Vince Cable: Dancing fan Cable keeps his party on its toes

The Monday Interview: Lib-Dem shadow Chancellor

Vince Cable is looking forward to the Liberal Democrat conference this year in Blackpool - but it has nothing to do with the fact the Liberal Democrats' shadow Chancellor will oversee a review that could ditch the party's pledge to raise income tax to 50p in the pound for top earners.

Vince Cable is looking forward to the Liberal Democrat conference this year in Blackpool - but it has nothing to do with the fact the Liberal Democrats' shadow Chancellor will oversee a review that could ditch the party's pledge to raise income tax to 50p in the pound for top earners.

Mr Cable, 63, is a keen ballroom dancer and the Tower Ballroom, where Reginald Dixon used to play, has one of the best sprung floors in the country.

He will need to be fleet of foot in the review of taxation so he can tango between the party's commitment to greater fairness in taxation, while avoiding making the party look more left-wing than old Labour.

He is clear there is no future for the Liberal Democrats on the left of New Labour. "We should not be trapped into a simple left-right dichotomy. The basic model that works for us is a belief in a private enterprise free market system that has a social conscience with fairness in taxation, decent public services, environmental awareness and decentralisation of decision-making.

"There is a package of ideas where we ought to be and largely are. There is a lot of scope over how you position yourself over those areas but there are some no-go areas that it would be foolish to get into.

"There is absolutely no future for us as a left-of- Labour party, appealing either to this new fashionable anti-globalisation anti-capitalism movement, or appealing to an old Labour corporatist resistant to reform tendency.'

Blair resisted the 50p tax increase to make Labour electable. Does not clinging to that policy make it less likely the Liberal Democrats will make a breakthrough?

"Blair resisted it for different reasons," he said. "Blair had to take out some symbolically important positions that represented a clear break with their history," said Mr Cable.

"They had to fall over backwards to over-compensate. We are not carrying that baggage so we don't have to do it. Provided it's clear we are a liberal party with a small 'l', liberal in economic terms, we can combine liberal economics with a more redistributive tax policy. I don't think calling that old Labour is a meaningful criticism."

He was an economics lecturer at Glasgow University in the 1970s and comes across as an academic, handing out the odd B-minus. Gordon Brown respects Mr Cable, a former chief economist for Shell, but even the Chancellor has been marked down Mr Cable.

"I have often chided Gordon Brown. Despite his social justice rhetoric, we have a tax system which is highly inegalitarian where the bottom 20 per cent pay a higher percentage of their income in tax than those at the top," he said.

So will he keep the commitment to a 50p tax band for the rich? "That's something this tax commission is going to look at. What Charles Kennedy and I have made clear is we are willing to be open-minded."

Inviting Mr Cable to rumba over the proposals for replacing the council tax with a local income tax, he came out dancing. "I think it's possible to look at different ways of achieving the redistributive objectives of the 50p tax rate - we will be looking at different options for doing that - the commitment to replace council tax with a tax related to the ability to pay is pretty solid, and I don't think the party will want to move away from that, which is both popular as well as effective."

Mr Cable joined the party when he went to Cambridge, where became president of the Union after Norman Lamont but the Liberals booted him out for the "apostasy" of trying to form an alliance with the university Labour club.

In the 1970s, he joined Labour in Glasgow when he returned from a two-year contract as a senior official in the Kenyan Treasury. He contributed to the Red Papers, a socialist book edited by Gordon Brown, but does not count himself among Mr Brown's bosom pals.

He said Mr Brown has got a "rather prickly temperament" and, in spite of Mr Cable's Labour past, does not seem to have roots in Labour. When he moved to London in the early 1980s, he found the "loony lefties" in the Labour Party too much to bear, and joined the fledgling SDP.

"It was just the frustration of trying to deal with a completely manic Labour Party. I was one of the early wave of SDP. Surburban Trotskyism was so completely barmy, I didn't see any future in it all."

He sees a realignment of British politics as inevitable, and is rewriting a pamphlet he wrote 10 years ago called The Politics of Identity. "It's about how the old left-right distinction has become much less important and that the real distinctions are over these deep identity questions, race nationality religion in the US.

"It was not just a coincidence that Michael Howard led on immigration in the election campaign because he was appealing to these deep undercurrents.

"It's because of the politics of identity that I can't see the Conservative Party reverting back to the role it had in the Fifties, Sixties and even under Margaret Thatcher as a broad church appealing to people on the middle ground. I cannot see that happening any more. There will have to be realignment.

"I can see a world where there is an authentic party of the nationalist right, an authentic socialist party and several in the centre."

Mr Cable does not believe it will require PR, although he supports voting reform. "It's been the traditional assumption but it's not necessarily true. The Liberal Democrats have flourished in a first-past-the-post system. This could come about anyway because the underlying dynamics are creating it.

"I think what is happening is you are getting this massive disconnect between how people vote and the outcome."

The Conservative Party chairman, Francis Maude, recently said he would be happy to have Mr Cable and other members of his team in the Tory party. Mr Cable admitted that made him uncomfortable, not least because his own father was a committed right-wing Tory. "My dad was a working-class Tory. He chaired his local branch. He introduced me to Conservatism at an early stage and there were always bits of Conservatism that I could relate to but there was a very nasty undercurrent of nationalism which has remained to this day.''

Mr Cable can clearly sweep people off their feet with the right music. But he is not standing for the party leadership. "It's not in my life plan," he said.

The CV

* BORN: 9 May, 1943 in York

* EDUCATION: Nunthorpe Grammar School, York; BA economics Fitzwilliam College Cambridge, president of the Union

* CAREER: 1968-74: Economics lecturer, Glasgow University

* 1970: Labour candidate for Hillhead, Glasgow

* 1971-74: Labour councillor, Glasgow City Council

* 1979: Special adviser to John Smith

* 1983, 1987: SDP candidate for York

* 1985-87: Adviser to the Brundtland commission on environment

* 1995-97: Chief economist for Shell international

* 1997: Won Twickenham seat for Lib Dems