Vince Cable MP webchat

We were delighted that Vince Cable, Secretary of State for Business, Innovation and Skills, joined us at GNHQ for a live webchat in December 2011. This is an edited transcript of the original webchat.

A LibDem MP (for Twickenham) and an economist, Vince has been a leading commentator on the banks and their role in the economic crisis. He holds one of the key posts in the coalition.

Lib-Dems and the coalition

Q: What do you think the impact of the Con-Dem coalition will be at the next election? grannyactivist

A: The impact of the coalition in a 2015 election all depends heavily on how the public react to our handling of the profound economic crisis we have inherited. As someone who was, and still is, left of centre and an opponent of Tories for 40 years I sometimes feel uncomfortable with the coalition too. But working with other parties in the national interest is only "betrayal" in a very tribal view.

Q: At the Lib Dem Conference this year a motion was successfully passed to oppose various aspects of the Welfare Reform Bill including opposing the Employment Support Allowance time limit. However it appears that very few Lib Dem MPs and Lords are taking action with regard to this issue. Why are they not abiding by the motion and what is the point of motions being passed at Conference if no one takes any notice? carer

A: Of course we respect and listen to conference motions. But in government the disciplines are different from opposition. It isn’t just a question of taking up priorities but negotiating compromises within the coalition and then honouring agreed positions, even if they are unpalatable.

Q: Did you ever in your wildest dreams imagine that you would be in coalition with the Conservatives? flopsybunny

A: No, except as a nightmare! But the best way of dealing with nightmares isn’t to hide under the sheets but to get up and deal directly with the things we feared.

Q: How do you feel about the public attitude towards Nick Clegg and how far do you feel it is justified? effblinder

A: Nick has had a savage press (and the rest of us to a lesser extent). He is attacked from the right for not being sufficiently close to Tory policy and from the left for being too close. Perhaps he - and we - are therefore in the right place.

Q: I would honestly like to know where the point is when you break. Student debt, the NHS, Europe - all of the principled positions you have held so dearly for 40 years slain in just 18 months of this coalition. When do you say "enough is enough"? eggmayo

A: I realise it's difficult to get one's head round the idea of working together with people who have a different outlook, but don't most people do this very day of the week at work or in their neighbourhood?

You're very negative, because we have quite a lot of positive stories to tell: lifting low earners out of tax, protecting state pensions, the pupil premium and radical reform of the banks.

Q: My concern is that as the acceptable face of the coalition you're given a licence to come on here and joke around and say the coalition is a "nightmare" - but do you ever worry that in doing so you're just legitimising time and time again the Tories getting away with murder? When is enough enough for you? eggmayo

A: Just two thoughts, really. Sorry if you're offended by attempted humour, I think most people prefer it. I don't accept that we let the Tories get away with murder. We drive hard bargains and I was very pleased yesterday that we got a significant agreement to proceed with radical reform of the banks. Recently I was pressed to do things which would have undermined employees' basic rights in the workplace, but didn't go along with them. That's the way we operate, fighting our corner.

I don't know what the line is I wouldn't cross until I get to it.

Q: I voted Lib Dem at the last election and was horrified that they chose to form a government with the Conservatives and not the Labour party. What do you think a LibDem/Labour coalition could have achieved that a Conservative/LibDem coalition won't, i.e. on tuition fees? Dropstitch

A: It was not possible to negotiate a coalition with Labour. The numbers were not there. We did look at the possibility. This present coalition was the only way to get a stable government. Labour introduced tuition fees and suggested an increase so this was not an alternative.

Universities and tuition fees

Q: Before the 2010 election, the LibDems peddled themselves as being the party of "no more broken promises". And what was the biggest promise? "I pledge to vote against ANY rise in tution fees". So how can you possibly expect a voter to ever trust a word a Liberal Democrat says again? NativityQueen

A: All three parties promised to oppose tuition fees in opposition but weren’t able to deliver in office. Lib Dems made a mistake, which we regret, of making a pledge in 2010 which collided with economic reality. We have instead introduced in office progressive reforms eliminating up front fees, improving access and scholarships for those from disadvantaged backgrounds and establishing a graduate payment related to ability to pay (in effect, a form of graduate tax).

