Business Secretary Vince Cable said Liberal Democrats support diversity in ownership and described himself as "a strong believer in mutuality and the co-operative movement".
Keynote speaker at the Social Liberal Forum conference in Manchester, Vince Cable talked about the current state of the British economy, highlighting the main differences between the Liberal Democrat and the Conservative approach.
According to Mr Cable, the two parties propose distinct solutions to dealing with the financial crisis, mainly because they cannot agree on the factors that caused it. If Conservatives blame it on too much public spending, Liberal Democrats think the fault lays in allowing the banking system to get out of control.
As a result, the Conservative government believe the solution is to minimise the role of the state, where as their coalition partners think the government has to work to restructure the economy. Other big divides include the view over the place of the UK within the European Union and the issue of immigration.
“We now have to be much more outspoken and clear about where the dividing lines are,” said Mr Cable. He also argued that social democratic movements are in retreat, with people turning to politics of identities, nationalism and regional movements.
The traditional Keynesian approach does not fit with the world in which we are living, he said, adding that running bigger deficits is not the answer to solving the crisis. He proposed as an alternative to try to restructure the economy in a different way and shift resources away from consumption to investment, from housing boom and manufacturing in a systematic way.
Mr Cable also responded to concerns over the privatisation of Royal Mail. Asked by a delegate whether a worker-owned model would not have been a better alternative, Mr Cable said that he wanted to give workers a real incentive, enabling ten per cent of them to receive shares free of charge and enjoy some of the benefits if they hold the shares for three years.
Unhealthy banking system
The banking sector was at the core of the crisis, therefore there is a need for more diversity within the sector, said Mr Cable.
The Business Secretary also referred to the situation in which the Co-operative Bank finds itself, adding that the Bank is distinct from the rest of the co-operative movement, but that its credibility had been damaged due to the “giant hole in their balance sheet”.
“I am hoping they will sort the problem out. That has been a step back for the Co-op, unfortunately,” said Vince Cable. “I do believe that what we need in this country is a much more varied system of banking – is currently dominated by a handful of banks. That’s a very unhealthy system they completely monopolise business lending.
“I do welcome new banks, I welcome mutuals; building societies have a key role to play; I hope the Co-op Bank is quickly restored to health so it can get back into the market, particularly for business lending.”
He said Britain needed more local banks and said the Government has been involved in creating banking institutions such as Green Investment Bank and Business Bank. “We need a wide variety of banks and establish a British business bank which will give a platform for this kind of diversity to flourish."
Crisis not over
Mr Cable also spoke of the housing sector crisis, saying that there was a chronic deficiency of social housing. “I would like to see much more active support for councils that want to build their own houses,” he said.
The Business Secretary said real inequalities are in wealth and called for a proper asset taxation through the mansion tax. He added that he disagreed with the approach adopted by the Conservatives, who promised not to increase taxation if elected again in 2015, claiming the decision was “highly ideological”. He also argued that once the income tax gets to more than 40 per cent there is a problem of enforcing it.
Credited with predicting the 2008 financial crisis, Vince Cable said his main concern was that people were “jumping too quickly from some positive data, trying to imagine that we have escaped from the crisis, we do need radical surgery”. “We’ve got to be realistic about the state of the economy,” said Mr Cable.
He added that some figures give reasons for optimism, such as the fact that the employment rate is good given the crisis, adding that there is an enormous number of start-up businesses.
Join the Conversation