Cable positions himself as the man for a Lib Dem-Labour coalition

Forecasting a hung parliament at the next election, the Business Secretary looked to life after the Tories.

Vince Cable used his speech to the Lib Dem conference to present himself as a free radical, a man who was prepared to work with the Tories and Labour when they were right and to criticise them when they were wrong. He restated the original rationale for the coalition - to provide national government at a time of "permanent crisis" - but added that he made no apology for maintaining "good communications with politicians across the spectrum", before motioning as if he had just received a text, "Please Ed, not now, this is not the time". Cable's political motives became clear at the end of the speech, when he suggested that the most likely outcome of the next election was another hung parliament (the British people, he said, would not want to "entrust their future to any one party"). If you want someone who can lead the Lib Dems into coalition with Labour, he implied, I'm the man for the job; messrs Miliband and Balls already having ruled out working with Nick Clegg.

Throughout the speech, the Business Secretary was careful to combine attacks on both parties with references to those areas where they could work together. So he derided the Tory "headbangers" who wanted a "hire-and-fire culture" and the "backwoodsmen" who opposed a mansion tax, but offered a strong endorsement of George Osborne's deficit reduction plan and declared that he had "considerable personal sympathy" for the Chancellor, who was attacked both for "borrowing too much" and "borrowing too little". In a notable jibe at Andrew Mitchell's expense, which was left out of the original text, he also joked that he was a "mere pleb". As for Labour, he mocked Ed Balls's plan to eliminate the deficit over seven years, rather than the coaliton's six ("wow!"), but nodded to Ed Miliband's agenda when he called for a culture of "responsible capitalism".

Cable, who has openly declared that he is prepared to stand for the Lib Dem leadership, was astutue enough to avoid anything resembling disloyalty to Nick Clegg, praising the Deputy PM early on for proving that "coalitions work". But he also deftly positioned himself as a social liberal ("this is no time for the state to be stepping back"), who, unlike Clegg, continued to command respect across the centre-left. While conservative columnists write paeans of praise to the Lib Dem leader (see Boris Johnson's piece in today's Daily Telegraph), Cable reminded activists of a Telegraph poll showing that he was the cabinet minister who Tory activists most wanted to evict from the government. The message to the party's base - "I'm one of you" - could not have been clearer.

Vince Cable gives his speech to the Liberal Democrat conference in Brighton. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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What type of Brexit did we vote for? 150,000 Conservative members will decide

As Michael Gove launches his leadership bid, what Leave looks like will be decided by Conservative activists.

Why did 17 million people vote to the leave the European Union, and what did they want? That’s the question that will shape the direction of British politics and economics for the next half-century, perhaps longer.

Vote Leave triumphed in part because they fought a campaign that combined ruthless precision about what the European Union would do – the illusory £350m a week that could be clawed back with a Brexit vote, the imagined 75 million Turks who would rock up to Britain in the days after a Remain vote – with calculated ambiguity about what exit would look like.

Now that ambiguity will be clarified – by just 150,000 people.

 That’s part of why the initial Brexit losses on the stock market have been clawed back – there is still some expectation that we may end up with a more diluted version of a Leave vote than the version offered by Vote Leave. Within the Treasury, the expectation is that the initial “Brexit shock” has been pushed back until the last quarter of the year, when the election of a new Conservative leader will give markets an idea of what to expect.  

Michael Gove, who kicked off his surprise bid today, is running as the “full-fat” version offered by Vote Leave: exit from not just the European Union but from the single market, a cash bounty for Britain’s public services, more investment in science and education. Make Britain great again!

Although my reading of the Conservative parliamentary party is that Gove’s chances of getting to the top two are receding, with Andrea Leadsom the likely beneficiary. She, too, will offer something close to the unadulterated version of exit that Gove is running on. That is the version that is making officials in Whitehall and the Bank of England most nervous, as they expect it means exit on World Trade Organisation terms, followed by lengthy and severe recession.

Elsewhere, both Stephen Crabb and Theresa May, who supported a Remain vote, have kicked off their campaigns with a promise that “Brexit means Brexit” in the words of May, while Crabb has conceded that, in his view, the Leave vote means that Britain will have to take more control of its borders as part of any exit deal. May has made retaining Britain’s single market access a priority, Crabb has not.

On the Labour side, John McDonnell has set out his red lines in a Brexit negotiation, and again remaining in the single market is a red line, alongside access to the European Investment Bank, and the maintenance of “social Europe”. But he, too, has stated that Brexit means the “end of free movement”.

My reading – and indeed the reading within McDonnell’s circle – is that it is the loyalists who are likely to emerge victorious in Labour’s power struggle, although it could yet be under a different leader. (Serious figures in that camp are thinking about whether Clive Lewis might be the solution to the party’s woes.) Even if they don’t, the rebels’ alternate is likely either to be drawn from the party’s Brownite tendency or to have that faction acting as its guarantors, making an end to free movement a near-certainty on the Labour side.

Why does that matter? Well, the emerging consensus on Whitehall is that, provided you were willing to sacrifice the bulk of Britain’s financial services to Frankfurt and Paris, there is a deal to be struck in which Britain remains subject to only three of the four freedoms – free movement of goods, services, capital and people – but retains access to the single market. 

That means that what Brexit actually looks like remains a matter of conjecture, a subject of considerable consternation for British officials. For staff at the Bank of England,  who have to make a judgement call in their August inflation report as to what the impact of an out vote will be. The Office of Budget Responsibility expects that it will be heavily led by the Bank. Britain's short-term economic future will be driven not by elected politicians but by polls of the Conservative membership. A tense few months await. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.