working properly is key and it is here where Vince has the ideas and the imagination to make a difference. Vince’s talents are being wasted in BIS, which ever since the sixties and the days of George Brown has always been subordinate to the Treasury. He cannot implement his ideas from there.

    The point about Ken Clarke is that in a coalition, you have to have a balanced ticket in the treasury team. Ken is an elder statesman within the Conservatives, and once you become an elder statesman, status or percieved lack of it is unimportant. Status is something you achieve by force of your personality and through your achievements. Ken has plenty of both.

    Good luck to John Pugh.

  • Elliot Bidgood 2nd May '12 - 11:56am

    I like Vince Cable, so do the public I think, and he’d make a far better chancellor than Osborne in my view. However, even with Pugh’s points about Tories wanting cabinet government and a reciprocal reduction in LD ministerial posts elsewhere, I can’t see it happening. The arrangement for the Chief Secretary to be a Lib Dem is fair in that it is designed to make sure Lib Dems have their foot in the door on fiscal policy, while assuring the Tories retain overall control, although I wouldn’t be surprised if there are Tory backbenchers who feel that even this arrangement affords too much relative power to their junior partners to dictate fiscal policy. This proposal would make not only backbench Tories, but probably also many on the frontbenchers, go apoplectic.

  • Alex Sabine 3rd May '12 - 4:03am

    @ Chris: “Cruelly but not very accurately, to be fair to Cable.”

    But it was accurate and generally fair – I listed at least four specific examples, most of which Neil and Flanders probed in that interview.

    The one charge that was unfair in my view was to accuse him of denouncing QE as the ‘Robert Mugabe school’ of economics. He had used that phrase, but simply to make the point that QE was inherently risky, and could lead to hyperinflation if it became a licence to print money as a means of financing budget deficits or defaulting on debt repayments rather than a means of fighting deflation. This was a perfectly reasonable point and not inconsistent with qualified support for QE. But perhaps it is the lot of politicians with a taste for colourful phrases to be quoted out of context!

    Neil and Flanders also alighted on a key flaw in the Lib Dem manifesto costings, which was that the figure for public expenditure savings involved some double-counting by including measures already identified by Labour that would be implemented in a different form (eg public sector pay restraint, where the Lib Dems advocated a £400 cap on pay rises rather than 1%). The manifesto said “all the savings we have identified are either instead of or additional to (my italics) proposals the government has already made”, but costed all these measures as net savings relative to Labour plans.

    @ Simon

    “Changing your plan when the facts on the ground change is a sign of strength not weakness. Keeping doing the same thing and hoping for a different result was Einstein’s definition of madness.”

    As I made clear in my comment above, I agree that there is no shame in the occasional properly justified U-turn. However this can become a convenient cover for opportunistic headline-chasing; pragmatism, a virtue, can become expediency, a vice. (Similarly, a government can weather the odd U-turn but too many of them look shambolic.)

    More to the point, Vince had cultivated a reputation as a soothsayer who foretold the crisis and had unique insights into what to do about it. Given how frequently his policy advice changed it would have been difficult to develop a coherent strategy on the basis of it.

    @ Simon again: “Vince’s talents are being wasted in BIS, which ever since the sixties and the days of George Brown has always been subordinate to the Treasury. He cannot implement his ideas from there.”

    The Treasury’s (in my view necessary) stranglehold over economic policy stretches back much further than the 1960s. George Brown’s unsuccessful attempt to challenge it was via the short-lived Department of Economic Affairs rather than BIS (which was formerly the DTI and before that the Board of Trade).

    The DEA failed not because of George Brown’s fiery temper or alcoholism but because it was fundamentally misconceived, based on the hubristic belief that the government could engineer a given level of growth through central planning. Its growth targets were fantastic and it had no idea how to achieve them. Understandably given the vulnerability of sterling within the Bretton Woods system, the Treasury was more concerned to avoid a collapse in international confidence and a run on the pound.

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