Exclusive: Vince Cable calls on Osborne to change direction

Business Secretary argues in the New Statesman for "greatly expanded" capital spending and suggests that the Chancellor should borrow for growth.

In recent months, as the economy has continued to shrink and as borrowing has continued to rise, Vince Cable has become increasingly convinced of the need for a change of economic policy. With the Budget now just two weeks away, the Business Secretary has made his boldest intervention yet. In a 3,800 word essay for the New Statesman, Cable calls for "greatly expanded" capital spending and suggests that any increase should be funded through borrowing, not greater cuts elsewhere.

Ahead of a speech by David Cameron on the economy tomorrow, in which the Prime Minister will defend the government's strategy, he warns that Osborne's cuts to capital spending have had "economic consequences" and that the £5bn increase in last year's Autumn Statement was too "modest" to have any major effect. He adds: "one obvious question is why capital investment cannot now be greatly expanded. Pessimists say that government is incapable of mobilising capital investment quickly. But that is absurd: only five years ago the government was managing to build infrastructure, schools and hospitals at a level £20bn or more in 2009/10 than last year."

Cable then takes a significant step towards Labour's position by implying that the government should now borrow to invest.

The more controversial question is whether the government should not switch but should borrow more, at current very low interest rates, in order to finance more capital spending: building of schools and colleges; small road and rail projects; more prudential borrowing by councils for house building. This last is crucial to reviving an area which led economic recovery in the 1930s but is now severely depressed.

Such a programme would inject demand into the weakest sector of our economy – construction – and, at one remove, the manufacturing supply chain [cement, steel]. It would target two significant bottlenecks to growth: infrastructure and housing.

While maintaining that the coalition was right to adopt an aggressive deficit reduction plan in June 2010, he suggests that the "balance of risks" may have changed. 

When the government was formed it was in the context of febrile markets and worries about sovereign risk, at that stage in Greece but with the potential for contagion. As the country arguably most damaged by the banking crisis and with the largest fiscal deficit in the G20 there were good reasons to worry that the UK could lose the confidence of creditors without a credible plan for deficit reduction including an early demonstration of commitment. The main international agencies (the IMF, European Commission and OECD) and business groups stated that it judged the balance of risks correctly.

Almost three years later the question is whether the balance of risks has changed. 

He points to IMF research showing that the risk of losing market confidence as a result of higher borrowing may now be outweighed, in his words, by "the risk of public finances deteriorating as a consequence of continued lack of growth."

Osborne has consistently rejected calls to loosen fiscal policy but Cable argues that borrowing for growth "would not undermine the central objective of reducing the structural deficit" and may even assist it "by reviving growth". He notes that Britain's long-term debt maturity means it suffers "less from the risks of a debt spiral where refinancing maturing debt rapidly becomes impossible" and argues that "the effect on our fiscal situation of higher interest rates is in fact nowhere near as bad as having weak growth."

Constrained by collective ministerial responsibility, Cable ultimately concludes that the balance of risks remains "a matter of judgement", "which incorporates a political assessment of which risk is the least palatable". But his decision to reopen a debate long regarded as closed by Osborne shows his willingness to dissent from the Treasury line. With government unity already frayed ahead of next summer's Spending Review, the intervention will be viewed with hostility by Cable's cabinet colleagues. 

In a further act of provocation, the Business Secretary uses the essay to launch a withering dismissal of those Conservatives demanding greater deregulation of the labour market and a reduction in workers' rights. 

This bastardised ‘supply side’ economics often degenerates into a saloon bar whine about HSE inspectors, newts and birds which block new development, bloody minded workers, equalities and Eurocrats who dream up regulations for square tomatoes and straight bananas. Philosophical cover is provided by the belief that the private sector can always fill the space left by a retreating state.

In advance of Mark Carney's arrival as governor of the Bank of England in July, Cable also calls for more creative monetary policy, including the expansion of the Bank's quantitative easing programme to include private sector assets. He writes: "There is currently a pause in QE in the UK and two related ideas are being developed to sustain loose monetary policy. The first is for the Central Bank to acquire a wider range of assets from corporate loans to infrastructure project bonds. By taking risk off the private sector balance sheet, we encourage it to find new investments. This is surely sensible."

