Clegg sets up Lib Dems as the niche party of government

The Lib Dem leader yesterday addressed the criticism levelled at him from within his own party

Nick Clegg drew clear dividing lines with the Conservatives over tax and green issues yesterday as he sought to carve out a niche for the Liberal Democrats as a "third party of government" who could rein in either the Tories or Labour in another coalition after the next general election.

In his closing speech to the Liberal Democrat conference, Mr Clegg vowed to veto a further reduction in the top rate of income tax from 45p to 40p in the pound, the level George Osborne originally wanted before he cut it from 50p to 45p from next April.

The Deputy Prime Minister said his party would use its influence to ensure the Coalition lived up to its promise to be the greenest government ever.

Mr Clegg positioned the Liberal Democrats as equidistant from the two biggest parties and said politicians would "take their orders from the voters" in another hung parliament. However, he told regional newspaper journalists in Brighton: "If people want just protest politics, if they want a sort of 'I don't like the world let me get off' party, they've got one. It's called the Labour Party."

ECONOMY

Mr Clegg said: "If Plan A was really as dogmatic as our critics claim, I'd be demanding a Plan B… We have taken big and bold steps to support demand and boost growth. And we stand ready to do so again and again and again until self-sustaining growth returns."

Analysis: The Liberal Democrats will stick to the Coalition's core mission, but nag the Conservatives to do more to boost growth by increasing spending on housing and infrastructure.

TAX

Mr Clegg said: "Now that we have brought the top rate of tax down to 45p….there can be no question of reducing it further in this parliament…All future cuts in taxation must pass one clear test: do they help people on low and middle incomes get by and get on?"

Analysis: This means Mr Osborne cannot go any further, even if the cut from 50p to 45p brings in more revenue. However, Mr Cameron was unlikely to risk another "tax cut for millionaires" before 2015.

SPENDING CUTS

Mr Clegg warned that "further belt tightening" is "inescapable", but said the Liberal Democrats would ensure it would not start with benefits cuts.

Analysis: George Osborne is seeking £10bn more welfare cuts, but Mr Clegg will demand tax rises for the wealthy in return. Liberal Democrats will agree a government-wide spending plan for 2015-16 but not for later years.

ENVIRONMENT

Mr Clegg attacked Mr Cameron for backing away from his early pledges to promote wind, solar and tidal power. "Of course, there was a time when it looked like they got it…When the Tories were going through their naturalist phase…the windmills gently turning; the sun shining in. As a PR exercise, it was actually quite brilliant."

Analysis: Mr Clegg wants to defend the proposed Green Investment Bank, the green deal for energy consumers and electricity market reform. But Mr Osborne appears to hold the whip hand on future policy and is reluctant to set to a decarbonisation target for 2030.

CLEGG'S LEADERSHIP

Mr Clegg's subliminal message was, to quote the then Prime Minister Harold Wilson in 1968: "I'll tell you what's going on, I'm going on."

Analysis: Some Lib Dems gossiped privately about whether Mr Clegg is the right man to lead the party into the 2015 election. The noise will get louder if the opinion poll ratings do not improve by next autumn. But there is no evidence of a plot to oust him. Some insiders say there is a 5-10 per cent chance he would fall on his own sword if he felt the party would do better without him.

LIB DEM STRATEGY

Mr Clegg announced that Lord (Paddy) Ashdown, the party's former leader, would head its 2015 election campaign. Its doorstep message would be: "Are you ready to trust Labour with your money again? And do you really think the Tories will make Britain fairer? Only the Lib Dems can be trusted on the economy and relied upon to deliver a fair society too."

Analysis: Mr Clegg senses a gap in the centre ground as Mr Cameron and Mr Miliband woo their core supporters. But it would be risky for the Lib Dems to base their 2015 election hopes on that. Some were puzzled by how his "party of government" message will translate into an election strategy. One asked: " How do you vote for a coalition in a first-past-the-post system?"