Cable’s ‘responsible capitalism’ speech fails to silence the critics

By Ian Dunt

Vince Cable's dramatic promise of a new "responsible capitalism" was widely mocked by Labour figures and trade unions today.

The business secretary's conference speech demanded that Britain be "turned around" so that it can reduce the "appalling inequality" of modern society.

But political opponents accused him of "grandstanding" while he did "precisely nothing" in government.

In what is quickly becoming an annual tradition, Vince Cable focused his conference speech on the ravages of modern capitalism and promised measures to restrain it.

A year after he angered the business press with a speech that said "capitalism takes no prisoners", the outspoken minister outlined plans to put workers and possibly trade union members on company's remuneration boards.

Shareholders would also be given a legally binding right to block excessive boardroom pay.

"I want a real sense of solidarity, which means a narrowing of inequalities," he said.

"People accept capitalism, but they want responsible capitalism.

"It is hard to explain why shareholders can vote to cut top pay but the managers can ignore the vote.

Under Mr Cable's plans, all firm directors on the London Stock Exchange will have to set out the total value of their salary, pensions, share schemes and bonuses.

Remuneration committees will need to explain any bonuses handed out if it is not warranted by performance in their annual reports.

This part of the speech was welcomed by TUC general secretary Brendan Barber who said workers' representatives on remuneration committees would add "a sense of perspective" to corporate pay.

The speech comes as several senior Lib Dem figures ruled out any move to scrap the 50p top rate of income tax unless the money is made up with another tax on the wealthy.

The business secretary did not hesitate to implicitly attack his coalition partners, telling delegates that he regretted not lobbying harder for tighter control of bank pay and bonuses.

"A bad message was sent: that unrestrained greed is acceptable," he said.

Mr Cable also issued a stern rebuke to Steve Hilton, David Cameron's most trusted adviser, who floated the idea of scrapping maternity leave.

"I will not… provide cover for ideological descendents of those who sent children up chimneys," the business secretary said.

"Panic in financial markets won't be stopped by scrapping maternity rights."

Within the parameters of the deficit reduction plan, Mr Cable also outlined plans to stimulate the economy by streamlining the decision-making process for "shovel-ready" infrastructure projects.

"The immediate threat is lack of demand – with consumers, companies and governments cutting spending," he said, reminding the audience that the phenomenon is described by economist John Keynes as the 'paradox of thrift'.

The paradox refers to why it is rational for each family and country to cut down on spending during a recession, but that collectively the situation triggers even worse outcomes because it deprives the national and world economy of growth by restricting demand.

Even though he is a well-know Keynsian, Mr Cable use of the economist's rhetoric highlights the political distance between himself and chancellor George Osborne.

Ed Balls is an even more vocal disciple of Keynes, but Mr Cable went out his way to attack the shadow chancellor in his speech, saying he "advocates policies that would repeat the disaster".

Labour's John Denham said Mr Cable would be judged by his "actions", not his "words".

He added: “The recovery has been choked off and yet despite calling for a Keynesian approach to a demand crisis, he still relentlessly supports George Osborne’s reckless policy of cutting too far and too fast.

"Given his failure on banks, why should anyone believe he can deliver on high pay?"

RMT general secretary Bob Crow highlighted the inaction in government since his last conference speech, when he promised to sort out the “spivs and gamblers” in the City.

"In the past 12 months he has done precisely nothing and that same bunch of crooks are still filling their boots while working people face the biggest attack on their standards of living since the end of wartime rationing," Mr Crow said.

“While Vince Cable’s Tory cohorts talk of slashing rates of tax for the wealthy and the gap between rich and poor opens up to unprecedented levels, the business secretary is reduced to grand-standing at his party conference while doing nothing as the UK economy slides back into recession."