Leading from the front
Ahead of his appearance as a headline speaker at the Personal Finance Society’s Festival of Financial Planning, Liberal Democrat leader Sir Vince Cable talks to The Journal
After a stint as Secretary of State for Business Innovation and Skills, Sir Vince Cable, leader of the Liberal Democrats and MP for Twickenham, is well aware of the issues facing the UK’s insurance market. And, while he believes it has an important role to play in creating a fairer society, he can see some challenges ahead.
Unsurprisingly, Brexit is top of his list. “It’s massively unclear what the future holds but we have to be better off in the EU than out of it,” he says. “The worst-case scenario will be that we fail to reach an agreement and crash out, but it’s already creating a lot of cost and uncertainty that is affecting confidence.”
For Mr Cable, the uncertainty being experienced by the insurance sector is a perfect example of this. Alongside a slew of insurers looking to shift their offices out of the UK to ensure they can retain passporting rights, the future of existing long-term insurance contracts is also up in the air. “Unless an arrangement is agreed, these will have no legal force beyond 2019. Without some agreement with the EU, no one knows what they need to do to solve this problem,” he adds. “Unravelling these contracts could take longer than the transition period.”
Alongside the Brexit upheaval creating its fair share of uncertainty, with consumer credit levels approaching those seen in 2008, there is also talk of the UK sleepwalking into another financial crash. But Mr Cable, who was one of the first to warn of the last crash, does not believe history is about to repeat itself.
“The huge boom in consumer credit is very worrying for these individuals and it’s not good that our economy depends on it,” he says. “But I can’t see there being a repeat of the last crash: the reforms introduced under the coalition government mean the banks are in a much better position now.”
Mr Cable is also concerned about how the increases in insurance premium tax (IPT) are affecting consumers. Now at 12%, recent reports from the Motor Insurance Bureau of a sharp increase in uninsured driver compensation claims could be an indication that more people are struggling to afford cover. “If the increase in IPT means people aren’t able to access insurance, then it has to be taken more seriously,” he says. “Insurance, providing it’s properly priced, has an important part to play in society. It helps to ensure people are treated fairly and rewarded for being prudent.”
If the increase in IPT means people aren’t able to access insurance, then it has to be taken more seriously. Insurance, providing it’s properly priced, has an important part to play
This notion of a fairer society is one of his key motivators, with the fact that many of today’s young people do not expect to have as good a lifestyle as their parents something that troubles him greatly. “The younger generation can’t look forward to the job security, final salary pension and home ownership that were taken for granted in the past,” he says. “There’s no easy answer to this but it would make sense to boost the supply of housing and give people more options around their homes.”
Apprenticeships are another strand in his vision. Having relaunched these while in government, he sticks with the view that they should be regarded as on a par with going to university. “It’s disappointing that people still think if you’re clever you should go to university,” he says. “More work needs to be done through careers advice to ensure that apprenticeships are regarded with the esteem they deserve.”
But while a supporter of apprenticeships, Mr Cable does believe the current funding framework needs an overhaul. In particular, he is critical of the complexities around the apprenticeship levy and especially the support available for employers under the levy threshold.
“The system’s not working very well,” he says. “It needs to ensure that SMEs offering training to apprentices are rewarded through tax breaks. We need to encourage more businesses to support this.”
With so many issues to address, taking up the reins of the Liberal Democrat party back in July may mean his diary is a little busier, but Mr Cable has kept the beginning of November free for his appearance as a headline speaker at the Personal Finance Society’s Festival of Financial Planning. “I am looking forward to it,” he adds. “My background’s in economics, business and finance, so I will enjoy attending and catching up with what’s going on in the market.”
Education: Mr Cable read Natural Sciences and Economics at Cambridge University followed by a PhD at Glasgow University. He was first elected as MP for Twickenham in 1997.
Getting political: He was Secretary of State for Business Innovation and Skills in the coalition government and became leader of the Lib Dems in 2017.
The right steps: A keen ballroom dancer, he was pipped to the Strictly Come Dancing glitterball by John Barrowman in the 2010 Christmas Special.
Chartered Insurance Institute Hong Kong committee member Trevor Smith speaks to The Journal…
After a career in law and politics, Jonathan Evans has taken a senior role at BIBA. Here, he talks about his goals for the insurance sector…
Recently appointed Zurich UK CEO Tulsi Naidu talks to Luke Holloway about the need to keep the core purpose of insurance in mind while embracing the future.