In a letter leaked to the BBC written to David Cameron and Nick Clegg, Cable said that the government must show greater leadership in supporting key industries, warning it lacked “a compelling vision” for the UK’s long-term future.
Writing on 8 February, Cable said: “We badly need an initiative that gives business confidence that expansion will not be choked off by the banks.
“My suggestion is that we recognise that RBS will not return to the market in its current shape and use its time as ward of state to carve out of it a British Business Bank with a clean balance sheet and a mandate to expand lending rapidly to sound business.
“We should be willing to use such an institution to support our other industrial objectives, such as supporting exports and sectors identified as of strategic importance.”
Cable said that the government must take a “more strategic and proactive” long-term approach across numerous industries, in particular highlighting the construction industry.
He said he welcomed the Housing Strategy and added: “Galvanising the housing construction market would have a much wider economic impact in stimulating innovation and growth, and I absolutely agree that it should be an important priority….We should have the same level of commitment across government to getting housing moving as is beginning to happen for infrastructure.”
However, following controversy over his comments in the leaked letter, Cable told BBC Five Live that his letter “certainly wasn’t a comprehensive attack on the government’s economic policies” and added: “This is an enormous storm made out of something much less.
“I think a great deal about what the government is doing, and what my department is doing.”