Lib Dem conference: Nick Clegg rejects calls by activists for government to adopt Plan B

Deputy Prime Minister accused of 'manufacturing' row over amendments to party’s economic policy

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Nick Clegg defeated his internal Liberal Democrat critics today when the party’s conference in Glasgow rejected calls by activists for the Coalition to adopt an economic Plan B.

The Lib Dem leader, took the unusual step of winding up a crunch debate on the economy, warned his party that it would play into the hands of the Chancellor George Osborne and his Labour shadow Ed Balls if it distanced itself from the Government’s strategy just when growth is returning.

His critics accused Mr Clegg of “manufacturing” a row over their amendments to the party’s economic policy, which called for a new “fiscal mandate”  and for the Bank of England to do more to boost growth and jobs.  But the two proposals, promoted by the left of centre Social Liberal Forum (SLF) pressure group, were rejected by the conference on a show of hands.  Defeat would have been an embarrassing setback for Mr Clegg, whose aides claim his leadership has been strengthened by today’s vote.

Vince Cable, the Business Secretary, who is close to the SLF, thought the conference showdown have been avoided and a compromised reached. He considered staying away from the debate, but in the end turned up towards its close and voted with Mr Clegg.  A Cable aide  said reports of a split had been “completely blown out of proportion”.

The Deputy Prime Minister rejected the SLF’s claim that the Government’s “fiscal mandate” to eliminate the structural deficit by 2018, meant the Lib Dems signing up to more spending cuts without any tax rises after the 2015 election. He reassured his party by saying: “None of that ties our hands on tax and spend. 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.”

But Naomi Smith, the SLF’s co-chair, told the conference that leadership was promoting an “ideological merger” with the Conservatives on the economy.  She the SLF proposal “sets out a distinctive, liberal and sustainable vision for the economy, marking us as a party committed to long-term investment and growth... But we can't do this without a re-balanced fiscal mandate.”

Today’s vital debate about the Coalition’s economic strategy comes at a difficult time for Mr Clegg, after an exclusive poll for The Independent showed that 59 per cent of all those who voted Liberal Democrat at the last election believe the party has got worse in the three years since.