Cable says the Bank is right to consider targeting growth as well as inflation but adds that the stability provided by the current regime means "the bar for any change must be high."

Osborne, who characterises himself as a "fiscal conservative" but a "monetary activist", is likely to welcome Cable's intervention on this subject. But with the Chancellor already under pressure from Tory MPs to cut taxes, the Business Secretary's call for higher spending, potentially funded by higher borrowing, means he now faces a war on two fronts. 

Update: Shadow financial secretary to the Treasury Chris Leslie has responded for Labour. He said that Cable "may at last be seeing sense" but added: "he has consistently supported a failing economic policy which has led to stagnation, falling living standards, slashed investment in infrastructure and rising borrowing to pay for the mounting costs of economic failure."

"Labour, business groups and even the IMF have spent the last two years making the case for this. If Vince Cable is finally coming round to that view he needs to start winning the argument round the Cabinet table, but his words today read like they have been written by a Secretary of State who despite being in office, is not in power."

Business Secretary Vince Cable addresses delegates at the annual CBI conference in London on November 19, 2012. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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This Ada Lovelace Day, let’s celebrate women in tech while confronting its sexist culture

In an industry where men hold most of the jobs and write most of the code, celebrating women's contributions on one day a year isn't enough. 

Ada Lovelace wrote the world’s first computer program. In the 1840s Charles Babbage, now known as the “father of the computer”, designed (though never built) the “Analytical Engine”, a machine which could accurately and reproducibly calculate the answers to maths problems. While translating an article by an Italian mathematician about the machine, Lovelace included a written algorithm for which would allow the engine to calculate a sequence of Bernoulli numbers.

Around 170 years later, Whitney Wolfe, one of the founders of dating app Tinder, was allegedly forced to resign from the company. According to a lawsuit she later filed against the app and its parent company, she had her co-founder title removed because, the male founders argued, it would look “slutty”, and because “Facebook and Snapchat don’t have girl founders. It just makes it look like Tinder was some accident". (They settled out of court.)

Today, 13 October, is Ada Lovelace day – an international celebration of inspirational women in science, technology, engineering and mathematics (STEM). It’s lucky we have this day of remembrance, because, as Wolfe’s story demonstrates, we also spend a lot of time forgetting and sidelining women in tech. In the wash of pale male founders of the tech giants that rule the industry,we don't often think about the women that shaped its foundations: Judith Estrin, one of the designers of TCP/IP, for example, or Radia Perlman, inventor of the spanning-tree protocol. Both inventions sound complicated, and they are – they’re some of the vital building blocks that allow the internet to function. 

And yet David Streitfield, a Pulitzer-prize winning journalist, someow felt it accurate to write in 2012: “Men invented the internet. And not just any men. Men with pocket protectors. Men who idolised Mr Spock and cried when Steve Jobs died.”

Perhaps we forget about tech's founding women because the needle has swung so far into the other direction. A huge proportion – perhaps even 90 per cent - of the world’s code is written by men. At Google, women fill 17 per cent of technical roles. At Facebook, 15 per cent. Over 90 per cent of the code respositories on Github, an online service used throughout the industry, are owned by men. Yet it's also hard to believe that this erasure of women's role in tech is completely accidental. As Elissa Shevinsky writes in the introduction to a collection of essays on gender in tech, Lean Out: “This myth of the nerdy male founder has been perpetuated by men who found this story favourable."

Does it matter? It’s hard to believe that it doesn’t. Our society is increasingly defined and delineated by code and the things it builds. Small slip-ups, like the lack of a period tracker on the original Apple Watch, or fitness trackers too big for some women’s wrists, gesture to the fact that these technologies are built by male-dominated teams, for a male audience.

