Cable Needs Fire In His Belly

A dire warning the economic crisis could drag on for a decade has been delivered by the LibDems Vince Cable, warning tougher action is needed. But his borrowing solution has glaring omissions - government waste and squandered billions. His economics need political bite.

The gentleman of economics delivered a well-reasoned way out of the economic mess in today's Independent. But his grounding is still in New Labour, politically steered by Blair-boy Clegg. 

Dancing around the political dancefloor, Cable wrestles with the politician's dilemma – "Do we try to be positive and risk misleading people through complacency; or do we tell it like it is and risk adding to the fear and financial panic?"

Put simply should we be taken in by the government and the BBC"s 'Downturn' spin or ITV News 'UK Recession'. 

The Orange Party is in no doubt. Come clean and shout it from the rooftops. And as Cable says: "On balance, it is better to be straight."

Straight is not something that springs to mind after Monday's farcical Budget. That's led Labour MP, Frank Field, to conclude: "The package therefore raised some fundamental questions about the government competence in running a crisis economy."

The liberal economist, JK Galbraith, does spring to mind as Cable suggests precedents can be found in history for a way out of the crisis. 

Current interest rate cuts are not nearly enough to kick-start the economy. They must come down further and indeed they will. 

Tax cuts must be seen as fair. Cut taxes for the low paid funded by removing tax relief, allowances, tax loop holes and tax breaks which fund the lavish lifestyles of the wealthy, rather than the government's "tokenistic higher rate".

But it is on the issue of borrowing, which Cable reckons is necessary to prevent a further downward spiral, where the Orange Party would take serious issue. 

There's no need to borrow a penny more. Cut back on government waste, ridiculous schemes which squander billions and you have all the savings you need. Here the LibDems need to inject serious politics into economics. 

Make a start. Pull all troops out of the hugely expensive wars in Iraq and Afghanistan, scrap the despised ID cards, scrap Trident, the failed NHS computer system and meaningless government quangos. Do the maths, add up the savings. There would be money to spare.

There is no need for a squeeze on the public sector if the cash is spent wisely and sensibly. And those savings will allow public spending for where it really matters. Spending on schools, hospitals, social housing and public transport. 

Though ignoring the massive £33 billion off-balance sheet PFI debt, Cable does put his finger on the key to a way out of the current economic mess. The banks or rather the way money is lent. 

The present £37 billion bank bail-out was sold as part-nationalisation, when it was nothing of the sort. As Tony Benn said, you cannot have it both ways. True nationalisation is the answer, bringing full state control, responsibility and accountability. 

The government cannot walk away from direct responsibility, warned Cable. "It must take seats on the boards of leading banks, not to micromanage them, but set strategy." 

At the moment, as Galbraith said, government bail-outs with taxpayer's cash just allows the banks and financial institutions to "sail into the wild blue yonder".

The pain of deep recession will be most obviously felt by those facing house repossession and loss of jobs, Cable points out. Easing that pain should be top priority. 

The LibDems are moving in the right direction economically, thanks to Cable. Politically, they still have a long way to go, if Cable economics are to be turned into political votes.