Cable Survival May Weaken His Party in U.K. Coalition

U.K. Business Secretary Vince Cable’s political survival after he was quoted as saying he “declared war” on Rupert Murdoch may weaken his Liberal Democrat party in the coalition.

Cable, the No. 2 Liberal Democrat in David Cameron’s Conservative-led Cabinet, was stripped of responsibility for media, broadcasting and telecommunications, according to a statement issued by the prime minister’s office in London late yesterday. Cameron called Cable’s secretly recorded remarks, which were published in the Daily Telegraph newspaper, “totally unacceptable and inappropriate.”

The move “strengthens Cameron’s hand because he’s effectively slapped Cable down and stripped him of privileges,” Justin Fisher, who teaches politics at Brunel University in northwest London, said in a telephone interview. “Chastened by the experience, Cable will be more loyal and presumably will be less likely to raise objections to policies behind the scenes.”

The uproar over the planned takeover of pay-television broadcaster British Sky Broadcasting Group Plc (BSY) by Murdoch’s News Corp. (NWSA) came an hour after Cameron and his deputy, Nick Clegg, defended previous Cable remarks in the Telegraph detailing Cabinet infighting and declaring the prospect of his resignation a “nuclear option” that could topple the government.

‘Move On’

“I fully accept the decision of the prime minister and deputy prime minister,” Cable said in a statement yesterday. “I deeply regret the comments I made and apologize for the embarrassment that I have caused the government.” Clegg told reporters today that “Vince and the government can move on, and that’s an end of it.”

By keeping Cable, Cameron resisted calls by both Conservative lawmakers and the opposition Labour Party that he quit.

“His increasingly erratic behavior is not conducive to being in the Cabinet,” Conservative lawmaker Philip Davies said on BSkyB’s Sky News. “You can either shoot from the hip and be on the back benches or you can be in the government. Mr. Cable seems to want to have the best of both worlds.”

Cable had the power to decide if the acquisition of BSkyB by News Corp. would give Murdoch too much media power. “I have declared war on Mr. Murdoch and I think we’re going to win,” Cable was recorded by the Telegraph as telling reporters who posed as constituents.

‘Under Attack’

Murdoch “is trying to take over BSkyB, you probably know that,” Cable told the undercover Telegraph reporters. “I can’t politicize it, but for the people who know what is happening, this is a big thing. His whole empire is now under attack.”

New York-based News Corp. said it was “shocked and dismayed” by the comments. Cable’s remarks “raise serious questions about fairness and due process,” News Corp. spokeswoman Miranda Higham said in a telephone interview.

Culture Secretary Jeremy Hunt, a Conservative, will now take over responsibility for media and telecoms issues, including the media regulator Ofcom.

“This is not a straightforward issue because Jeremy Hunt has given interviews since he was in his position saying we shouldn’t worry about how many TV stations are owned by individuals within reason, clearly talking about Murdoch,” Evan Harris, vice chairman of the Liberal Democrats’ policy committee, told BBC Radio 4’s “Today” show. “‘None of the parties have got clean records on this. Conservatives and Labour have always been more pro-Murdoch.”

EU Approval

News Corp., the owner of four of the biggest-selling U.K. newspapers, is waiting for the government to rule on the deal. Ofcom has a Dec. 31 deadline to recommend to Cable whether to start a Competition Commission probe on how the deal might affect the British media landscape. The company won European Union approval for the proposed purchase yesterday.

News Corp., attempting to gain from the steady subscription business of BSkyB, asked the EU on Nov. 3 to approve its proposed 7.8 billion-pound ($12.1 billion) bid for the 61 percent of BSkyB that it doesn’t already own. BSkyB rejected the initial offer of 700 pence a share in June as too low. The companies are seeking regulatory approval before a new offer is made.

Cable placed himself “in an untenable position,” Robert Bell, a London-based antitrust lawyer with Speechly Bircham LLC, said in a telephone interview. “He’s exercising some sort of quasi-judicial role in the whole process and he has to maintain an element of fairness in his decision-making. Quite frankly, his reported comments go contrary to that.”

‘Good’ Relationship

Cable’s comments on Murdoch were released just after Cameron and Clegg signaled their approval of the minister at an end-of-year press conference. Cameron said he had a “good and business-like relationship” with Cable, while Clegg called the minister “an incredibly important member of the government and an outstanding secretary of state.”

They were commenting on remarks published earlier by the Telegraph in which Cable told two reporters posing as voters from his district that “there is a constant battle going on behind the scenes” between the Conservatives and Liberal Democrats in the Cabinet.

“I have a nuclear option, it’s like fighting a war,” Cable was cited as saying by the Telegraph. “They know I have nuclear weapons, but I don’t have any conventional weapons. If they push me too far then I can walk out of the government and bring the government down and they know that.”

More Criticism

Today, the newspaper published further secret recordings of Liberal Democrat ministers questioning the coalition government’s removal of child-benefit payments for higher-rate taxpayers and the increase in university tuition fees.

“In some ways it’s helpful. We’ve been protesting for the last eight months that Liberal Democrats have a mind of their own,” party president Tim Farron told BBC radio. “You can be in coalition with another party, get on reasonably well, be collegiate and a good team player but still retain your own identity.”

It was necessary for Cameron to keep Cable in the Cabinet to prevent rank-and-file Liberal Democrat lawmakers, who have already rebelled over higher student tuition fees, from growing more unhappy with the government, according to Fisher.

“If Cable had gone it could have started to make things a bit sticky,” Fisher said “You’d have had more left-wing Liberal Democrats starting to get more disgruntled because their chap’s been ousted. His bigger problem now could be right wing Conservatives saying ‘why special privileges?’ Anyone else would have been sacked.”

To contact the reporter on this story: Thomas Penny in London at rhutton1@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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