The MT Interview: Vince Cable

The deputy leader of the Lib Dems and former chief economist at Shell has won widespread regard for his wise commentaries on the downturn and his independence of mind. And then there's his famous Mr Bean jibe at PM Brown. So why has he never had a go at the top job?

by Andrew Saunders
Last Updated: 31 Aug 2010

Vince Cable is that rarest of creatures, a politician who not only knows what he is talking about but also believes in giving it to his public straight, no chaser. In the storm of outraged blather that has accompanied the nation's recent descent into economic gloom - ranging from impossibly sugared pills at one extreme to verbal cyanide capsules at the other - his informed, no-nonsense commentaries have sounded a welcome note of reason.

Offering pithy, straightforward prognoses of situations like the collapse of Northern Rock (he was calling for nationalisation months before the Government finally made its mind up), the rise in inflation and the collapse in house prices has made the 65-year-old deputy leader of the Liberal Democratic party into a national treasure - 'the only MP really worth listening to on the economy', as one prominent blogger put it.

It's an expertise that is a product of his 'other' life - before his entry into Westminster in 1997, Cable spent 30 years as a financial prognosticator for organisations as varied as the Kenyan government, the Royal Institute of International Affairs at Chatham House and the World Bank. But the peak of his career was a two-year spell as chief economist for oil giant Shell in the mid '90s. That's a big job, and gives him a depth of commercial experience and understanding pretty much unrivalled in politics.

He clearly enjoys his new-found reputation, but is too wily to be drawn into any crowing. 'There's an element of "In the land of the blind, the one-eyed man is king" about it. There are 20 or 30 other MPs with a reasonable grounding in business,' he says, with a twinkle that invites you to draw your own conclusions about the adequacy of that number, less than 5% of the total House of Commons membership.

Waspish humour aside, it's clear that he takes his brief - he's the party's chief treasury spokesperson as well as deputy leader - very seriously. The conversation is peppered with references to economists and the bigger thinkers in the press. He reads Martin Wolf and John Kay in the FT, and Elliott and Atkinson's polemic on unbridled capitalism, The Gods that Failed (Bodley Head), lies on top of the pile of paper on his desk.

'I don't think the current crisis has sprung out of nowhere,' his explanation begins. 'A few years ago, in response to the last downturn, we got into a phase of rapidly expanding credit, which fed personal debt and the property boom. By 2004, it was clear that we were getting into a runaway asset bubble, which got progressively more extreme. So any external shock' - like the credit crunch and the collapse of Northern Rock - 'was going to hit an already imbalanced economy. That's essentially what happened.'

Sitting in his office - spacious and modern by Westminster standards, but on the wrong side of Portcullis House, so no Thames view - it's easy to imagine he's an academic rather than an MP. The walls are lined with files, books and papers, while Cable himself - grey hair unruly, suit rumpled, tone easy but didactic - seems more like a prof than a politician. David Lodge might have written him into one of his campus novels.

The resemblance is not entirely fanciful. He has lectured at both Glasgow University, where he got his economics PhD, and at the LSE. He has written books, and papers for organisations including the Overseas Development Institute, Demos and the Economist Intelligence Unit.

But the metaphor stretches only so far. One minute you're enjoying an engaging tutorial on asset prices, then suddenly his eyes flash, a vulpine grin spreads across his face and, before you know it, he has stuck the knife in. Yes, he's a politician after all. 'Northern Rock wasn't just about the lack of credit flow; it was also about a bank making bad loans, and one with a dangerous balance sheet. There's a fundamental problem with banks; essentially, they are underwritten by the government, but they do not behave as if they are. They have taken excessive risks.'

He continues: 'It was the job of the FSA to spot that and deal with it, but in the case of Northern Rock, it did not. It was a mindset problem. The FSA simply wasn't willing to accept that the UK economy was potentially volatile and that we could have bubbles here.'

