The former business secretary tells Kevin Gopal about his new book After The Storm
The former business secretary tells Kevin Gopal about his new book After The Storm
Former business secretary Vince Cable lost his seat at the last election and has written a follow-up to his 2009 book about the economic crisis. The new book, After The Storm (Atlantic Books, £18.99) adds experiences of his time in coalition government, analysis of the global economy and recommendations for the UK.
What are the aims of the book?
I’m in a unique position of having commented on the crisis and been brought into the Cabinet for five years to try to sort out the mess, so I’ve seen it from the outside and the inside and perhaps I have something to contribute. Half the book is about the big global picture and half is about the UK. In the UK part I’m not trying to just be an analyst – you can get paralysis by analysis – but trying to recommend how people of my broadly centre-left persuasion could be addressing the legacy problems we’ve got.
Has our understanding of the 2008 crisis changed over the years since then?
Yes, and not necessarily for the best. It was a banking crash but the way the Conservatives managed to portray it is that it was all to do with the last Labour government spending too much money. There is an argument that back in 2008 they could have had a slightly tighter ship but that’s not central to the issue at all. But nonetheless the Tories have managed to spin a narrative out of it that it was all about public debt and deficit – which was part of the problem but not the heart of it – and the banking crisis, which is what this was, has rather slipped off the agenda.
Did the Eurozone crisis of 2010 provide cover for more austerity than people were expecting from the new coalition government?
All the issues around austerity and tightening of the deficit and so on had been raised before the election. Alistair Darling had a seven year plan, I had written up a plan for my party and whoever was in power would be faced with a tighter economy. So all of this was out there. What the Greek crisis did in 2010 was first of all to create a sense of urgency around the formation of the government. Had there not been a sense of crisis we could have approached the formation of the coalition in a more leisurely way. Secondly, it gave a legitimacy to early measures that otherwise we would have taken our time over. And that proved very controversial.
“We prevented the Tories doing some fairly wicked things.”
What were Lib Dems’ greatest achievements in government?
We’re now beginning to understand, having had nearly six months of the Tories, just quite what we did in managing to curb their excesses. If I just start with the areas of government that I was in, we did a lot around banking and bank reform, the splitting of the casinos and the retail banks through ringfencing, the creation of the business bank, the green investment bank, the creation of an industrial strategy, support for advanced manufacturing, creative industries, the promotion of apprenticeships – lots of activist, active things the Tories wouldn’t necessarily have opposed but been lukewarm about and they’re now cutting back on. So there was a kind of activist agenda that made us different from the Tories. That was in my corner of the forest.
You could argue there was a whole lot of other things around civil liberties, the tax agenda focused on the low paid, which would not have happened otherwise. And also stopping them doing a whole lot of reactionary things. People are now getting concerned about this trade union bill, which I managed to stop when I was in government but is now going ahead. A lot of these things were not publicised at the time but we prevented the Tories doing some fairly wicked things.
You commented on the economy and excessive debt before the 2008 crash. Do you see similar conditions in the global economy now?
There are disturbing things going on. They’re not quite the same as before 2008 but they are disturbing: the problems with China, which are well advertised, the Eurozone crisis, which is temporarily in remission but which hasn’t gone away. More seriously, even in the most successful economies like the US, you have these very abnormal conditions – virtually zero interest rates. In a way the system is still on life support. Nobody has yet worked out how you get back to something like normality.
Is the west condemned to secular stagnation [long-term very low economic growth]?
My book sort of endorses the view that Lawrence Summers has been putting out. The secular stagnation argument is a mixture of different concerns. A lot of people have argued we’re running out of steam with technology. I wasn’t arguing that way – it’s just I do think we have a fundamental problem, a global Keynesian problem of too much savings related to investment. This is depressing long-term interest rates and there is a lack of co-operation between countries. We’re now getting this outbreak of nationalism that is making it very difficult to co-ordinate a response to all this in a way that was happening in 2008-09.
“People have got to be in high productivity jobs, producing high earnings.”
What about the productivity problem in the UK?
I devote quite a bit of time in the book to this. We have got to a fairly healthy position in terms of employment but a lot is employment in fairly low wage, low productivity things. If the economy is to get on to a fairly sustainable path people have got to be in high productivity jobs, producing high earnings, otherwise we just stagnate. And the whole purpose of the industrial strategy was to try to make sure we had that kind of change, and we were beginning to get good results, in industries like aerospace and the car industry, which were doing pretty well with government support. But this government seems much less interested in building on it.
What role do the northern regions play in rebalancing the economy and how should that be promoted?
The question of an imbalance in the economy and the dominance of the City and property values is very much linked to the north-south divide. I’m a bit sceptical of this thing called the Northern Powerhouse that Osborne talks about. It’s a good slogan and we did a lot in the coalition goverment to promote more self-government, such as devolution in Manchester, but so far there hasn’t been a great deal of follow-through in terms of resources. It’s good as far as it’s happened but I think Manchester is so far a kind of isolated case, Leeds to some extent. You don’t see the same kind of energy in the North East or around Hull or Sheffield or Nottingham.
Cities like that would be saying give us more City Deals.
Not just City Deals but genuine freedom for city-regions, for example to borrow and issue bonds for development.
What does the election of Jeremy Corbyn mean for the Lib Dems? It’s been reported you’ve talked of a possible new centre-left party.
I think it will take 18 months to two years for the Labour Party to settle down and work out what they’re going to do about all of this. Like a lot of other people I quite like Jeremy Corbyn – this is not a personal thing. The problem is that his track record and approach to policy mean the Tories will almost certainly slaughter him if he’s there in the general election. He’s unelectable – that’s the problem. The result of that is the Tories will move to the right and feel they can get away with it, and there’s a whole series of things coming down the tracks – the deep cuts, legislation on social housing, the trade union legislation – where they will feel they are in command of the political landscape and can do what they like. And that’s the real worry I have about the Corbyn phenomenon.
And a realignment of parties?
I think it’s too early to say but I do think we have to get out of the very tribal approach we’ve got at the moment. It’s not doing us any good. There’s a danger you’ve got a powerful Tory party and the Greens, the Lib Dems, Labour squabbling with each other at a grassroots level. So there has to be much more practical co-operation. I’m no longer a player but I’ve tried to set an example by working with Chukka Umunna on industrial strategy, and with Frances O’Grady on trade union reform. I think you’ve got to reach out and work across the spectrum.
Vince Cable will be talking about his book on 11 October at Ilkley Literature Festival