By Peter Hoskin
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What's Vince Cable up to? The Business Secretary has a cumbersome essay in today's edition of the New Statesman which every newspaper has written up as an affront to George Osborne. The Staggers' George Eaton has already provided a excellent summary, so that you don't have to plough through all 3,800 of Mr Cable's words, but I thought I'd bash out another for ConHome. Three things stand out from the article:
i) A call for more capital spending, perhaps funded by borrowing. Mr Cable's central recommendation is an increase in capital spending; he reckons that the extra £5 billion announced in the Autumn Statement was too modest to really boost the construction industry and that wider economy. This suggestion is unsurprising – Nick Clegg has also made noises about capital spending – but it is significant. It represents another shift towards the idea of a fiscal stimulus, which the Coalition has been careful not to emphasise, nor really endorse, in the past.
And even more significant is the "more controversial question" that Mr Cable raises: about how the extra spending should be funded. While he maintains that the Coalition was right to embark on deficit reduction as it did, he also suggests that the "balance of risks" may have shifted in a way that justifies extra borrowing in the pursuit of growth. He warns of the "risk of the public finances deteriorating as a consequence of continued lack of growth". The Business Secretary poses all this as a question – leaving the answer open as a "matter of judgement" – but there's little denying that he's moving closer to Labour's position here.
ii) A more radical monetary policy. Mr Cable's second major recommendation is an expansion of monetary policy, which involves the Bank buying up more private sector assets as part of its Quantitative Easing programme, as well as NGDP targetting. This is also unsurprising and, so far as intra-Coalition relations are concerned, considerably less controversial than his musings about borrowing. Indeed, the FT reports this morning (£) that George Osborne will use the Budget to loosen up the monetary side of things.
iii) An attack on the supply-side right. Which reads as follows:
"This bastardised ‘supply side’ economics often degenerates into a saloon bar whine about HSE inspectors, newts and birds which block new development, bloody minded workers, equalities and Eurocrats who dream up regulations for square tomatoes and straight bananas. Philosophical cover is provided by the belief that the private sector can always fill the space left by a retreating state."
Of course, we're used to Mr Cable and his freelance punditry by now. But, against the backdrop of the forthcoming Spending Review, and of the pressure being applied to David Cameron, George Osborne and Nick Clegg from all sides, this essay feels as noteworthy as it is long. The Business Secretary denied at the weekend that he wants to be his party's leader, but he's more and more sounding like its voice.