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/Christopher Furlong
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A dozen defeated parliamentary candidates back Caroline Flint for deputy

Supporters of all the leadership candidates have rallied around Caroline Flint's bid to be deputy leader.

Twelve former parliamentary candidates have backed Caroline Flint's bid to become deputy leader in an open letter to the New Statesman. Dubbing the Don Valley MP a "fantastic campaigner", they explain that why despite backing different candidates for the leadership, they "are united in supporting Caroline Flint to be Labour's next deputy leader", who they describe as a "brilliant communicator and creative policy maker". 

Flint welcomed the endorsement, saying: "our candidates know better than most what it takes to win the sort of seats Labour must gain in order to win a general election, so I'm delighted to have their support.". She urged Labour to rebuild "not by lookin to the past, but by learning from the past", saying that "we must rediscover Labour's voice, especially in communities wher we do not have a Labour MP:".

The Flint campaign will hope that the endorsement provides a boost as the campaign enters its final days.

The full letter is below:

There is no route to Downing Street that does not run through the seats we fought for Labour at the General Election.

"We need a new leadership team that can win back Labour's lost voters.

Although we are backing different candidates to be Leader, we are united in supporting Caroline Flint to be Labour's next deputy leader.

Not only is Caroline a fantastic campaigner, who toured the country supporting Labour's candidates, she's also a brilliant communicator and creative policy maker, which is exactly what we need in our next deputy leader.

If Labour is to win the next election, it is vital that we pick a leadership team that doesn't just appeal to Labour Party members, but is capable of winning the General Election. Caroline Flint is our best hope of beating the Tories.

We urge Labour Party members and supporters to unite behind Caroline Flint and begin the process of rebuilding to win in 2020.

Jessica Asato (Norwich North), Will Straw (Rossendale and Darween), Nick Bent (Warrington South), Mike Le Surf (South Basildon and East Thurrock), Tris Osborne (Chatham and Aylesford), Victoria Groulef (Reading West), Jamie Hanley (Pudsey), Kevin McKeever (Northampton South), Joy Squires (Worcester), Paul Clark (Gillingham and Rainham), Patrick Hall (Bedford) and Mary Wimbury (Aberconwy)

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