In Lean Out, one essay written by a Twitter-based “start-up dinosaur” (don’t ask) explains how dangerous it is to allow one small segment of society to built the future for the rest of us:

If you let someone else build tomorrow, tomorrow will belong to someone else. They will build a better tomorrow for everyone like them… For tomorrow to be for everyone, everyone needs to be the one [sic] that build it.

So where did all the women go? How did we get from a rash of female inventors to a situation where the major female presence at an Apple iPhone launch is a model’s face projected onto a screen and photoshopped into a smile by a male demonstrator? 

Photo: Apple.

The toxic culture of many tech workplaces could be a cause or an effect of the lack of women in the industry, but it certainly can’t make make it easy to stay. Behaviours range from the ignorant - Martha Lane-Fox, founder of, often asked “what happens if you get pregnant?” at investors' meetings - to the much more sinister. An essay in Lean Out by Katy Levinson details her experiences of sexual harassment while working in tech: 

I have had interviewers attempt to solicit sexual favors from me mid-interview and discuss in significant detail precisely what they would like to do. All of these things have happened either in Silicon Valley working in tech, in an educational institution to get me there, or in a technical internship.

Others featured in the book joined in with the low-level sexism and racism  of their male colleagues in order to "fit in" and deflect negative attention. Erica Joy writes that while working in IT at the University of Alaska as the only woman (and only black person) on her team, she laughed at colleagues' "terribly racist and sexist jokes" and "co-opted their negative attitudes”. 

The casual culture and allegedly meritocratic hierarchies of tech companies may actually be encouraging this discriminatory atmosphere. HR and the strict reporting procedures of large corporates at least give those suffering from discrimination a place to go. A casual office environment can discourage reporting or calling out prejudiced humour or remarks. Brook Shelley, a woman who transitioned while working in tech, notes: "No one wants to be the office mother". So instead, you join in and hope for the best. 

And, of course, there's no reason why people working in tech would have fewer issues with discrimination than those in other industries. A childhood spent as a "nerd" can also spawn its own brand of misogyny - Katherine Cross writes in Lean Out that “to many of these men [working in these fields] is all too easy to subconciously confound women who say ‘this is sexist’ with the young girls who said… ‘You’re gross and a creep and I’ll never date you'". During GamerGate, Anita Sarkeesian was often called a "prom queen" by trolls. 

When I spoke to Alexa Clay, entrepreneur and co-author of the Misfit Economy, she confirmed that there's a strange, low-lurking sexism in the start-up economy: “They have all very open and free, but underneath it there's still something really patriarchal.” Start-ups, after all, are a culture which celebrates risk-taking, something which women are societally discouraged from doing. As Clay says, 

“Men are allowed to fail in tech. You have these young guys who these old guys adopt and mentor. If his app doesn’t work, the mentor just shrugs it off. I would not be able ot get away with that, and I think women and minorities aren't allowed to take the same amount of risks, particularly in these communities. If you fail, no one's saying that's fine.

The conclusion of Lean Out, and of women in tech I have spoken to, isn’t that more women, over time, will enter these industries and seamlessly integrate – it’s that tech culture needs to change, or its lack of diversity will become even more severe. Shevinsky writes:

The reason why we don't have more women in tech is not because of a lack of STEM education. It's because too many high profile and influential individuals and subcultures within the tech industry have ignored or outright mistreated women applicants and employees. To be succinct—the problem isn't women, it's tech culture.

Software engineer Kate Heddleston has a wonderful and chilling metaphor about the way we treat women in STEM. Women are, she writes, the “canary in the coal mine”. If one dies, surely you should take that as a sign that the mine is uninhabitable – that there’s something toxic in the air. “Instead, the industry is looking at the canary, wondering why it can’t breathe, saying ‘Lean in, canary, lean in!’. When one canary dies they get a new one because getting more canaries is how you fix the lack of canaries, right? Except the problem is that there isn't enough oxygen in the coal mine, not that there are too few canaries.” We need more women in STEM, and, I’d argue, in tech in particular, but we need to make sure the air is breatheable first. 

Barbara Speed is a technology and digital culture writer at the New Statesman and a staff writer at CityMetric.