Clegg: We'd tax wealthiest, balance books and fix roads

Nick Clegg said the idea the coalition with the Conservatives had robbed the Lib Dems of their "soul" was a ''myth''

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Nick Clegg has said the Lib Dems would borrow to fix Britain's "creaking" roads, railways and water networks once the deficit has been axed, saying he does not want "austerity forever".

Mr Clegg said he aimed to have fixed the deficit by 2017/2018.

He said this would be achieved by increasing taxes for the wealthier rather than by more welfare cuts, as the Conservatives proposed.

Mr Clegg's speech comes after the party finished sixth in a by-election.

In the speech he defended the decision to go into coalition in 2010 and outlined his party's "record of delivery and promise of more" ahead of the 2015 election.

It is being seen as part of an attempted fight-back after the party suffered a string of heavy losses in recent English local and European elections.

'Throwback to the 1970s'

It lost all but one of its 11 MEPs in the European contest, finishing fifth behind the Green Party. It also shed more than 300 council seats in local elections across England, and came sixth in the Newark by-election.

In his speech at Bloomberg in London, Mr Clegg committed the Liberal Democrats to finishing "the job we've started" in eliminating the structural deficit by 2017/18 - but he insisted this would be done "in a fundamentally different way to the Conservatives".

"We are not the Tories," he said. "We don't believe in an ever-shrinking state. We are not so ideological about making cuts that we'll deny people the things they need.

"We're not so dogmatic about borrowing that we'll jeopardise Britain's economic health. Responsibility, yes, austerity forever, no."

Mr Clegg said unlike the Tories who have "ruled out asking the very wealthy to pay even just a bit more in tax to help the ongoing fiscal effort", his party will be "asking those with broadest shoulders to make some additional contributions" by extending new council tax bands on higher value properties.

Nigel Farage and Nick Clegg UKIP leader Nigel Farage and Deputy Prime Minister Nick Clegg went head to head in two televised debates

He said investment was needed "to fix our creaking national infrastructure".

"No-one looking at Britain's prospects for the future can overlook the fact that we are relying on roads, railways, an energy network and a housing supply which simply will not be able to support the aspirations and ambitions of future generations.

"Our railways are a throwback to the 1970s. We rely on water and waste networks from the 19th Century. We have some of the most congested roads in Europe.

"We cannot build a stronger economy and a fairer society where there are opportunities for everyone unless we are prepared to put our shoulders to the wheel and use the muscle of the state - if necessary through borrowing - to rewire and revamp our infrastructure."

He said up to 300,000 new houses were needed a year: "We have to give people the homes they need and protect the country from another crisis - and if that means borrowing a bit when times are good and debt is falling, so be it."

'Bravest' party

Mr Clegg's efforts to boost his party's standing since entering into coalition with the Conservatives in 2010 - including apologies for his U-turn in raising tuition fees, and making the Lib Dem case for staying in the EU in two debates with UKIP leader Nigel Farage - have so far failed to boost poor poll ratings.

The Deputy Prime Minister defended his decision to enter into coalition with the Conservatives after the 2010 general election and warned that the Lib Dems would not allow their critics to "airbrush out" their role in delivering recovery.

But he told activists they need to be "much clearer and louder" about their motives and their reasons for wanting to govern.

Hailing his party as "the bravest and toughest party in British politics", Mr Clegg said: "The Liberal Democrats are not and will never be a split-the-difference party. I am not interested in coalition at any cost - I am interested in Liberal Democrats in government to deliver a more liberal Britain."

He said they were not "some sort of electoral wedge" standing ready to prop up either Labour or the Conservatives in the event of another hung parliament.

He said the "plucky" party had decided to put the country's interests ahead of its own in 2010 and recalled "anguishing" through the night about whether or not the Lib Dems should go into coalition with the Conservatives.

The Lib Dems were not "opportunists" willing to sign up to policies just to get into power, he said, but had decided to take the "gritty grown-up" decision to go into coalition because the country "was teetering on the edge".

Commenting on Mr Clegg's attempted fight-back, Labour's deputy leader Harriet Harman said: "Nick Clegg should be in no doubt, people will not forget what the Lib Dems have done in government - his party has been an accomplice rather than a brake on this Tory-led government."

She added: "It is not brave to make promises and break them, it is reckless with people's confidence in our democracy."

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