Labour is failing to engage in the debate about financial services reform, instead focusing on short-term issues like levels of quarterly growth, according to Business Secretary Vince Cable.
In an interview with the Guardian, he says Labour’s refusal to accept that the decade of growth it presided over was based on an unsustainable model has stymied debate and contributed to people not understanding the extent of Britain’s “massive” economic problems.
He says: “[Labour] are in a state of denial that there is a big structural problem with the UK economy. So we stick to this short-term, tit for tat: why has growth in this quarter been slower, the scale of cuts should be slower – there is genuine debate we should be having about how radical reforms to the financial sector should be – but there is not, from the progressive wing of politics a sustained critique or pressure and argument.”
In a column in the same paper, Labour leader Ed Miliband, currently awaiting the results of wide-ranging, two-year party policy reviews, called for a “better capitalism” adding Labour’s failure to “offer solutions” to concerns like welfare, immigration and banking had cost them at the ballot box.
He says: “We need a different kind of economy, fairer to the lowest paid and demanding greater responsibility from the higher paid: broader based, less reliant on financial services.”
Miliband slammed what he called the increasingly “pessimistic, austere prospectus” offered by the Government on the economy, positioning the party to “be the optimists, the party with a positive, patriotic mission” at the next election.
Cable did not share his optimism saying Britain has been relegated from the world league of price setters and is now vulnerable to rising prices on the international commodity markets.
He says: “That is something we have got to live with and adjust to. It is painful. It is a challenge in Government for us to explain it. The political class as a whole is not preparing the public for how massive the problem is.”
He adds: “We had the complete collapse of a model based on consumer spending, a housing bubble, an overweight banking system – three banks each of them with a balance sheet larger than the British economy. It was a disaster waiting to happen. It has done profound damage and it is damage that is going to last a long time.”