Coalition government minister (2010–2015)
At the 2010 general election Cable was again returned as MP for Twickenham. With the election resulting in a hung parliament, Cable was a key figure in coalition talks, particularly the unsuccessful negotiations with the Labour Party. He strongly favoured working with Gordon Brown and reluctantly acquiesced in the decision to go with the Conservatives instead. The Liberal Democrats entered a coalition agreement with the Conservative Party on 11 May 2010, and Cable was appointed Secretary of State for Business, Innovation and Skills on 12 May. The Queen approved his appointment as a Privy Counsellor, and he formally joined the Privy council on 13 May 2010.
The major issue in which he was engaged at the outset of the Coalition was bank reform: setting in train the splitting of high risk investment banking from retail banking (which, following the Vickers Report on banking, was implemented in the form of 'ringfencing').
One of the major disagreements within the Coalition was over tax. In May 2010, Cable insisted the coalition government was not split over planned increases to non-business Capital gains tax, which some thought would raise taxes on sales of second homes by 40% or 50%. Senior Conservative MPs attacked the rise as a tax on the middle-classes and a betrayal of Conservative values. Cable said that it was a "key" part of the coalition deal and there was no disagreement over it between the coalition partners. Cable said the changes to Capital Gains Tax would help to fulfill the Lib Dem aim of bringing more "fairness" to the tax system: "It's very important that we have wealth taxed in the same way as income." He continued,
At present it is quite wrong and it is an open invitation to tax avoidance to have people taxed at 40% or potentially 50% on their income, but only taxed at 18% on capital gains; it leads to large scale tax avoidance so for reasons of fairness and practicality, we have agreed that the capital gains tax system needs to be fundamentally reformed."
In May 2010, Cable declared his resignation as Deputy Leader to dedicate more time to his Cabinet role as Business Secretary. His responsibilities and authority were somewhat reduced when it was revealed in December 2010 that he had boasted to Daily Telegraph reporters posing as constituents of his "nuclear option" to bring the government down by his resignation. Still worse, he claimed to the reporters that he had "declared war" on Rupert Murdoch of News Corporation despite having the responsibility to impartially arbitrate on the News Corporation bid to acquire the remaining 60.9% of BSkyB it did not already own. Amid cries for his resignation or sacking, all his responsibilities concerning the bid were removed. Cable did not resign.
In July 2010, Cable sought to reform credit lines amid a "significant demand" (according to the Forum of Private Business) of smaller firms finding it harder to secure loans. Among a range of proposals published in a green paper, Cable urged banks to limit bonus and dividend payments to "pre-crisis and 2009 levels respectively", the green paper stating that such a move would enable banks to retain £10,000,000,000 of additional capital in 2010 could in turn sustain £50,000,000,000 of new lending. Concrete results included an agreement by the banks to finance a Business Growth Fund which has since invested £4 billion in 'patient capital' in growing firms. Agreement followed in 2012 to establish the British Business Bank with £1 billion of government money. Formally established in 2014 it was investing £3.5 of public money in small business a decade later. He was however seen as being vindicated when the story emerged in July 2011 of the News International ‘hacking’ scandal'. He was attacked from both right and left. He was deemed as an 'anti-Business Secretary'.
The left-leaning parts of the British press have been critical of his role in the Coalition Government, from The Guardian to the Morning Star describing him as "the man who started off a Lib Dem and now looks more convincingly Tory than most of the Tory frontbench" for his role in supporting public spending cuts.
Beginning in 2010 and continuing throughout the Conservative-Lib Dem coalition's tenure in office, Cable led the drive for deregulation; notably the "Red Tape Challenge" to reduce existing regulation and the "One In, One Out" rule to limit any future regulation, Cable agreeing with the need for a "bonfire of regulations". The Guardian dubbed this as "neoliberal" while the response from the business community was largely positive. The right-leaning press took the opposite view: "Socialist Cable not fit for office. Business Secretary and fellow Lib Dems are damaging the economy with objections to cutting red tape, warns no. 10 adviser."
