Clegg backs green economy boost
Mr Clegg will say the government's VAT cut is only 'tinkering'
The Liberal Democrats would scrap the 2.5% cut in VAT and spend the £12.5bn it is costing on green measures to boost the economy, Nick Clegg will say.
Mr Clegg says the government's plan is to "tinker" with VAT when what is needed is "fresh, bold thinking".
The Lib Dems would instead insulate schools and hospitals, subsidise energy efficiency and upgrade rail lines.
On Wednesday a Lib Dem move to annul the temporary cut was defeated in the Commons by 303 votes to 223.
Mr Clegg will launch his proposals on Thursday, the first anniversary of his election as party leader.
He is visiting Derby, whose Bombardier train company could benefit from the construction of 700 new carriages proposed by the party.
The Lib Dem proposals would include a five-year plan to insulate every school and hospital, subsidies for home energy efficiency, 40,000 new zero-carbon homes, improvements to rail lines and 700 new train carriages.
Instead of a meaningless VAT cut that people won't notice, we will insulate every school and hospital in the country
Mr Clegg will say people are losing their jobs, struggling with bills and being "plunged into fuel poverty".
"The government's answer is to borrow £12.5 billion to tinker with VAT when what is really needed is fresh, bold thinking," he will say.
"Instead of a meaningless VAT cut that people won't notice, we will insulate every school and hospital in the country and the homes of a million people languishing in fuel poverty.
"We will build thousands of desperately needed social houses, install money-saving smart meters, re-open rail lines and build new trains."
The temporary VAT cut, from 17.5% to 15%, came into force on 1 December but will revert to 17.5% at the end of 2009.
In a Commons debate on Wednesday, the Liberal Democrat Treasury spokesman Vince Cable described it as a "seriously defective" way of getting money into the economy.
The Conservatives have also criticised the cut, saying it is "unaffordable and ineffective" and would lead to a massive increase in taxation.
And two German politicians have also broken with diplomatic convention and criticised the UK's response to the economic downturn.
But defending the policy in the Commons, Treasury Minister Stephen Timms said it was a fair way to put money into the economy because low income households spent a larger share of their income on VAT than richer households.
He also said tax cuts would not help those who do not pay income tax, such as pensioners.