When you first got into Parliament, what was your ambition?
Having got in aged 54, I didn't see it primarily in terms of climbing a greasy pole to the top. Like most newly elected MPs with small majorities, my ambition was to get re-elected, so during most of my first term, as well as caring for Olympia, my other preoccupation was doing local things and being a good constituency MP. I wasn't looking at all beyond that. It was only in the second term that I started getting a profile. Charles Kennedy had already appointed me as our trade and industry spokesman. I made a bit of a splash with one or two issues like abolishing the DTI [Department of Trade and Industry]. I got a headline I was rather proud of. It was Richard Littlejohn identifying what he described as the first Liberal Democrat policy he'd ever agreed with [laughs]. But my profi le was overwhelmingly local and it was only in the second term that I started doing more stuff that got national attention. I went into the last election campaign as our Treasury spokesman. I wasn't thinking about ambition in terms of leadership and the rest of it. I was pleasantly surprised to discover that I was a) in Parliament, and b) had been re-elected with a big majority and was starting to get national attention for some of my ideas. Although I admit I am an ambitious person, otherwise I wouldn't be where I am, I guess.
Does it frustrate you that, being in a third party, power is fairly elusive?
Why we're here ultimately is not just to have views and make speeches but to actually try to do something. So yes, in that sense, but I'm not thinking of it just as an individual. My ambitions are for the party.
In the event of a hung Parliament, wouldn't going into a coalition with one of the parties be a good thing for the Lib Dems?
Well it might be, and we're not ruling that out. But the point we emphasise is that it's not our call ultimately. If you get a government with a minority then they have a choice. They can run as a minority government, or they can turn to other parties and ask for help. The spirit in which we approach it, and I don't mean this in a pious way, would be to act in the national interest, because we still do have an emergency situation. It's their call, it's not our call.
If the day after the election there was a hung Parliament and you got the call saying: "Vince, the country has more confidence in you than anybody else to sort us out, we want you to be Chancellor of the Exchequer." You'd find that a bit difficult to turn down wouldn't you?
I wouldn't, because I've made it very clear from the outset that I'm not acting as a freelance individual. It would be up to the party leader and our team to decide what they do, and I'm part of that, but I'm not going off on my own. That's very clear.
Do you see the Liberal Democrats as a centreleft party?
No, I don't use that description. I know some of my colleagues have in the past. There are some areas where we are, to use the jargon, centre-left progressive. A redistributive approach to taxation is obviously one of them, but there are other respects in which we are genuinely liberal, which puts us on the other side. Lots of the writing I've done on economics is very much about a liberal approach to economic policy, free-trade and open markets. I don't use that term because, although some of the things we say can be very clearly put in that box, in other respects, we are economically liberal. I think the other thing is, a lot of the things we're about have nothing to do with the traditional left/right spectrum - localism, environmentalism, civil liberties, you can argue these from either a libertarian or a leftist perspective.
I was going to say, you sound like David Cameron there for a second [laughter].
Did I? Hopefully that's a compliment.
What do you make of him? Do you have much to do with him?
Not on a personal level, no. He's very professional, and he's obviously done a lot to decontaminate the Tory brand, and as a political professional, one observes that. I think there are some problems with the position he's got. It isn't entirely clear how deep and sincere all of this is. We've moved a long way from hugging huskies, the environmental stuff has gradually sort of disappeared, and I suspect it isn't all that deep. They've got themselves into this problem recently with these loony European parties, which suggests he does feel he has to give his right-wing red meat. It may indeed be that's what he believes. So, I think they have a bit of an identity problem. He's taken them so far that some of the nasty Tory stuff has been neutralised, but I think there is a genuine issue now about what he really believes, and the way he really wants to take them. I see locally, also, the old nasty Tory stuff, that quite a lot of it's still there at grass-roots level.
Does Nick Clegg have a problem with David Cameron in that he's seen as a 'Cameron-lite'?
Well, he's the same generation but I don't think they have much else in common. I suppose they are both nice-looking, youngish leaders, but politically I don't think there's much in common. This was said of Nick when he fi rst became the leader, but he's trodden a separate path. He's now got a very clear sense of identity. He's come well out of the last year and on a whole series of issues he's carved out a distinctive position - on expenses and the Gurkhas, for example. He's now much more publicly identified than other leaders we've had at the same stage, and the image is a positive one.
Did you regret not standing for leader?
No, I didn't. You probably know the story. It was never actually an option in the circumstances where the issue arose, when Ming Campbell stood down in a hurry. I just got on with the job.
So you don't do what Ming Campbell used to do every morning when he was shaving and think: "God, I wish I'd stood against Charles Kennedy?"
No, absolutely not, I genuinely don't. I quite enjoyed the 'acting leader' period, and did quite well, but I've got a very full role. I have a dual role. One is the economics stuff, which I enjoy and have a competence in, and I wouldn't, frankly, have been able to do it if I'd been the party leader. I wouldn't have been able to write that book which has, I think, been quite influential. I also get round the country for the political stuff. Every weekend I go off to some exotic place. So I get the high level politics and the economics, and without a lot of the stresses that you have in a leadership role.
Do you feel that there's sometimes a danger that you slightly overshadow Nick Clegg in some ways? I wonder whether sometimes he's frustrated by that?
I've never sensed that and it's helpful to the party, and to him, and to me in a way, that we're a team. The Tories are putting themselves forward in a presidential way whereas we're presenting it much more as a team approach and that goes down well. But he's very clearly the leader now. That image has been very clearly marked. He's got some distinctive issues that he's done very well on. People did say that a year ago but I don't think it's an issue now. It's an inevitable consequence of the fact the economy has been at the top of the agenda.
