Deputy prime minister also uses spring conference speech to try and paper over differences on economic policy at top of party
A newly optimistic Nick Clegg, saved from the near death experience of the Eastleigh byelection, said the Liberal Democrats have moved from protest party to the anchor that will deliver centre ground governments committed to both a strong economy and a fairer society.
In a speech closing his party's spring conference, he attempted to paper over the mounting differences at the top of the party over stimulating growth saying both the business secretary, Vince Cable, and the treasury chief secretary. Danny. Alexander agreed the coalition needed to take a flexible approach to deficit reduction.
He also insisted that being in a coalition government did not dilute the party's identity, but strengthened it.
He said: "There is a myth that governing together, in coalition, diminishes the ability of the smaller party to beat the bigger party. The idea that, in Tory facing seats the Liberal Democrats will find it impossible to distinguish our record, our values, from theirs. But that myth has been utterly confounded. The opposite is true. The longer you stand side-by-side with your opponents, the easier your differences are to see. We don't lose our identity by governing with the Conservatives. The comparison helps the British people understand who we are."
He said he relished the fact that the party was no longer seen as the party of protest, or the automatic "none-of-the-above" choice.
"The Liberal Democrats are not a party of protest, we are a party of change. A party that is for things, not simply against things. A successful political party cannot thrive just by picking up the votes that have been lost by its opponents. Our ambition is to reach out to the millions of people in this country who want a party that strikes the right balance between economic credibility and social fairness."
In a thinly coded reference to Ukip, he added: "We are not some kind of receptacle for people who don't like the world – and don't want to do anything about it. We grapple with the world. We strive to make it better. And the more people who see that, all the better too."
With Cable saying the balance of risk had shifted to the wisdom of an economic stimulus, Clegg admitted: "Britain's economic recovery has proved more challenging than anyone imagined. The crash in 2008, deeper and more profound than we knew."
But he also warned of the dangers still confronting the economy, and the threat of rising interest rates, saying: "Just two weeks ago, the uncertain outcome of the Italian election threatened to plunge Europe back into crisis. Suddenly we were reminded of the danger that looms when markets question the ability of governments to live within their means.
"Countries around the world face the same, hard truth: we must all pay the piper in the end. I want to make one thing clear: We will not flinch on the deficit. But to be unflinching is not to be unthinking. And the idea that the choice is between a cruel and unbending plan A and a mythical plan B is simply not the case."
He continued: "Balancing the books is a judgment, not a science. And our plan has always allowed room for manoeuvre.
"Sticking to a plan requires government to be flexible, as well as resolute; nimble, as well as determined."
He argued the coalition had already shown some flexibility by delaying its deficit reduction programme by two years.
"When economic circumstances around us deteriorated and UK growth forecasts suffered, voices on the right called for us to respond by cutting further and faster. But instead we took the pragmatic choice to extend the deficit reduction timetable. As tax receipts went down we let the automatic ebb and flow of government borrowing fill the gap."
Clegg denied the coalition was slashing the state, saying: "By the end of this parliament, public spending will still be 42% of GDP. That's higher than at any time between 1995 and when the banks crashed, in 2008."
In an oblique reference to Cable's call for a multibillion pound direct investment in a house-building programme, Clegg said the government was already "straining every sinew to invest every available pound into UK infrastructure". The coalition was spending more on capital projects than Labour spent, on average, between 1997 and 2010.
He also referred to the massive investment already underway in major construction projects and insisted the Treasury had already made an unprecedented break from the straitjacket of its orthodoxy, by offering of £50bn worth of guarantees from central government to those people willing to invest in UK's infrastructure and get construction going.
"No government has offered these kinds of guarantees, on this scale, ever before."
In a key passage, he said : "We will and must do more to mobilise investment into our long-term infrastructure needs. I agree with that. Vince [Cable] agrees with that. Danny [Alexander] agrees with that. But, as we all equally acknowledge, there are no cost-free, risk-free ways of finding such huge sums of money. Not at a time when Labour left the cupboard bare and we still have the second highest deficit in Europe, behind only Greece."
Clegg also claimed: "We may be the smaller party, but we have all the biggest ideas," pointing to "the world's first ever Green investment bank. The Business bank; the bank levy; the Green Deal. Better schools and proper vocational learning. Greater shareholder democracy. Flexible working and shared parental leave. Tax cuts for working families, paid for by higher taxes on unearned wealth."
He then set out his criticisms of Labour and the Tories, arguing that only the Lib Dems offered both economic and social renewal. "The Conservative party knows it needs to stay on the centre ground to have any chance of speaking to ordinary people's concerns. At least the leadership seem to. But they just can't manage it, no matter how hard they try. They're like a kind of broken shopping trolley. Every time you try and push them straight ahead they veer off to the right hand side."
Referring to the calls from Conservative ministers for Britain to withdraw from the European convention on human rights, Clegg said the Tories would actively take away rights enjoyed by British citizens just to appease their backbenchers.
"Conference, make no mistake, no matter what the issue – safeguarding the NHS, creating green jobs, stopping profit-making in schools, preventing a return to two-tier O-levels – the Liberal Democrats will keep the coalition firmly anchored in the centre ground."
Clegg went on to criticise Labour for opposing "every single saving the coalition has been forced to make with not a single suggestion for how to raise money instead". Labour, he claimed, "are embracing opposition in the worst possible way. All they are interested in is striking poses and playing parliamentary games. They try to lecture us about taxing the rich. Even though taxes on the richest are now higher than they were for every year under thirteen years of Labour. They conspired with Tory rebels to scupper Lords Reform, even though it was in their manifesto."
Clegg continued: "By now I expected a re-energised Labour party, re-focused. The whole point of opposition parties is that they come up with ideas. But they haven't. Under Ed Miliband and Ed Balls, Labour remain a blank page in British politics. These people were in the government that crashed the economy before. They've given us no apology. No solutions. No plans. No sign that they even understand what they did. The truth is, left to their own devices, they'd do it again."
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