But he is not the sort of laissez-faire type who would like to see the FSA abolished. 'There is a tendency to regulate for what went wrong last time, and things always re-occur in slightly different ways,' he says. 'But we mustn't throw the baby out with the bathwater. You can have intelligent regulation that isn't obstructive.'

Take banking reserves, for example. 'Banks' capital-reserve requirements should vary according to the business cycle. At the moment, the regulations are flat, which reinforces the problem,' he enthuses, before conceding, 'well, it's a bit of techie point, but it's supported by people more rigorous than me - Charles Goodhart on the Monetary Policy Committee, for example. It could help.'

He's equally trenchant on the house-price crash. The realisation that property values can go down as well as up has come as a nasty shock to many, but there is likely to be worse to come, says Cable. 'A while ago, when people like me were saying that a 10% fall wouldn't be the end of it, we were greeted with horror. But now the IMF is talking about a correction of 25%-30%, and that's probably the right magnitude. That's in real terms; the nominal fall could be greater.'

And a speedy recovery is unlikely - things may yet get worse than they were in the early '90s, he warns. 'Unemployment was the cause then; now people are just grossly over-borrowed. There's no fallback; you can't get help with your mortgage from the government any more.'

Cable's USP as a commentator is his two-pronged ability to delve a lot deeper into the oily workings of the financial system than most, and, having done so, to explain what he found there in relatively plain language.

Take the oil price, for example. It has doubled in the past year or so, and although it has dropped back from the $130-a-barrel level, the trend is still upwards. This has resulted in all kinds of rabid speculation, with pundits blaming everything from irresponsible traders out for a quick buck to the prospect of Barak Obama winning the US presidency. Cable has a less fevered interpretation: 'It's silly to blame oil prices on speculators, or on Opec wickedly withholding supplies. There is simply rapidly rising demand from new countries, and there hasn't been much investment in increasing the supply, because until recently the prices have been so low.'

Or the perennial debate over how much involvement business should be allowed in the arena of public expenditure. 'In principle, there's nothing wrong with private-sector involvement in things like PFI deals and the NHS. Private capital can do many things better,' he says. 'But public-sector negotiators lack experience buying on the open market, and private companies have been offered favourable contracts to get them in. It leads to cream-skimming.'

Where he parts company with hard-line free-marketeers is on the question of the wealth gap. He's a firm believer in using taxation to encourage social cohesion. 'I don't support penal rates of taxation, but I am in favour of people on very high incomes paying appropriately - on capital gains too. If you tax income at 40% and capital gains at 18%, it's blindingly obvious that people will take their rewards in capital gains.'

He had two spells at Shell, briefly in the late '80s, then again as chief economist from 1995-1997. 'It was a wonderful job, and a wonderful company to work for,' he says, simply. The most lasting impression his former employer made on him was its organisation. 'One thing that really impressed me, and that I have desperately tried to communicate in politics, was the way Shell let go of its operating companies and allowed them to do their own thing. Big companies understand that you can't run everything out of one central office, but that's the way Gordon Brown tries to run the country. It's completely mad.'

Ah, yes, Gordon Brown: the embattled PM is no stranger to the sharp end of Cable's tongue. During his spell as acting leader of the Lib Dems last year, Cable made a name for himself as master of that arena of single combat, Prime Minister's Questions. Did he enjoy it? 'That's not really the right word; it's very intimidating. But you do get a buzz out of doing it well.'

Most memorable of his PMQ moments was the quip that Brown had transmuted, in the space of a few weeks, 'from Stalin to Mr Bean - creating chaos out of order, rather than order out of chaos.' It was a gleeful put-down that the Economist dubbed 'the single best line of the Brown premiership'. Did he appreciate how much of an impact it would have when he said it? That wolfish look again, that steely glint of eye. 'It was planned, yes. But at the time I was trying to produce one-liners on a weekly basis and I didn't realise that this was the one that would stick.'

