In the crisis conditions of 2009 these problems can be concealed in very high levels of deficit financing and government borrowing – and that is the right policy in recession – but this cannot be sustained for long. We could easily descend into a vicious downward spiral of rising costs of borrowing, and rising government debt, leading in due course to high inflation or penal taxation or both. The next five to ten years will be dominated by the politics of fiscal correction, and in particular by austerity in public spending. There are fiscal conservatives (and Conservatives) who will approach this task with relish having long wished to complete the unfinished revolution of the 1980s and take an axe to the NHS, state education and the welfare state. I certainly do not relish such a task; nor, I suspect, do large swathes of the public who nonetheless recognise the need for financial discipline. My personal and constituency experience has taught me that there are public services which are under-supported: mental health, adult part-time education, scientific research, training and rehabilitation of young offenders, social housing, respite and support for carers. These are the unfashionable bits of public spending that will not survive - nor will genuine public investment - unless there is a careful review of priorities elsewhere. Such prioritisation will not be comfortable.
But I see my party’s role and my own as leading the public debate on how to achieve it. It is tempting to take refuge in ‘greater efficiency’ and ‘reduced bureaucracy’ and, while these things are necessary and desirable, the capacity of politicians to deliver them is far less than they claim. What has to be faced is the need for severe restraint on public sector pay and future pensions, especially at the bloated top end of the scale; a willingness to tackle middle class welfare entitlements as in the tax credit system; a downgrading of the country’s global defence role; and a willingness to extend personal co-financing in fields such as social care and higher education.
There is a danger that a period of austerity in the public sector is achieved by damaging the country’s long term future, allowing school standards and physical infrastructure to degenerate and abandoning some of the visionary investments – in high speed rail or harnessing tidal power – which are desirable for environmental sustainability. While it is easy to spout rhetoric about investment for future generations, mobilising the resources to achieve it will be a difficult sell.
Taxation is a political minefield and fine, radical politicians from John Smith to Charles Kennedy have suffered the effects of detonating hidden bombs. I have worked hard to change my own party’s thinking away from an instinctive approval of higher taxes and in particular high rates of income tax on low and middle earners. Even at a time of fiscal difficulty, there is a powerful economic and moral case for lifting low earners out of direct tax. But I do value my party’s continued commitment to redistributive taxation and for closing off, as far as possible, the loopholes and generous tax allowances which favour the wealthy. ‘Fairer not higher taxes’ is the right mantra. In a prolonged fiscal crisis, however, some further taxation may be unavoidable and, if that is to happen, the least damaging way of proceeding is through taxation of consumption and land, the latter an obvious if technically challenging way to combat the national obsession with property speculation. A century on from Lloyd George’s 1909 budget there is an urgent need for an approach to fiscal management which is honest, disciplined, radical and redistributive.
Alongside the management of the fiscal crisis the other central economic issue is radical reform of the financial system, domestically, in Europe and globally, to prevent a recurrence of the financial collapse. A disproportionately large financial sector is dangerous because of its capacity to inflict enormous costs on the rest of the economy when a collapse occurs. I have used the analogy with Chernobyl. After such a disaster, it is imperative to adopt higher safety standards. I have written extensively on what I believe has to be done and this is not the place to rehearse the arguments in detail. But what alarms me is the way in which vested interests, political cowardice and inertia are blocking serious and necessary reform. Lazy arguments about promoting the ‘competitiveness’ of the City and encouraging financial ‘innovation’ are winning the day. It is hardly surprising that Conservative politicians whose predecessors deregulated the financial sector and demutualised building societies should have a political and intellectual investment in the status quo; but the subservience of the Labour Party to the same interests is genuinely shocking and one of the reasons why I believe the Labour Party has outlived its usefulness. There is a similar conservatism in the Obama administration but they have less at stake since the UK banking sector is many times larger in relation to the economy than the US equivalent. The UK debate has been shunted into a siding by the Conservatives with a second-order argument about which quango should do the regulating, thereby avoiding the central issues.
The case must continue to be made that banks cannot be allowed to pursue short term profit and bonus-maximising objectives if this puts the rest of the economy in peril. The sector and the large banks are currently too big for any British government to guarantee. There is plenty of scope for debating the techniques for regulating these institutions but breaking them up seems to me an essential step to managing the systemic risk they pose and for competitive purposes. As for the nationalised and semi-nationalised banks, the government is in too much of a hurry to re-privatise them. Experience of other countries which have been forced to nationalise their banks in a crisis is that it may take a decade or more to restructure them, manage their bad assets and to pave the way for asset sales which are profitable for the taxpayer. In the meantime, they have a role in supporting economic recovery which the government is failing to realise in a misguided attempt to prove to the City that it will not interfere, even in strategic lending and remuneration policy. As the Labour government shuffles lamely towards the exit door, its failure to build on and develop a timely crisis intervention in October 2008 will come to be seen as a major missed opportunity. But it is not too late to change course.
