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The eyes have it

The recession has brought social housing to its knees, says Vince Cable. So what does the man dubbed ‘the soothsayer’ think will happen next, asks Simon Brandon.

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The eyes have it

Vince Cable is sitting in his Westminster office getting ready for prime minister’s questions. With party leader Nick Clegg on paternity leave, he’s the Liberal Democrat doing battle at the despatch box.

Mr Cable has delivered a few memorable barbs in his time – describing Gordon Brown’s transformation ‘from Stalin to Mr Bean’ in 2007 was probably his most famous – so you might think he would relish the chance to deliver a few more. But when asked whether he enjoys the experience, the Lib Dems’ deputy leader and shadow chancellor hesitates.

‘It’s a very intimidating task,’ he says at last. ‘Most of Parliament is very low-key and that’s the one occasion in the week when it’s pure theatre and you have to perform. Enjoyment is not the right word – it is exhilarating but you know if you fluff your lines you can make a complete fool of yourself.’

Once chief economist at oil giant Shell International before being elected MP for Twickenham in 1997, Mr Cable has made a name for himself recently for his prescient analysis of today’s turbulent economy. At the Lib Dem conference last year, he was introduced as ‘the soothsayer’, having predicted the failure of Northern Rock and the downturn it preceded.

‘It’s not something I’m comfortable with,’ he says with a smile. ‘It’s not magic and I’m not setting myself up as a forecaster.

‘It comes out of my own and my party’s philosophy.’

Guess who’s listening

He might downplay it, but when Mr Cable talks economics, people listen. Gordon Brown appears to be paying attention too: Mr Cable called for the nationalisation of Northern Rock, greater council involvement in social housing procurement and provision, and a mortgage rescue scheme, before all three ideas were implemented by the government. And so when he asserts social housing can be an economic boon – he calls it ‘a fundamental part of the economy’ – it’s wise to take note.

But at the moment he’s concerned that social housing isn’t doing what he thinks it should.

‘There is a complete collapse in private house building,’ he states. ‘It’s not just bad for the building industry… it has dragged social housing down with it because the section 106 model isn’t happening. So in a sense, social housing is reinforcing the cyclical element in the housing market rather than offsetting it, which is what it should be doing… The government has got to crack that, but it hasn’t.’

So what would the ‘soothsayer’ do? Mr Cable’s answer comes in two parts. The first involves judicious management of banks it now part owns.

The second – putting the keen back into Keynesian and along the lines of government plans – would include building council housing as part of a programme of public investment.

‘There is a tricky problem about how to pursue an active policy of public works – which are necessary for economic and social and environmental reasons – in a way that is compatible with sound public finance, because public finances are deteriorating,’ he says.

‘But we can’t have a position where public investment just stops. Because that’s what is happening at the moment – the PFI model isn’t working, and the problem in social housing is a manifestation of that.’

Doing the maths

This begs the question – how to square public investment with the problem of deteriorating public finances? Mr Cable may advocate more public works, but he’s wary about the cost to the taxpayer.

‘We’re going to have to make some pretty unpopular decisions about people entering public service and what they can expect in terms of pension entitlements,’ he says.

In his conference speech in September last year, Mr Cable went so far as to suggest that any non-frontline public servant earning more than £100,000 should be required to reapply for their job as well as take a cut in pay and pension entitlement.

He now says he was indulging in a ‘bit of kite-flying’, but adds: ‘The world is now changed, and just as bankers can’t assume they are going to get massive bonuses on top of their salaries regardless of conditions, we are moving into a more austere era when the public sector equally cannot expect very large salaries for large numbers of public administrators.’

A few big names in the housing sector might do well to take notice. After all, there is a real possibility of a hung Parliament after the next general election, and of Mr Cable becoming chancellor.

‘It is a possibility, but I don’t want to overstate it,’ he says.

But he seems to feel it’s more of a possibility than fulfilling another well-publicised ambition. Despite his increased public profile, Strictly Come Dancing has yet to give ballroom aficionado Mr Cable a call.

‘I suspect they won’t,’ he says sadly as he hurries off to the Commons. ‘I suspect they are terribly nervous about political people getting involved – we may say something controversial.’ Surely not.

Vince’s vote

Mr Cable’s policies to preserve social housing during the recession:

  • Keep public investment flowing
  • Find a way to build – and pay for – more council homes
  • Review housing sector salaries and pensions

READ MORE

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