Vince Cable's leaked letter: the reaction

The Business Secretary's harsh criticism of government economic policy hurts because it is true.

In a remarkable leaked letter, the Business Secretary Vince Cable has ripped apart the government's strategy on growth and other key economic policies.

The four page letter (which you can read in full here) was published yesterday by the BBC. Date 8th February and addressed to David Cameron and Nick Clegg, the private letter warns that "market forces are insufficient for creating the long term industrial capacities we need" and says there is "no connected approach across government". In a brutally frank assessment, Cable writes:

I sense however that there is still something important missing: a compelling vision of where the country is heading beyond sorting out the fiscal mess; and a clear and confident message abut how we will earn our living in future... We can be more strategic and the economic backdrop will increase demands that we are ambitious.

He makes several suggestions, the most radical of which is that the majority taxpayer owned Royal Bank of Scotland is broken up to create a "British Business Bank with a clean balance sheet and a mandate to expand lending rapidly to sound business".

But, predictably, it is not Cable's suggestions which have drawn the most attention, but his tough criticism of the way his own government -- and in places, his own department -- have handled the economy. This lays bare tensions in the coalition, at a particularly crucial time as the Budget draws near.

There was some irritation in the Treasury at the timing of the leak, as tense negotiations over the Budget continue. Downing Street and the Deputy Prime Minister's office both downplayed the importance of Cable's intervention, but a range of Conservative MPs - amongst whom the Business Secretary is already unpopular - expressed their annoyance.

Brian Binley, a Tory member of the Business Select Committee, summed up the feelings of many, telling the Times (£):

I am bitterly disappointed that the man put in charge of the growth agenda feels there is a problem with the agenda.

I find him a pleasant person to deal with. But if he is disappointed by the lack of growth, he is in as good a place as anybody in the Commons to make that clear. If he is struggling to do that, perhaps he should step aside and allow someone else to have a go."

Commentators across the political spectrum have been quick to notice that Cable's suggestions -- interventionism, patriotism, and supporting winners -- closely echo Labour's line. Yesterday, Ed Miliband gave a speech on "industrial activism". My colleague George Eaton noted the concordance between the views touted publically by Miliband and Cable yesterday.

This letter will strike a nerve with Tory top command precisely because it is close to the bone. The charge they are most sensitive to is that they have failed to articulate a strategy for growth, or indeed any economic strategy beyond deficit reduction. It is more damaging because it comes from within the government, even if it is from Cable, Liberal Democrat and eternal discontent. Yet, on the other hand, many Conservative commentators are raising the question: as Business Secretary, isn't Cable at least partly responsible for creating this situation? The shadow business secretary Chuka Umunna has been fast to say that the letter shows that "David Cameron and George Osborne have become roadblocks to the modernisation and reform needed to create a more productive economy."

The blame game will continue in Westminster, but outside it is largely irrelevant. What matters is that these criticisms sting because they are founded in fact, and the government does not have any decisive answers.

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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As a Conservative MP, I want Parliament to get a proper debate on Brexit

The government should consider a Green Paper before Article 50. 

I am very pleased that the government has listened to the weight of opinion across the House of Commons – and the country – by agreeing to put its plan for Brexit before Parliament and the country for scrutiny before Article 50 is triggered. Such responsiveness will stand the government in good stead. A confrontation with Parliament, especially given the paeans to parliamentary sovereignty we heard from Leave campaigners during the referendum, would have done neither the Brexit process nor British democracy any good.

I support the government’s amendment to Labour’s motion, which commits the House to respecting the will of the British people expressed in the referendum campaign. I accept that result, and now I and other Conservatives who campaigned to Remain are focused on getting the best deal for Britain; a deal which respects the result of the referendum, while keeping Britain close to Europe and within the single market.

The government needs to bring a substantive plan before Parliament, which allows for a proper public and parliamentary debate. For this to happen, the plan provided must be detailed enough for MPs to have a view on its contents, and it must arrive in the House far enough in advance of Article 50 for us to have a proper debate. As five pro-European groups said yesterday, a Green Paper two months before Article 50 is invoked would be a sensible way of doing it. Or, in the words of David Davis just a few days before he was appointed to the Cabinet, a “pre-negotiation white paper” could be used to similar effect.

Clearly there are divisions, both between parties and between Leavers and Remainers, on what the Brexit deal should look like. But I, like other members of the Open Britain campaign and other pro-European Conservatives, have a number of priorities which I believe the government must prioritise in its negotiations.

On the economy, it is vital that the government strives to keep our country fully participating in the single market. Millions of jobs depend on the unfettered trade, free of both tariff and non-tariff barriers, we enjoy with the world’s biggest market. This is absolutely compatible with the result, as senior Leave campaigners such as Daniel Hannan assured voters before the referendum that Brexit would not threaten Britain’s place in the single market. The government must also undertake serious analysis on the consequences of leaving the customs union, and the worrying possibility that the UK could fall out of our participation in the EU’s Free Trade Agreements (FTAs) with non-EU countries like South Korea.

If agreeing a new trading relationship with Europe in just two years appears unachievable, the government must look closely into the possibility of agreeing a transitional arrangement first. Michel Barnier, the European Commission’s chief negotiator, has said this would be possible and the Prime Minister was positive about this idea at the recent CBI Conference. A suitable transitional arrangement would prevent the biggest threat to British business – that of a "cliff edge" that would slap costly tariffs and customs checks on British exports the day after we leave.

Our future close relationship with the EU of course goes beyond economics. We need unprecedentedly close co-operation between the UK and the EU on security and intelligence sharing; openness to talented people from Europe and the world; and continued cooperation on issues like the environment. This must all go hand-in-hand with delivering reforms to immigration that will make the system fairer, many of which can be seen in European countries as diverse as the Netherlands and Switzerland.

This is what I and others will be arguing for in the House of Commons, from now until the day Britain leaves the European Union. A Brexit deal that delivers the result of the referendum while keeping our country prosperous, secure, open and tolerant. I congratulate the government on their decision to involve the House in their plan for Brexit - and look forward to seeing the details. 

Neil Carmichael is the Conservative MP for Stroud and supporter of the Open Britain campaign.