Why it is absurd for Cameron to claim that he and Cable are united

The PM and the Business Secretary are making diametrically opposed arguments on borrowing for growth.

There is no need to have "a fight" with Vince Cable because there is nothing to have a fight about. That was the argument David Cameron sought to make during the Q&A following his speech on the economy. He pointed out that Cable's New Statesman essay had been signed off by the Treasury (a decision Team Osborne may well now regret) and insisted that the Business Secretary was in full agreement with the government's economic policy. 

But as a close reading of both texts shows, the Prime Minister and the Business Secretary are making diametrically opposed arguments on borrowing for growth. Here are three key points of difference. 

Where Cameron and Cable disagree

1. Would higher borrowing threaten economic stability?

Cameron claimed that deficit-financed stimulus would "jeopardise" the nation’s finances by triggering a spike in interest rates. Cable said the reverse. Highlighting the long-term maturity of the UK's debt, he wrote that "we suffer less from the risks of a debt spiral, where refinancing maturing debt rapidly becomes impossible. Consequently, the effect on our fiscal situation of higher interest rates is in fact nowhere near as bad as having weak growth". 

2. Can borrowing for growth aid deficit reduction?

In his speech, Cameron ridiculed those who think "borrowing more money would mean borrowing less". But in his NS essay, Cable argued that borrowing to invest would not "undermine the central objective of reducing the structural deficit" (a measure that excludes capital spending) and could even assist it "by by reviving growth".

3. Can the government afford to spend more?

Cameron argued that was there no "magic money tree", insisting that the government could not afford to borrow to significantly increase spending. 

It was precisely this kind of economic fatalism that Cable took a razorblade to. He denounced as "absurd" the claim that capital spending could not be "greatly expanded" and attacked the "pessimists" who say "the central government is incapable of mobilising capital investment quickly". 

Borrowing for growth, he added (rather than imposing further cuts elsewhere), "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."

David Cameron delivers his speech on the economy during a visit to precision grinding engineers Kinetic Landis Ltd on March 7, 2013 in Keighley. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
Show Hide image

The buck doesn't stop with Grant Shapps - and probably shouldn't stop with Lord Feldman, either

The question of "who knew what, and when?" shouldn't stop with the Conservative peer.

If Grant Shapps’ enforced resignation as a minister was intended to draw a line under the Mark Clarke affair, it has had the reverse effect. Attention is now shifting to Lord Feldman, who was joint chair during Shapps’  tenure at the top of CCHQ.  It is not just the allegations of sexual harrassment, bullying, and extortion against Mark Clarke, but the question of who knew what, and when.

Although Shapps’ resignation letter says that “the buck” stops with him, his allies are privately furious at his de facto sacking, and they are pointing the finger at Feldman. They point out that not only was Feldman the senior partner on paper, but when the rewards for the unexpected election victory were handed out, it was Feldman who was held up as the key man, while Shapps was given what they see as a relatively lowly position in the Department for International Development.  Yet Feldman is still in post while Shapps was effectively forced out by David Cameron. Once again, says one, “the PM’s mates are protected, the rest of us shafted”.

As Simon Walters reports in this morning’s Mail on Sunday, the focus is turning onto Feldman, while Paul Goodman, the editor of the influential grassroots website ConservativeHome has piled further pressure on the peer by calling for him to go.

But even Feldman’s resignation is unlikely to be the end of the matter. Although the scope of the allegations against Clarke were unknown to many, questions about his behaviour were widespread, and fears about the conduct of elections in the party’s youth wing are also longstanding. Shortly after the 2010 election, Conservative student activists told me they’d cheered when Sadiq Khan defeated Clarke in Tooting, while a group of Conservative staffers were said to be part of the “Six per cent club” – they wanted a swing big enough for a Tory majority, but too small for Clarke to win his seat. The viciousness of Conservative Future’s internal elections is sufficiently well-known, meanwhile, to be a repeated refrain among defenders of the notoriously opaque democratic process in Labour Students, with supporters of a one member one vote system asked if they would risk elections as vicious as those in their Tory equivalent.

Just as it seems unlikely that Feldman remained ignorant of allegations against Clarke if Shapps knew, it feels untenable to argue that Clarke’s defeat could be cheered by both student Conservatives and Tory staffers and the unpleasantness of the party’s internal election sufficiently well-known by its opponents, without coming across the desk of Conservative politicians above even the chair of CCHQ’s paygrade.

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