Vince Cable: From hero to zero and back again: the vindication of Vince

Eight months after being humiliated for declaring war on Rupert Murdoch, the Business Secretary is back, bullishly reflecting on the fate of News International, the state of the economy and the future of the Lib Dems. Matt Chorley meets Vince Cable

Vince Cable is back. And he means business. Eight months after being publicly humiliated by undercover reporters and robbed of his halo, he is, once again, a man with a plan. Or, more specifically, a Plan A+. The Business Secretary insists that, despite calls from the sidelines for Plan B, there will be no deviation from George Osborne's central economic strategy.

But after growth figures last week showed the economy had expanded by an anaemic 0.2 per cent, Mr Cable believes it is now time for additional radical measures to stimulate growth. And the reinvigorated 68-year-old thinks he can win this new battle. In the topsy-turvy world of Westminster politics, it's the very issues that the so-called experts said would lead to Mr Cable's downfall which are once again propelling him back to the pedestal where his fans think he belongs.

He successfully stood up to the Prime Minister over immigration, tax-cutting Tories, casino bankers and lazy universities. And Rupert Murdoch, of course. Having declared "war" on the media tycoon last Christmas when boasting to covert reporters from The Daily Telegraph, he feels vindicated by the events of recent weeks. But he is reluctant to brag "I told you so" to Tories now tarnished by their close association with News International. ("I don't like that phrase.") And, anyway, the atmosphere around the Cabinet has only just recovered from the "rocky period" around the elections and AV referendum in May when he accused the Tories of being "ruthless, calculating and thoroughly tribal".

Once again "businesslike", he likens working with Tory political rivals to his days as an economist at Shell, having to adapt to different nationalities working to a "common mission". He thinks he is still able to restrain the Tories, though "they probably feel like they are restraining me as well".

The economy remains the central purpose of the coalition. Mr Cable believes they should be doing more. Multibillion-pound building projects – from road and rail schemes to power plants and super-fast broadband – could be fast-tracked to provide an injection of cash and jobs to industry.

"Plan A+ is about really mobilising growth, thinking outside the box, not breaking your fiscal rules – because you have to do that for credibility – but shifting the emphasis on to these growth-enhancing interventions."

Mr Cable was not surprised at the small level of growth, given the scale of the "heart attack" the economy suffered. The "patient is still being fed steroids" – the monetary policy, including "abnormally" low interest rates. Getting back to normal will take a long time and, for now, Britons have got to get used to times being tough. "We are a poorer country."

But anyone who thinks this plan will involve big tax cuts can think again. "Whether it's Ed Balls or the Mayor of London [Boris Johnson], they are assuming there is some kind of Father Christmas at work that helps you keep a balanced budget. Well, there isn't. You can't just have tax cuts without paying for them."

In particular, scrapping the 50p tax rate for those earning more than £150,000 remains "impossible". "It would be politically inconceivable for government to take some of the tax pressure off high earners at a time when people on low pay are suffering public sector pay restraint and cuts in real incomes because of high commodity prices." Raising more people out of paying tax altogether, possibly above the £10,000 threshold already set out in the coalition agreement, should take priority. "We will look at it [the 50p rate], but it will have to be balanced by something that's really strong in terms of tax fairness."

Mr Cable will not cede his pet projects. He refuses to give up on a mansion tax – "mansions can't run away to Switzerland" – and is adamant the Lib Dem pre-election policy of a levy on homes worth £2m or more is "still a solid basis to proceed from".

He likes to be the outsider at the heart of the coalition, at times referring to "the Government" as if he'd never clutched a red box on the steps of No 10. For instance, he will not defend the official attempts last week to blame the sluggish recovery on the royal wedding and a mild spring. "I don't think we should be making excuses of that kind," he says.

Mr Cable is not triumphalist about the spectacle of the Murdoch empire crumbling, but takes time to point out that his "instincts were right and they are shared by the majority of people". He says it "looks like" Murdoch's days as an overbearing media mogul are over, and Ofcom's "fit and proper" test of ownership of BSkyB will be "critically important" in deciding if the Aussie octogenarian has a future in Britain. Mr Cable hopes the forthcoming reviews will lead to a "presumption against cross-media ownership".

He is "somewhat surprised by the scale" of Tory contact with media executives, particularly from News International. The Lib Dems have observed it all from the comfort of the moral high ground. "We have come out of that, as a party, creditably, because we were never part of the sucking-up to Murdoch that happened with the other two parties, for their own reasons. We were often on the receiving end, but we never compromised. We maintained our independence and that's what we are proud of."

As a result, the Lib Dems head to their conference in Birmingham next month in reasonably good shape. One poll put them on 16 points – double where they have been at their lowest ebb. The Business Secretary believes the Lib Dems have four years to prove their "economic competence" and brace themselves for another onslaught from the Tories as well as Labour. While Nick Clegg has taken a "terrible pounding", he has "shown strength of character" and the party as a whole remains strong. "There is not going to be any great bloodletting or calls for leadership change."

The Lib Dems have had to grow up, and Mr Cable has found the transition into government tougher than most. As the minister in charge of university funding, he was responsible for smashing the flagship Lib Dem pledge to oppose tuition fees, which will treble to £9,000 for most students.

"I don't pretend we have got a perfect solution." But there will be more money and more places, and teenagers might now think twice about university. "There probably was a tendency for people to drift into university because they couldn't make their mind up what they wanted to do with their lives. I think that will stop. People will think hard about what they want to do."

And if they are paying more, students will expect more. "Some universities might find this quite uncomfortable. Teaching has not been valued in the way that it should have been. That will change."

He will not be drawn on the idea that the increase in fees could spell the end of Mickey Mouse degree courses. But students will now weigh up a degree alongside other options, including apprenticeships, "notably around employability". On banks, he remains instinctively committed to splitting traditional high street firms from the high-risk investment arms – "casino banking" – but will wait for the Vickers banking commission to report on 12 September.

Before that he has decided to walk – not out of government, as so many bookmakers and pundits have predicted – but around the Irish countryside with wife, Rachel. Then he'll be back at his desk in Whitehall, aggravating the Tories and taking tough decisions.

"I don't think you can deal with these issues by chickening out of them; you have to face it." And so he is. From hero to zero and back again. And even if a big dip lies around the corner, he is determined to keep his place on the Westminster rollercoaster.