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.