Transcript of Vince Cable interview

On Sunday 19th December Andrew Marr interviewed Business Secretary Vince Cable.

Please note 'The Andrew Marr Show' must be credited if any part of this transcript is used.

ANDREW MARR:

And so to the man with the flying feet who will be wowing viewers of Strictly on Christmas Day and who danced from nation's favourite economic guru to one of the ministers getting serious grief over student fees and more. Vince Cable of course, the Business Secretary, who tells us this morning in the newspapers that he is finally losing patience with the banks if, as seems likely, we're going to see another round of massive bonus payments announced next month. Well according to the papers, he isn't going to take it. Vince Cable, welcome, thank you for coming in. You say you're not going to take it, but what can you do about it?

VINCE CABLE:

Well I think there are various things and things we've already done actually. I mean the government has done a lot on banks already and we've got this levy, permanent levy in place; we've stopped the banks engaging in large-scale tax avoidance; and we've set up this banking commission to let it look at the mechanics of how banks are to be broken up. The banks themselves have come forward with extra money. But in terms of bonuses specifically, I mean the responsibility actually lies with their owners, it's often you and me through our pension funds, and so you've got to have proper disclosure, so we know actually what we're acting on. So there is an issue around bonuses. The coalition agreement was quite clear: the government was going to take robust action on unacceptable bonuses. And we've got to keep an eye on the other key issues, which is bank lending to small-scale business, the real economy. That's got to happen too.

ANDREW MARR:

Which I also want to talk about. Nonetheless, you know the rumours are that we're going to see another round of very, very hefty bonuses being paid in January and February. The banks' own sort of way of trying to deal with this project, Merlin, seems to have fallen apart rather. And I come back to the question … You can huff and puff about it, you can be cross about it, but you can't do anything about it.

VINCE CABLE:

Well, as I said, we've already done a lot as far as the banks are concerned. We are continuing to talk to them, making it absolutely clear that they have a responsibility to the rest of society, and that's why we took a very robust position in the coalition agreements. If they don't behave, if they don't take account of their wider responsibilities, the government has as a possibility some form of taxation - there are various ways of doing this - but we'd rather they accepted that they had wider obligations to British business and to the public.

ANDREW MARR:

I'm sure you would rather, but what kind of taxation penalties could you impose? Are you talking about specific taxation of people receiving bonuses at a certain level or general taxation of the banks that do that kind of thing?

VINCE CABLE:

Well I obviously wouldn't expect them to spell out exactly what …

ANDREW MARR:

(over) Oh I would, I would.

VINCE CABLE:

Well I'm sure they would too. But no, we're obviously not going to spell out the detail of it. It clearly is an option. They understand that.

ANDREW MARR:

Are you going to tell them what the options are when you see them this week?

VINCE CABLE:

Well we will be meeting them and we will be discussing the bonus issue as well as the lending issue, as well as disclosure. There's a wide range of issues. We've met them several times already. And I think it's fair to say that the bankers do understand the seriousness of the problem. They've come forward with initiatives already to try … You know they've put more money into equity funding for medium sized companies, they've suggested a new bankers code. They do understand that something has to happen. We can't go through the winter season of bonuses without real restrain and social responsibility.

ANDREW MARR:

David Cameron and George Osborne emphasise more perhaps the importance of banking to the economy, the danger of them all flying off to Switzerland. Eleven percent I think of UK taxation comes from the banking sector now, an awful lot. Are they 100% with you on this?

VINCE CABLE:

Yes, they are, and the measures I've already described - the bankers' levy, the crackdown on tax avoidance, the Banking Commission which I jointly set up with the Chancellor - we're very much working together on this. And there is a …

ANDREW MARR:

These as it were are rear mirror issues now. You've agreed on those. I'm talking about going forward

VINCE CABLE:

Yeah, sure. No, there is a recognition that we have to deal with it. There is a coalition agreement. It's absolutely clear and explicit that we have to take robust action on unacceptable bonuses, and both parties in the coalition are fully signed up to that.

ANDREW MARR:

(over) If you can't get it … If you can't get effective action through on bank bonuses, would you leave the government?

VINCE CABLE:

No, I'm not talking about what we'd do in these hypothetical situations and I'm absolutely confident we will. And there are things I can do in my own department to take us forward. For example, under our corporate governance rules we can have more effective disclosure of individuals - the kind of thing that already happens for big companies in the United States or Hong Kong. This isn't just a British issue. There's this myth …

ANDREW MARR:

(over) Well that's part of the problem, isn't it - they can go around …

VINCE CABLE:

(over) … this myth that's somehow been created in parts of the banking community that we're being uniquely severe. We're not. There is much more disclosure in some other Western countries, and this is something we can do, something I can do.

ANDREW MARR:

You mentioned right at the beginning the problem of lending, particularly to small businesses. How worried are you still that the lending is not flowing?

