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.

Paul McMillan
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"We're an easy target": how a Tory manifesto pledge will tear families apart

Under current rules, bringing your foreign spouse to the UK is a luxury reserved for those earning £18,600 a year or more. The Tories want to make it even more exclusive. 

Carolyn Matthew met her partner, George, in South Africa sixteen years ago. She settled down with him, had kids, and lived like a normal family until last year, when they made the fateful decision to move to her hometown in Scotland. Matthew, 55, had elderly parents, and after 30 years away from home she wanted to be close to them. 

But Carolyn nor George - despite consulting a South African immigration lawyer – did not anticipate one huge stumbling block. That is the rule, introduced in 2012, that a British citizen must earn £18,600 a year before a foreign spouse may join them in the UK. 

“It is very dispiriting,” Carolyn said to me on the telephone from Bo’ness, a small town on the Firth of Forth, near Falkirk. “In two weeks, George has got to go back to South Africa.” Carolyn, who worked in corporate complaints, has struggled to find the same kind of work in her hometown. Jobs at the biggest local employer tend to be minimum wage. George, on the other hand, is an engineer – yet cannot work because of his holiday visa. 

To its critics, the minimum income threshold seems nonsensical. It splits up families – including children from parents – and discriminates against those likely to earn lower wages, such as women, ethnic minorities and anyone living outside London and the South East. The Migration Observatory has calculated that roughly half Britain’s working population would not meet the requirement. 

Yet the Conservative party not only wishes to maintain the policy, but hike the threshold. The manifesto stated:  “We will increase the earnings thresholds for people wishing to sponsor migrants for family visas.” 

Initially, the threshold was justified as a means of preventing foreign spouses from relying on the state. But tellingly, the Tory manifesto pledge comes under the heading of “Controlling Immigration”. 

Carolyn points out that because George cannot work while he is visiting her, she must support the two of them for months at a time without turning to state aid. “I don’t claim benefits,” she told me. “That is the last thing I want to do.” If both of them could work “life would be easy”. She believes that if the minimum income threshold is raised any further "it is going to make it a nightmare for everyone".

Stuart McDonald, the SNP MP for Cumbernauld, Kilsyth and Kirkintilloch East, co-sponsored a Westminster Hall debate on the subject earlier this year. While the Tory manifesto pledge is vague, McDonald warns that one option is the highest income threshold suggested in 2012 - £25,700, or more than the median yearly wage in the East Midlands. 

He described the current scheme as “just about the most draconian family visa rules in the world”, and believes a hike could affect more than half of British citizens. 

"Theresa May is forcing people to choose between their families and their homes in the UK - a choice which most people will think utterly unfair and unacceptable,” he said.  

For those a pay rise away from the current threshold, a hike will be demoralising. For Paul McMillan, 25, it is a sign that it’s time to emigrate.

McMillan, a graduate, met his American girlfriend Megan while travelling in 2012 (the couple are pictured above). He could find a job that will allow him to meet the minimum income threshold – if he were not now studying for a medical degree.  Like Matthew, McMillan’s partner has no intention of claiming benefits – in fact, he expects her visa would specifically ban her from doing so. 

Fed up with the hostile attitude to immigrants, and confident of his options elsewhere, McMillan is already planning a career abroad. “I am going to take off in four years,” he told me. 

As for why the Tories want to raise the minimum income threshold, he thinks it’s obvious – to force down immigration numbers. “None of this is about the amount of money we need to earn,” he said. “We’re an easy target for the government.”

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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