Clegg: another coalition in 2015 is the best outcome for UK

Speaking at his party's annual conference in Glasgow, Mr Clegg said that another coalition government would be the best outcome for the country because it enables the Liberal Democrats to act as a restraining influence on the larger parties of the left and right.

The Deputy Prime Minister told BBC1's Andrew Marr Show that there have so far been no discussions with Tories about whether the two parties will continue their coalition in the event of a hung Parliament, and declined to say whether he would prefer a partnership with Conservatives or Labour, insisting that the decision would depend on the precise outcome of the poll.

Liberal Democrats will go into the 2015 election with the message "let us finish the job, but finish the job fairly", he said.

The sacrifices of the past few years would be "squandered" by a single-party government of either of the larger parties.

Mr Clegg said that the increase in the income tax threshold to £10,000 would not have happened without Lib Dems in the coalition, and indicated that his party will put at the heart of its next manifesto a further upgrading to take everyone on the minimum wage out of income tax altogether. By joining the coalition, Lib Dems have also been able to put a stop to Conservative plans to give inheritance tax breaks to millionaires, he said, warning that Tories would pursue "ideological cuts" if they were governing by themselves.

"Our message to the British people in 2015 will be essentially this: We will say `We've done very good things in Government - let us finish the job, but finish the job fairly'," Mr Clegg told the Marr Show.

"There are millions of people in this country who've made huge sacrifices and we've gone through this very difficult time over the last two or three years. That would be squandered if you have a single-party government of either Labour or Conservatives in 2015.

"It is my genuine belief that if we go back to the bad old days, not of coalition or balanced politics, but of either the left or the right dominating government on their own, you will get a recovery which is neither fair nor sustainable.

"I think Labour would wreck the recovery, and under the Conservatives - who don't have the same commitment to fairness which we do - you would get the wrong kind of recovery.

"Our message is that coalition is good, for the Liberal Democrats to stay in government is good, let us finish the job but let us finish it fairly."

Asked if he was "leaning towards" the Tories, Mr Clegg said: "Far from it, I don't want to see the wrong kind of recovery. I don't want to see the kind of recovery where under the Conservatives they would risk our exit from the European single market, jeopardising millions of jobs, they would resuscitate some of these ideas that we've blocked in government like giving employers the right to fire anyone at will.

"I don' think they would care as much as we do about boosting manufacturing and other parts of the economy, not just financial services.

"I think there would be a real danger, particularly with a small Conservative majority, that they would pursue ideological cuts rather than the pragmatic approach to deficit reduction we have taken in this coalition."

Mr Clegg indicated that a further rise in the income tax threshold would be one of the conditions for the Lib Dems forming another coalition.

"I'm not going to get into red lines now but what I'm saying to you is that you shouldn't be surprised that, given that the £10,000 tax allowance was our signature tune policy last time, which we have now delivered - the biggest transformation, a fair one, in the income tax system in a generation -, the fact that we want to make sure that nobody in this country pays income tax up to the minimum wage is clearly one of the things that we care about a great deal more than other issues."

Mr Clegg said the party's commitment to a mansion tax on properties over £2 million, raising £2 billion, sent a signal that "even though we are committed to deficit reduction" that would not be achieved entirely through spending cuts.

"What we are very clear about is, in the same way that I think the Conservatives left to their own devices would say that all further deficit reduction has to come out of spending reductions on public services, we say 'no, taxes and particularly taxes on people who can afford it, have to play some role in the ongoing effort to making sure that we complete the job of filling the black hole in the public finances," he said.

"If the Conservatives don't want to do that then they need to tell people, and that's part of the debate we will have to have over the next year-and-a-half, what they will cut - schools or hospitals or pensions or police or the armed services - to make up that £2 billion."

Mr Clegg said he was "absolutely not" already discussing a second coalition deal with the Tories.

He said: "If they came to me with 'let's talk about another coalition agreement' I would give them pretty short shrift because you have to let the British people have their say first.

"At the last general election there was not the remotest possibility of a Liberal Democrat/Labour coalition because the numbers didn't add up."

