Exclusive: Lib Dems tell PM: You must rein in Osborne

After bruising AV campaign, Cable and Huhne produce shopping list of demands

David Cameron is being urged by senior Lib Dems to rein in George Osborne amid accusations that the Chancellor is wrecking the survival prospects of the coalition.

The disclosure came as the three most senior members of Nick Clegg's cabinet team launched a direct challenge to the Prime Minister's call for "business as usual" after the fallout from the alternative vote referendum and elections.

Vince Cable, Chris Huhne and Danny Alexander produced a shopping list of demands – including fairer taxes that punish the wealthy and pressing ahead with voting reform – to ensure the Lib Dems retain a grip on coalition policy.

In an interview with The Independent on Sunday, Mr Cable, the Business Secretary, cautioned that the coalition must never again "stray into the policies of the Conservatives" and away from the agreed coalition policy – a pre-emptive strike against any attempts by Mr Cameron to bow to right-wing pressure to introduce a purer Tory agenda in the second year of the coalition. In a veiled swipe at Mr Clegg, he also called for an end to Lib Dem "cosying up to the Tories".

As Mr Clegg and Mr Cameron made clear this weekend, they wanted to move on from the infighting that overshadowed the AV campaign.

They will attempt to present a united front this week to mark the first anniversary of the formation of the coalition and their appearance in the Downing Street Rose Garden. A joint appearance is planned, though both will make separate keynote speeches to stake out their independence.

The Lib Dems now view Mr Osborne as a divisive figure who is trying to drive a wedge between the Prime Minister and his Lib Dem deputy and between the two parties.

"Osborne is the one who there is the least trust in at the top of the coalition," a senior Lib Dem figure in the Government said. "He was the one who pushed Cameron into mobilising the full Tory machine against us in the referendum.

"Osborne constantly has his eye on a Conservative majority in 2015 and he is not minded to help out the Liberal Democrats any more than he has to. Cameron is more comfortable in the coalition and sees himself as chairman of the board, keeping everyone happy."

In his interview Mr Cable issued a veiled threat to Mr Cameron that he would resist any wholesale takeover of coalition policy, or else quit the Cabinet. Making clear that his "main justification" for remaining in the Cabinet was to help solve Britain's economic problems, he said: "I will fight my corner very strongly."

He said the Lib Dems had "failed to communicate" the party's achievements in government, such as lifting lower and middle earners out of income tax and relinking the state pension to earnings, which were central to the coalition agreement. This, combined with the "ruthless" conduct of the Tories in the AV campaign, had contributed to the crushing losses at the polls, including a resounding No vote in the referendum, he said.

Referring to the NHS reforms, which could be watered down further as a consolation prize for Mr Clegg, Mr Cable said: "We have to make sure that the coalition does not stray into policies of the Conservatives when it is not agreed coalition policy."

He once again raised his pet project to impose a "mansion tax" on the most expensive properties as a way of financing Mr Osborne's plans to scrap the 50p rate of tax. "There is a lot of unfinished business in the coalition agreement," he said.

He refused to criticise Mr Clegg directly, but said: "We have all made mistakes in the last year. If you look at the ruthless way our coalition partners operated, we have to be very hard-headed."

Mr Cable and the Energy Secretary, Mr Huhne, also called for a renewed drive for political reforms. Mr Huhne told The IoS: "As Liberal Democrat ministers we need to be more confident and assertive in the difference we are making in the Government."

Mr Alexander, the Chief Secretary to the Treasury, said there needed to be a "tonal shift" in coalition policy and messages.

It emerged last night that the coalition has granted the SNP leader, Alex Salmond, key concessions only days after his historic win in the Scottish parliamentary elections. Mr Cameron has agreed to allow the Scottish administration immediate access to Treasury funds to help bolster Scotland's economic recovery and he has vowed not to obstruct plans for a referendum on independence.

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