He was in prolonged dispute with the leading banks over their reluctance to lend to small and medium-sized business. A party conference speech in September 2010 attracted particular attention, positive and negative: "On banks I make no apology for attacking spivs and gamblers who have done more harm to the British economy than Bob Crowe in all his Trotskyite fantasies while paying themselves outrageous bonuses underwritten by the taxpayer" attacked as 'banker-bashing' by the Daily Telegraph. He argued that the Coalition should focus on long term industrial strategy rather than deregulation, attacking 'backward looking Tory right-wingers and their ridiculous and bizarre claim that the key to economic growth in the UK lies through more business deregulation' which earned him the moniker 'Twickenham's Karl Marx'. The Industrial Strategy was launched in 2011. It formed a major part of his ministerial legacy and had enduring importance through the Aerospace Growth Partnership, the Catapult Network.
In September 2010, during a speech at the Liberal Democrat conference, Cable said that bankers present more of a threat to Britain than trade unions.
After the interim report on banking by John Vickers was published in April 2011, Cable said: "I was very impressed with the quality of the analysis. It does address head on the issue of banks that are too big to fail, the dependency on the government guarantee. It makes the case for separation," he added.
In June 2011, Cable said "rewards for failure" were unforgivable at a time when real wages were being squeezed across the country. Speaking at the Association of British Insurers biennial conference, Cable warned he planned to bring "excessive and unjustified" executive pay under control by launching a fresh consultation. He said that although "Britain does have some world-class executives", investors had not seen a return "since the turn of the century" and claimed executive pay was 120 times that of the average UK employee, whereas it was only 45 in 1998. Cable introduced legislation that would require companies to publish "more informative remuneration reports" for shareholders. The plans also included binding votes by shareholders on executive pay as well as greater transparency and diversity on boards.
In November 2011, Cable announced the first of several reforms to employment laws. Beginning with changes to the tribunal system, he proposed the introduction of tribunal fees for employees making claims against employers, stating that the current system had become a "major impediment" to small businesses hiring people. The tribunal fees introduced by the Justice Secretary, Chris Grayling, were later ruled unlawful by the Supreme Court in 2017 after a court victory by trade union UNISON.
In an article in May 2012, Cable denounced the "red tape factories" of the European Union, calling for increased deregulation and labour market flexibility, as well as the expansion of the Single Market and scrapping of the Working Time Directive. He revealed that at a recent meeting of European economic ministers, a group of like-minded nations had formed in making these same demands.
In September 2012, Cable and his department colleague Michael Fallon announced a large package of deregulation for businesses, including scrapping 3,000 regulations and implementing exemptions from health and safety inspections for shops, pubs, and offices. Cable claimed that businesses should not be "tied up in unnecessary red tape", but the move was criticised by trade unions. Days later Cable announced further deregulation involving changes to employment laws, proposing to reduce employee compensation for unfair dismissals and allowing employers and employees to agree to an out-of-court 'pay off' for under-performance dismissals. This was also criticised by trade unions. Cable was however attacked by the right-leading press for refusing to accept the recommendations of a Tory donor Adrian Beecroft for ‘no fault dismissal’: in effect firing at will subject to compensation.
In January 2013, Cable rejected calls by Labour for the government to intervene in the high street crisis following the collapse of music retailer, HMV, he said: "it is not the job of Government to sort out the problems of competition on the high street. Consumers make their choices and there are consequences." In December 2013, Cable supported the continuation of zero hours contracts after a government review, saying "they have a place in today's labour market", although admitting there had "been evidence of abuse." His statements were met with negative responses from British trade unions. He introduced legislation to outlaw abusive zero-hours contracts such as those where employers had imposed exclusivity conditions.
In 2014, during the Israel-Gaza conflict, Cable received criticism for his involvement in the signing off of arms deals to Israel, primarily concerning component parts used in the assembly of Hermes drones. Shortly afterwards, he announced that arms exports to Israel would be suspended unless the recently declared ceasefire was upheld, a response which was condemned by Baroness Warsi, and by the CAAT who called it "very weak".
