Vince Cable has been flexing his muscles in the last few days, and in this afternoon’s major speech about industrial strategy, he set out the action to be taken to get UK growth on track.
However timing is of the essence for a man that still has big ambitions, especially as Tories Michael Fallon and Matthew Hancock have already been throwing their weight around, having been placed by the prime minister in BIS during the recent cabinet reshuffle.
Yet despite giving numerous interviews and with the BIS PR machine promoting the speech at full throttle, the latest plan will do more to massage Vince Cable’s damaged ego, and less for economic growth.
He has reiterated how there must be an end to government “laissez faire” industrial policies and that the government needed to intervene, provide a catalyst and support a more strategic partnership to deliver growth.
In his speech today at Imperial College London, the business secretary unveiled urgent action being taken and setting up a state- backed business bank that would increase lending and "shake up the market." Cable acknowledged how the latest SME Finance Monitor shows that in the last 12 months, 33% of businesses who applied for a loan were rejected.
Also, earlier today in an interview with Today the veteran Lib Dem pointed to the “gazelles” in the business sector: or the “rapid growth success stories”, in urgent need of “patient 20 year capital”.
However, a lot more persuading has to be done. Cable’s announcement of a business bank was met by some scepticism in the UK business community. John Cridland, the director general of CBI and spokesman for the Business Community in the media, told the BBC that he “would like to see the back office get together and handle loans,” yet was not convinced that he wanted to see a government bank.
But at the same time, it is also true that Cridland welcomed the overall vision in targeting sectors for growth, saying that this was the next critical stage. He added how, “growth through sectors backed with skills, science and innovation, is why our trade figures are better.” This is backed by the latest Office for National Statistics figures showing that Britain’s trade deficit narrowed – with the overall gap between imports and exports narrowing to £1.5bn in July, down from the previous £4.3bn. Even so, this good news is far from concrete growth figures that the UK needs.
None of this can paper over the fact that Cable’s grand launch coincided on the same day as a Public Accounts Committee report, in which senior MPs lambasted the Regional Growth Fund, set up about two years ago. The PAC criticised the failure of RGF in supporting enough front-line projects, particularly given the importance of this scheme in stimulating growth and providing a trickle-down effect. Only 2,442 new jobs had been delivered in projects with final offers of funding in place.That is against a target of 36,800. The Labour chair of the select committee, Margaret Hodge said:
"Given the dire state of the economy, it is nothing short of scandalous that so few projects funded by the Regional Growth Fund have actually got off the ground. Some two years into the programme, of the £1.4 billion allocated only £60 million had reached front-line projects.
The rest of the £470 million spent so far had been parked in intermediary bodies, over which the departments have limited control. It is unclear what is being done to make sure that money is not wasted but spent on creating real jobs.”
In response to this, a Number 10 spokesman rebutted many of these claims, saying that this report was out of date and failed to provide a full picture, and that half of those are now been allocated the funding.
A lack of clarity like this shows a deficiency of consistency and undermines confidence, essential for growth. Although Cable has been adamant in the last few days to demonstrate his strength in his own department, whether it is wheeling out his ‘Uncle Vince’ image on the Marr show admitting that he does exchange messages with Labour leader Ed Miliband because this is “grown up politics,” or appearing comfortable to accommodate Tory firebrands in his department, another new scheme will do nothing for growth when the evidence is clearly not stacking up.