Extracts from Vince Cable's Spring Conference speech

March 14, 2015 12:01 AM
Originally published by UK Liberal Democrats

At the Liverpool Spring Conference, Liberal Democrat Secretary of State for Business, Innovation and Skills Vince Cable will deliver his speech on the economy. He is expected to say:

Record of Delivery

I make no apology for beginning my period in office, here in Liverpool, with the warning that I would shine a light in the murky corners of business practice. I made it clear that our party is pro-business but also pro-consumer and pro-worker. It wants to see business which is successful and profitable but also socially responsible; which treats the labour force as an asset, not just as a cost; pays taxes where it makes profits; and respects the law.

In five years I have been able, with Nick's support and the work of Lib Dem departmental colleagues Ed Davey, Jo Swinson, Norman Lamb and Jenny Willott to achieve a vast amount to create a genuinely responsible, modern capitalism.

Future of economic policy

Of course, there is a cleaning up job still to be done from reducing the post-crisis deficit and from finishing reconstruction of the banks. But beyond these hygiene factors there is a bigger task. I want to set out how we progress from rescue to recovery to a truly great British industrial renaissance.

Our starting point has to be that the two standard models of laissez-faire capitalism - to which Tories are instinctively attached - and socialist planning - which is where Labour start from - are broken and don't work.

The Tories have an ideological obsession with cutting back on state spending, however useful or productive, and relying on markets instead. But any illusions people may have had about rational and efficient markets were destroyed in the banking crisis. Left to themselves, markets often will generate speculative bubbles driven by short term greed or panic; and they primarily reward those who do not need rewards: the wealthiest 1%; the Tories' paymasters and mentors.

Any illusions that existed about the virtues of central planning disappeared with the Berlin Wall but the leadership of the Labour Party still clings to the idea that the decision over what is what is produced and prices charged should be made by ministers and civil servants sitting in Whitehall.

Lacking a clear vision for the future, they both pander to their core vote. Promising to cut taxes or increase spending out of money they don't have for their favoured demographics. It used to be the Greens and UKIP whose economic policies involved breaking the laws of arithmetic: cutting taxes, increasing spending and reducing budget deficits all at the same time. Now this fantasy world has been mainstreamed.

So, how do we build a strong economy?

  • Investment in skills

To achieve this we need a much stronger skill base. We are chronically short of all kinds of engineers, at professional and technical level, construction skills from site managers to bricklayers, digital skills in coding and systems design and much else. We can and should look outward and bring in talented people from overseas who have something to contribute and resist the anti-immigration clamour. But we mustn't let the British economy become like the Premier League where the top clubs - even in Liverpool - are stuffed with foreign players and there are barely enough English players to make up a decent national team.

  • Double government spend on innovation to £1billion

We need also to build on our commitment to innovation. Innovation doesn't emerge by chance. The biggest innovations which have changed our lives - the internet, the WW Web - happened on the back of government programmes. We need to double the innovation budget to get close to the average of our main competitors. We must grow our basic science research alongside it.

  • Strengthen public interest tests

It isn't just about spending. If we are to nurture our own science base in Britain we cannot allow company takeovers - driven by short term financial logic and tax breaks - which destroy it. That is why we need a new public interest test for takeovers which safeguard the science base, in which so much taxpayers' money has been invested.

  • Access to finance

The old banks are still in retreat. Our successful interventions need to be scaled up. And RBS must not return to private ownership until it is strong enough to support lending to the real economy and fully repays the taxpayer investment.

We have a vision of a British industrial renaissance in which firms invest for the long term and financial institutions cease to operate like Blackpool casino.

Borrowing for investment and an open economy

The Tories say the government cannot borrow more for investment. But this is foolish economics. It surely depends what the borrowing is for. Borrowing for productive investment is not the same thing as borrowing to pay for salaries or benefits. It generates the future income to make debt sustainable. That is simple common sense as any business understands. At a time when interest rates - the cost of government borrowing - are negligible it is simply negligent not to invest in our future.

It is critical too that we don't turn our backs on the world. The Tories have a strange, split personality which embraces, on one hand, free market economics and, on the other, nationalism - or, at least, English nationalism. A century ago the Tories believed in closing down trade: protectionism. Now they try to throw obstacles in the way of highly skilled Indian software engineers or Brazilian students or Chinese business visitors in order to meet some ludicrous, unobtainable target set for them by Nigel Farage or Migration Watch.

And their fear of the UKIP Right has led them into the cul-de-sac of the EU referendum: potentially years of uncertainty which will scare off many inward investors who want to retain or bring jobs here for British workers. And if the result is negative or, even, close will leave Britain in a no-man's land: diminished, marginalised and irrelevant. There are many sensible, moderate Conservatives who are horrified by what their party is becoming. We can offer them a home as we can to social democrats disillusioned with Labour.

The message from our opponents is a negative one. They define themselves by what they are against. Labour's default position to anti-business; this in a country which depends on business to create wealth and jobs. The Tories have a lot of antis. They don't like trades unions. They don't like people dependent on benefits. They don't like multi culturalism. I have called this an attack on workers, shirkers and burqas. Not just that: they don't like young people very much either.

By comparison we have something positive to sell on the doorstep. There is much more to be done. But we can now see, thanks to Lib Dems in government, the outlines of an economy that is strong and sustainable and a business culture that is long term and social responsible.