VINCE CABLE:

No, it is a worry and we've had this argument with the banks over the last years. Is it a problem of lack of demand? Is it a problem of lack of supply? Whenever you meet a group of small businesses, they will tell you they find it very difficult to get credit from the banks on terms that are not crippling. And there was a very revealing analysis by the Bank of England in the last week, which did point to the supply problem. And this is critical because if we're going to grow out of this economic mess that we've inherited, we're going to have to do it through the private sphere, particularly through small-scale enterprise. They're the people who create the jobs and they can't do it unless they get access to bank credit.

ANDREW MARR:

The official figures on growth for next year have been downgraded a bit and a lot of the private forecasters are saying growth's going to be as low as 1.2%, something like that. Currently what's your sense of where we're going economically?

VINCE CABLE:

Well I think in many ways the government's been vindicated in what it's doing. I think the last time I was on your programme, you tackled me about double dip recessions this year which of course haven't happened. And there are strong areas of growth. We're getting private sector investment, particularly in exports, and I think something of the order of 300,000 jobs in the last few months. The private sector growth is happening. We are going through a difficult time and nobody denies that, and we are going to have to make these very painful cuts in public spending, which are going to have to be absorbed and replaced by private sector growth. Nobody pretends this is easy, but there are a lot of indicators out there that the economy is strong enough to absorb this.

ANDREW MARR:

And in terms … I mean a lot of people, forgive me, have said that you haven't looked entirely happy during this process.

VINCE CABLE:

No.

ANDREW MARR:

You've been through the fire on tuition fees and on the overall setting of the budgets. We're now going to see what happens at local level when some of those cuts are actually made. Are you confident your party is robust enough to hang together through this?

VINCE CABLE:

Yes, I am. We knew this was going to be difficult. We've had the most difficult test we could possibly have had over this tuition fee issue. We knew it was politically going to be very difficult, and since it came into my department I was personally confronted with it. And I'm confident that having faced it and having dealt with the difficult politics, we've actually got a good policy; and the good policy involves accepting the fact that you know universities, like other bits of the economy, had to absorb some cuts. We've put it on a long-term financial basis, so universities will remain world class, and we've produced a fairer package so that it will be higher paid graduates in future who will pay.

ANDREW MARR:

And yet the way this is panning out, the cuts come well before any income from the higher tuition fees for universities.

VINCE CABLE:

Not well before. There is a year, there's a year's lag.

ANDREW MARR:

(over) A year and then a sort of half year of transition as well.

VINCE CABLE:

Yes, the cuts are going to be phased in gradually at the beginning of next year. And then the following year, they will have an opportunity to replace that loss of income with new income from the graduate contribution. But all sectors of the economy are having to face cuts and we will ensure that universities are properly funded in the long-term.

ANDREW MARR:

How important to the Liberal Democrats is this forthcoming by-election?

VINCE CABLE:

It is important. I was there actually on the day the election was announced. But morale's very good. Eleanor Watkins is a superb local candidate.

ANDREW MARR:

You've got David Cameron's support.

VINCE CABLE:

No, we haven't got his support. He's putting …

ANDREW MARR:

His warm and genial support.

VINCE CABLE:

No, no, no. He's putting up his own candidate.

ANDREW MARR:

Yuh.

VINCE CABLE:

People can compete. But I think people in Oldham can do the arithmetic and they can see that this is a straight fight between the Liberal Democrats and Labour and they'll you know make their calculations on that basis.

ANDREW MARR:

Let me ask you about another story in the papers today - the Queen's head. Are you going to be the man who's removing the Queen's head from postage stamps because you haven't done the legislation tightly enough?

VINCE CABLE:

No, absolutely not. I and Ed Davey, who's the minister who's taking this through parliament, have thought very hard about you know how we protect the brand: the Royal family. There is within the legislation provision to stop abuse of it. It has now been pointed out that there's nothing specifically to stop whoever runs the Royal Mail in future dropping the Royal head. I think it's very unlikely they would because, after all, it's a very powerful brand. We'll talk to the palace about whether any further changes need to be made.

ANDREW MARR:

And, finally, we'll see you Strictly Come Dancing this evening. Is it true that Nick Clegg feels that you shouldn't be tripping the light fantastic while the country is plunged in this economic gloom?

VINCE CABLE:

No, absolutely not, and I don't know where this story came from. I mean he's been very supportive, as my colleagues. And as you said at the beginning of the programme, and you were quite generous in the way you pointed this out, I work very hard - I mean you know sometimes an 80 hour week, something of that order, work very hard. I need something to keep me fit and sane and dancing's my hobby, so why not do it in this way?

ANDREW MARR:

Vince Cable, for now thank you very much indeed.

VINCE CABLE:

Thank you.

INTERVIEW ENDS