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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The Fire Brigades Union reaffiliates to Labour - what does it mean?

Any union rejoining Labour will be welcomed by most in the party - but the impact on the party's internal politics will be smaller than you think.

The Fire Brigades Union (FBU) has voted to reaffiliate to the Labour party, in what is seen as a boost to Jeremy Corbyn. What does it mean for Labour’s internal politics?

Firstly, technically, the FBU has never affliated before as they are notionally part of the civil service - however, following the firefighters' strike in 2004, they decisively broke with Labour.

The main impact will be felt on the floor of Labour party conference. Although the FBU’s membership – at around 38,000 – is too small to have a material effect on the outcome of votes themselves, it will change the tenor of the motions put before party conference.

The FBU’s leadership is not only to the left of most unions in the Trades Union Congress (TUC), it is more inclined to bring motions relating to foreign affairs than other unions with similar politics (it is more internationalist in focus than, say, the PCS, another union that may affiliate due to Corbyn’s leadership). Motions on Israel/Palestine, the nuclear deterrent, and other issues, will find more support from FBU delegates than it has from other affiliated trade unions.

In terms of the balance of power between the affiliated unions themselves, the FBU’s re-entry into Labour politics is unlikely to be much of a gamechanger. Trade union positions, elected by trade union delegates at conference, are unlikely to be moved leftwards by the reaffiliation of the FBU. Unite, the GMB, Unison and Usdaw are all large enough to all-but-guarantee themselves a seat around the NEC. Community, a small centrist union, has already lost its place on the NEC in favour of the bakers’ union, which is more aligned to Tom Watson than Jeremy Corbyn.

Matt Wrack, the FBU’s General Secretary, will be a genuine ally to Corbyn and John McDonnell. Len McCluskey and Dave Prentis were both bounced into endorsing Corbyn by their executives and did so less than wholeheartedly. Tim Roache, the newly-elected General Secretary of the GMB, has publicly supported Corbyn but is seen as a more moderate voice at the TUC. Only Dave Ward of the Communication Workers’ Union, who lent staff and resources to both Corbyn’s campaign team and to the parliamentary staff of Corbyn and McDonnell, is truly on side.

The impact of reaffiliation may be felt more keenly in local parties. The FBU’s membership looks small in real terms compared Unite and Unison have memberships of over a million, while the GMB and Usdaw are around the half-a-million mark, but is much more impressive when you consider that there are just 48,000 firefighters in Britain. This may make them more likely to participate in internal elections than other affiliated trade unionists, just 60,000 of whom voted in the Labour leadership election in 2015. However, it is worth noting that it is statistically unlikely most firefighters are Corbynites - those that are will mostly have already joined themselves. The affiliation, while a morale boost for many in the Labour party, is unlikely to prove as significant to the direction of the party as the outcome of Unison’s general secretary election or the struggle for power at the top of Unite in 2018. 

Stephen Bush is editor of the Staggers, the New Statesman’s political blog.