Nick Clegg says economic realities have changed

The Lib Dems are to drop their pledge to cut the overall tax burden at the next election in light of the worsening economic situation.

Leader Nick Clegg won a battle at the party's 2008 conference to put a broad tax-cutting message at the heart of the party's next election manifesto.

But Mr Clegg told the Financial Times net tax cuts were now "implausible" given the state of the public finances.

The party says it is still committed on a 4p cut in basic income tax.

Tough choices

A spokesman said its longstanding pledge to cut the headline rate of tax from 20p to 16p was still "fundamental".

But Mr Clegg is following Conservative leader David Cameron in adjusting his party's sights given the budgetary constraints expected after the next election.

Mr Cameron has warned tough choices will be needed on tax and spending if spiralling public deficits are to be brought under control and said reducing debt levels would be a priority.

The government has delayed its Comprehensive Spending Review amid speculation it will also need to revise its spending projections.

In September, Mr Clegg won the backing of his party to give some of the £20bn he claims the party can save from cutting government waste back in additional tax cuts for low and middle income earners.

A minority within the party opposed the move, which marked a significant shift in Lib Dem policy, which had seen it fight general elections on a tax-raising platform.

Now, Mr Clegg has acknowledged reducing the overall tax take, in the short term at least, given the deterioration in the state of the public finances.

The Lib Dems have broadly backed Labour's plan to sharply increase borrowing - which ministers say is necessary and sustainable - to help the economy through the recession.

But they have attacked many of the government's measures, such as the 2% VAT cut, as flawed and ineffective.

Mr Clegg said his long-term goal was still to cut taxes and he would focus on redistributing the tax burden by ending tax breaks for the rich and tackling tax avoidance.

And while accepting the state may have to grow in the short term, Mr Clegg said politicians had to be honest about where spending cuts may have to come from in the next Parliament.

Beyond existing commitments to scrap ID cards and government "baby bonds", Mr Clegg said areas such as public sector pension entitlements and university enrolment targets could be looked at.

The construction coalition has drawn up a 10-point manifesto

A campaign to protect thousands of building jobs in the recession is to be launched at the Welsh assembly later.

The Get Britain Building coalition of construction organisations and companies is warning 300,000 jobs could be lost in the industry around the UK.

A 10-point manifesto includes calls for a cut in VAT for building repairs and targets for local authorities to identify land for social housing.

Assembly members from all four parties will be speaking at the launch.

The coalition predicted 90,000 jobs could be lost at small and medium-sized builders.

A survey by the Federation of Master Builders (FMB) found 61% of its members were expecting a fall in work during the first quarter of 2009.

Richard Jenkins, Wales director of the FMB said smaller companies were the backbone of the economy but were being hit hardest by the recession.

THE BUILDERS' MANIFESTO Cut VAT to 5% for building repair and maintenance Restore empty homes in Wales and make existing homes more efficient Return to 'responsible lending' and mortgage interest tax relief Welsh targets to identify land for 6,500 affordable homes Assembly and UK governments to work closely to reform planning law Government co-operation on public-sector spending plans Planners drop demands for community contributions from developers Public sector and contractors observe guidelines on prompt payment Reform stamp duty to only cover home value above the tax threshold Reintroduce empty property rate relief Source: Get Britain Building

"During the last recession the UK construction industry lost over 500,000 skilled jobs - we cannot allow that to happen again.

"We are not asking the government for a financial bailout, we are simply asking the government to allow our members and manufacturers to do what they do best and keep building a better Britain," he said.

Chris Pateman, the managing director of the Builders Merchants Federation said: "We all need the government to create conditions in which people can borrow money at sensible rates or have the confidence to invest their savings in those millions of pent-up garage conversions, house extensions and roof insulation jobs that can make an immediate and quantifiable improvement to individual families' quality of life.

"And, at the same time, improve the quality and energy-efficiency of the built environment, reduce the waiting lists for social housing and take some pride in the size, scope and skills of the nation's largest industry - building," he said.

The downturn in the economy has already effected the construction industry in Wales.

In February, the Flintshire-based builder Redrow said it was planning to cut another 90 jobs after revenues for the second half of 2008 had fallen by 58%.

Last summer, the house-builder Bellway halted construction of two blocks of flats in Cardiff Bay, including one in front of the Wales Millennium Centre - close to the Senedd building, where the manifesto is launched later.

But the company has now confirmed it hopes to start building again "soon" at a 17-storey tower at Prospect Place in another part of Cardiff Bay.

Work on a development in Cardiff Bay was halted last summer

The One Wales coalition agreement commits the assembly government to increasing the supply of affordable housing by at least 6,500 by 2011.

On Tuesday, the Finance Minister Andrew Davies brought forward £15m to support around 400 more affordable homes over the next three years.

A £15m deal to allow housing associations to buy unsold homes and plots from private builders was agreed by the assembly government in February.

A spokesperson for the assembly government said it was "more than ready" to discuss the points raised by the coalition.

"We listened to their calls at the first economic summit when the industry asked us to help their cash flow problems by purchasing the newly built properties they couldn't sell in order to help boost our supply of affordable housing.

"We are working with Shelter Cymru in order to address the issue of empty homes and we have extended a pilot scheme to make homes more energy efficient.

"We are also encouraging local authorities to release land for affordable housing and we are leading by example on this.

"We have also just announced that 40 schools and colleges across Wales are to benefit from nearly £109m of capital investment from the Welsh Assembly Government over the next three years including the delivery of 12 new schools."

