Exclusive: Vince Cable – “Keynes would be on our side”

Cable argues in this week’s New Statesman that the famous economist would back the coalition’s econo

In an exclusive essay published in this week's New Statesman, the Business Secretary, Vince Cable, discusses the ideological battle between left and right over John Maynard Keynes's legacy – and why Keynes would back the coalition's policies.

Cable argues that knee-jerk opposition to the cuts will not suit the long-term causes of the left. "If the British left follows Bob Crow and the National Union of Students to the promised land of the big spenders, it will enjoy short-term popularity at the expense of the coalition but it will also enter an intellectual and political blind alley," writes Cable.

The cuts that the coalition is making are not a matter of choice. "For all the protesters shouting 'No to cuts', this electoral term would always have been about public-sector austerity, no matter who won the election," Cable argues.

"The outgoing Labour government was already planning a fiscal tightening of 1.5 per cent of GDP in 2010/2011," he writes. "The difference between its deficit reduction plan beyond 2010/2011 and that of the coalition amounts to roughly half a per cent of GDP per annum: well within the forecasting error."

The rhetoric of anti-cuts protesters is overblown, says Cable. "Such differences, though not trivial, hardly justify the titanic clash of economic ideas advertised in the commentaries or a threatened mobilisation of opposition comparable to the General Strike."

This week's New Statesman is available on news-stands from today. You can subscribe here.

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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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