Cable in attack on bonuses for City 'spivs'
- 22 September 2010
- From the section UK Politics
Vince Cable has insisted he has a pro-business agenda but refused to apologise for attacking excessive bank bonuses paid to "spivs and gamblers".
In his speech to the Lib Dem conference, the business secretary called for action to stop capitalism "killing competition".
But he attributed the idea to the free-market economist Adam Smith.
Mr Cable also revealed Royal Mail staff would be given 10% of shares in any future flotation of the company.
The business secretary, who confirmed last month that he intended to sell off Royal Mail, said this would represent the largest employee share scheme for 25 years.
In the lead-up to the speech, the last major address on the final day of the conference in Liverpool, it emerged that Mr Cable would be making an outspoken attack on unbridled capitalism and short-term decision-making in the City as damaging to the economy.
Business groups questioned the "emotional" tone of the speech and said there was no alternative to a private-sector led recovery.
Mr Cable acknowledged his calls for restraint in bonuses had "infuriated" bank bosses but said he would not tone down his warnings about their behaviour.
"I make no apology for attacking spivs and gamblers who did more harm to the British economy than [transport union leader] Bob Crow could achieve in his wildest Trotskyite fantasies, while paying themselves outrageous bonuses underwritten by the taxpayer.
"There is much public anger about banks and it is well deserved."
Although he was not seeking "retribution", he said he was prepared to intervene further if bonuses were paid while businesses were unable to get loans at reasonable rates.
He also reiterated calls for reform of the banking system to separate High Street and investment activities, so as to prevent a repeat of the financial crisis.
Mr Cable has come under pressure for seeming to criticise big business but Downing Street said it was "relaxed" about his comments.
The business secretary said the UK needed successful companies but the government would not stand aside where directors and shareholders ignored wider social concerns and threatened to damage the economy.
"Markets are often irrational or rigged," he said, announcing a review of executive pay and the responsibilities of directors during takeover battles.
"So I am shining a harsh light into the murky world of corporate behaviour. Capitalism takes no prisoners and kills competition where it can, as Adam Smith explained over 200 years ago."
He added: "I want to protect consumers and keep prices down and provide a level playing field for small business, so we must be vigilant right across the economy… Competition is central to my pro market, pro business, agenda."
Rallying party supporters in a packed hall, he attacked Labour for being "in denial" about the need to tackle the deficit and said his party would "emerge with credit" for having the courage to take tough decisions on public spending.
But amid concerns the party is being swept along by a Conservative agenda, he urged the Lib Dems retain their "authentic voice" within the coalition and continue to develop "distinctive and progressive" tax policies.
While the party had "punched above their weight" in the government, he said senior figures needed to do more to explain the influence they were having.
Being in coalition with the Tories was "not much fun", he suggested but he added: "It's necessary for our country that our parties work together at a time of financial crisis. It is an opportunity for the party to demonstrate that we have the political maturity to make difficult decisions and wield power, with principle."
Mr Cable said power-sharing was the "future" of British politics but the party must keep "its options open" as an independent force in the run-up to the next election in 2015.
CBI director general Richard Lambert said Mr Cable was right to call for shareholders to act in the wider public interest, but he added: "It's odd that he thinks it sensible to use such emotional language.
"The case for corporate takeovers is that they allow control of poorly run businesses to pass into more efficient hands. Mr Cable has harsh things to say about the capitalist system. It will be interesting to hear his ideas for an alternative."
For Labour, shadow business secretary Pat McFadden said: "Vince Cable knows how to get a cheer from the hall. But his attempt at being in opposition and in government at the same time can't go on forever.
"As he bashes banks and capitalism, the real test will be whether growth returns and business gets the support it needs from the finance sector. On that he'll need more than warm words."
The speech follows warnings from Lib Dem leader Nick Clegg and Mr Cable earlier in the week that a new tax on bankers' pay and profits could be introduced if they continued to pay huge bonuses to staff.
These led to Lord Turner, the chairman of the Financial Services Authority, saying there was a need to "move beyond the demonisation of overpaid traders", and instead pointed to regulation which had failed to recognise and address the dangers in the financial system.