Clegg says Coalition was wrong to cut capital spending

Nick Clegg Mr Clegg said evidence showed more capital spending would help the economy

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The coalition made a mistake in cutting back capital spending when it came into office, Nick Clegg has said.

The deputy PM told The House magazine that ministers had reassured themselves at the time that the reduction was in line with plans drawn up by Labour.

But they now realised investment in infrastructure was crucial for economic recovery, he added.

However, Downing Street said the "right decisions" had been taken and infrastructure spending was rising.

Mr Clegg's comments came ahead of fresh GDP figures - which show that the UK economy contracted by 0.3% in the last three months of last year. Most economists had forecast a drop of 0.1%.

Labour said Mr Clegg's comments were the coalition's first admission of a "serious mistake" on the economy.

'Foster recovery'

In his interview, Mr Clegg said: "If I'm going to be sort of self-critical, there was this reduction in capital spending when we came into the coalition government.


Nick Clegg's admission that there was a reduction in capital spending when the coalition was formed has been seized on by Labour.

For months shadow chancellor Ed Balls's mantra has been that the government is cutting too far and too fast.

Now Boris Johnson has waded into the argument, urging the chancellor to "junk talk of austerity".

George Osborne is coming under increasing pressure - not just from opponents - but from within the coalition to moderate his austerity measures.

He announced £5bn of investment spending by 2015, including £1bn on roads upgrades in the Autumn Statement.

He'll be hoping that may help with the economic turnaround and quieten critics calling for a Plan B.

"I think we comforted ourselves at the time that it was actually no more than what [former Chancellor] Alistair Darling spelt out anyway, so in a sense everybody was predicting a significant drop off in capital investment.

"But I think we've all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private capital into infrastructure as possible."

He said more capital investment would create jobs and help the economy in the long run.

In his Autumn Statement, Chancellor George Osborne announced an additional £5bn of investment spending, including £1bn for road upgrades and £1bn for schools expansion.

Conservative health minister Anna Soubry told BBC One's Question Time there was "some merit" in the deputy prime minister's comments.

But David Cameron's spokesman said: "The PM's view is that the right decisions were taken.

"As the Treasury has explained, the government is spending £20bn more on infrastructure than in plans prior to the 2010 Spending Review, including increases in infrastructure spending in the last two autumn statements, which have been possible in part because of the progress that has been made in reducing current spending."

'Junk austerity'

The UK registered a double-dip recession last year, contracting for three quarters in a row before bouncing back with growth of 0.9% in the three months to September.

Anna Soubry: "There may be some merit that at the beginning...we weren't making big capital expenditure"

Mr Osborne has said UK spending cuts must continue if the government is to retain credibility.

His comments came as a rebuff to the International Monetary Fund's chief economist, Olivier Blanchard, who called for the UK to slow down its austerity programme.

Labour's Rachel Reeves said of Mr Clegg's comments: "This is the first admission that this government has made serious mistakes on the economy.

"But the real question is what Nick Clegg's government is going to do about it. We have urged ministers to bring forward infrastructure investment and build thousands more homes, but they have refused to listen."

Meanwhile, the Daily Telegraph reports that London Mayor Boris Johnson is urging the coalition to "junk the rhetoric of austerity and be confident".

Mr Johnson outlined a seven-point economic plan to business leaders at the World Economic Forum in Davos, including more house-building, investment in roads and railways, and tax cuts.

According to the Guardian, he also accused ministers of addressing airport capacity in south-east England at a "panda-like pace".


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  • rate this

    Comment number 704.

    Clegg finally admits what what most of us and Labour have been saying for over 2 years. The coalition cut too far, too soon and in the wrong places. Cutting Labour's economy-saving infrastructure investment programme has been the most disastrous of all. Too late the coalition have realised that we would have been better off with Labour.

    To make it worse the coalition are ruining schools and NHS.

  • rate this

    Comment number 498.

    I think they're trying to run the UK like a business, which essentially cutbacks will balance out the books, but this is a country, cutbacks reduce the workforce therefore depleting production and export, spending creates demand meaning more work. The more we spend the more confidence from investors.

  • rate this

    Comment number 495.

    I'm confused how so many commenters are using this as a platform to slate individual parties, when all three of the big political parties had the same plan.

    This one doesn't count as an opportunity for regurgitating your political bias I'm afraid.

    Clegg's got one thing right here, recession is a good time to build infrastructure. The rest, we all knew already.

  • rate this

    Comment number 398.

    The Coalition got the recession wrong from word go: they thought it was a rerun of 1992. It isn't. This is not to say that Labour got it right either as there is little difference between their economic plan and that of the Coalition.

    Politicians with their short time span forget it takes up to two years at least for capital investment to shift from off paper to things happening on the ground.

  • rate this

    Comment number 394.

    He is wrong. More roads rails houses are no use or purpose in a already well provided developed nation. It is not like there is any difficulty in getting about, gains would only be tiny bits of speed. Spending for the sake of it to look good as politicians, with money we do not have.

    Nationwide spread of spending would be much better on things for the real future, like broadband, & solar subsidy.


Comments 5 of 15


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