Shoppers in Camden market. Critics say the government

Deficit U-turn? Clegg unveils Plan A+

Deficit U-turn? Clegg unveils Plan A+

By Ian Dunt

Nick Clegg has unveiled plans to speed up capital infrastructure projects, in a sign the government is prepared to deviate from its economic policy.

In a pivotal speech to the London School of Economics (LSE), Mr Clegg announced plans to get major infrastructure projects going to increase skills, boost employment and jolt the economy.

While the initiative would not see any new money being injected into the system, it tacitly accept the arguments of critics who say the government's deficit reduction programme has no plan for growth.

"Investment in infrastructure stimulates demand and raises productivity," Mr Clegg admitted, in a comment which could easily have been made by shadow chancellor Ed Balls.

"Since we came into government ministers have been expected to make savings. Now they’re under the same pressure to spend the money they’ve got.

He added: "And, to make sure, Danny Alexander, the chief secretary, will be shaking the Whitehall tree, making sure no one is stockpiling capital that can be put to good use today."

The speech signals a clear departure from the government's previous insistence that the original deficit reduction plan could not be tampered with, but stays within the limits set by the spending cuts timetable.

It follows from a careful assessment of President Barack Obama's job plan, which saw $447 billion (£283 billion) injected into the US economy.

It also represents a new confidence in the Lib Dems to push for a more centrist economic position and suggests a nervousness among Conservative ministers at the relentlessly depressing economic forecast.

Ministers will hand pick up to 40 of the infrastructure projects considered most important to growth and give them priority status.

Those selected will be shepherded by ministers, to ensure there are "no delays, no blockages, and we get these projects delivered", Mr Clegg said.

While Labour and the trade unions are likely to brand the move too half-hearted to make a serious economic difference, it is similar to the moment that Gordon Brown used the word 'cut' for the first time – two years ago tomorrow.

With the government now taking on board some of its rhetoric and economic analysis, Labour officials will be congratulating themselves on moving the debate closer to their own turf.