An optimistic discontent: Vince Cable and recession blues

Lucia Hodgson discusses the prospects of an economic revival with the Liberal Democrat’s deputy leader and Treasury spokesperson

Official figures released this week show that the UK started to clamber its way out of a tiresome, messy recession at the end of 2009. But it is clear that Vince Cable, the Liberal Democrat Treasury spokesperson, has issues with this, as he furrows his brow at the prospect of a revival. “The British economy is still very weak indeed, whatever the numbers show, and I could certainly envisage a relapse.”

It is hard to believe that it has been two years since the financial downturn began — and, for many of us, the word recession entered our vocabulary. It feels like only yesterday that we were being promised the end of astronomical banking bonuses, and told that ballooning house prices were a sign of trouble. Some of us have been too busy job-hunting, or worrying about paying this winter’s heating bill, to notice if anything has really changed.

And now, as hundreds of Cadbury workers face losing their jobs in the wake of CEO Todd Stitzer’s eye-wateringly lucrative sale of the British institution, we are left wondering if the banks ever really changed their agendas? As if the wound wasn’t deep enough already, it’s worth noting that the taxpayer-owned Royal Bank of Scotland is funding the takeover.

Further, for a government which owns a substantial portion of the domestic banking industry, it has said very little to reassure us that anything has in fact changed, as the banks prepare to fire off another round of bonuses.

Cable is perturbed by this, too: “Worryingly little has changed and there is a mentality in the City which is very much business as usual and this is very dangerous.”

Barack Obama, on the other hand, has bluntly promised taxpayers he will get them back “every dime”. Does Cable think bankers’ buddy Brown will make a similar statement? “I think he should, he should be tough on the banks, and I think the government have been too weak. What I think the British Government should have done, but haven’t yet done, is to require the banks to pay the taxpayer a levy, an insurance premium, for the risk that the taxpayer runs, because they are effectively guaranteed by the taxpayer. Much like car insurance, the banks enjoy insurance from the state, but they don’t pay for it. We want that rectified.”

Banking used to be a lot less troublesome than this. The ethics of building societies and mutuals have been lost in the downward spiral of risky investment and bonus culture, which rewards the ugly notions of excess and risk. Even after the crash, bankers still seem to be motivated by the sweet glut of profits which investment banking promises.

“The government are acutely embarrassed by the upsurge in bonuses in the last few weeks,” Cable says, “particularly in the nationalised banks. It was because they were embarrassed that they introduced this special one-off tax on bank bonuses, which we have criticised because it is ineffective and short-term, and it doesn’t deal with the underlying problem that the banks continue to rely on the taxpayer.”

Amongst fears that the bonus tax which Cable berates will threaten the City of London’s financial clout, many are left wondering if a temporary loss of power and influence would be such a terrible thing. Perhaps it would force the industry to curb its over-indulgent ways.

Increasingly, we hear stories about people burning furniture in their home to keep warm, sharp rises in the popularity of food-banks, and nothing speaks more voluminously than the tragedy of the elderly Northamptonshire couple who froze to death in their own home. The divide between rich and poor, which has stretched itself beyond repair over the past ten years, seems to have been exposed further by the Baltic conditions this winter.

“The rich-poor divide must close. You can’t have a society which is at peace with itself when you have enormous disparities in income. The way in which I think we should deal with it is what the Lib Dems call the Fairer Tax Policy, the very well-off should pay more. You could introduce a greater fairness, reduced inequality, through the tax policy.”

Surely, though, tax can’t change our culture of greed? “You’re right in that fairness isn’t something that can be introduced from the top; it’s got to be embedded in social values. I think in the UK there is a yearning for more of a sense of a society; I think it’s probably stronger in Scotland than it is in London. It has got out of control. We have got unacceptable levels of inequality of income and wealth. I think there is a popular grassroots feeling that this is not acceptable.”

What parliament is lacking, though, is a uniting figure who offers a powerful alternative vision for the future of the country. “The government haven’t done that very well, I must say. I’ve been surprised going to provincial towns and seeing 500 to 1000 people turning up. We never used to have this level of public engagement, I think it’s a general desire to know and engage. It was very unfortunate that the expenses crisis erupted in the middle of the financial crisis. It considerably weakened the moral authority of politicians.”