Cable is possessed of an undemonstrative brand of self-belief, the strength of which is not immediately apparent, but emerges gradually, the more you engage with him. It's part of the unshakeable resolution that enabled him to fight four unsuccessful by-elections in three decades - Glasgow Hillhead for Labour in 1971, York twice for the SDP/Liberals in the '80s and Twickenham for the Lib Dems in 1992 - before he finally succeeded, in Twickenham again, in 1997. That is a long haul by any standards.

'Twenty-seven years,' he muses, with a rueful smile. 'It's probably some kind of record.' After his third and fourth tries in York, he explains, he felt he had put his family through enough of the trials of the wannabe politician's lot - endless travelling, meetings, late nights and early mornings as he held down a day job at the same time - and so he more or less gave up. But the itch got stronger. 'When Twickenham came up again - I was living there, it was a winnable seat - we all agreed we'd invested so much of our lives in politics that I would have one last try.'

There's a gleam in his eye as he tells the story, reliving the moment when the scent of victory finally came his way. 'I had good pay and high status in my various commercial jobs, but I didn't find them entirely fulfilling. If you take it seriously, being an MP is bloody hard work. But of all the jobs I have had, it is the one I've enjoyed the most and been best at.'

But his election triumph was marred by personal tragedy. During the campaign, his wife of over 30 years, Olympia - with whom he had three children - became increasingly ill with breast cancer, from which she would not recover. 'The disease spread, and she died in due course,' he says, quietly. It must have been tremendously hard, balancing his ambitions against his desire to be with his wife and family; their relationship was clearly a strong one. 'She took the view that it was a joint enterprise. You can't do these things unless you have the support of your family.'

Cable talks a lot about family; it's a big part of his make-up. He's inordinately proud of his own children - eldest son an opera singer, middle daughter a lawyer, youngest a theoretical physicist in the US. 'They are all intelligent high-achievers. I put that down to my first wife, who was extremely highly motivated on their behalf.'

When Olympia died in 2001, he reconciled himself to a lonely old age. But in 2004, as much to his own surprise as anyone else's, he re- married. Second wife Rachel has three kids of her own, plus five grandchildren to add to Cable's two. 'It's quite a crop, but absolutely lovely,' he says, beaming.

Perhaps his evident delight in family life is a reaction to a rather troubled childhood. Born in York to working-class parents, he bridled under the strictures of a time and place that - before the university and tourism expanded the city's horizons enormously - he describes as being 'about as un-cosmopolitan as it gets'.

His father was a joiner at the Rowntree's factory, his mother packed chocolates at the 'other place' - Terry's, just down the river. But Dad had ambitions for betterment and became a tech-college lecturer. 'My childhood was moulded by being on the borders of the working and middle classes,' he says. 'Dad was always on the edge and conscious of being looked down upon.

'I fell out with him over politics - although he did get me interested,' he says. 'He adored Mrs Thatcher. When she got into power, it was like he'd finally reached the promised land.'

Cable senior was a forceful personality. 'He dominated my mother, who was liberal-minded but not very strong. She had a bad nervous breakdown when I was 10 and never really recovered from it. It wasn't easy at the time. She was a bit more enlightened than my dad, admitting she secretly voted Liberal once, despite his instructions to her to vote Conservative.'

His escape route was up and out, via the traditional means of grammar school and Cambridge - Fitzwilliam College, where he read Natural Science and Economics. President of the Union in 1965, after graduating he landed a plum job as a treasury finance officer to the Kenyan government. But before he left his home town for Africa, the city sprang one more surprise on him. 'I met my wife in York - in a mental hospital. We were both doing part-time work there, I should explain. It was just a romantic coincidence that she was from Kenya and that I was going there for my first job.'

They married in Kenya, despite fierce opposition from both families. 'Our parents disowned us - it was real Romeo-and-Juliet stuff. People still had a colonial mindset about racial purity and all that nonsense in those days.'

