Lib Dems would use tax rises to help cut deficit after next election, Nick Clegg tells business leaders

Nick Clegg said the Liberal Democrats remain committed to balancing the nation's books (Getty Images)

The Liberal Democrats would demand a faster deficit-reduction programme than Labour is proposing if the two parties were in coalition after next year’s general election.

Nick Clegg said on Monday that his party remained “absolutely committed” to the Coalition’s target to balance the nation’s books by the 2017-18 financial year. “That is the right timescale,” he told business leaders at London’s Mansion House. “If I am in government again, this is the plan I want us to stick to.”

The statement puts him at odds with some Lib Dem activists and could cause tension with Vince Cable, the Lib Dem Business Secretary. Mr Cable’s position is closer to that of Ed Balls, the shadow Chancellor, who has pledged to clear the annual deficit by 2020.

Mr Clegg called for further moves to reduce the £1.5trillion stockpile of national debt to an acceptable level to prevent future generations being saddled with an “unbearable” burden. Aides suggested that debt as a share of GDP could be cut from about 80 to 60 per cent but admitted this could take between 10 and 20 years.

However, the Deputy Prime Minister also said that spending on public services could grow again once the annual deficit had been eliminated. “Unlike Labour, we’ll finish the job. Unlike the Conservatives, we’ll finish it fairly,” he said.

He suggested that tax rises should account for about 20 per cent of the deficit-reduction programme after the election, with 80 per cent coming from further spending cuts. The Tories have promised no more tax increases.