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.

Show Hide image

Have voters turned against globalisation? It depends how you describe it

Brits are more positive about diversity than Sweden. 

New research shows that citizens across Europe are pessimistic about the future, distrustful of government and other political institutions, ambivalent at best about multiculturalism, and increasingly sceptical about the role of the European Union.

We wanted to understand the extent to which Europe’s citizens favour a "closed" rather than an "open" outlook and perspective on politics, economics and society. Making globalisation work for ordinary people in the developed world is one of the defining challenges of the 21st century. Globalisation’s popularity and political viability is both a pre-condition and a consequence of making it work, but mainstream politicians seem to be failing to persuade us to embrace it, to the detriment of democratic institutions and norms, as well as their own careers.

The decision of the British people to leave the European Union has been perceived as yet another step back from globalisation and a rejection of an "open" outlook that favours international co-operation in favour of a more closed, inward-looking national debate.

There’s certainly a strong element of truth in this explanation. The referendum campaign was deeply divisive, with the Leave campaign playing heavily on concerns over immigration, refugees and EU enlargement. As a consequence, the "liberal" Leavers – those who wanted to leave but favoured a continuing a close economic relationship with the EU along with free movement of labour – appear to have been side-lined within the Conservative party.

Our results are by no means uplifting, but it’s not all doom and gloom. While there’s no doubt that opposition to certain features and consequences of globalisation played an important role in driving the Leave vote, Brits as a whole are just as open, outward-looking and liberal-minded, if not more so, than many of our European neighbours.

First, we asked respondents in all six countries the following:

“Over recent decades the world has become more interconnected. There is greater free trade between countries and easier communication across the globe. Money, people, cultures, jobs and industries all move more easily between countries

“Generally speaking, do you think this has had a positive or negative effect?”

Respondents were asked to consider the effects at four levels: Europe as a whole, their country, their local area, and their own life.

Overall, British voters are overwhelmingly positive about globalisation when described in this way - 58 per cent think it has benefited Europe and 59 per cent think it has benefited Britain. More than half (52 per cent) think it has benefited their local area, and 55 per cent think it has benefited their own life.

One might respond that this question skates over questions of immigration and multiculturalism somewhat, which are the most controversial features of globalisation in the UK. Therefore, we asked whether respondents thought that society becoming more ethnically and religiously diverse had changed it for the better or for the worse.

Overall, 41 per cent said that ethnic and religious diversity had changed British society for the better, while 32 per cent said it had changed for the worse. That’s a net response of +9, compared to -25 in France, -13 in Germany, and -17 in Poland. Brits are even more positive about ethnic and religious diversity than Sweden (+7) – only Spanish respondents were more positive (+27).

There’s a long way to go before ordinary people across the developed world embrace globalisation and international cooperation. Despite the apparent setback of Brexit, the UK is well-placed politically to take full advantage of the opportunities our increasingly inter-connected world will present us with. It would be a mistake to assume, in the wake of the referendum, that the British public want to turn inwards, to close themselves off from the rest of the world. We’re an open, tolerant and outward-looking society, and we should make the most of it.

Charlie Cadywould is a Researcher in the Citizenship Programme at the cross-party think tank Demos. His writing has been published in peer-reviewed journals as well as the national media.