ITV News Business Club grills Vince Cable

Vince Cable faced questions from the ITV News Business Club. Photo: ITV News

At the beginning of the year we invited a panel of some of the country’s leading businessmen and women to take part in the ITV News Business Club, to track what was actually going on in the real economy as it slipped back into recession, with the recovery still not yet secure.

Indeed, Vince Cable admitted to the panel that there is a real possibility that the economy will slip back into recession again, becoming a ‘triple dip’. On balance he believes that ‘bumping along the bottom’ is more likely.

But for at least two of our group that chance is weighing heavily on their mind. The boss of Balfour Beatty, one of our biggest building firms told us that ‘2013 will be even worse.’

Despite politicians’ promises to get infrastructure going, he believes the government has been far too slow to make decisions, whether on transport, energy, or aviation. That will mean layoffs at his company and he acknowledged in the supply chain.

Andy Clarke, the boss of Asda put it to Dr Cable that working people and those who live only on benefits will have less cash in their pocket to spend because of the 1% increase in state payments, in real terms a cut.

He worries that consumer confidence will be really challenged in that context, in a time when the economy desperately needs it to return.

And perhaps not surprisingly Dr Cable locked horns with Chris Sullivan, the boss of corporate banking at RBS, an institution often in his sights. Sullivan urged government to acknowledge that banks have made many changes, and to accept that demand, not just credit, is not a very real problem in the economy.

Cable said that a lack of lending is now ‘throttling’ some small and medium sized businesses but Sullivan disagreed saying, “I have no constraints on lending…I have 10 billion…I if I could find businesses that were confident enough to borrow.’

Cable clearly believes, as do many firms, that availability of credit is a big part of the problem, saying he is ‘baffled by this gap in perception’ between business and the banks. Sullivan said, ‘to say all bankers are still bad is like saying all politicians are still fiddling their expenses’. The two, politely, (well almost) agreed to disagree.

But it is not just RBS who expressed a concern about the government’s attitude towards the financial industry as a whole. Richard Ward, the boss of Lloyd’s of London, said ‘it has damaged the City..when I travel the world I don’t hear other governments being so critical.’ Dr Cable said that it was right to continue to express anger to the banks but did say, ‘if I’ve not made that distinction clear in the past I regret it.’

The panel raised other worries, Margaret Wood, manufacturer from Wakefield talked of the North ‘being neglected’, with a real fear that the government is far too focused on infrastructure in the South East, forgetting about the rest of the country.

Entrepreneur Kavita Oberoi pressed the Business Secretary to admit that there are too many different schemes, pots of money, government initiatives that aren’t publicised properly to firms around the country, so cash is not getting out to companies. He admitted that there probably are too many, and promised to work to ‘streamline’, in other words, get rid of some of them.

Miles Bullough, formerly of Aardman Animations, now setting up a new production company, expressed his concern shared by the rest of the panel that schools are squeezing out the kind of subjects that industry needs taught. Clippy McKenna, the jam maker embroiled in a health and safety row over jam, vented her frustrations that she is still, eighteen months on, stuck in a tangle with government officials over the sugar content of her product – Dr Cable said he and colleagues are doing what they can to stop some of the ‘sillier things’ that come out of Brussels.

But as our project draws to a close it occurs to me that despite all the hard work being done by companies up and down the country, despite the best efforts of government too, we are heading towards the end of 2012 still grappling with two of the same big problems we discussed right at the beginning of the year.

Despite promise after promise, businesses feel the government is still not moving fast enough of those big ticket infrastructure projects that just might make a significant difference to the economy. And government and the banks are still rowing over whose fault it is that lending to business is falling.

The government, and particularly the Business Secretary, still fervently believe much of the blame is due at the banks’ door. The banks, believe that until confidence, that elusive spirit, returns to the economy, they can’t force firms to want to borrow, even despite some of them offering some historically low lending rates. Both are issues that right now don’t have a solution. And for the sake of the recovery, if you can call it that, both are problems that need to be fixed.