Vince Cable talks to Cherwell

Vince Cable seems happily immune to the seemingly endless string of scandals and corruption found in UK politics. Although the Liberal Democrats have suffered recent blows to their political reputation, support for Cable remains firm, especially by those on the Left. I interviewed him just after party conference season, a time when all parties are looking to the future. This is especially true of the Liberal Democrats who are at a relative high point in their history, albeit at a very insecure one.

The background of the Coalition has presented major challenges for the party, as students who voted Liberal Democrat are painfully aware. When I ask Cable about the tuition fees pledge he is keen to emphasise his own distance from the party, referencing his book, Free Radical, and saying that for ten years he had been, “frankly rather sceptical” about the party policy, but did echo it. He also by points out a usually neglected fact: all three main parties have U-turned on the same issue. The Tories opposed tuition fees very strongly in 2004-2005, while labour did it twice: first by campaigning against tuition fees before introducing them and resisting a raise in fees before increasing them.

Despite the validity of his point, this begins to sound like some compulsory manoeuvre in a driving test: to be correctly executed by any party having a go in the driving seat of power. Cable emphasises how of all the parties the Liberal Democrats alone have apologised on the issue (and what a cracking tune it has made) and rightly comments that “all parties should now have learned to tread with very great care on this issue, and not promise more than they can sensibly deliver.”

Cable considers the party to be composed of people who are, “quite resilient and tough” in terms of political will. The party was hit strongly by a backlash from anti-Conservative supporters who believed that the coalition was not a natural political alliance. From these early days, Cable observes that the position of the party has stabilised two years on, as he sees Liberal Democrats possessing a kind of fighting spirit. “Many of them have come off as councillors and fought for various seats in difficult conditions in the past. We’ve been in a much worse position in times before this, so I think the mood was quite positive in the sense that we can turn it round.”

Cable outlines how core beliefs have remained intact despite the failure to deliver on key issues like constitutional reform. “That wasn’t for want of trying. We have tried and were blocked by the Conservatives, and Labour were not being very helpful. It remains a core belief.” He points to the fight for fairer taxes and lifting the threshold for lower income workers as major, successful campaigns. A strong Liberal Democrat influence has been felt in civil liberties, on which there have taken numerous measures to grant liberties, from stopping ID cards and DNA databases to clearing the criminal records of people who were convicted for being gay, which were left intact for far too long.

Cable implies that the Tories are obstructing green policies, on which I ask him for more detail. “Obstructing may be a strong word there. They are beginning to seem to sound as if they don’t really believe in them anymore. We want to make strong commitments to a low carbon economy and they are very reluctant to support the necessary measures. Energy and Environment is one area where we are in disagreement with the Tories.”

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That Cable felt comfortable to express this outright disagreement with the Tories was in contrast with the ambivalence of his speech at the party conference. There, speaking on the economy he had a less clear line: both fully in agreement with George Osborne, “making no apology” for the deficit-reduction plan, and also echoing the Shadow Chancellor on the need for a demand stimulus. Cable reasons that “both those things are true”, and indeed, deficit reduction would have happened under Labour. “The only real difference has been that we’ve argued to deal with the structural deficit over six years, this is our current estimate, and the Labour Party have been talking about seven years. So it’s not a big difference of philosophy.”

The conversation turns to the economic crisis. My suggestion that the effectiveness of George Osborne’s plan is questionable provokes Cable to emphasise how multifaceted the problem is. Osborne’s plan has so far seen the economy into near stagnation, and as he put it, “deep crisis”, but “there are some very deep problems. The government can’t just press a button and solve this issue.” He stresses the severe damage to the British economy: the massive financial crisis in the banking system with banks not working properly still, dealing with a massive deficit whilst deficit reduction is deflationary, individuals in high levels of debt have a reluctance to spend, and crisis in the Eurozone. “All these factors make life difficult. It’s not that we don’t want to see economic recovery, of course we do.”

Three years ago Cable wrote that “at some point, producers and consumers or both will recover their nerve and start to spend and invest” in his book examining the financial crisis, The Storm. Now, “There is still a crisis of confidence. The government is trying to address it partly by encouraging this continued, very aggressive, monetary policy, which is interest rates, quantitative easing. I’d quite like to see some variation of QE to make it target assets more. We are also trying to use government guarantees to get investment in infrastructure and housing, and that would stimulate demand. We are obviously thinking about what the government should do more on capital investment.” He mentions the green investment bank, overseen by his department, as a signal for future progress. “We won that one. That’s three billion of government money, and hopefully fifteen billion of private money. We’re just starting this state business bank, which will get more money into small companies.”

If different initiatives are being tried to get finance flowing, I wonder about the slow nature of the process. “Things were done at the beginning to provide things like government guarantees for bank lending,” Cable says, “and we tried to twist the banks’ arms and get them lending more. We’ve done a whole lot of things but we’re fighting a very powerful current here.” I asked how big banks that were bailed out by tax-payers, especially the Royal Bank of Scotland or RBS, could have done so little, especially since the balance sheet of RBS in particular was originally one and a half times the size of the British economy. “Since then it’s shrunk by about a half. They’re trying to get the bank into a position where it’s viable and they’ve sorted out all bad loans and got rid of them, selling them off. It’s not really performing the functions it is for, which is taking people’s deposits and giving them to business. The mechanism’s broken down. There is an ongoing argument as to whether they should be more actively engaged in business lending: I have made it very clear that is what I think the emphasis should be.”

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Cable seeks to reform the banking sector in a dramatic way. “Legislation is actually before parliament at the moment, but it’s certainly being taken through in the next couple of years, and it’s called ring-fencing. The casinos are separated from the ordinary banking functions within the bank. The banking sector didn’t like this and resisted it, but we’ve got past that point now, and they have accepted the need to do it.” I ask him to respond to the idea posed by the economic right, that such legislation could some how damage the UK as a leading centre of banking.

“No, I think it certainly doesn’t damage Britain’s reputation if our banks are made safe. We are trying to stop a repetition of that catastrophe. We commissioned some of the top people in the country to give us advice and this was the conclusion. People are saying, ‘you’re not being radical enough, why don’t you split the banks completely?’, but I think we’ve done enough to make them safe.”

However radical the changes he will make as Business Secretary, they are in a sense microeconomic, with limited scope for shaping the economy. “The Chancellor does have more direct responsibility in terms of macroeconomics, that is the case. My department has some important functions, but they don’t involve managing the level of demand in the economy, so I am only indirectly involved in that.”

To those who would like to see him more directly involved, ambitions for his Chancellorship are obstructed by the coalition agreement. “They may privately have ambitions, but the problem is that under the coalition agreement certain departments are allocated to different parties, and so this is the one I’ve been given, but it’s an important job. The Conservatives wanted to keep the Chancellor’s job, and that of the Foreign and Home Secretaries – that’s not an issue which is there to be reopened.”

On the possibility of leading his party Cable is not especially enthused. “I’ve done it once for a couple of months a few years ago: I’ve been there and done it. I’ve got a very big job. I’m not pushing, let alone intriguing to get into the leader’s job. I’ve always said I won’t rule it out if the leader falls under a bus. But leading the party is not something I’m yearning to do.”