In February 2015, Cable was reportedly a speaker at an event hosted by various arms companies at a London hotel.
In 2015, Cable refused to issue export licences for the sale of Paveway IV laser-guided bomb to the Royal Saudi Air Force over concern about how they might be used in the Saudi Arabian-led intervention in Yemen. Cable came under pressure from then-Prime Minister David Cameron, Defence Secretary Michael Fallon and Foreign Secretary Philip Hammond for the immediate resumption of exports. Cable stated he was then given specific assurances by the Ministry of Defence that the UK would be given oversight of potential bombing targets to minimise the risk of civilian casualties, including involvement in decisions, to a similar level given to the United States. On this understanding, Cable agreed to issue export licences for a £200,000,000 order for the weapons. In 2016, it became apparent the Ministry of Defence did not have this level of oversight, to which Cable responded "That is categorically contrary to what I was told was going to happen." The sale is being investigated by the Committees on Arms Export Controls. As part of his responsibilities for export licensing Cable introduced a ban on the export of three pharmaceutical drugs used in the US to execute prisoners on death row.
Cable also introduced a wide range of other legislation: to introduce shared parental leave (Shared Parental Leave, Working Families); a register of beneficial ownership (House of Commons Library Registers of Beneficial Ownership); a strengthening of copyright protection (the Intellectual Property Act 2014); the protection of supermarket suppliers (Grocery Code Adjudicators Act 2013); and the protection of pubs from pubcos.
In late-December 2010, undercover reporters from The Daily Telegraph, posing as constituents, set up a meeting with Cable, who expressed frustration with being in the coalition and compared it to "fighting a war"; he stated he had "a nuclear option... if they push me too far then I can walk out and bring the government down and they know that", and had to "pick" his fights carefully. He also claimed the Liberal Democrats had pressed for a "very tough approach" to the UK's banks, which had been opposed by the Conservatives. He described the coalition's attempt at fast, widespread reforms (including the health service and local governments) as being a "kind of Maoist revolution", and thought "we [the Government] are trying to do too many things... a lot of it is Tory inspired. The problem is not that they are Tory-inspired, but that they haven’t thought them through. We should be putting a brake on them." When his comments appeared in the press, Cable stated, "Naturally I am embarrassed by these comments and I regret them", before reaffirming his commitment to the Coalition Government, stating that "I am proud of what it is achieving".
In part of the Daily Telegraph transcript that it did not disclose, Cable stated in reference to Rupert Murdoch's News Corporation takeover bid for BSkyB, "I have declared war on Mr Murdoch and I think we are going to win." Following this revelation, Cable had his responsibility for media affairs – including ruling on Murdoch's takeover plans – withdrawn from his role as Business Secretary. In May 2011, the Press Complaints Commission upheld a complaint regarding the Telegraph's use of subterfuge.
Cable's stature in the Government grew since then, being dubbed "the moral centre of this Coalition" by Peter Oborne, chief political commentator at the Daily Telegraph.
As Business Secretary, Cable oversaw the privatisation of the Royal Mail in 2013. The share price increased by 38% within a day and 70% in a year. The National Audit Office said that the Department for Business, Innovation and Skills was too cautious when setting the sale price, but that a planned postal workers' union strike also affected the government's sale price. Cable refused to apologise, and said that the Government had been right to take a cautious approach, pointing out that the sale had raised £2,000,000,000 for the taxpayer, with a further £1,500,000,000 from the 30% stake in Royal Mail which it had retained. The NAO also noted that some "priority investors", had made significant profits following the sale, having been allocated more shares in the belief that they would form part of a stable and supportive shareholder base. However, almost half of the shares allocated to them had been sold within a few weeks of the sale. Cable invited the independent Labour peer and financier Lord Myners to conduct a review of the sale. He was critical of some technical aspects of the sale but concluded that there had been little undervaluation.
