Cable's most serious challenge yet to Cameron's authority: "Jeremiah was right"

The Business Secretary's repeated attacks on the Tories in his speech and his warnings of a new housing bubble meant it was easy to forget he is serving in the government at all.

There were moments in Vince Cable's speech to the Lib Dem conference where you had to pause to remind yourself that he is a serving member of the government, rather than an opposition politician. While Nick Clegg and Danny Alexander are focused on ensuring that the Lib Dems receive their share of the credit for the economic recovery, Cable cast himself as a Cassandra warning of a new and dangerous housing boom.

In the most striking passage of his speech, he declared that "there are already amber lights flashing to warn us of history repeating itself" and derided those (George Osborne) who would settle for "a short-term spurt of growth fuelled by old-fashioned property boom and bankers rediscovering their mojo". After David Cameron rather mildly remarked, "It's not right to cast Vince as a perpetual Jeremiah. He can brighten up from time to time", Cable pulled no punches in response, quipping that "David Cameron has called me a Jeremiah, but you’ll recall from your reading of the Old Testament that Jeremiah was right." He added: "He [Jeremiah] warned that Jerusalem would be overrun by the armies of Nebuchadnezzar.  In my own Book of Lamentations I described how Gordon Brown’s New Jerusalem was overrun by an army of estate agents, property speculators and bankers.

"The problem we have now is that the invaders are coming back.  They have a bridgehead in London and the south east of England. They must be stopped.  Instead we need sustainable growth."

Cable has never been a stirring platform orator and the response from delegates was more muted than in previous years but the speech was the most significant he has delivered since becoming Business Secretary. More than at any other point, he has gone exceeding the normal limits of collective responsibility.

While the speech opened with a recollection of the "unhealthy tribalism" and "Tammany Hall culture" that led him to resign from Labour in the 1970s (which he suggested had been reborn in Falkirk and other "Labour fiefdoms"), it was otherwise dominated by excoriating attacks on the Tories. He declared that "the nasty party" was back, with "dog whistle politics, orchestrated by an Australian Rottweiler.  Hostility towards organised labour, people on benefits and immigrant minorities." He rebuked his "cabinet colleagues" for "careless talk" about Britain leaving the EU and declared: "Let’s remember that we voted to join the present Coalition.  We did not vote to join a coalition with UKIP."

Elsewhere, in a rebuke to those on the right of the Lib Dems, such as Jeremy Browne and David Laws, seeking to push the party in a more free market direction, he warned that it was not enough to be "a nicer version of the Tories", again signalling his instinctive preference for Labour.

Ahead of 2015, the balancing act required of the Lib Dems is to differentiate themselves from the Tories without discrediting the government they have served in for more than three years. After Cable's unreserved attacks on the coalition's economic policies, Clegg will feel that the Business Secretary has failed in that task.

Vince Cable delivers his speech at the Liberal Democrat conference in Glasgow. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Why relations between Theresa May and Philip Hammond became tense so quickly

The political imperative of controlling immigration is clashing with the economic imperative of maintaining growth. 

There is no relationship in government more important than that between the prime minister and the chancellor. When Theresa May entered No.10, she chose Philip Hammond, a dependable technocrat and long-standing ally who she had known since Oxford University. 

But relations between the pair have proved far tenser than anticipated. On Wednesday, Hammond suggested that students could be excluded from the net migration target. "We are having conversations within government about the most appropriate way to record and address net migration," he told the Treasury select committee. The Chancellor, in common with many others, has long regarded the inclusion of students as an obstacle to growth. 

The following day Hammond was publicly rebuked by No.10. "Our position on who is included in the figures has not changed, and we are categorically not reviewing whether or not students are included," a spokesman said (as I reported in advance, May believes that the public would see this move as "a fix"). 

This is not the only clash in May's first 100 days. Hammond was aggrieved by the Prime Minister's criticisms of loose monetary policy (which forced No.10 to state that it "respects the independence of the Bank of England") and is resisting tougher controls on foreign takeovers. The Chancellor has also struck a more sceptical tone on the UK's economic prospects. "It is clear to me that the British people did not vote on June 23 to become poorer," he declared in his conference speech, a signal that national prosperity must come before control of immigration. 

May and Hammond's relationship was never going to match the remarkable bond between David Cameron and George Osborne. But should relations worsen it risks becoming closer to that beween Gordon Brown and Alistair Darling. Like Hammond, Darling entered the Treasury as a calm technocrat and an ally of the PM. But the extraordinary circumstances of the financial crisis transformed him into a far more assertive figure.

In times of turmoil, there is an inevitable clash between political and economic priorities. As prime minister, Brown resisted talk of cuts for fear of the electoral consequences. But as chancellor, Darling was more concerned with the bottom line (backing a rise in VAT). By analogy, May is focused on the political imperative of controlling immigration, while Hammond is focused on the economic imperative of maintaining growth. If their relationship is to endure far tougher times they will soon need to find a middle way. 

George Eaton is political editor of the New Statesman.