Nick Clegg will urge his party to seize the moment

Liberal Democrat leader Nick Clegg will claim the recession gives his party the chance to seize the initiative from Labour and the Conservatives.

In his closing speech to the party's spring conference in Harrogate, he will say Labour is "spent" and the Tories can "never be the party of change".

And he will urge voters to look to the Lib Dems to steer them through.

The "one dim light" in a crisis is that it "opens the door to a genuinely new way of doing things," he will say.

Mr Clegg has used the two-day conference to paint Labour and the Tories as the joint architects of economic meltdown.

And he portrayed his party as the one with a radically different solution to the country's economic woes.

VAT 'pinprick'

Treasury spokesman Vince Cable mounted his most outspoken attack yet on "fat cat" salaries in the public as well as the private sector on Saturday, calling for full public disclosure of all packages over £194,000 - the prime minister's annual pay.

And in his keynote address to the party faithful, Mr Clegg will set out Lib Dem plans to scrap the £12.5bn VAT cut, which he describes as a "pinprick", and invest the cash in green initiatives he claims will create thousands of jobs.

The Lib Dems want to use the money to insulate schools and hospitals and install smart meters in every home, in a massive scheme which would also reduce the UK's carbon footprint.

They believe the move would create 95,000 jobs.

Criticising Labour's response to the recession, Mr Clegg will say: "The government has borrowed £12.5bn to finance this year's pinprick VAT give-away.

"That's more than £350 every second of every minute of every hour. That money alone could have created nearly 100,000 new jobs, and laid the foundations, quite literally, for a new green economy."

'Spent match'

He will go on to insist the "flame" of progress no longer burns for Labour, and that the Lib Dems are the only party capable of rebuilding the country.

"Labour is like a spent match - there's nothing left," he will say.

"You remember how hopeful people felt in 1997, remember the promise of a better future? Don't you feel the disappointment?

"An economy in tatters, a country more unequal than before, an illegal war, our government implicated in torture and rendition, our environment poisoned, our privacy invaded, our freedom curtailed.

"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."

The Liberal Democrats have been celebrating their party's 21st birthday this weekend.

They have also played host on Saturday to a guest speaker, Howard Dean, the former chairman of the Democratic National Convention, who ran for the Demoocratic nomination in 2004.

Dr Dean told delegates he was "delighted" Barack Obama was US President, which had made the Democrats a "national party again".

He hailed Mr Obama's commitment to a more consensual foreign policy and the environment.

He also spoke of the importance of "knocking on doors" and not just relying on the internet to mount political campaigns and raise money.

And he urged Lib Dems to take a leaf out of Obama's book and to reach out to the under-25s who he said were turned off by conventional politics and, in particular, Britain's "opaque" Parliamentary system, which he said needed to be explained better.

Vince Cable has called for highly paid executives in the private and public sectors to be named and shamed.

In his speech to the Lib Dem spring conference, the party's deputy leader demanded full disclosure of salaries more than £194,000 - what the PM earns.

The move would ensure "fat cats have nowhere to hide", he told delegates.

Publicly listed firms publish board members' pay but Mr Cable claimed some of the highest earners do not join boards to avoid full disclosure.

The Lib Dem Treasury spokesman, who has been one of the leading critics of excessive City salaries, criticised what he called "extreme, obscene, inequalities of reward".

But he extended criticism to public sector employees who expect bonuses whether they succeed or fail.

"Civil servants now expect big bonuses if they meet their targets and, if they don't, bonuses to encourage them to try harder," he said.

"The scale of greed is less but the self-serving instincts of the public sector aristocracy are fundamentally no different from the bankers'."

Labour attacked

He said rank-and-file workers at failed banks should be thankful that they still have a job at all rather than appealing for bonuses.

"The bonus culture has become all-pervasive.

"I get plaintive letters from bank employees - not well off but not poor - demanding to be paid their bonus even though their banks have collapsed and survive only on public money," he will say.

"I understand the annoyance of people who do not get the pay they were expecting. But without the taxpayer, they would not have a job, let alone a bonus.

"Many in other industries have not been so lucky."

Mr Cable also launched a stinging attack on Gordon Brown's economic record, comparing New Labour to a "bad bank".

He told delegates in Harrogate: "Labour has dominated the progressive side of British politics for 80 years. But no more.

"Labour has lost its moral authority.

"And economic failure has killed the New Labour brand.

"Just as good banks are being separated from bad banks there is a separation in progressive politics.

"Labour is the bad bank with a legacy of toxic policies and failed management. We are the good bank.

"In these difficult and uncertain times the Liberal Democrats have the ideas, the idealism and the values to meet the national need."

'Get-rich-quick'

The Lib Dems are using their two-day conference to highlight their message on the economy - such as tax cuts for low and middle income workers - and show that the party can lead Britain out of recession.

Despite positive media coverage of Mr Cable's response to the economic crisis, the Lib Dems still trail behind the two larger parties when it comes to the public's confidence in their ability to steer the economy out of recession, a ComRes poll for The Independent newspaper this week suggests.

Tory leader David Cameron and shadow chancellor George Osborne have overtaken Gordon Brown and Chancellor Alistair Darling as confidence leaders in the poll.

Lib Dem leader Nick Clegg opened the conference with a rally for delegates on Friday evening at Harrogate's Royal Hall, in which he attacked the "get-rich-quick" philosophy of the Thatcherite 1980s.

He also paid tribute to previous Lib Dem leaders, as the party celebrates its 21st birthday.

It was formed in 1988 following a merger between the Liberal Party and the SDP.