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Coalition's early capital spending cut was a mistake, says Clegg Clegg says Coalition was wrong to cut capital spending
(about 5 hours later)
The coalition made a mistake in cutting back capital spending when it came into office, Nick Clegg has said.The coalition made a mistake in cutting back capital spending when it came into office, Nick Clegg has said.
He told The House magazine that ministers had "comforted" themselves at the time that the reduction was in line with plans drawn up by Labour. 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 the economic recovery, he added. But they now realised investment in infrastructure was crucial for economic recovery, he added.
Labour said it was the coalition's first admission of a "serious mistake" on the economy. His comments came of the eve of fresh GDP figures - which may show the UK economy is contracting once again.
GDP figures to be released on Friday are widely predicted to show the UK economy shrank in the final three months of 2012. If the figures show the economy shrank in the final three months of 2012 they will be held to show that Britain is suffering a "triple-dip" recession.
Labour said Mr Clegg's comments were the coalition's first admission of a "serious mistake" on the economy.
'Foster recovery''Foster recovery'
In an interview with the magazine, 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.In an interview with the magazine, 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.
"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."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.""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.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.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 the BBC's Question Time there was "some merit" in the deputy prime minister's comments.Conservative health minister Anna Soubry told the BBC's Question Time there was "some merit" in the deputy prime minister's comments.
She said: "At the beginning we weren't making - and this was very early on in the coalition - big capital expenditure.She said: "At the beginning we weren't making - and this was very early on in the coalition - big capital expenditure.
"But then if you look at what's been rolled out, certainly if I look at my own region... there has been phenomenal investment by this government in the infrastructure, and rightly so.""But then if you look at what's been rolled out, certainly if I look at my own region... there has been phenomenal investment by this government in the infrastructure, and rightly so."
Asked about the prospect of a triple-dip recession, Mr Clegg said the "overwhelming" economic evidence showed more capital spending would help.Asked about the prospect of a triple-dip recession, Mr Clegg said the "overwhelming" economic evidence showed more capital spending would help.
And he said more would need to be done to "put money back in the pockets of people on middle and low income".And he said more would need to be done to "put money back in the pockets of people on middle and low income".
A triple-dip recession is widely accepted to mean that the economy has fallen into recession three times since 2008 without returning to a period of robust growth in between. A triple-dip recession is widely interpreted as meaning that the economy has fallen into recession three times since 2008 without returning to a period of robust growth in between.
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.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.
Childcare plan Mr Osborne has said UK spending cuts must continue if the government is to retain credibility.
Asked about the expected announcement on measures to help families with the cost of childcare, the deputy prime minister said it would provide an "additional layer" of support to "the squeezed middle" and help those on benefits who will receive universal credit but not enough to incentivise them to work. 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.
As part of its plans for the second half of its term in office, the coalition has promised more help with the cost of childcare, but has yet to set out the details of the plan. "We have a credible and flexible debt reduction plan. That credibility is very hard won and easily lost," said Mr Osborne.
Mr Clegg said said he was an "arch-proponent of giving more help to the British middle-classes", adding that the government wanted to provide support that would be "as simple and transparent and uniform as possible". 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.
Labour's Rachel Reeves said: "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."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.
"Nick Clegg also claims he wants to put money into the pockets of people on middle and low incomes. So he should now admit that the VAT rise was a mistake and cancel the plan to cut tax credits for working families on modest incomes on the day millionaires get a tax cut."