Nick Clegg warns of 'crucial year' for Britain

This will be a "crucial year" for Britain as spending cuts begin to bite and the economy begins to recover, Deputy Prime Minister Nick Clegg said today.

He said there would be "challenging circumstances" for millions of people as the cuts hit, but he also hoped there would be signs that the "repair job" on the economy was beginning to work.

With his Liberal Democrat party facing a key test in this week's Oldham East and Saddleworth by-election and in May's local council poll, Mr Clegg said he believed Lib Dems had delivered on key issues in government and were fighting for families trying to make ends meet.

"For the country as a whole, clearly this is the year when the savings that we have announced are going to start having an impact," Mr Clegg told the BBC Radio 4 Today programme.

"That clearly will be difficult but I think at the same time there are signs that the repair job we are doing on the government finances and the general creation of greater confidence in the economy might also start showing itself as well.

"I think it will be a crucial year - a crucial year, yes, of some very challenging circumstances for millions of people in this country, but I hope the beginning of a real turnaround as we move forward and as we successfully implement the repair job on the economy."

Mr Clegg said there were signs that private sector employment was growing and added that independent forecasters were predicting some growth in the economy as a whole.

But he stressed: "Of course we need to do more. We constantly need to do more."

He said he did not accept the notion that the Lib Dems had failed to deliver in government: "I want to challenge this idea that we are not delivering on those ideas we put front and centre in our manifesto.

"The fact is, we didn't win the election, we came third." And he said if his party had gone into coalition with Labour, student tuition fees would have been even higher.

Mr Clegg said of the fees controversy: "Yes, of course it's been difficult for us but we have crafted a system which I think will be a pleasant surprise to people."

He added: "I accept there is an immense amount of controversy over higher education. I personally believe the policy will stand the test of time."

He insisted that on four big issues - the pupil premium, raising personal tax allowances, rebalancing the economy and reforming politics - progress had been made and added: "I think that shows a clear liberal direction to this Government as a whole."

He said raising the personal tax allowance for basic rate payers would help people who were "getting up early, working hard, trying to make ends meet".

Mr Clegg said he had gone into government with his eyes open and added: "Whoever was in government would have to take very difficult decisions because Britain was genuinely standing, I think teetering, on the edge of a sovereign debt crisis."

The deputy premier said: "Over the course of this parliament I genuinely believe people will have a more rounded view of what this government is doing.

"We have got a lot of good things to say, come May. I know good news isn't very fashionable. There is another side to the story. We are on the side of people who want to get ahead and are trying to do the best for their family."