Q: Wouldn't it make sense to reduce the number of spurious non-degrees and instead spend public money educating future generations on courses that will actually make the UK a competitive nation on a global scale in the future? clocktowergal

A: I think we have to let students at universities decide what figures in degree courses - not let politicians' prejudices rule. But we do need to build up engineering and STEM subjects, but not in a philistine way. I recently went to a performing arts college in Cornwall that was churning out brilliant graduates who will form the backbone of the creative industries, which is also a big earner for Britain.

Q: In that case what are you going to do about the dismal state of the sciences? My husband suggested that science degrees should be subject to much lower fees. How about that for an incentive for bright students to follow that path? JessM

A: I do care about sciences. Unusually amongst ministers I have a science degree (but later switched to economics) and one of my two sons is a research scientist. Actually there has recently been a big increase in students applying to do STEM, especially maths and physics. There is no need to drop standards and we shouldn’t. The science research budget has been protected.

Q: A further point on the university funding. There were 2 things you could have done that would have been much much fairer. Either, make it a graduate contribution, but instead of being an "amount owing" make it a % of income over a fixed level, for a fixed number of years. Or, make the loans interest free. Neither of those things are rocket science, but would make the thing so much fairer than the proposed system. NativityQueen

A: Your suggestions are thoughtful and helpful. Actually, the amount people pay as a graduate contribution rises with income, which makes it more progressive than the formula you suggest. Also, if there was no interest rates there would be a massive subsidy, which to be frank we can't afford. The system we have now is a kind of graduate tax and the wealthiest should pay the most.

Q: Personal debt - do the Lib Dems think it is a good thing to inculcate a "debt = good" mindset in 18 and 19 year-olds looking for an education? What do you think of the way Alex Salmond is looking after his Scottish students? dotnet

A: The overall level of household debt is too high in the UK mainly because of the house price boom in the last decade which took prices (and mortgage debt) to extreme and unsustainable levels. But there is nothing wrong with individuals borrowing prudently – for example for house purchase. Most of us did when we were younger and managed our debt. Student loans are subsidised and only have to be paid if the incomes of graduates rise above £21,000. The Scottish anomaly is unaffordable and will come to grief.

Q: Why do universities come under the umbrella of business rather than education and, given the way the liberal arts and languages have been dismissed by this coalition, is there a plan to change the nature of further education simply to training for employment? absentgrana

A: Universities are grouped with business because the last government believed (and we agreed) that universities are crucial to the economy. They are a big export industry (overseas students) and crucial to preparing the UK for the "knowledge economy". There is a critical shortage of engineers in particular. But liberal arts and languages are equally valued and there has been no change in the relative support levels given to arts and sciences (sciences have expensive labs and so always received greater subsidy). In FE we have protected the budget which supports adult learning including non-vocational courses.

The economy

Q: Restricting people's incomes by upping taxes is not answer. If you want people to spend and create growth for this country you must reduce taxation and thus give incentive for spending.

I am not an economist but I can add up. LESS taxation = More spending = More growth = Stronger economy. auldcodgers

A: Your antithesis modelling is superficially attractive. If the economy worked like that is would be great. Unfortunately, unfunded tax cuts don’t translate into ‘stronger economy’ as you describe unless we are very lucky. The more likely outcome is:

Tax cuts = bigger budget deficit = higher borrowing costs = less growth = weaker economy. I think I can add up too!

Q: Why is Sir Fred Goodwin still Sir Fred? I worry about how my grown up children are going to afford to have a family and lay foundations for the future. Am I right to be worried? How many Tory MPs are you really sending Christmas cards to? greatgablegran

A: I have just received the report on what's happened inside Sir Fred Goodwin's RBS. It is an absolute scandal, but there are limited legal powers to act. You're right, though, we do need to clean up this appalling mess and stop it happening again. That's why we're splitting up the big banks through ringfencing to stop the casinos affecting ordinary sensible banking.