Mr Clegg said coalition was "much better than either the left or the right messing things up on their own all over again".

Turning to Ed Miliband's party, Mr Clegg said Labour "have got to spell out what they believe in".

He added: "They also have to show some responsibility for the past and some clarity about what they would do in the future. That at the moment is absent."

Mr Clegg said whichever party gained the "clearest mandate, the most votes and the most seats" at the election had the democratic right to attempt to form a government.

Despite the party's poor opinion poll ratings, Mr Clegg said: "I genuinely believe that the historical decision we took to step up to the plate, roll up our sleeves, get our hands dirty, to pull the country back from the economic precipice even at the cost of short-term political popularity, was right."

Mr Clegg said that his party's 2015 manifesto will distinguish between "die in the trenches" policies which the Lib Dems will insist on keeping in any coalition negotiations, and others which may be open to compromise.

"Given that it's more likely than not that in the future we will get more coalitions, it is less likely that you will get these slam-dunk results where one or the other of the two major parties always get a majority, I think it is incumbent on political parties to be up-front with the British people about those issues which we really will die in the trench for and those which clearly will depend on political and economic circumstance," he said.

He declined to say, more than 18 months ahead of the election, which policies will be "red lines" in any coalition talks.

But he said: "I can give you a clue that I strongly suspect that - given we have put so much effort and money into making the tax system fairer - tax fairness will of course be one of the signature tunes for the Liberal Democrats.

"We are committed as a party - and I am committed to this - to raising the allowance further such that... everybody on the minimum wage pays no income tax."

Mr Clegg acknowledged that ministers will have to be "vigilant" to ensure that a new house-price bubble does not develop as a result of Chancellor George Osborne's flagship Help to Buy scheme.

But he played down fears, expressed by Business Secretary Vince Cable, that offering loans to help house-buyers afford home deposits could fuel a damaging spiral in prices, particularly in London and the South-East.

The DPM said: "What Vince said is absolutely right, that given the sorry history of asset bubbles in the British economy, we need to be vigilant.

"Of course we are going to be vigilant, but as Vince will be the first to acknowledge, we are nowhere near yet the peak of that unsustainable housing bubble.

He added: "If there's another bubble, the Bank of England and the Government of course have means by which we can anticipate that and ensure that that doesn't happen again."

Asked if Help to Buy was "putting more air into the bubble", Mr Clegg said: "We are putting a little bit more air into giving credit-worthy customers the ability, not irresponsibly, to borrow money in order to get their feet on the first rung of the property ladder. There is nothing wrong with encouraging people to do that.

"Clearly in parts of the country - notably central London - the housing market is now marching forward, but you can't set a national policy, neither the Government nor the Bank of England, based only on what happens in Kensington and Chelsea. You have to think about all the other households."

Mr Clegg said that the most important part of the Government's housing policy was a drive to build more homes. A motion at this week's conference would allow local councils to play a greater role in building more affordable properties in their areas, he said.

"It's the lack of building of houses in sufficient numbers that has blighted our housing market for too long," said Mr Clegg.

The DPM said he did not "relish" some of the benefit cuts being imposed as part of the Government's deficit-reduction agenda, but insisted that they were necessary if priorities like the NHS, schools and pensions were to be protected.

"There are some of the individual measures that I don't relish, but the nub of it is to increase the incentive to work," said Mr Clegg.

"I think that is immensely important when we are facing these huge economic difficulties that we try to keep as many people (as possible) - as we successfully have - in work."

Mr Clegg insisted Lib Dems should be "proud" of their record in coalition.

"What we have done is very unusual," he said. "First, we have formed a coalition - the first proper coalition in living memory. Controversial though that is, I think it was the right thing for the country, given that we were teetering on the economic edge back in 2010.

"But we've taken the opportunity, as well as the central mission of repairing and reforming and recovering the British economy, to deliver some really important progressive and liberal advances in taxation - taking three million people out of paying income tax - higher state pension, more apprenticeships, more money for kids from disadvantaged backgrounds in the school system.

"These are things I think we are rightly proud of."