Today, Cable has attended the Cities Outlook conference for 2010, held by the independent policy research unit, Centre for Cities. This year’s forecast indicates that, whilst some cities, such as Brighton and Milton Keynes are well-placed to see a strong upturn, other areas of the UK will face an uneven recovery.

It came as a surprise to Cable that the traditionally poorer cities of the North were the ones set to suffer again following the recession, especially considering that the banking crisis and property inflation mainly centred around the South East.

“It’s very difficult to turn these things around. I went back to Maryhill recently, the ward I represented [Cable was a Glasgow City councillor in the 1970s], and 35 to 37 years later, it hasn’t changed. The poverty is still very serious. But through grassroots initiatives, using the limited power that councils have to support small business, local housing initiatives, or in the case of Newcastle using their local reserves, it is possible to do things at a local level, which probably can’t completely change the story but can change matters on the ground.”

Cable looks back at his Maryhill and Partick door-knocking days fondly. He found residents extraordinarily friendly, “bearing in mind I was a sort of young Englishman with a slightly middle-class accent, in a fairly basic part of Glasgow. There was a bit of a language problem! People were usually very warm and very direct, I developed a real affection for the people there.”

The door knocking strategy doesn’t seem to be such a crucial part of election campaigning anymore. Cable puts this down to the simple matter of safety, and that the Partick and Maryhill doors he once rapped on are either a great deal less welcoming, or completely inaccessible to those who aren’t residents. Wary of the social alienation experienced by those out of touch with their local councillors or MP’s, Cable instead envisions the town-hall meetings adopted by Liberal Democrat leader, Nick Clegg as a way of bringing people together.

Cable cuts a serious figure, both in person and in his politics. He is much more capacious than you would expect from his appearances on television. He is most content in his comfort zone of economics and current affairs, waxing in the most lyrical way possible about shares and premiums. He does so in a manner which would leave even the least politically-inclined animal enthused.

Outside of this safety-net of figures and political jargon, Cable is a polite, if rather shy, gentleman, whose bloodshot eyes already show the strain of the pre-election grind. Just this week his party has had to place their pledge to scrap tuition fees on the backburner. A central tenet of the Liberal Democrat’s agenda, it has commonly been a student favourite.

Cable is adamant, however, that it is still a pledge to which the Liberal Democrats are committed.

“For reasons of realism it cannot be done overnight. It is still a popular and relevant policy for students. We haven’t abandoned it, but we must present it in a framework which is economically realistic.”

Cable says he never believed in the 50% target for young people to be attending university, and that the competition for places will inevitably become even more fierce. “There simply isn’t the money, and I’m not sure it’s desirable either. We’re getting a growing number of young unemployed graduates. And they’re saddled with debt”.

Recognising that university education isn’t always the best prospect for seventeen- or eighteen-year-olds, Cable believes tailor-made vocational training should be the subject of greater promotion and encouragement.

The futures of universities and students alike looks uncertain as 2010 has already produced blow after blow to that 50% dream espoused by Labour’s education commitments. University funding is set to be cut by £135m, and David Blanchflower, a leading economist, called for students from well-off families to pay more to attend university, up to as much as £30,000.

How the government believes it can achieve such a lofty target whilst taking an axe to the roots of higher education is a mystery. These uncertain prospects leave the future of higher education looking alarmingly bleak, even in the hands of the party who were so keen to nurture it back to health.

In the run-up to the election, the Liberal Democrats will have to try to turn the public perception of politicians back around if they hope to increase their number of seats. Their 2010 campaign is focusing on fairness, which will, they hope, prove to be a persuasive enough message to gain more support for the Party.

Hidden behind the airbrushed campaign posters and celebrity-saturated endorsements of modern politics, surely there is an idea powerful enough to engage with the public? Not just through policy, but in changing the minds of those around the country who feel disillusioned with the process of ticking a box in May.

The Liberal Democrats hope that their slogan, “We are the only party that believe in Fairness”, will help voters to see past the endless cut and spend debates of the two main parties. In a year which poses the serious possibility of a hung parliament, the Liberal Democrats will need to provide clear reasons as to why they are the alternative voice. And whichever direction the Party chooses to take, Vince Cable won’t be far behind. “Until May it will be long days campaigning to boost the Liberal Democrats; a great deal of hard work on the political campaign trail. What happens after May? That’s in the lap of the electorate.”

Photo courtesy of Dave Angell


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