Cable attacks City 'spivs and gamblers'

James Tapsfield,Joe Churcher,Pa
Wednesday 22 September 2010 13:10 BST

Business Secretary Vince Cable launched a searing attack today on the City "spivs and gamblers" who crippled the British economy.

In a rousing speech to round off the first Liberal Democrat conference since they entered coalition, Mr Cable condemned the "outrageous" scale of bank bonuses after the credit crunch.

But he also attempted to calm business concerns over his damning critique of capitalist excess and threats to legislate against big payouts, insisting he was not seeking "retribution".

The address in Liverpool was littered with crowd-pleasing rhetoric to counter activists' anxiety over the compromises made to govern with David Cameron.

In abrasive remarks that contrasted with leader Nick Clegg's more emollient tone on Monday, Mr Cable admitted it was "not much fun" being in bed with the Conservatives.

But he said it was "necessary for our country that our parties work together at a time of financial crisis".

He said the Lib Dems were "punching above our weight" in the coalition, stressing that the Tories had been forced to accept changes to income tax and capital gains as well as dropping key policies such as cutting inheritance tax.

"Ironically, we may be able to make more progress on a fairness agenda with the Conservatives than New Labour was willing to do," he said. "Labour was constantly on its knees trying to prove that it was a friend of the super-rich."

Giving Lib Dem activists a green light to criticise coalition policy, Mr Cable said the party had to "maintain our distinctive and progressive tax policies for the future".

"In government we are trying to put Lib Dem ideas into action; your job is to keep us honest," he said. "We have punched above our weight in government because we have a democratic party which has clear principles and policies."

He suggested the party had not given up hope of further tax reforms, saying he "personally regretted" that plans for a mansion tax on homes worth more than £2 million had been dropped for the coalition agreement.

With Lord Browne's review of higher education funding due next month, Mr Cable acknowledged that many activists believed university education should be free.

But he insisted: "In reality, the only way to maintain high quality higher education with less government money is for the graduate beneficiaries to make a bigger contribution from the extra earnings they enjoy later in life.

"I am doing everything I can to ensure that graduate contributions are linked to earnings. Why should low-paid graduates - nurses, youth workers or science researchers - pay the same as corporate lawyers and investment bankers? We have to balance higher contributions with basic fairness."

In a striking passage, Mr Cable delivered a searing assessment of the City's behaviour leading up to the financial crisis, saying he shared public fury.

"On banks, I make no apology for attacking spivs and gamblers who did more harm to the British economy than Bob Crow could achieve in his wildest Trotskyite fantasies, while paying themselves outrageous bonuses underwritten by the taxpayer," the Cabinet minister said.

"There is much public anger about banks and it is well deserved.

"But I am not seeking retribution. We have a pressing practical problem: the lack of capital for sound, non-property business. Many firms say they are already being crippled by banks' charges and restrictions."

Mr Cable was forced to deny he was espousing "Marxism" last night after business leaders criticised pre-released extracts from his speech which lambasted capitalist excess.

But the final version of the address today kept the most controversial passages in which he described markets as "often irrational or rigged".

Announcing a wide-ranging review into the "murky world of corporate behaviour", including takeovers and over-generous incentives for executives, Mr Cable said: "Why should good companies be destroyed by short-term investors looking for a speculative killing, while their accomplices in the City make fat fees?

"Why do directors sometimes forget their wider duties when a cheque is waved before them?

"Capitalism takes no prisoners and kills competition where it can, as Adam Smith explained over 200 years ago."

Mr Cable conceded that deep cuts to public spending were "bound to hurt", saying "strong disinfectant stings".

But he laid the blame for the situation firmly on the previous government, which left the UK "exceptionally vulnerable and damaged".

Labour had now taken the "easy option of deficit denial", and were "ranting with synthetic rage", Mr Cable said.

"A proper debate is impossible with people who start from the infantile proposition that there isn't a problem; and simply hark back to a failed world of 'business as usual'," he added.

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