In future, we will have to be more outward-looking and looking in particular to the big emerging markets of Asia and South America - exports and attracting inward investment. We've had a long period of artificial prosperity based on excessive borrowing and the country will in future have to earn its living through exports, business investment and being good entrepreneurs.

I'm sending no Christmas cards to Tory MPs, but I look forward to getting back to business working with them in the New Year.

Q: What do you think about Cameron's veto of the financial treaty in Europe? There's been lots of discussion on Gransnet about it - some saying he was grandstanding and others saying he had to do it. Do you think he did the right thing or was he just trying to curry favour? GrannyMurray

A: I think, as Chou En-lai once said of the French Revolution, it is too early to tell what the impact of the veto has been. I think, actually, it's a side issue. What really matters is whether the eurozone crisis is resolved in the next few months, and we are only on the sidelines.

What I do believe, however, is that we should not be giving overriding priority to the interests of the City of London. We need to think of all of Britain.

Q: What do you think of Ed Miliband as a leader? Do you think David Miliband would have proved a more formidable leader of the opposition? Foreveryoung

A: I won't intrude on the private grief of the Labour party. They have a deep problem regardless of who the leader is. The economic boom that got out of control occurred on their watch, leading to the disastrous collapse of the banking system. We're now a poorer country and people will remember where this originated.

Q: On a scale of one to ten, how optimistic do you feel about the country's economic future? If you are at all positive, which industries are going to supply the growth? spid

A: The next few months will be very difficult. But in the longer term, I'm optimistic - around 7 or 8 out of 10. We have some superb companies in advanced manufacturing (cars are doing very well), creative industries, IT, professional and business services. We're also open to the best companies in the world who like being based in Britain.

Q: What would you say to an 18-year-old who is totally dispirited about the future? Huge debts if they do study, harder to get a job if they don't, lack of jobs altogether and no hope of ever being able to buy their own home? It was so much easier in my day. rosiemus

A: There is no reason for 18 year-olds to be dispirited. If they want to study they do not acquire huge debts under the new system. The repayment is linked to their future income as graduates and if there is a low income or none, they don't pay.

You're right that life was easier when we were young, but those days of job security, cheap housing and guaranteed private pensions are now over and, nonetheless, hardworking enterprising young people will succeed.

Q: As an economist, can you explain the enormous influence that the ratings agencies have on the world's economic situation? Why should these private companies (is that what they are?) dictate interest rates to democratically elected governments? Annobel

A: The rating agencies certainly need to be effectively regulated not least because of conflicts of interest (they receive income from the companies they rate). There are moves in the EU to tighten regulation but we do not have direct control of the rating agencies (the main ones are US based).

Q: Do you think the NMW is a reasonable living wage? If it was raised it could be funded by ensuring that executive salaries were kept reasonable, with wealth spread around more evenly throughout organisations. MrsMicawber

A: I support the minimum wage and recently approved an increase. I act on the advice of an independent body, the Low Pay Commission, and I think it is better to keep decisions non-political, I certainly agree with you on executive pay and I've just finished an exercise looking for ideas on how we ensure that companies keep their top pay under control.

Q: Isn't all the talk about a different type of capitalism just a way to get us to accept being poorer? fabuless

A: I don't quite know what you're driving at. I think Churchill once said that capitalism, like democracy, was not a good system, but it just happens to be better than the others. Nobody has yet come up with an alternative model which works and some of the experiments with communism in particular have been an unmitigated disaster.

Q: Have you heard of the Every Disabled Child Matters campaign against 50% cuts to the tax credits enhancements for disabled children that the Government is proposing/has proposed which Mumsnet is also supporting? I think it is very low to sneak in a cut like that to the absolutely most vulnerable people in society, who cannot fight back. AvadaKedavra

A: I don't know the answer to your question, without checking, but I am sure my colleagues wouldn't knowingly take steps which damaged disabled children. I'll raise it with colleagues.

