Nick Clegg says 2009 will be a year of hardship for many

The next year will be a "difficult" one for thousands of people at risk of losing their jobs and homes, Lib Dem leader Nick Clegg has warned.

The economic downturn was a crisis that could only be tackled by new thinking, which neither Labour nor the Tories were able to offer, he said.

The Lib Dems are calling for large tax cuts for those on low and middle incomes to help them and the economy.

Extra help for families with young children was also needed, he added.

'Tough times'

Mr Clegg promised announcements in early 2009 on proposed increased investment in childcare and reduced class sizes for infants.

In his new year message to party members, Mr Clegg said people were suffering because of the "economic mess" caused by Labour.

Both Labour and the Conservatives keep doing the same thing over and over again and expect something different to happen Nick Clegg

While the government did not have the "right ideas" to get the economy back on track, he claimed the Conservatives were not prepared to help those in trouble.

"Britain is facing a difficult year," he said.

"Every day, 200 families are now at risk of losing their homes and three million people could be out of a job."

The difficulties offered the possibility for lasting change but only if leaders were prepared to do things differently.

"Both Labour and the Conservatives keep doing the same thing over and over again and expect something different to happen."

Different approach

Mr Clegg has proposed spending £12.5bn - the estimated cost of the government's temporary VAT cut introduced earlier this month - on measures to insulate homes, support renewable energy and improve public transport as part of a "green road" to economic recovery.

He also promised new ideas to help parents with children to get back to work and to improve the education of children from disadvantaged social backgrounds.

"Perhaps the greatest danger of today's recession is that it will mortgage the future of our children," he added.

"We must prevent that happening."

Labour have accused the Lib Dems of being prepared to cut public services to fund income tax cuts, something which they have denied.

Mr Clegg says measures like the VAT cut will not work

The Lib Dems are offering a "sense of hope and direction" for people suffering in the current economic climate, Nick Clegg has said.

On the first anniversary of his election as leader, Mr Clegg said his party had taken the lead on the economy and other key issues affecting the UK.

He is outlining plans to scrap Labour's 2.5% cut in VAT and spend the £12.5bn it will cost on green measures.

Creating "sustainable" jobs was vital to future economic growth, he added.

Year in charge

As he marks a year in the job, Mr Clegg is setting out his vision for dealing with the downturn and preparing the UK for future recovery.

Gordon Brown and David Cameron are like two dogs fighting over the wrong bone Nick Clegg Nick Robinson on the Lib Dem proposals

He told the BBC that his party was focused on practical help for people most at need rather than squabbling over questions such as how much the government should borrow to support the economy.

"Gordon Brown and David Cameron are like two dogs fighting over the wrong bone," he said.

The Lib Dem proposals would include a five-year plan to insulate every school and hospital, subsidies for home energy efficiency, 40,000 new zero-carbon homes, improvements to rail lines and 700 new train carriages.

Mr Clegg accused the government of "tinkering" with ineffectual measures such as the VAT cut when what was needed was "fresh, bold thinking".

On Wednesday a Lib Dem move to annul the temporary cut was defeated in the Commons by 303 votes to 223.

Lib Dem policies sent a "message of hope and fair values which I believe are very attractive to many people in the country," he said.

The Lib Dems were the first party to "identify" the risk of a recession and campaign against "astronomical" rises in energy bills.

Mr Clegg added: "Instead of a meaningless VAT cut that people won't notice, we will insulate every school and hospital in the country and the homes of a million people languishing in fuel poverty.

"We will build thousands of desperately needed social houses, install money-saving smart meters, re-open rail lines and build new trains."

'Leading the way'

Mr Clegg defended his performance over the last year, saying the party had led the way on the major issues affecting the British people such as Iraq and the defence of civil liberties.

He added that he was "proud" of the party's performance in May's local elections.

The Lib Dems back government plans to inject money into the economy to support jobs but argue the VAT cut - which came into force on 1 December - is the wrong solution.

In a Commons debate on Wednesday, the Liberal Democrat Treasury spokesman Vince Cable described it as "seriously defective".

The Conservatives also criticised the cut, saying it is "unaffordable and ineffective" and would lead to a massive increase in taxation.

