Clegg warns of economic trouble ahead – but offers few clues about Plan B

(REUTERS)

Nick Clegg told the Liberal Democrats yesterday that they must stay the course and fully support the Government's painful deficit reduction strategy as he admitted: "There is a long, hard road ahead."

His serious, sober and steely closing speech to his party's conference in Birmingham was punctuated by his message that the Coalition's decisions were "not easy but right". He said: "There are no shortcuts, but we won't flinch."

The Deputy Prime Minister was speaking against an increasingly gloomy economic backdrop as official figures showed that public sector net borrowing in the UK last month was a higher-than-expected £15.9bn, a record for August. He eschewed the politicians' usual desire to offer light at the end of the tunnel, but did promise to build "a new economy for the whole nation ... safe from casino speculation", after the banks are reformed.

Mr Clegg conceded: "The outlook for the global economy has got worse. So we need to do more, we can do more, and we will do more for growth and jobs." However, his 43-minute address offered few clues about what "more" can be done and was seen as a holding operation as the Cabinet looks for ways to get Britain's stalled economic wheels turning without departing from George Osborne's spending plans – a move that could spook the financial markets and suck Britain into the same problems engulfing the eurozone.

The Treasury is alarmed by what it regards as "loose talk" by some Liberal Democrats this week. Yesterday Liberal Democrat ministers played down speculation the Government might boost capital spending by up to £5bn. They insisted there was "no crack of light" between the two Coalition parties. "We can't afford to wobble," one Liberal Democrat insider admitted.

Behind the scenes, a frantic hunt is going on in Whitehall for ways to speed up some building projects, including housing and road schemes, without upsetting the City. A cabinet battle looms as Liberal Democrat ministers Vince Cable, the Business Secretary, and Chris Huhne, the Energy Secretary, press the Treasury to allow more flexibility.

The Chancellor is expected to announce measures to ease burdens on business in his Tory conference speech on 3 October, trailing his wider "growth review" on 29 November as part of his autumn statement.

Yesterday Mr Clegg told the Liberal Democrats that voters "need to know more about the character of our party, not just how we govern, but why". He repeatedly defended the decision to join the Conservatives in coalition to "pull the economy back from the brink" rather than play politics with the economy and jobs.

Mr Clegg avoided the strident conference attacks on the Tories made by senior Liberal Democrats and did not mention David Cameron once. He reassured his party he would veto Tory demands to water down the Human Rights Act. "It is here to stay," he said.

His theme was that the Liberal Democrats are the only party capable of taking on "vested interests" and failed institutions like the banks, Parliament and the media because "we are in nobody's pocket". He previewed the Liberal Democrats' next election pitch – more economic credibility than Labour and a stronger commitment to social justice than the Tories.

Noting that the Coalition had now lasted for 500 days, Mr Clegg praised his party members for their "resilience" and "grace under fire". He promised them it would be "worth it in the end", saying: "None of us thought it would be a walk in the park, but I suspect none of us predicted just how tough it would turn out to be."

His "most heart-wrenching" and "painful" decision was the rise in university tuition fees to £9,000 a year, and acknowledged "how much damage this has done to our party". Insisting he has learnt lessons, he said: "No matter how hard you work on the details of the policy, it's no good if the perception is wrong."

The Liberal Democrat leader told his party to "hold your heads up and look our critics squarely in the eye." He insisted: "This country would have been in deep trouble if we had not gone into government last year. And Britain will be a fair nation tomorrow because we are in government today."

He acknowledged that "the positive power of government" was more important than "stopping bad things" and said: "We must move now beyond the reflexes of opposition to the responsibilities of government and the opportunities of government too."

He declared that his own "passion" and "fire inside" was to ensure a fair start for every child and boost social mobility. Confirming a £50m summer schools programme for disadvantaged children, Mr Clegg said: "I know I have had all the advantages – good school, great parents. I was lucky. But it shouldn't be about luck."

Anatomy of a speech

The disco lights: Man of Destiny-style music announcing the Leader was accompanied by disco lights sweeping the audience in a blood-quickening way, but the video introducing him appeared to have been run at the wrong speed.

The sombre suit: The Lib Dem leader dug out his most sober suit (buttoned up throughout his peroration) and paired it with a deep purple tie. The standing ovation was kept deliberately short at less than three minutes.

The lectern: Nick Clegg spoke from a lectern – the technique of roaming round the stage reciting a memorised speech (perfected by David Cameron) would have seemed too theatrical for a sombre occasion.

The audience: The block of the audience in camera shot behind the speaker had been bussed in early – perhaps to give the impression of "real people". They didn't seem to be wearing lanyards for ID badges and before the rest of the audience came in they had a tutorial in clapping.

The words: Jokes were few and far between – again they would have felt inappropriate as he steeled the country for hard times ahead.

Brains behind speech

Paddy Ashdown and Charles Kennedy used to leave it until the last minute. But Nick Clegg takes a different approach to his conference speech. Barring a few minor tweaks, it was finished before he arrived in Birmingham.

He worked with two of his closest aides – Richard Reeves, his special adviser, and Polly Mackenzie, deputy director of strategy in Downing Street. The final version was sent to David Cameron, although the Liberal Democrats stressed he had no power of veto over any part of it.