Lib Dem Conference: Cable backs Clegg economy plan

Nick Clegg saw off a challenge to his authority over Liberal Democrat economic policy today, as rebel amendments were overwhelmingly defeated at the party’s annual conference in Glasgow.

Nick Clegg: Fought off economic challenge from party delegates. Picture: Getty

The amendments tabled by centre-left Lib Dems would have committed the party to watering down the Government’s deficit-reduction programme and changing the mandate of the Bank of England to encourage growth and job creation.

In an unusual move, the Liberal Democrat leader spoke in the debate, warning delegates that victory for the amendments would be welcomed only by Chancellor George Osborne and his Labour shadow Ed Balls.

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After overnight reports of a rift between the Deputy Prime Minister and Vince Cable over the economy, the Business Secretary - who had not been planning to vote - made an 11th-hour change of heart and turned up in the conference hall to cast his vote in support of Mr Clegg.

Vince Cable sits among party delegates. Picture: Getty

Mr Clegg played down suggestions of a rift with Mr Cable as “a storm in a teacup”.

“We do agree, we have sat around the Cabinet table for the last three years agreeing fulsomely on the need to fill the black hole in the public finances left by the Labour Party, to reform the banking system,” he told the Press Association.

“There is a strong agreement there.”

A source close to Mr Cable insisted that reports of a split had been “completely blown out of proportion”.

The Business Secretary arrived in the hall towards the end of the debate and cast his vote in favour of the leadership line, but did not speak.

Asked if David Cameron continues to have full confidence in Mr Cable, the Prime Minister’s official spokesman told a Westminster media briefing: “He has.”

The spokesman added: “I think the Government has a very clear economic plan for sustainable prosperity.”

‘Be careful what you wish for’

Urging delegates to reject the rebel amendments, Mr Clegg said: “Please be careful for what you wish for. If we start messing about with the big goalposts we have stuck in the ground which frame the stability which is required for further economic growth, we will destroy jobs and decrease prosperity.”

“Chopping and changing” the Bank’s mandate for setting interest rates would “increase the uncertainty that all speakers have said is very destructive of further economic confidence and recovery”, he warned.

And he said that proposals to remove councils’ borrowing limits to allow them to invest in social housing would mean a “complete revolution” in local authority funding and would mean “not a single extra affordable home will be built on our watch,” adding: “That cannot be right.”

Existing Lib Dem plans would mean more affordable homes being built immediately, he said.

Mr Clegg rejected the idea that the Lib Dems’ commitment to the Government’s “fiscal mandate” to eliminate the structural deficit by 2018 would require them to sign up to Mr Osborne’s plans to fund 100% of future savings from reductions in spending, rather than tax hikes.

“None of that ties our hands on tax and spend,” he said, to applause from delegates. “I am against 100 per cent spending cuts, completely against it. We will go into the next election in favour of more fair taxes, and not follow George Osborne’s plan - such as it might be - to only make further savings out of spending cuts.

“Of course we won’t do that. It’s not Liberal Democrat, it won’t happen under my watch, it will not happen. And nothing prevents us from doing that, nothing prevents us from having independent policies on broadband, on skills, on housing, on all the other crucial issues where our voice, our independent voice is so essential.”

The rebel amendments were rejected and the leadership’s motion accepted on a show of hands, as was an amendment backed by Mr Clegg which called for increased capital investment and the use of “fairer taxes” on wealth and land to contribute towards deficit reduction.

Support

Mr Clegg received strong support in today’s debate from party president Tim Farron, a popular figure on the left of the party who has been tipped as a possible future leader.

Mr Farron warned that Lib Dems could lose any credit for the recovery produced by their economic policy if they “at the 11th hour, choose to disown it”.

“What an irony (if), just as the economy was growing, just as our 2010 decisions were being vindicated, just as our fortunes were turning, we got the jitters and handed the credit to George Osborne,” said Mr Farron.”What an irony if just at the moment that even as Ed Balls isn’t sure that he agrees with Ed Balls ... we might agree with Ed Balls.”

Mr Clegg said the successful motion reaffirming his party’s support for the Government’s fiscal mandate showed the “unique Liberal Democrat resolve to finish the job that we have started, but crucially to finish it fairly”.

“We must show the British people of course that we have got new, fresh ideas of our own on housing, banking and renewable energy,” said the Lib Dem leader.

“But we also need to keep the stability, our approach to clearing up the mess left by Labour, without which I do not think the recovery will continue and gather momentum.”

Mr Clegg suffered a setback in two polls of current supporters of his party.

A YouGov survey for the Independent found that 36% of those who say they would now vote for the party believe it has changed for the worse since the 2010 election, with just 20 per cent saying it has got better.

And among those who voted Lib Dem at the last election, an overwhelming 59% said the party had got worse, compared to 9 per cent saying it has improved since joining Conservatives in coalition.

Meanwhile, almost three-quarters (72 per cent) of people identifying themselves as Lib Dem voters in a separate survey by OnePoll for ITV1’s Daybreak said Mr Clegg was not a good leader, and more than half (57 per cent) said he should stand down before the 2015 election.

Mr Clegg told Daybreak: “I totally accept that there are some people who think we shouldn’t have entered into the coalition in the first place in 2010, but if we hadn’t done and unemployment had gone up and the economic situation had got worse and we hadn’t played our role in setting the economy right, I suspect a lot of people now would be accusing us of bottling out.

“I think we were right to step up to the plate and roll up our sleeves, however much it’s clearly hit our short-term popularity, because without us the economy would not now be recovering. It was because of our resolve, our resilience, because we stuck to the plan of dealing with the black hole in the public finances left by Labour that things are now finally getting better.”

Speaking to BBC Radio 5 Live, Mr Clegg refused to say whether he would prefer to forge a coalition with Conservatives or Labour if the next election results in a hung Parliament.

“I’m not the one to answer that,” said the Lib Dem leader. “It’s the British people who are going to give me and the other party leaders our marching instructions after the next election.

“I would certainly ensure, if we were in a coalition with Labour, that we would keep them on the straight and narrow on the economy, just as within the coalition with Conservatives we make sure that we are doing things to promote fairness which never would happen if the Conservatives were in power on their own.”

Earlier, Mr Clegg told BBC Radio 4’s Today programme that his party was “in rude health” and said membership levels were in the “mid-40,000s”.