4:55am Friday 25th January 2013
© Press Association 2014
Deputy Prime Minister Nick Clegg has appeared to admit the coalition cut capital spending too deeply when it took power.
Speaking before the release of figures which are expected to show a fresh contraction in the UK economy, he said ministers had "comforted" themselves at the time that the reduction was in line with plans drawn up by the previous Chancellor, Labour's Alistair Darling.
Mr Clegg said ministers now realised money for infrastructure was needed to foster recovery and the Government must do more to fuel capital investment if Britain does plunge into a triple dip recession.
In an interview with The House magazine, he 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 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.
"Wherever we can we've got to mobilise more capital investment. The economic evidence is overwhelming. It helps create jobs now - people go on to construction sites. It raises the productive capacity of the economy in the longer run.
"Money in people's pockets, people on low and middle incomes, and, and mobilise capital investment will always remain my two - I mean, there are plenty of other things: supply-side reforms, making us more competitive and so on, there's fixing the banks, but those two are the ones I always single out."
Experts believe gross domestic product (GDP) will have fallen by 0.1% in the final quarter of 2012, putting the country on course for an unprecedented triple-dip recession. Labour has repeatedly urged the Government to implement a "plan B" for economic recovery based on temporary tax cuts and to bring forward long-term infrastructure investment.
Rachel Reeves, shadow chief secretary to the Treasury, 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.
"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."
© Copyright 2001-2014 Newsquest Media Group