My demands for a post-election deal, by Nick Clegg

In an exclusive interview, Lib Dem leader explains how he will decide between Labour and Tories in the event of a hung parliament

Nick Clegg will this weekend announce the four "tests" he would set for Labour and the Conservatives in return for the support of the Liberal Democrats if neither main party wins an overall majority at the general election.

In an interview with The Independent, the Liberal Democrat leader also revealed that his party would try to calm jitters in the financial markets about a hung parliament by calling for a £10bn "repayment" to cut Britain's public deficit. It would be found from £15bn of spending cuts to be outlined this month.

Mr Clegg will use his party's spring conference in Birmingham starting tomorrow to unveil "four steps to fairness" that would be his initial negotiating demands for backing a minority government led by David Cameron or Gordon Brown.

They are a shake-up of the tax system to lift four million people out of tax by raising tax thresholds to £10,000, with higher taxes for the rich; a boost to education spending targeted at children from poor families through a "pupil premium"; a switch to a greener economy less dependent on financial services; and political reform including a new voting system for Westminster elections.

In his interview, Mr Clegg declined to speculate whether his party would lean towards Labour or the Tories and insisted that all options, including a formal coalition with Liberal Democrats sitting in the Cabinet, were possible. He said he would talk to the party that won the "strongest mandate".

He pledged that his party's priority would be to ensure "stable government" and to be a "guarantor of fiscal responsibility".

Mr Clegg launched a scathing attack on the Tories, accusing them of whipping up fears in the City of London that a hung parliament would create a run on sterling as a minority government would lack the political will to tackle Britain's £178bn deficit.

He insisted: "We are the guarantee, if you are worried that Labour is not taking it [the deficit] seriously enough and Gordon Brown is in denial.

"We are the guarantee that it will be taken seriously because we are candid and open about the enormity of the problem. If you are worried that the Tories would cut the deficit from day one when there is no economic case and when the effect would be unfair, you can rely on us to make sure that cuts would be implemented when the economy can sustain it and in a way that is fairly distributed."

The Liberal Democrat leader argued that an "open-ended" election result could be "a virtue" because his party would have the most detailed and costed plan for tackling the deficit of any party.

He will spell out £15bn of cuts in the run-up to the Budget, which the Government confirmed yesterday will be delivered on 24 March, paving the way for a 6 May election.

Almost a third of the savings would be spent on creating jobs and improving schools for the disadvantaged. The rest would be "a down payment" to reduce the deficit.

Ideas for savings already floated by Vince Cable, the Liberal Democrats' Treasury spokesman, include a freeze on the public sector pay bill; scrapping bonuses for civil servants; a review of public sector pensions; abolishing quangos; axeing the renewal of the Trident nuclear missile programme, identity cards and a computerised system for NHS patient records. Some of these will become official party policy before the Budget.

Mr Clegg described warnings by David Cameron, George Osborne and Kenneth Clarke about market instability in a hung parliament as "an act of economic vandalism and a political protection racket".

He added: "They are basically saying, 'Vote Conservative or the markets in the City of London will tear the house down'. It is a very thuggish threat – using the markets for short-term political benefit, warning people that their savings and jobs are at risk because their mates in the City would not tolerate anything other than the result we want."

The Liberal Democrat leader denied that the prospect of political deadlock after the election had caused a run on the pound in the past two weeks. "Sterling was at £1.38 to the dollar last March when the Conservatives were 15 points ahead in the polls," he argued. "There has been a general decline in confidence in UK plc."

He said: "The markets have got to be smart and thoughtful about the politicians and the reverse is true: the politicians must be smart and thoughtful about the markets."

The Tories have pledged to "make a start" in reducing the deficit this year but Labour had warned that this could plunge Britain back into recession and want to delay cuts until next year. The Liberal Democrats will offer a middle way, Mr Clegg revealed.

"The crucial thing is to show the markets that you have a plan [for cuts]. A secondary issue, a wholly different issue, is when to press the 'Go' button for that plan to start. There is nothing magical about a 7 May date in the diary," he said.

"It must be governed by economics, not by political timetables or political dogma. The markets will be much calmer about the issue of timing once they are satisfied that the politicians have a plan."

Accusing the Tories of a "macho, tub-thumping masochistic approach" to cuts, he said: "They keep banging on about a timetable because they don't have a plan. We want to turn this on its head. We are not fixated on a timetable. It will happen at a time when it is most sensible economically."

Start your day with The Independent, sign up for daily news emails
Life and Style
Marie had fake ID, in the name of Johanna Koch, after she evaded capture by the Nazis in wartime Berlin
historyOne woman's secret life as a Jew in wartime Berlin
News
news... and what your reaction to the creatures above says about you
News
Jihadi John
newsMonikers like 'Jihadi John' make the grim sound glamorous
News
newsAnother week, another dress controversy on the internet
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA special investigation by Andy McSmith
2015 General Election
May2015

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Telesales & Customer Service Executive - Call Centre Jobs

£7 - £9 per hour: Recruitment Genius: Are you outgoing? Do you want to work in...

Ashdown Group: Finance Manager - Covent Garden, central London - £45k - £55k

£45000 - £55000 per annum + 30 days holiday: Ashdown Group: Finance Manager - ...

Ashdown Group: Systems Administrator - Lancashire - £30,000

£28000 - £30000 per annum: Ashdown Group: 3rd Line Support Engineer / Network ...

Recruitment Genius: Graduate Web Developer

£26000 - £33000 per annum: Recruitment Genius: A Web Developer is required to ...

Day In a Page

The difference between America and Israel? There isn’t one

The difference between America and Israel? There isn’t one

Netanyahu knows he can get away with anything in America, says Robert Fisk
Families clubbing together to build their own affordable accommodation

Do It Yourself approach to securing a new house

Community land trusts marking a new trend for taking the initiative away from developers
Head of WWF UK: We didn’t send Cameron to the Arctic to see green ideas freeze

David Nussbaum: We didn’t send Cameron to the Arctic to see green ideas freeze

The head of WWF UK remains sanguine despite the Government’s failure to live up to its pledges on the environment
Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Author Kazuo Ishiguro on being inspired by shoot-outs and samurai

Set in a mythologised 5th-century Britain, ‘The Buried Giant’ is a strange beast
With money, corruption and drugs, this monk fears Buddhism in Thailand is a ‘poisoned fruit’

Money, corruption and drugs

The monk who fears Buddhism in Thailand is a ‘poisoned fruit’
America's first slavery museum established at Django Unchained plantation - 150 years after slavery outlawed

150 years after it was outlawed...

... America's first slavery museum is established in Louisiana
Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

Kelly Clarkson: How I snubbed Simon Cowell and become a Grammy-winning superstar

The first 'American Idol' winner on how she manages to remain her own woman – Jane Austen fascination and all
Tony Oursler on exploring our uneasy relationship with technology with his new show

You won't believe your eyes

Tony Oursler's new show explores our uneasy relationship with technology. He's one of a growing number of artists with that preoccupation
Ian Herbert: Peter Moores must go. He should never have been brought back to fail again

Moores must go. He should never have been brought back to fail again

The England coach leaves players to find solutions - which makes you wonder where he adds value, says Ian Herbert
War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

The battle for Mosul will unleash 'a million refugees'

Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
Yvette Cooper: We can't lose the election. There's too much on the line

Yvette Cooper: We can't lose the election. There's too much on the line

The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

It's not easy being Green

After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

Gorillas nearly missed

BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

The Downton Abbey effect

Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
China's wild panda numbers have increased by 17% since 2003, new census reveals

China's wild panda numbers on the up

New census reveals 17% since 2003