Revealed: where Vince Cable got his RBS plan from

The problem is, he isn't really following it to the letter.

Blogger Left Outside thought that the proposals by what the FT called "cabinet ministers" – "it's Vince Cable, everyone knows it's Vince!" – to fully nationalise RBS in order to be able to force it to start lending serious amounts of money to small and medium enterprisise sounded familiar. So they dug around the archives and found Giles Wilkes' paper for Orange Book Lib Dem think-tank Centre Forum from 2010, Credit where it's due: making QE work for the real economy.

What Vince is suggesting is basically creating an independent, government owned bank to finally start an effective policy of credit easing. Although Osborne has used the phrase before, he has been hamstrung by the desire not to do it directly, and the carrot-and-stick approach he has taken up doesn't seem to be convincing the banks to do it themselves.

Wilkes' overview of his paper laid out the plan:

"In deploying quantitative easing, the Bank may have forestalled a total collapse in our financial system. But QE has been less successful at stimulating the real economy. Now it needs reform if it is to restore the confidence needed for sustained growth. Money that is subsidizing the borrowing costs of the state should instead be helping smaller businesses and households.

"The Bank should start by targeting a high level of nominal growth until the economy is performing at its potential. This will reassure the private sector that liquidity won’t dry up in the near future, and so encourage more investment now. The second step should be for ‘credit easing’ to replace ‘quantitative easing’. The Bank’s independence of action on traditional monetary matters should be respected. But by putting taxpayer’s money at risk, QE is as much fiscal as monetary policy. So it is quite right for the government to direct the Bank to deploy the funds in the private economy, which is where it is really needed. For example, the money could help guarantee loans to small companies, or alleviate the dearth of financing for long-term infrastructure.

"With incomes stagnating and huge spending cuts in prospect, the Bank is right to ignore scare stories about spiralling inflation. It should even consider expanding the programme if the economy stays weak. What it should not do, however, is increase the size of QE without changing the way it works. It is time that politicians realised that QE is their business, and that failure to make it work properly will be their failure."

Notice anything strange, though? Vince seems to have jumped straight to step two in Wilkes' plan, skipping entirely the rather cruical first step.

Nominal growth targeting involves switching the Bank's aim from keeping inflation within 1 percentage point of 2 per cent inflation to attempting to keep nominal growth at certain level (usually around 4-6 per cent). The cruicial difference between the two being that it would allow the bank, in times of crisis (like now!) to allow higher inflation.

This matters for Cable's plan because the immediate impact of increasing the number of loans to SMEs would likely be a - temporary - burst of inflation. As companies borrow to expand production, all sorts of macroeconomic effects kick in. Young workers gain employment and move out of their parents houses (increasing the cost of housing), more people drive to work (increasing the cost of fuel), businesses invest in machinery and equipment (increasing the cost of those) and so on. This inflation would be temporary, because eventually the bottlenecks in those industries would be expanded, but it would still be felt.

Yet with the bank's mandate as it is now, it would have to respond to that inflation spike by tightening monetary policy. Interest rates go up, lending gets more expensive, and everything good is bad again. We'll see if that is how it actually plays out. Of course, the political game is, as ever, where the real action lies.

Business Secretary Vince Cable addresses employees at the BMW MINI plant in Oxford. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Women's bodies should not be bargaining chips for the Tories and the DUP

Women in Northern Ireland have been told for too long that the Good Friday Agreement is too fragile to withstand debates about their reproductive rights

When Members of Parliament are asked to pass laws relating to when and whether women can terminate their pregnancies, women’s rights are rarely the focus of that decision-making process. You need only look at the way in which these votes are traditionally presented by party leaders and chief whips as “a matter of conscience” - the ultimate get-out for any MP who thinks their own value or belief system should get priority over women’s ability to have control over their bodies.

Today’s vote is no different. The excellent amendment that Labour MP Stella Creasy has put before the house reveals not just the inequalities experienced by women in different parts of the UK when it comes to being able to make decisions about their health, but also the latest layers of subterfuge and politicking around abortion. 

Creasy’s amendment seeks access to the NHS for women who travel to England and Wales from Northern Ireland seeking abortion. Right now women in Northern Ireland are pretty much denied abortion by legislative criteria that limits it to cases that will "preserve the life of the mother" - (that’s preserving, not prioritising) - and pregnancies under nine weeks and four days. Rape, incest or fatal foetal abnormality are not included as grounds for termination. The thousands of women who thus travel to England are refused free abortions on the NHS - confirmed by a recent Supreme Court ruling - on the grounds that this is a devolved matter for Northern Ireland. 

The idea behind devolution is that power should be more evenly and fairly distributed. It is not intended to deprive people of rights but to ensure rights. In refusing to exercise the powers available to him, Health secretary Jeremy Hunt is rightly acknowledging a difficult history of power imbalance between Westminster and Stormont, but he is also ignoring a wider imbalance of power, between men and women.  

There is so very much wrong with this arrangement. But a further wrong could be done if, as reports suggest, the Conservative Party whips its MPs to vote the amendment down in order to protect the regressive alliance with the anti-abortion Democratic Unionist Party (DUP) that is keeping their fragile minority government in power.

Instead of taking this opportunity to respond to the demands of women of Northern Ireland, this government is setting out the parameters of its complicity in refusing to listen to them. 

It is not the first time. In 2008 it was reported that the Labour party struck a deal with the DUP to leave Northern Ireland’s abortion laws intact, in exchange for their support over detaining terror suspects without charge for 42 days. Labour said at the time that it was concerned about the impact on existing UK abortion laws if the debate was opened.

But not one woman has equality until all women have equality. Women’s bodies are not chips to be bargained and we should not be bargaining for one group of women’s rights by surrendering the rights of another group. The UK parliament has responsibility for ensuring human rights in every part of the UK. Those include the rights of Northern Irish women.

It’s time to wake up. It’s time to stop playing politics with women’s lives. Women in Northern Ireland have been told for too long that the Good Friday Agreement is too fragile to withstand debates about their reproductive rights – a fragility that was dismissed by the Conservatives as they drew up a deal with one side of the power-sharing arrangement.

It’s time to confront the fact that nowhere in the United Kingdom – taking Northern Ireland as a starting point rather than an end in itself – do women enjoy free and legal access to abortion. Even the UK’s 1967 act is only a loophole that allows women to seek the approval of two doctors to circumvent an older law criminalising any woman who goes ahead with an abortion.

As long as our rights are subject to the approval of doctors, to technological developments, to decisions made in a parliament where men outnumber women by two to one, to public opinion polls, to peace agreements that prioritise one set of human rights over another – well, then they are not rights at all.

The Women’s Equality Party considers any attempt to curtail women’s reproductive rights an act of violence against them. This week in Northern Ireland we are meeting and listening to women’s organisations, led by our Belfast branch, to agree strategy for the first part of a much wider battle. It is time to write reproductive rights into the laws of every country. We have to be uncompromising in our demands for full rights and access to abortion in every part of the UK; for the choice of every woman to be realised.

Sophie Walker is leader of the Women's Equality Party.

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