Nick Clegg faces Lib Dem opposition on spending cuts

Activists table motion calling on leader to abandon austerity and kickstart economy

Liberal Democrat leader Nick Clegg (Getty Images)

Nick Clegg is facing a revolt over the Coalition’s economic policy by allies of Vince Cable, who oppose further spending cuts and are calling for the building of 100,000 houses a year to kickstart the economy.

Liberal Democrat activists have tabled an emergency motion to the party’s spring conference starting today, urging Lib Dem ministers to “take radical action to get growth going with a bold Plan A-plus.” The move came as David Cameron and Mr Clegg dismissed a call by Mr Cable, the Lib Dem Business Secretary, for higher borrowing to fund housing, school building, road and rail projects. The Prime Minister echoed Margaret Thatcher by inisting “there is no alternative” to his economic strategy and slapped down Mr Cable by declaring: “There’s no magic money tree.”

The Lib Dem motion, seen by The Independent, challenges Mr Clegg’s decision to sign up to £10bn of spending cuts in the 2015-16 financial year. It calls on ministers to resist “curbs on public spending beyond the lifetime of this parliament when this Coalition Government will be over.”

It expresses concern at the latest figures on the economy, which “continues to suffer... from a serious shortage of confidence and domestic demand.” It calls for a loosening of the “straitjacket” by building at least 100,000 houses a year by 2015, including 50,000 social homes.

The motion has been tabled by Naomi Smith, co-chair of the Social Liberal Forum, a pressure group which hopes delegates at Brighton will choose it for debate on Sunday. If passed, it would become Lib Dem policy, putting Mr Clegg under pressure to take a tougher line in Coalition negotiations. The motion is likely to be opposed by Clegg allies, as it contradicts the £10bn of cuts announced by George Osborne in December and approved by Lib Dem leaders.

Mr Cameron hinted at more help for home-buyers and a limited boost to housebuilding in this month’s Budget. But he ruled out a rise in borrowing and rebuffed demands for tax cuts by Conservative MPs.

“Getting taxes down to help hard working people can only be done by taking tough decisions on spending,” he said. “That is what we are doing in our plan. And this month’s Budget will be about sticking to the course.”

The Prime Minister said Mr Cable’s article in the New Statesman had been “cleared and approved by the Treasury”, adding: “There’s no need for me to have a fight with Vince Cable because he agrees with the Government’s plan.”

Mr Clegg joined Mr Cameron in warning that higher borrowing could end the UK’s record low interest rates, meaning higher costs for home-buyers and businesses. He said: “I am afraid there is no cost-free, magic-wand solution to this.”

Number 10 and Mr Clegg tried to play down differences between the parties. But some Conservatives were angry that Mr Cable’s intervention overshadowed Mr Cameron’s speech. Although Labour wants higher borrowing to kickstart growth, Mr Cable denied he was departing from Coalition policy or advocating a Plan B. He said: “We just need to pursue what I’ve often called Plan A-plus. That is financial discipline and getting down the deficit and at the same time pursuing growth. That’s what we are doing and will continue to do.”