There's five months before the election will be called. What do you think is the overwhelming priority for the Liberal Democrats in those five months?
If it all has to be done in five months then that's difficult. But there is a hinterland of policy and record which is what we're building on, so it isn't starting from scratch. There will be clear dividing lines with the Tories over fairness in taxation. We're very distinct from the Labour government in our approach to radical reform of the banking system and economic institutions, and on their centralisation of power and contempt for local government. We'd certainly argue that we were greener than the other two major parties. But these are things that haven't just come out of nowhere.
Can you imagine going into the next election campaign saying: "We think we should pull out of Afghanistan?"
We have to be very careful about how the whole issue of withdrawal is dealt with, because it's different from Iraq - Iraq was an illegal war. We all supported intervention in Afghanistan. It's quite different in that sense and a lot of British troops have already been sent and died there for this cause. But certainly, we have raised and will continue to raise the basic question of how much longer can you send British troops to die for a cause when there's no strategy at present and where the government we're trying to protect isn't defensible politically. Where that leaves us in six months' time I can't speculate on, but Nick's been very clear.
What was Susan Kramer's response to your mansion tax plan?
She was critical of it.
Because she could lose her seat in Richmond Park?
No, I don't think so. Our position on the mansion tax is that we think it's a good idea that people with large amounts of personal wealth should pay a bit more in order to cut taxes for people at the bottom. We've taken it through our party's federal policy committee that determines policy, so it will be there. But how exactly it applies is something we're working on. Obviously we have to be sensitive to the concerns people have raised.
That sounds a bit like backtracking.
No, I think you'll find it will be in our electoral manifesto.
But you will know from your own constituency, particularly in London, there are lots of houses that have a high value, but the people who live in them are not cash rich.
Yes, there are some in that category.
But how do you differentiate between them and the people who are genuinely rich?
Well that's an issue that arises at the moment in the council tax system, which the Tories bought in. We've expressed unhappiness about it and that affects every single household in London. We're talking about a very minor subset of an existing problem, which is for people who have very large assets but don't have very large incomes. We've suggested that if people have retired, we would roll up the tax payments, which is what councils are already doing if people have very large commitments and residential home fees. There are ways of dealing with it, but we are looking at the details of how you would deal with that genuine, practical problem.
Wasn't that announcement a victim of the fact that you needed a big announcement at conference and you actually made it a bit too quickly? A lot of your colleagues were incandescent with you about it, weren't they?
One or two of them were concerned.
Your local government spokesman [Julia Goldsworthy] didn't even know about it!
It was a national tax policy, but as I said at the time, she should have been told more about it. I actually raised it two years ago at one of our party conferences and got predominantly positive reactions to it, so the concept was already out there and had already been floated.
I was watching the interview you did with Andrew Neil, which you didn't look particularly comfortable in. Did you get the feeling that that was the start of people trying to chip away at the reputation of Vince Cable as an economic guru?
Like everyone else you get some things wrong but I think I've been predominantly right. I don't think that's been in anyway changed. I had two interviews with Andrew Neil, one of which went perfectly well, the other of which there were a couple of areas where he got selective quotes of things I said, but in so far as I recall I had perfectly good answers to. But it's quite right that over a period of years you take a different position on things.
But he pointed out that you've changed your position on quantitative easing.
No, I haven't actually. He got that wrong. I'd probably been a little bit too clever in an article by using irony.
It is always dangerous, and I said that potentially large scale printing of money could lead you down a hyperinflationary route and it was said in a kind of semijokey way. But from the very outset I have argued very strongly in support of what the Bank of England was doing, and it clearly is a very necessary part of the monetary response. There was no inconsistency; you'll find a passage in my book which is very supportive of it.
In September 2008, you said the government must not compromise the independence of the Bank of England by telling it to slash interest rates. A month later, you urged the Chancellor to write to the Governor of the Bank demanding a large cut in interest rates.
Yes, that is true and like a lot of other people, I realised in the autumn of 2008 that we were on the verge of a completely catastrophic failure of the system - a once in a lifetime experience. The whole banking system was in danger of going down and this was a system for which the Bank of England had not been prepared. The mandate of the independent Bank of England, which I supported, was not just concerned with those issues, it was concerned with a broadly stable environment. I had supported the independence of the Bank of England and I still do and I think its role will be increasingly important in future years when we get a lot of inflationary pressure. But that moment in September and October when they had to do something dramatic and where their existing mandate was simply about responding to and anticipating inflation rates, this was not actually the primary concern. And I was certainly the first person out of the traps saying that, although it was a departure from the line I had been giving before.
Do you think in retrospect that it might have been better to let one bank go under? Wouldn't that have made the bankers 'get it'?
When the Northern Rock crisis broke, my view was that that probably should have been what happened - the government should have rescued the depositors and let the bank go. That was how I responded to it for precisely the reasons you implied. But once the government had decided to put in taxpayers' money, it seemed inevitable and right that you had to take it over, because you then had the problem of the public taking the risk and the private donors taking the profit. But the moral hazard argument was and is a powerful one. The problem with it in practice is that in the panic environment you had last year, any sense that our government or the American government were just going to back off a major institution would have just fuelled the run. And we all know what happened with Lehman's. The principle of moral hazard is this: if a bank has got itself into trouble through chronic mismanagement then the senior management and directors and shareholders have to take a big hit. And that's the principle. Whether or not the institution is then taken over by the state or run down - there are different techniques of dealing with it.
You can read the whole interview HERE. Next month: John Bercow.
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