When the histories of the coalition government come to be written, those chapters focussing on the role of Vince Cable will be some of the most fascinating. Vince’s fierce intelligence combined with a (perhaps deliberate) flair for the enigmatic meant he was involved in some of the most interesting of the coalition’s key moments.
One area of particular significance is likely to be the analysis of his views on austerity. Throughout the coalition Vince was often portrayed in the media — and by some Liberal Democrats — as a brave warrior fighting an axe-wielding Tory-Lib-Dem cabal of ideological austerians. Yet this seems to me to be precisely wrong.
In 2009 Vince wrote a pamphlet for the Reform think tank called ‘Tackling the fiscal crisis: a recovery plan for the UK’. In it he termed the UK’s fiscal deficit and accumulated debt the “central issue” in politics, and predicted the need for fiscal tightening of around 8% of GDP over a 5-year period (compared to the “optimistic” plans of the Labour government for a correction of 6.4% over 8 years). Moreover, deficit reduction should be achieved largely through cuts rather than tax rises:
Fiscal consolidation could come from curbs on spending or increased taxation. In practice there will almost certainly be elements of both and no Chancellor would sensibly rule out tax increases. But the emphasis certainly should be on public spending.
In the paper, Vince also identified some specific areas of spending where savings could be achieved, including:
- “Curbing industrial policy” including scrapping Regional Development Agencies
- Scrapping Strategic Health Authorities and other savings from the NHS budget
- Significant cuts to defence programmes
- Freezing public sector pay overall and cutting higher salaries
- Sales of public assets
In the event, of course, many of Vince’s specific proposals were implemented by the coalition.
So how did the coalition’s record on deficit reduction match Vince’s predictions?
Originally, of course, the coalition sought to eliminate the structural deficit entirely within its 5-year term. The period in which this would take place was then extended in 2011 in response to two things: an upward revision by the Office for Budget Responsibility in the estimated size of the structural deficit, and the eurozone crisis.
In the end, then, deficit reduction over the course of the coalition was rather more modest than predicted by Vince Cable: about 5% of GDP (rather than the 8% predicted – see chart), but of course austerity continues.
Inevitably, there seems to have been rather more politics than hard-headed analysis in the portrayal as Vince as the coalition’s deficit dove. It suited those seeking to undermine Clegg and the coalition to paint Vince as his antithesis to whatever extent possible.
I note with interest that Vince is due to summate this (evidentially problematic) motion on economic policy at conference, so it will be good to hear his analysis of the current state of the economy – though for a preview you can listen to his interesting comments on last night’s PM programme (at about 6 minutes in).
* Nick Thornsby is a day editor at Lib Dem Voice.