Lib Dem conference: Clegg to defend cspending cuts

Nick Clegg will defend the government's economic strategy and his party's role in the coalition in his leader's speech to the Liberal Democrat conference.

The deputy PM is expected to say they will not change course on spending cuts but can do more to encourage growth.

He will argue the economic crisis shows the party made the "right call" in entering power with the Conservatives.

The BBC understands ministers are discussing how to inject up to £5bn into the economy.

BBC political editor Nick Robinson says some Cabinet members believe the chancellor could raise capital spending on infrastructure.

The news comes as Mr Clegg prepares for his big speech at his party conference in Birmingham, in which he is expected to focus heavily on the state of the economy after the International Monetary Fund warned of the risk of a double-dip recession in the UK and other countries unless policymakers took urgent action.

Mr Clegg is expected to reject accusations from Labour that the deficit reduction strategy is not working, saying the course of action is tough but right.

Economic challenge

But despite the squeeze on the public finances, Mr Clegg will say the government is not "helpless" to do anything about the problems of flagging growth and rising unemployment.

Critics say recent Lib Dem initiatives to kick-start local infrastructure projects and ensure money earmarked for national projects - like Crossrail - is actually being spent, are far too modest.

Although it is understood the speech will not contain any new announcements on infrastructure, Mr Clegg is expected to say ministers will do more to help boost economic activity and create jobs.

A succession of senior Lib Dem figures have warned about the difficulties facing the UK, with Business Secretary Vince Cable comparing the task of securing prosperity to the "economic equivalent of war".

While defending the austerity drive as being necessary for economic credibility, Mr Clegg is expected to say it will be done in the fairest possible way with the wealthiest in society contributing.

'Summer schools'

Mr Clegg has said that were the 50p tax rate to be scrapped, it would have to be replaced by other taxes on the wealthy - such as on property or land.

He will use the speech to reassure party members that they remain a distinct political force and that manifesto commitments on reducing the tax burden of the lowest-paid, providing more money for the most disadvantaged pupils and restoring the link between earnings and pensions, have been delivered.

Responding to last month's riots in England, Mr Clegg will say the disorder showed there were a group of people who "had fallen through the cracks" and had "nothing to lose" by their actions.

"It was about what they could get, here and now, not what lies in front of them, tomorrow and in the years ahead," he will say.

Some of those involved "lost touch with their own future" years before the riots, he will argue. The Lib Dem leader will announce a programme of catch-up summer classes for children "most in need" prior to starting secondary school.

"So often the people who have gone off the rails are the ones who were struggling years earlier," he will say. "This is a £50m investment to keep them all on the right path."

Electoral setbacks

The Lib Dems have been trying to regroup after suffering a double setback in the polls in May.

The party suffered heavy losses in council elections in England and Scotland. Nearly 800 councillors lost their seats, including all those up for election in Manchester and Liverpool.

The Lib Dems also suffered a defeat in a referendum on the UK voting system when the alternative vote campaign they backed was overwhelmingly rejected by the voters.

Despite these reverses and continuing poor poll ratings, the Lib Dem leader has dismissed speculation about his own future.

He has insisted he will remain in his job "well beyond" the end of the current Parliament and lead his party into the next general election in 2015.