*
The fiscal crisis and the toxic legacy of the banking crash will dominate economic policy debate for a long time to come. Whether in opposition or government I expect to be centrally engaged in that debate. But these are not just issues for economic nerds. They are political. And looming over the country’s economic crisis is a political crisis: the shaming and discrediting of the political class, and specifically of parliament.
Yet there was never a time when strong and healthy democracy was more needed and for the progressive tradition of politics to be championed. There is a likelihood that, on the ‘Buggins’ Turn’ principle, the Conservatives could slide back into power on the strength of a public appetite for ‘change’. Having studied at the Blair academy, they have brilliant public relations and tactical skill but little conviction or purpose beyond personal ambition, rewarding their friends and indulging a nostalgia for the 1980s. The contrast with the United States, which produced inspirational politics in response to crisis and previous failures of leadership, is palpable and painful. The country desperately needs the courage and energy of the 1906 Liberals or the 1945 Attlee government or, for that matter, Mrs Thatcher. But we face the prospect of rule by charming but utterly inexperienced young men armed with only a sense of entitlement to run the family estate. There is a risk that the idealism and energy of the politically committed, especially young people, will be siphoned off into single issue campaigns and fragmented protests which are dissipated in a political vacuum. There is a risk too that a sense of political failure could mutate into nationalism and racism. The United Kingdom could fracture along Hadrian’s Wall and England along cultural and class lines.
This sense I have of unfinished business and of difficult times ahead helps to explain why I have no intention of quitting the political scene any time soon, unless of course my local constituents decide to get rid of me. Goodness knows, it is tempting to walk away. There are those endless conversations with people which have to s
tart with mumbled explanations that I am not actually stealing their taxes or spending half the year on holiday. Even the nice people, and there are many – strangers who come up to me in the street and on the underground with words of encouragement – often suggest that I should be doing something else. I have plenty to fall back on. I have a family I am very proud of – children and grandchildren – and do not spend enough time with them. I have a blissfully happy marriage and an opportunity to spend more time with my wife in idyllic rural surroundings. I could spend a comfortable retirement addressing approving audiences, saying ‘I told you so’. Such humility as I still possess tells me that I am not indispensable and certainly not immortal.
Yet I believe it would be wrong to walk away: indeed, a betrayal of the family, friends and political supporters who helped me to get where I am. There is an enormous job to be done for my party and as part of a wider national debate. I believe that there is a duty, now more than ever, to defend the idea that politics is an honourable and important activity and that the country would be greatly diminished if we gave up on parliament and other democratic institutions.
I draw encouragement from the fact that some of our greatest leaders came into their political prime in their sixties or seventies. And I cannot be the only pensioner in the country to have discovered deep reserves of energy, curiosity and ambition when convention suggests that we are ‘too old’. This is no time to quit.
Index
Afghanistan
Airlie, Jimmy
Al Yamamah arms contract
Alexander, Gavin
Alfonso, Juan Pablo Pérez
Ali, Anthony
Ali, Tariq
Allende, Salvador
Angola
Applegarth, Adam
Ashdown, Paddy
Audrey (girlfriend)
Aylmer, Gerald BAe Systems
Balassa, Béla
Balls, Alistair
Bank of England, Monetary Policy Committee
banking crisis
Barclays
Bayley, Hugh
Baylis, Trevor
Bear Stearns
Benn, Tony
Bennett, Joan
Bercow, John
Bergh, Maarten van den
Birmingham Midshires building society
Blair, Tony
Blanchflower, Danny
Blunkett, David
Boothroyd, Betty
Botswana
Boulton, Adam
