Clegg says coalition can be 'progressive' despite cuts
The cause of "progressive" politics need not be set back by public spending cuts, Deputy PM Nick Clegg has said.
He accused Labour leader Ed Miliband of "outdated" views on tax, spending and how to reduce inequality, saying the divide between them was widening.
The Lib Dem leader said it was right to help the poorest at a time of austerity by protecting NHS and schools spending.
Labour says coalition policies "risk making it harder for regular families to achieve their aspirations in life".
In a speech in London, Mr Clegg claimed it was possible for the government to tackle poverty and promote fairness despite its planned £81bn budget cuts over the next four years.
"Certainly the crisis in the public finances means making some hard choices," he said in the Hugo Young memorial lecture.
"But it also forces us to be clearer about what it really means to be progressive. With less money, we need more focus."
Mr Clegg said he agreed with Mr Miliband - who announced a major internal policy review on Monday - that the UK was an unequal society and that for too many children the barriers preventing them from fulfilling their ambitions seemed higher than ever.
But he said he disagreed with Labour's solutions for tacking inequality, saying they were stuck-in-the-past and too wedded to state action.
"The need to make choices is revealing an important divide in progressive politics," he argued.
"Between old progressives, who emphasize the power and spending of the central state and new progressives who focus on the power and freedom of citizens.
"Labour risk being on the wrong side of this divide. They are becoming the conservatives of British politics, defending outdated approaches rather than looking forwards to a new progressive future."
The potential impact of deficit-reduction measures announced in June's Budget and October's Spending Review - including a VAT rise and £18bn in welfare cuts - continues to be hotly contested, with the Institute for Fiscal Studies saying they would be broadly regressive in their effect on different income groups.
But Mr Clegg argued that those focused on "income-based snapshots" were ignoring the wider picture and the benefits that decisions such as protecting NHS spending, boosting funding for early-years education and investing in schools in the most deprived areas would have on the poorest families.
The previous Labour government, he said, had pursued a narrow, target-driven approach to tackling inequality focused on "shifting money around rather than shifting life chances".
"Social mobility is what characterises a fair society rather than a particular level of income equality," he said. "For old progressives, reducing snapshot inequality is the ultimate goal. For new progressives, reducing the barriers to mobility is."
Many Lib Dem MPs have said the party needs to keep its options open in the run-up to the next election and should not rule out working with Labour in the event of another hung Parliament.
But Mr Clegg claimed Labour was struggling to engage with the new style of politics embodied by the coalition with the Conservatives - which was "working with integrity".
"Labour is in danger of being left behind, of becoming stuck in an anti-pluralist rut," he added.
"When we practice plural, coalition policies, they cry foul. If you see every compromise as a betrayal, you will never understand plural politics and will certainly never be able to engage in it."
However, shadow cabinet office minister Liam Byrne said Mr Clegg's speech demonstrated how little he understood about the damage coalition policies - including January's increase in VAT to 20% - were doing to people's chances of getting on.
"It is Nick Clegg's new policies, from student debt to cuts in EMA which risk making it far harder for regular families to achieve their aspirations in life," he said.
"Today's attempt to justify his government's attack on the opportunities and aspirations of hard working families is intellectually hollow and deeply disingenuous."