But Treasury Minister Stephen Timms said it was a fair way to put money into the economy because low income households spent a larger share of their income on VAT than richer households.

Labour has accused the Lib Dems of wanting to cut public spending at a time when investment in public services should be maintained.

Kirsty Williams said she had "broken the mould" after being elected Wales' first female party leader in the Welsh Liberal Democrat leadership contest.

The Brecon and Radnorshire AM will replace Mike German after beating Cardiff Central AM Jenny Randerson.

She gained 59.9% of vote over Ms Randerson's 40.1% on a 68.1% turnout

Ms Williams, aged 37, launched her leadership bid saying she wanted to embrace the party's talent to achieve success "in all parts of Wales".

She has been an AM since 1999 and was a member of the National Assembly Advisory Group (NAAG) which decided the institution's working arrangements when it was created.

The mother-of-three looked tearful when the result was announced at the Wales Millennium Centre in Cardiff.

We will re-ignite the flame of liberalism that once burnt so bright in this country Kirsty Williams Analysis: Challenges ahead for new leader

She said her party had to reach out to people who felt let down by politics and the assembly and she had "something unique to offer the people of Wales".

"As a party we have broken the mould today by electing a woman," she said.

"If you have been turned off by politics, by the way the Labour Party has let Wales down, or the Conservatives' attitude, or Plaid's abandonment of principles, then come.

"We will re-ignite the flame of liberalism that once burnt so bright in this country.

"I am determined as leader of this party that the Welsh Liberal Democrats will blaze a trail for a new politics in Wales."

Ms Williams also paid tribute to her "formidable opponent" Ms Randerson and called Mr German a "tremendous leader of this party".

Mrs Randerson said the contest had "ignited" interest in the party and "re-engaged" its membership.

Kirsty has a strong record on the issues that matter most to the people of Wales Lib Dem leader Nick Clegg

Addressing the party's new leader she told Ms Williams: "You have a mandate for change within the party and a platform for bringing change to the nation."

"Kirsty, you have my deepest and sincere congratulations.

"I have worked with you since the day the assembly started. Your qualities and strengths are formidable.

"You have my word that from this moment onwards I will be with you every step of the way."

Liberal Democrat leader Nick Clegg was one of the first to congratulate his new Welsh counterpart on her success.

"Kirsty's election as leader is excellent news for the Welsh Liberal Democrats and for Wales," he said.

"I know that Kirsty will be a strong champion for liberal values in the Senedd, helping to make Wales a fairer and greener nation.

"Kirsty has a strong record on the issues that matter most to the people of Wales, taking the fight to both Labour and Plaid Cymru in their heartlands."

Labour leader and First Minister Rhodri Morgan added his own congratulations and took time to pay tribute to the departing Mr German.

KIRSTY WILLIAMS FACTFILE Born: Taunton, Somerset Age: 37 Previous occupation: Marketing executive Constituency: AM for Brecon and Radnorshire since 1999 Supporters include: Mark Williams MP, AMs Mick Bates and Peter Black, Powys councillor Liam Fitzpatrick, Cardiff councillor Gareth Aubrey

"Not only is she the first woman to be elected as a party leader in Wales, she has already shown her abilities as a feisty campaigner back in the referendum campaign in 1997, and in the assembly over the past nine years," he said.

"Can I also take this opportunity to pay tribute to Mike German both for his contribution to assembly politics since May 1999, and for his hard work as a cabinet colleague during the course of the Labour/Lib Dem coalition."

Plaid Cymru leader Ieuan Wyn Jones also paid tribute to the outgoing leader before congratulating his replacement on her success.

"He has been leader of his party since the first assembly election in 1999 and in this time has had a large impact on his party and Welsh politics," he said.

"I would also like to congratulate Kirsty Williams on her victory. She is an experienced AM and I'm sure that she will be a worthy opponent in the assembly chamber."

Welsh Conservative leader Nick Bourne AM added: "I congratulate Kirsty on her success and wish her well in her new role.

"This is an important moment for the National Assembly and for Wales in general, representing as it does a significant breakthrough in the representation of women in frontline Welsh politics."