Nick Clegg plans to pick Danny Alexander over Vince Cable as Lib Dem economy chief


Political Editor

Nick Clegg is expected to appoint Danny Alexander rather than Vince Cable as the Liberal Democrats' main economic spokesman at next year's general election.

The move follows a power struggle between Mr Alexander, who has worked closely with George Osborne as his Treasury deputy, and Mr Cable, the Business Secretary, who is closer to Labour than the Conservatives.

Mr Cable was shadow Chancellor in the run-up to the 2010 election. He was described as the "sage of the credit crunch" after predicting the housing market collapse and banking crisis. Some Lib Dem MPs hoped he would return to the key economic post for next year’s campaign.

But in the clearest sign yet that the job will go to his younger rival, Mr Clegg and Mr Alexander have written a joint article setting out the Lib Dems' stance on tax and spending in the 2015-20 parliament.

While they share the Conservatives’ goal of balancing the nation’s books by 2017-18, they accuse the Tories of being “wedded to austerity for austerity’s sake.” They say the Lib Dems have a “profoundly different approach”, rejecting Mr Osborne’s plan for £12bn of further welfare cuts and proposing taxes rises for the very wealthy. In an important change, they want borrowing limits relaxed for investment projects which ensure  economic growth and financial stability – including the building of 300,000 houses a year.

Today, Lib Dem sources said no final decision had been taken yet on who would take on the economic portfolio.

In part, the promotion of Mr Alexander would be seen in part as a reaction to the plot by Mr Cable's friend Lord Oakeshott to oust Mr Clegg after the Lib Dems' poor performance in last month's Euro and local elections.

Lord Oakeshott commissioned opinion polls on whether the party would do better with another leader. Mr Cable, the man most likely to take over if Mr Clegg was removed before the general election, distanced himself from the former Lib Dem peer but admitted he knew about some of the polls.

However, there were already signs before the failed coup that Mr Alexander could beat Mr Cable to the economic post. He is closer to Mr Clegg than the independent-minded Mr Cable.

The Business Secretary is said to be relaxed about "labels" and confident he will still play a role on economic affairs in the election campaign. Mr Cable has been calling for months for curbs on mortgage lending to prevent a housing bubble, which Mr Osborne announced on Thursday.

Ironically, Lib Dem MPs believe the new fiscal policy set out in the Clegg-Alexander article marks a significant shift towards Mr Cable's long-standing approach and takes the Lib Dems closer to Labour.

Some grassroots Lib Dems have accused Mr Alexander of “going native” at the Treasury and locking the party into “Osbornomics”. They regard the move away from “the politics of austerity” as a welcome admission that it damaged the Lib Dems at last month’s elections.

“The new fiscal policy is what Vince has been seeking for four years and Danny has been resisting,” said one Lib Dem MP.

Allies of the Deputy Prime Minister recognise Mr Cable’s experience and expertise but have said previously that he sometimes behaves more like an economic commentator than a Cabinet minister. They regard Mr Alexander as a safer pair of hands for the heat of an election. Mr Clegg’s faith in the Treasury Chief Secretary was shown when he put him in charge of planning for post-election period, a crucial role in the event of another hung parliament.

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