The Liberal Democrats will commit to “significantly” reducing the national debt as a percentage of GDP every year from 2018/19 and only borrow to invest in projects to boost growth, Nick Clegg has announced.
The two rules are to form a key part of the economic strategy in the Lib Dems’ manifesto for the 2015 election as the Deputy Prime Minister attempted to distance his party from Tory future tax and spending plans which he claims would mean “austerity for ever”.
Mr Clegg has committed to Chancellor George Osborne’s timetable to eliminating the structural deficit by 2017/18, but insisted the Lib Dems would do it in a way which would see the rich pay a greater share.
He also stressed the importance of investing in housing to “protect the country from another crisis” by reducing the risk of a property bubble.
In his speech in London, Mr Clegg began an extended campaign by the Lib Dems ahead of next year’s General Election – and accused his coalition colleagues of planning to balance the books by hitting those “down on their luck” or “scraping by on the minimum wage”.
But he promised to avoid a return to the “reckless borrowing” of Labour’s time in office, insisting that investment would focus on infrastructure and new homes.
Stressing the need to “finish the job we’ve started” in balancing the books, he promised to do it in a “fundamentally different way to the Conservatives”.
Highlighting the need for £12 billion in welfare cuts under the Tory plans, he said: “That means that when the Conservatives looked across society and thought, ‘Who should bear a bit more of the burden?’ they didn’t choose the best-off.
“They settled on people scraping by on the minimum wage, the jobseekers who’ve found themselves temporarily down on their luck, the men and women trying to earn their way out of poverty, often working more than one job.”
Mr Clegg’s speech comes after the Lib Dems finished sixth in the recent Newark by-election.
His party also lost all but one of its 11 MEPs in the European contest, finishing fifth behind the Green Party. It also shed more than 300 council seats in local elections across England.
Mr Clegg went on: “We are not the Tories. We don’t believe in an ever-shrinking state. We are not so ideological about making cuts that we’ll deny people the things they need.
“We’re not so dogmatic about borrowing that we’ll jeopardise Britain’s economic health. Responsibility, yes, austerity forever, no.”
“We’re not Labour either. Gordon Brown used to slap the words ‘capital spending’ on anything and everything just so he could get away with borrowing to pay for it. That can never be allowed to happen again. Sound investment, yes, reckless borrowing, no.”
Mr Clegg said unlike the Tories who have “ruled out asking the very wealthy to pay even just a bit more in tax to help the ongoing fiscal effort”, his party will be “asking those with broadest shoulders to make some additional contributions” by extending new council tax bands on higher-value properties.
The “muscle of the state” must be used to build the 300,000 new homes needed every year to meet demand, Mr Clegg said.
He admitted that a series of “very gory” spending decisions have left young voters questioning whether the Lib Dems are there for them.
The “notorious” decision to ditch their pledge on tuition fees means they have a lot of work to do to win back younger voters, he conceded.
Labour’s deputy leader Harriet Harman said: “Nick Clegg should be in no doubt, people will not forget what the Lib Dems have done in government – his party has been an accomplice rather than a brake on this Tory-led government.”