AN ATTACK yesterday by Liberal Democrats minister Vince Cable on “spivs and gamblers” in banking who he blamed for the global financial crisis, which provoked outrage from the Confederation of British Industry (CBI), had been cleared with Conservative prime minister David Cameron.
The coalition denied Mr Cable’s attack had damaged the stability of the new administration.
In a warmly welcomed speech on the final day of the Liberal Democrat conference in Liverpool, Mr Cable said something must be done to shine a light on the “murky world of corporate excess” as he spoke about plans to toughen up rules on corporate governance and hints that the 50 per cent bonus levy imposed by Labour could be continued or even increased if unacceptable bonuses were paid out this year.
He kept some of his strongest words for Labour’s record in office: “Our predecessors left Britain exceptionally vulnerable and damaged: more personal debt than any other major economy; a dangerously inflated property and a bloated banking sector behaving as masters, not the servants of the people.
“Their economic model combined the financial lunacies of Ireland and Iceland,” he declared.
“On banks, I make no apology for attacking spivs and gamblers who did more harm to the British economy than Bob Crow could achieve in his wildest Trotskyite fantasies, while paying themselves outrageous bonuses underwritten by the taxpayer,” said Mr Cable, secretary of state for business and innovation in the five-month-old administration.
The language was chosen to send a message to the broader electorate, concerned about spending cuts and tax rises, that “those with the strongest backs” will be expected to pay a greater share as the government prepares to conclude a deal on a comprehensive spending review next month, which will mark the beginning of a five-year effort to cut spending at most government departments by a quarter.
The business secretary, a vocal critic of the financial sector before he entered government, said he was not seeking retribution against the banks, as long as the banks increased lending to credit-hit firms.
Saying a range of sticks and carrots had been put in place to encourage them, Mr Cable went on: “Tough interventions will be needed if capital which could be used to support businesses is frittered away in bonuses and dividends.
“There is much public anger about banks and it is well deserved,” Mr Cable said.
“We have a pressing practical problem: the lack of capital for sound, non-property business. Many firms say they are already being crippled by banks’ charges and restrictions.’’
Mr Cable was forced earlier to defend his widely previewed remarks, saying the speech would be pro-business and pro-competition.
“That means – and I’m not just listening to the business community, crucial though they are – it also means taking account of the interests of consumers, small shareholders for example, who are often swamped by short-term speculative movements.”
The speech provoked former trade minister and ex-CBI chief Sir Digby Jones to accuse Mr Cable of behaving like “a Liberal rabble-rouser”, and urged him to have a last-minute change of heart ahead of the speech.
The employer confederation’s serving director-general, Richard Lambert, complained about the “emotional language” used and Mr Cable’s direct attack on the virtues of capitalism.
Some in the City said it could provoke highly paid executives to quit Britain.
Mr Cable pointedly accepted that it was “right” to say it would be counter-productive to tax income and corporate profits to “uncompetitive levels”, but this should be replaced by a progressive shift to higher taxes on property and land “which cannot run away and represent in Britain an extreme concentration of wealth”.
Nevertheless, he accepted that his preferences for higher taxes on expensive homes failed to be included in the coalition manifesto agreement.