Banks and business

Q: Do you think the Occupy movement has something important to say? And do you think the fact that there has been a surge of people power movements in the developed world suggests that politicians and mainstream politics have failed to take on the big corporations and the banks? distaffgran

A: Yes I think the Occupy movement does have something to say. They don't have the answers but they are posing a real challenge to politicians about the big divide in income and wealth. I accept that we have to come up with answers on extreme and unjustified pay and I'm embarking on policy initiatives in the new year in this area.

Q: What are you doing to help SMEs (small/medium enterprises) to grow and prosper? Most people in the private sector work for these businesses and unless some of them thrive and prosper there will be no future prosperity for the UK. JessM

A: I agree. SMEs are the key to job growth. We are trying to help them by concentrating apprenticeships, export promotion activities and advice/mentoring services at the SME sector – particularly the 10,000 or so rapid growth medium sized companies. We are also making it easier for SMEs to get the access to finance they need for expansion.

Q: Is 2019 soon enough to implement the proposals of the Vickers report into banking? Why the very long delay? politigeek

A: The aim is to finish the key policy reforms by the end of this parliament, ringfencing the banks and separating the casinos from high street and business banking. Four years is a long time, I accept, but the details are very complex. We will have done more than any other Western country, and we need to.

Q: Are you scandalised that HMRC did sweetheart deals with Vodafone and Goldman Sachs over their tax payments and that this only came to light through a whistleblower and Private Eye? Will HMRC be reformed so that this doesn't happen again? popsiclegran

A: I think the answer is yes, I am scandalised, when I discover that leading companies are dodging taxes. The government has, however, put in place tougher controls over the banks who were the worst when it came to industrial-scale tax dodging. We also need to think about very rich individuals who don't pay their share of tax, which is why the Liberal Democrats have been advocating better taxation of valuable property, which can't run away to Monaco.

Q: Before the election, you were vocal about the irresponsibility of bankers and this was very powerful, coming from someone who had worked in banking and had a sense of how things should be run to ensure stability. How do you reconcile this with lack of action over bankers' bonuses and the government's outright hostility to regulation of the City, as seen at the recent Brussels summit? firenze

A: I didn’t work in a bank (I worked in an oil company) but I did write a book about the financial crisis. There is a great deal of action being taken. Bankers are subject to a balance sheet tax; tax avoidance schemes are being curbed; so are bonuses (now less than a third of peak levels a few years ago); we are introducing mandatory pay disclosure; and we have embarked on reforms to split the banks which are more radical than the EU or USA.

Q: Do you feel you have been successful in convincing fellow members of the government of the importance of business, trade and industry in the UK beyond the narrow confines of the City of London and the financial services industry? How do you view the current wave of anti-European sentiments coming from parts of the Conservative party and the media in terms of its long-term impact on Britain's economic development? Mamie

A: I totally agree that we shouldn't let the City of London be the tail that wags the dog. I recently spoke out criticising this obsession with City institutions. We need to support economic growth in all parts of the country and boost our very high quality manufacturers in particular. We have to stay within the European Union and improve its single market.

Older people

Q: The Deputy Prime Minister, Nick Clegg, said that better-off elderly people should make a "sacrifice" to help the Government balance its books. This now appears not to be a voluntary sacrifice. He proposes to means test the elderly for their bus passes & heating allowance. What is your view on this? Supernan

A: The country is significantly poorer than three years ago because of the financial crisis and its legacy. This impacts on the living standards of almost everyone. We have sought to protect the elderly by re-linking the basic state pension to the higher of earnings or inflation. There is no government proposal to means test bus passes or heating allowance.

Q: David Willetts and others have suggested that the baby boomers - our generation - are at fault for hoarding wealth and denying our children the means to get decent jobs and on the housing ladder. What do you make of this argument? Can you assure us that the government won't try to dodge responsibility by setting one generation against another? froufrou

A: I don't think David sought to blame people of your and my generation, but there is a massive generation gap. My grandchildren don't expect cheap housing, secure jobs, pensions and free universities, in the way that I was able to enjoy.

