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Sunday 7 September 2008

Interview: Vince Cable

The Liberal Democrats’ sound money man

Simon Nixon talks to Vince Cable, the Lib Dem Treasury spokesman and acting leader, who the City admires as one of the few politicians to talk sense about Northern Rock

But Cable is kinder about the Tories recent eye-catching policies on inheritance tax and ‘non-domiciled’ foreign residents — which is hardly surprising, since he claims to have got there first. The Tory promise to raise the inheritance tax threshold to £1 million and fund it with a flat £25,000 charge on foreigners claiming ‘non-dom’ status was key to the revival of Tory fortunes and Brown’s decision to cancel the autumn election. But Lib Dem policy was already to raise the inheritance tax threshold to £500,000. And it was the Treasury’s refusal to provide Cable with data on non-doms that allowed Osborne to pluck a number out of thin air for the sums he claimed his policy would raise.

‘Osborne was politically smart,’ Cable concedes, ‘but his numbers are far too high and he fails to distinguish between high-profile super-rich non-doms such as Roman Abramovich and expats bringing small sums onshore.’ The Lib Dems would instead put a time limit on non-dom status of ten years, so that foreigners can still make money here, but those who choose to settle must pay.

Of course, the Lib Dems have an advantage over other parties: they’re free to make policies knowing they’re never likely to have to put them in action. Even so, few Tories could find fault with Cable’s robust economic pragmatism. The wider charge is that his party’s conversion to economic liberalism has come a bit late. After all, it’s three years since the Orange Book, a collection of essays setting out an economically liberal way forward, caused such a stir in political circles. Since then, David Cameron has adopted many Orange Book ideas. Meanwhile the leadership contest, which was supposed to showcase the Lib Dems’ new economically literate edge, has been a PR disaster. The party’s small band of long-suffering business supporters are alarmed at the way Huhne has tacked leftwards, while Clegg has trimmed in response.

But Cable insists the party’s course is set, whoever wins the leadership. He admits that Cameron presents a challenge, but is not discouraged. ‘The critical point lies ahead of us. Labour had huge support for a decade on the strength of its supposed economic competence. But we could now be heading into a prolonged downturn. If the economy turns sour, leading to falling house prices and job cuts, people are going to get angry and will switch away from Labour. Our challenge is to be ready with a clear set of values and policies.’ The new leader may find Cable has done much of the hard work already.

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