Vince and Responsible Capitalism
Vince Cable’s speech to the Liberal Democrat conference in Brighton included an attack on those ‘who want a hire and fire culture’ and more talk of a new small business bank.
The TUC has responded by challenging the Government to make the bank at least ten times its proposed size, to be able to make the impact the economy needs.
In the passage below Vince speaks to many trade union priorities, but the comment on cutting ’unnecessary red tape on small business’ will remind us that he recently announced plans to erode health and safety protection.
Vince Cable said at 1120 today: ”I am working with the Chancellor to develop a new institution that will combine a billion pounds of new government capital with a larger private sector contribution. This will apply leverage through guarantees to support up to ten billion pounds of finance to small and mid-sized business – a significant portion of all the lending currently available.
Industrial strategy; reforming the banks; these are parts of a bigger project: creating a culture of responsible capitalism. I launched a debate on this issue at conference two years ago, you may remember when I echoed Adam Smith saying that ‘Capitalism takes no prisoners and kills competition when it can’; this led to loud moans about Communists in government. Now everyone has seen the scandals of market rigging, mis-selling and phone hacking; the abuse of monopoly power; and the outrageous rewards for failure.
Despite all of that we must work within a market based, private enterprise system. Business will drive our recovery. And there are many outstanding and responsible British companies.
In two years we have done a lot to support them. Our legislation to introduce binding shareholder votes on executive pay is progressing through Parliament. We are scrapping unnecessary red tape on small business while strengthening regulation where it is necessary – as on the environment. We are getting more women into top business positions, on boards. And we have seen off the ‘head bangers’ who want a hire and fire culture and seem to find sacking people an aphrodisiac: totally irrelevant in a country with flexible labour markets which have created over a million private sector jobs in the last two years. Instead, we have concentrated on practical tribunal reform and supported progressive firms who want worker participation and share ownership.
Furthermore, we want the costs of our current crisis to be fairly shared. ‘We are all in it together’ is a good slogan. Forget the Tory messengers; let’s apply the message. Cracking down hard, not just on criminal tax evasion but on abusive tax avoidance. Working with our allies to close down tax havens. No one keeps their cash in tax havens for the quality of investment advice; these are sunny places for shady people”
Responding to Vince Cable’s plans for a new state investment bank, TUC general secretary Brendan Barber said: ‘The new state investment bank should provide much needed support for businesses to grow and create jobs. It’s a shame that so many businesses have gone to the wall in the two years it’s taken the government to agree to the scheme.
“Ministers claim that a £1 billion investment could support £10 billion of business lending. But with the UK trapped in double dip recession, this is nowhere near enough to deal with the scale of our economic crisis.
“If this bank is as good as ministers claim it will be, they should give it the backing it deserves and vastly increase its funds. Multiplying the government’s stake tenfold could support £100 billion of additional lending. This is the level of support businesses really need.”
Chuka Umunna MP, Labour’s Shadow Business Secretary, commenting on Vince Cable’s announcement of a business bank, said:
“Labour has led calls for the creation of a British Investment Bank, but it is far from clear that the business bank Vince Cable envisages is the kind of institution that will get credit to successful firms who can’t currently access the finance they need.
“Vince Cable will not be able to set up a business bank without the unequivocal backing of George Osborne, and already the Treasury is briefing that this bank is a non-starter. This is yet another Government policy thrown into uncertainty by bickering in Government before it has even got off the ground.
“A major problem with the Government’s previous failed schemes to get lending going to businesses, including Project Merlin and credit easing, was that they relied on the banks themselves getting money out of the door, without any real safeguards to ensure this happened. It is far from clear that Vince Cable’s business bank will be immune from these shortcomings.”
On Vince Cable’s call for an industrial strategy, Chuka Umunna MP said:
“Vince Cable has been in office for two and a half years and despite repeatedly calling for an industrial strategy has instead delivered confusion and uncertainty for business, while reiterating in his speech his absolute support for George Osborne’s failed plan which has delivered a recession made in Downing Street.”
On Vince Cable’s claims that the Liberal Democrats deliver ‘competence with compassion’, Chuka Umunna MP said:
“Vince Cable’s claim that his party delivers ‘competence with compassion’ is a fantasy. This Tory-led Government has trebled tuition fees, abolished the education maintenance allowance and withdrawn tax credits from working families whilst dishing out huge tax breaks to millionaires. Implementing a failed economic plan that has delivered a double dip recession is grossly incompetent.”
Meanwhile Union News reports on the TSSA demonstration at Lib Dem conference: A giant helium balloon outside the Brighton Conference Centre reads: ”Nick: You’re Nicked For The Great Train Robbery-Freeze Rail Fares Now.”
Find out about the Unions21 event at Lib Dem conference here.
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