Q: I worked and paid tax in the UK for 50 years, but when I emigrated to Vancouver, Canada my pension was frozen at £48 a week because of the UK governments' inconsistent arrangements with countries outside the EU. I should be getting £139 a week. What are you going to do to restore the pension I have earned, along with the pensions of more than half a million British pensioners in more than 120 countries? capbjackson

A: I am afraid that we do not plan to change the way that pensions are paid to people who moved abroad.

Q: I presume as a member of the cabinet that you don't really suffer from ageism, but do you sometimes look around your colleagues in Parliament and think that some highly competent people are passed over because of an obsession with youth? mousie

A: I think I have to declare an interest - I think Ken Clarke and I are now the senior members, but yes, of course, we need a good spread of age, as well as gender, class and other things.

Q: What is being done to help older people back into the workplace after they have been made redundant? I have been out of work for three years, despite looking for a new position almost daily, with little success. I have always been hard working and find this period of my life unnecessarily stressful. Berengaria

A: I am very sorry to hear about your personal experience of worklessness and stress. There is a lot of attention being paid to young people out of work but I recognise that older people suffer periods of unemployment too.
We are scrapping the "default age of retirement" so that older workers who make a valuable contribution can’t just be forced out of work on age grounds. Some employers (eg. B&Q) are proactively good at hiring older workers.
We are funding a lot of training and retraining places through the National Apprenticeships service and FE colleges. Some help is also being given to those on benefits who start their own business – have you looked into that?

Q: In the USA there have been very interesting schemes to help people in midlife to get back into work after they have been made redundant, or are no longer wanted by large companies - eg internships for older people, schemes for making the transition from private sector to third sector, and (generous) prizes and reward schemes for 50+ social entrepreneurs. Would you consider bringing in schemes of this kind here to focus on making use of the talents of people in the second half of life? GeraldineGransnet

A: That's a good idea. We must look at it carefully. I should say that since I've been in the government, we've massively increased apprenticeships, which mostly go to adults and include a lot of retraining. We've also kept up funding for adult education which keeps a lot of older workers mentally active.

Personal life

Q: What will you be getting the woman in your life for Christmas? frangipane

A: I promised Rachel a Kindle. We both devour books and travel a lot, so we'll see what this new technology has to offer.

Q: How did you feel after being duped by the journalists posing as two young mums for the Telegraph sting? I have to admit feeling very sorry for you. Is that why you choose Gransnet not Mumsnet? crumblygranny

A: I felt sick as a parrot, to coin a phrase. Several Lib Dem ministers in the government were subject to undercover recording by journalists who falsely represented themselves as constituents in confidential advice surgeries. The behaviour of the Telegraph was (unusually) subject to serious criticism from the press complaints commission.

I chose Gransnet since I am a Granddad, with two grandsons, and married very happily to a Gran with five grandchildren of her own.

Q: Have you paid back your winter fuel allowance? What do you make of the suggestions it should be means-tested? Cassandra

A: I haven't given it back. But I do a lot for charities anyway. People like me don't need it, but we have to be careful about rushing into more means testing. The system is already complicated enough.

Q: Do you cook? And what is your favourite cake? bigknitter

A: I'm a good assistant cook, chopping onions and taking instructions. I usually help with the Christmas cake.

Q: What's your favourite Christmas song, and what will you be doing this Xmas? hotnana

A: I've got a wonderful Pavarotti CD of seasonal but religious songs. Christmas will be with children and grandchildren and long walks.

Q: Who did you want to win this year's Strictly final? And which politician would you like to see in the next Strictly? agedliner

A: I supported and voted for Chelsee. But the last two were both brilliant, and I didn't feel bad about the result. Having done Strictly myself, at least for one episode, I strongly recommend it. I understand Lord Mandelson, my predecessor, volunteered his service, and I'd like to see him actually perform!

Many thanks for your questions - some of them were very testing. I'm sorry if time didn't allow fuller replies to some of the more difficult and complex issues.

Other things you might like

• Read about other politics topics on the forums.
• See the other webchats Gransnet has hosted.
• Read the original Vince Cable MP webchat on the forums.