The party of progress: Clegg urges radical change

Lib Dem leader claims to be torch-bearer of reform at spring conference. Jane Merrick reports

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The Liberal Democrats are the only party to offer the "torch of progress" to voters deserting Labour over the recession, Nick Clegg will tell members of his party today. In a speech to his spring conference in Harrogate, Mr Clegg says Labour has left an economy in tatters, has "poisoned" the environment and curtailed the privacy and freedom of millions of citizens.

He said the Conservatives likewise "will never be a party of change" because they offered no way of steering Britain out of the downturn.

Both Mr Clegg and Vince Cable, the Lib Dem Treasury spokesman, used the conference to assert a "progressive morality" in politics at a time when public outrage at the banks and ministers is at a height and on the weekend when Lloyds Banking Group is rescued by the Government for a second time.

Using apocalyptic language, Mr Cable told the conference yesterday that Britain was in the middle of a "moral crisis" because Tony Blair and Gordon Brown had made a "pact with the Devil" by going easy on the financial sector.

Mr Clegg launches a savage attack on the Government's handling of the recession, accusing Gordon Brown of squandering £12.5bn on cutting VAT. The Lib Dems would scrap the 2.5 per cent "pinprick VAT giveaway", introduced in December, and divert the cash to create nearly 100,000 jobs to help build a new "green economy". The money would be spent on insulating schools and hospitals and installing smart electricity meters in every home.

Mr Clegg, who returned from paternity leave this weekend after the birth of his third son, has promised to cut taxes for those on lower incomes, paid for by higher taxes for the wealthy, and universal childcare to boost social mobility. His speech follows remarks that he made on Friday blaming Margaret Thatcher for sowing the seeds of the financial crisis by putting money above morality.

Closing the conference today, Mr Clegg will say: "For as long as I can remember, there has been a movement for progress in Britain, a movement towards greater freedom, greater equality, greater opportunity. The flame of that movement has burned in the hearts of many men and women. There was a time when it burned for Labour. But that time is over. Labour is like a spent match. There's nothing left.

"If you believe, like I do, in progress, if you feel let down by Labour, and see that the Conservatives will never be a party of change, turn to the Liberal Democrats. We carry the torch of progress now. We exist to keep the flame of hope alive. Together we can fight for and win prosperity for all."

The Lib Dem leader will add: "The one dim light in a crisis like this is that it makes even the impossible possible. It makes the unthinkable thinkable. It makes the idealistic realistic. It opens the door to a genuinely new way of doing things."

Mr Cable, meanwhile, has launched an attack on the "all-pervasive" bonus culture and called for all private and public sector salaries of more than £194,000, equivalent to the Prime Minister's, to be made public.

He saw the blame-game between Labour and the Conservatives as "sterile, puerile and childish". David Cameron and George Osborne were "absolutely loving every minute of this crisis" because it would wipe the memory of previous Tory recessions, Mr Cable claimed. "As the jobless toll mounts, as homes are repossessed, they can barely conceal their glee."

Turning his fire on the Government, he added: "This is a moral as well as a financial crisis. The shocking stories coming out of the banks reveal a deep corruption of values which has now spread into government and society.

"A decade ago Brown and Blair made a pact with the Devil. In order to bolster New Labour's reputation for economic competence they got into bed with the financial aristocracy. They turned a blind eye to massive salaries and bumper bonuses, the large-scale use of tax havens and tax dodging and dangerous high-risk activities of some investment banks – ultimately underwritten by the British taxpayer."

At the heart of the Lib Dems' election campaign, he said, would be tax cuts for those on low and average incomes, while refusing to make "unrealistic" spending commitments.

"The spirit of our alternative budget will be the same which inspired the People's Budget 100 years ago – when liberal radicals led by Lloyd George laid the foundations for progressive politics in Britain."

Coalition dilemma: Will the party see red or blue after the next election?

The Liberal Democrats celebrated their 21st "birthday" last week, the child of two occasionally squabbling parents, the SDP and Liberal Party. But, the day after the next general election, could they become a grown-up party with seats in a coalition government?

Polls suggest that David Cameron remains on course for a healthy majority on election day, but a major upset during the campaign could leave the Conservatives forced to join with the Lib Dems to form a government.

Recent surveys have suggested that, as voters desert Labour over the economy, many are drifting towards the Lib Dems rather than making a straight switch to the Tories. There has been a Lib Dem "surge" of several points, although Nick Clegg's party has never gone beyond the mid-20s once enjoyed by the Alliance.

But just as there were differences between the SDP and Liberals, there could be a division at the top of the Lib Dems in the event of a hung parliament.

In his speech yesterday, Vince Cable, who used to be a Labour councillor, savaged the Tories for offering "no convincing alternative" and "loving every minute" of the financial crisis because it erases the memory of previous Tory recessions. "The Tories bring one unique strength to this crisis – they are no longer the government."

Mr Clegg says the Conservatives can "never be a party of change". He has always insisted his party remains "equidistant" between Labour and the Tories, and that he is not looking for seats in any government at any price.

But if forced to choose in a hung parliament, some observers believe he would rather join forces with Mr Cameron than prop up a tired and unpopular Labour government.

Jane Merrick