The Budget - Tough but Fair

Nick Clegg, Deputy Prime Minister, says:

Labour left our country with a mountain of debt. Every minute that goes by the government spends a staggering £80,000 on interest, that's over £800 million a week. If we don't take action now, the markets will force us into even more drastic measures as they have in Greece and Spain.

Without action on the deficit, we will carry on racking up unaffordable debts our children will have to pay off. We will carry on spending more money on debt interest than we do on our schools. And we will undermine the economic growth needed to create jobs and opportunities for all of us. There is nothing fair, liberal or progressive about any of that.

Of course, the Labour party will say that these decisions are not justified. They will say the budget creates risks for our economy and that Liberal Democrats have sold out to go along with Conservative cuts. They are wrong.

Every time you hear Labour say that, ask them why they covered up the details of the £44bn of cuts they themselves had planned. Ask them why they racked up so much debt that we could end up spending £70bn a year just on debt interest. And ask them why they created this fiscal bombshell in the first place by refusing to take action against the reckless banks even when Vince Cable warned of the risks they were taking.

Until Labour accepts the blame for the mess we are in and comes up with a plan for getting us out, they cannot be taken seriously.

We have always argued that cuts would be necessary, but the timing should be based on economic circumstances, not political dogma. The economic situation today means that time has come.

A lot has changed even in the last few months. The crisis in the Eurozone and the problems in Greece and Spain have put huge pressure on us. The new Office of Budget Responsibility has shown that the structural deficit is bigger than we thought. And in government, we have discovered billions of pounds of unfunded spending promises Labour had made, cynically raising people's hopes when they knew the coffers were bare.

So cuts must come. We have taken the difficult decisions with care, and with fairness at their heart. This is one of the hardest things we will ever have to do, but I assure you, the alternative is worse: rising debts, higher interest rates, less growth and fewer opportunities.

Sorting out Labour's mess will be difficult but it is the right thing to do.

In the past, efforts to tackle a big deficit have always hit the poorest the most. The coalition has ensured that - for the first time - this will not happen. The richest will pay the most, while pensioners and children will be protected.

Look through the Budget and you will see key policies we campaigned for being put into effect.

• The £1,000 increase in the Income Tax allowance will mean that 880,000 low paid workers will be freed from Income Tax altogether. This is the first step towards delivering our manifesto commitment to ensure no-one pays tax on the first £10,000 they earn.

• The Budget puts in place our promise of a new tax on banks, ensuring that they help to pay to clear up the mess left by the financial crisis.

• Top earners will pay a full 10% more in Capital Gains Tax than under Labour, with no loopholes or tapers or get-out clauses. That change helps ensure those with the broadest shoulders take the greatest strain.

• We will guarantee that pensioners get a fair deal, putting into effect the Liberal Democrat manifesto commitment for a "triple lock", so state pensions rise every year in line with earnings, inflation, or by 2.5%, whichever is the highest. Never again will pensioners be allowed to fall behind.

• The Coalition Government will not let regions, towns or cities that depend heavily on the public sector be forgotten. That's why this Budget establishes a regional growth fund to ensure those parts of the country get meaningful support to help create jobs and opportunities for all.

• Tackling Child Poverty remains at the heart of the government's approach. So while we have decided to cut child tax credits for those who can most afford it, we have increased tax credits for the poorest families and put up to £ 2 billion into child tax credits to help ensure children of all backgrounds get a fair start in life.

These measures will ensure that the burden of deficit reduction is shared fairly across society.

This Government is being honest with people about the road ahead. Together, we can make it through these difficult times and restore health to our economy and to the public finances. These difficult choices are the foundation stones for the fairer Britain we will build over the next five years.