There's so much about Cable that is impressive: his gravitas, quiet confidence and no- bullshit manner - all hard-to-find qualities these days. He's popular with the public; more so, say the mischief-makers, than current party head Nick Clegg. It's certainly hard to imagine him getting into hot water over the number of notches on his bedpost. He has even danced on live TV with Alesha, winner of last year's Strictly Come Dancing, for goodness' sake. Why on earth hasn't he had a crack at the top job?

It's a sore point and he braces himself to tackle it. 'If I could rewind, I would have stood for leader the first time I had the chance,' he says. That was in January 2006, when Charlie Kennedy was forced out by concerns that he was drinking too much (a piece of political drama in which Cable played no small role, reluctantly circulating a letter to senior Liberals calling for his old friend Kennedy to go). 'I wasn't very well known at the time and the consensus was that Ming (Menzies Campbell) would best unite the party. But I could have done it - although I might have lost and never have been heard of again.'

When Campbell himself stepped down in October 2007, having been hounded out ostensibly for being too old and boring (the press nicknamed him 'Mogadon Ming' and at least one cartoonist cruelly attached the former Olympic athlete to a Zimmer frame), Cable took over as acting leader. This time round, he publicly refused to rule himself out of the leadership race, but once again the party spiked his guns. 'I had 24 hours to get colleagues to nominate me. It was soon clear that they had decided they wanted a leader from the next generation.'

No senior figures have admitted to this, but it's hard to escape the conclusion that Cable is both more popular and more highly regarded outside his party than within. He has been called 'a natural apostate' - remember, he started out as a Labour candidate and came to the Lib Dems via the SDP. There's a sense that he is perhaps just a bit too much his own man and not enough of a team player to win convincing support for a leadership bid. It's not a point he is willing to concede, however. 'I am definitely not a party tribalist. I am independent-minded and I value that. But I could have done it (led the party) - I've done management jobs, I know how to build teams and manage political situations.'

There's also a growing question over how much influence he retains over Lib Dem economic policy. Under Clegg, this seems to be veering away from its thoroughly worked-out, if idiosyncratic, long-term tax-raising stance and towards a rather generic opposition position - 'we'll lower taxes by cutting wasteful public spending'. Exactly what spending, and by how much, they seem strangely reluctant to say.

In a way, he's in a Catch 22 situation - the very qualities of independence that make him valued in the country as a trusted commentator make political colleagues nervous. He is not, you can sense them fretting, someone who can be relied on to toe a line he doesn't believe in for the greater good of the party. As he says of his own defection from Labour to the SDP in the 1980s, 'There are limits to what people should put up with in terms of sacrificing their principles.'

Although he's clearly more than able enough in terms of skills and experience, political leadership also requires an extraordinarily high level of personal ambition, an overweening certainty in the mind of the candidate that they are uniquely suited to the role. And - wise, intelligent and seasoned as he is - Cable is far too sensible to indulge in that kind of thinking.

THREE CHALLENGES FACING CABLE

1. To ensure that the Lib Dems' economic policies remain focused on long-term systemic improvements, rather than short-term, vote-winning wheezes

2. To lobby for regulatory and banking reforms to help prevent another asset-price bubble developing

3. To wangle an invite to the next series of Strictly Come Dancing

CABLE IN A MINUTE
1943: Born 9 May in York. Educated at Nunthorpe Grammar School and
Fitzwilliam College, Cambridge
1966: Treasury financial officer, Kenyan government
1970: Fights first by-election, Glasgow Hillhead, for Labour
1982: Joins SDP
1995: Chief economist, Shell
1997: Wins Twickenham by-election. First wife Olympia dies of breast
cancer four years later
2004: Marries second wife, Rachel
2006: Deputy leader, Liberal Democrats
2007: Oct-Dec, acting leader, Lib Dems
2008: Deputy leader and treasury spokesperson, Lib Dems

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