Cable pours cold water on Osborne's green shoots

After the Chancellor declared that Britain was "turning the corner", the Business Secretary warns against "complacency", generated by "a few quarters of good economic data."

One can always rely on Vince Cable to provide a dose of economic realism (as he did in his famous pre-Budget New Statesman piece) and after George Osborne's triumphalist speech on Monday, the coalition's wizened seer has intervened again. In a speech to a CBI conference today, he will say: 

The kind of growth we want won't simply emerge of its own volition. In fact, I see a number of dangers. One is complacency, generated by a few quarters of good economic data. Recovery will not be meaningful until we see strong and sustained business investment.

Osborne, by contrast, declared that Britain was "turning a corner" on the basis of just two consecutive quarters of growth. 

Labour, unsurprisingly, has been quick to note the marked difference in tone between the Chancellor and the Business Secretary. Shadow business secretary Chuka Umunna said: "This is an embarrassing slapdown to George Osborne’s deeply complacent and out of touch speech this week.

"But it also reminds everyone that you can’t trust a word the Lib Dems say. Vince Cable has supported the Chancellor’s policies which choked off the recovery in 2010. Three wasted years of flatlining that has left families worse off and done long term damage to our economy is his record and he should take responsibility for it."

In response, and three days before the Lib Dem conference opens in Glasgow, Cable is keen to put some clear yellow water between himself and Osborne, most notably on housing. While the Chancellor provided a robust defence of his Help To Buy scheme on Monday, Cable fears that the government is inflating demand without addressing the fundamental problem of supply. In his speech he will warn that "There are risks, not least the housing market getting out of control."

Cable has been angered by Osborne's refusal to accept his plan to allow councils to pool their borrowing limits in order to build more affordable houses. As he recently told the Social Liberal Forum: "What is stopping them? Frankly, Tory dogma. And the Tories are hiding behind Treasury methodology, saying that more borrowing by councils beyond permitted limits will break the fixed rules.

"So even though freeing up this borrowing space would result in tens of thousands more homes being built, and many times more jobs, they would rather start talking about the cuts they want to make, rather than the houses that we should build. That is the difference between Lib Dems and Tories on this matter."

Expect to hear much more about this in Glasgow, where Lib Dem delegates will vote on Cable's proposal. So long as Osborne continues to resist any reform, he risks being outflanked on an issue of increasing political significance. 

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.

Photo: Getty
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What Jeremy Corbyn gets right about the single market

Technically, you can be outside the EU but inside the single market. Philosophically, you're still in the EU. 

I’ve been trying to work out what bothers me about the response to Jeremy Corbyn’s interview on the Andrew Marr programme.

What bothers me about Corbyn’s interview is obvious: the use of the phrase “wholesale importation” to describe people coming from Eastern Europe to the United Kingdom makes them sound like boxes of sugar rather than people. Adding to that, by suggesting that this “importation” had “destroy[ed] conditions”, rather than laying the blame on Britain’s under-enforced and under-regulated labour market, his words were more appropriate to a politician who believes that immigrants are objects to be scapegoated, not people to be served. (Though perhaps that is appropriate for the leader of the Labour Party if recent history is any guide.)

But I’m bothered, too, by the reaction to another part of his interview, in which the Labour leader said that Britain must leave the single market as it leaves the European Union. The response to this, which is technically correct, has been to attack Corbyn as Liechtenstein, Switzerland, Norway and Iceland are members of the single market but not the European Union.

In my view, leaving the single market will make Britain poorer in the short and long term, will immediately render much of Labour’s 2017 manifesto moot and will, in the long run, be a far bigger victory for right-wing politics than any mere election. Corbyn’s view, that the benefits of freeing a British government from the rules of the single market will outweigh the costs, doesn’t seem very likely to me. So why do I feel so uneasy about the claim that you can be a member of the single market and not the European Union?

I think it’s because the difficult truth is that these countries are, de facto, in the European Union in any meaningful sense. By any estimation, the three pillars of Britain’s “Out” vote were, firstly, control over Britain’s borders, aka the end of the free movement of people, secondly, more money for the public realm aka £350m a week for the NHS, and thirdly control over Britain’s own laws. It’s hard to see how, if the United Kingdom continues to be subject to the free movement of people, continues to pay large sums towards the European Union, and continues to have its laws set elsewhere, we have “honoured the referendum result”.

None of which changes my view that leaving the single market would be a catastrophe for the United Kingdom. But retaining Britain’s single market membership starts with making the argument for single market membership, not hiding behind rhetorical tricks about whether or not single market membership was on the ballot last June, when it quite clearly was. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.