Outlook So welcome then to Vince Cable, the Liberal Democrat who once called for the abolition of the Department of Trade and Industry but now runs the Department of Business, Innovation and Skills into which it has morphed. His first speech in that role yesterday was greeted with warm words from most quarters, reflecting an uncontroversial mission statement – and a lack of the sort of policy detail that tends to prompt controversy.
That is not to criticise what the new Secretary of State had to say. This was a scene-setter, not a putative Green Paper. Still, it's interesting that in the one area where Mr Cable did come close to a policy announcement, insisting that the state-backed banks will be forced to lend more to small and medium enterprises, contradictions in his approach were already apparent.
Mr Cable is keen to avoid "micro-managing the economy at the level of individual companies" or "trying to supercede the judgement of markets". Yet in forcing the banks to make lending available to companies currently finding it difficult to borrow, that is what he will be doing.
We may like the idea of a Mr Cable ordering banks such as Lloyds and Royal Bank of Scotland to make funds available to businesses they are currently denying credit. But he cannot pretend that in doing so he is not overriding the judgement of the markets. We don't yet know whether Mr Cable plans to proceed with the plan of his predecessor, Lord Mandelson, to have an independent ombudsman to which SMEs could appeal if they are turned down for credit. But any sort of move in that direction would be to intervene at the level of individual companies.
These are difficult matters with which Mr Cable will find himself wrestling time and time again. He hopes that setting economic and business policy on a certain course will be enough to encourage the reshaping of Britain's economy that so many people now want to see. And he should be given the opportunity to come up with a policy framework designed to achieve that goal without intervening at the micro level. Resisting the temptation to fiddle, however, will be quite some challenge.Reuse content