Bovey, Keith
Boyle, Sir Edward
BP
Bradford & Bingley
Brandt Commission, the
Branson, Richard
Brennan, Norman
British Bankers’ Association
Brittan, Leon
Brooking, Trevor
Brown, Gordon
Browne, Jeremy
Browne, John
Bruce, Malcolm
Brummer, Alex
Brundtland Commission, the
Buchan, Janey
Buchan, Norman
Buchanan, Colin
Buchanan, Dick
Bulger, Denise
Burke, Bill
Byers, Stephen
Cable, Annie
Cable, Edith (nee Pinkney)
Cable, Evie
Cable, Hugo
Cable, John
Cable, Keith
Cable, Len
Cable, Olympia (nee Rebelo)
arrival in Britain
courtship
family and background
education
life in Kenya
marriage to VC
honeymoon
LC’s acceptance of
life in Glasgow
visit to India
life in Twickenham
breast cancer
1992 election campaign
constituency work
health deteriorates
achievements and ambitions
death
Cable, Paul
Cable, Rachel (nee Wenban-Smith)
Cable, Reg
Cable, Vince
childhood
family backgrounds
education
adolescence
political education
Oxbridge place
university education
university political education
eastern bloc visit
Overseas Development Institute fellowship
courtship of Olympia
life in Kenya
marriage to Olympia
honeymoon
estrangement from parents
life in Glasgow
PhD
political campaigning in Glasgow
service on Glasgow council
diplomatic service
visit to Soviet Union
visits to India
at the ODI
Commonwealth secretariat post
on Shell’s group planning team
as Shell chief economist
life in Twickenham
as special adviser to John Smith
move to the SDP
York candidacies
elected MP for Twickenham
constituency work
maiden speech
joins shadow cabinet
bereavement
courtship and marriage to Rachel
parliamentary career, 2001-5
and the leadership crisis
elected party deputy leader
leadership of party
celebrity
Parliamentarian of the Year award
media relations
asked to be Speaker
investigation of economic crisis
future plans
Cairn Energy
Callaghan, James
Calton, Patsy
Cambridge, University of
Fitzwilliam House
Cameron, David
Campaign for Democratic Socialism
Campbell, Menzies
carbon taxes
Caribbean states
Carless, Hugh
Carmichael, Neil
Casey, Terry
Cash, Bill
Castro, Fidel
Chatham House
Chávez, Hugo
Cheadle
China
Ciano, Dr
Citizens Advice Bureau
Clark, William
Clarke, Charles
Clarke, Kenneth
Clegg, Nick
Clwyd, Ann
Comerford, Father
Commerce of Culture, The (Cable, Jain and Weston)
Common Market, the
Commonwealth secretariat
Communist Party
Conservative Party
Cook, Robin
Corbin, Jeremy
Costello, John
Coward, Michael
Cox, James
Craigen, Jim
Crosby, Sir James
Crosland, Anthony
Crossman, Richard
Cruickshank, Don
Cuba
Cuban missile crisis
Cunningham, George
Cunningham, Mavis
Darbari, Puja
Darling, Alistair
Davey, Ed
David (childhood friend)
Davies, Christie
Davis, Ewan
de Geus, Ari
Demos
Deng Xiaoping
Denham, John
Derek (HF ‘Host’)
Desai, Nitin
Deterding, Henri
devolution
Dewar, Donald
Dimbleby, David
Dixon, Alesha
Dobb, Maurice
Doherty, Dan
Donnelly, Dan
Doocey, Dee
Doss, Alan
Douglas, Dick
Douglas-Home, Sir Alec
Dumont, René
Duncan (childhood friend)
Duncan S
mith, Iain
Dunne, John Eagle, Angela
Ealing Southall
East African Union, the
economic crisis
Economist Intelligence Unit
Ecuador
Edinburgh University
elections
1959
1974
1979
1983
1987
1992
1997
2001
2005
Ennals, James
environmental issues
Equitable Life
European Commission
European Union
Eustace, Elmo
Evans, Neil
expenses scandal, the
Fabian Society, the
Facing Mount Kenya (Kenyatta)
Falklands War
False Start in Africa (Dumont)
Feinstein, Ann
Feinstein, Charles
Feltham young offenders’ institution
Fernandes, George
Field, Frank
Financial Services Authority
Fisher, Mark
Fleming, Sam
Flight, Howard
Foot, Michael
Foot, Paul
foreign aid
Foreign Office, the
Information and Research Department
Foulkes, George
Foyle, Snadra
Fulton, Tom
Future of Socialism (Crosland)
Galbraith, J. K.
Galbraith, Tam
Galloway, George
Galloway, Steve
Gandhi, Indira
Gandhi, Sanjay
Garraway, Kate
Gheewala, Ramesh
Gichuru, Mr (Kenyan finance minister)
Gillings, Guy
Giscard d’Estaing, Valéry
Glasgow
council
Labour Party
Glasgow Trades Council
Glasgow University
Glass, the Reverend Jack
Glazer, Tom
Goa
Goldsworthy, Julia
Goodall, Bob
Gordon, John aka John Junor
Gray, Sir William
Greaves, Bernard
Greer, Germaine
Gregory, Conal
Grimond, Jo
Guest, George
Gunn, Jimmy
Free Radical Page 33