When we came into office, we inherited an economy that was on the brink. With the largest budget deficit in Europe and no plan for tackling it, Britain faced huge economic risks. These could only be dealt with by a clear plan to deal rapidly with the worst financial position this country has faced for generations.

On Wednesday, we set out that plan. And while the scale and pace of the action we need to take is unavoidable, we can choose how we do it. The Spending Review sets out those choices: to spread the burden fairly, to promote economic growth, and to invest in the life chances of our children. These are hard choices that affect millions of people, but they are the right choices to set our country back on the road to prosperity.

We have spread the burden fairly by protecting the key services that the most vulnerable in our society rely on. Social Care has been given a funding boost worth £2bn, the NHS and schools have been protected and our plans for social housing will deliver up to 150,000 new affordable homes.

We have promoted future fairness through a £7 billion ‘fairness premium’ that will support improving the life chances of our poorest children from their first pair of shoes to their first pay packet.

We have promoted future growth by giving the go ahead to key transport projects that will unlock economic potential in every part of the country. We have also delivered on a Green Investment Bank that will kick start green investment and generate jobs.

And we are pushing forward with radical reform. Our decentralisation agenda will reduce the number of central government grants from 90 to fewer than 10. With the exception of schools and public health, ring-fences on council spending will disappear, giving local authorities much greater flexibility. We will deliver welfare reforms that simplify the system and make work pay. And our criminal justice reforms will roll out the community justice programmes that were pioneered by Liberal Democrats in local government.

Yes, it’s going to be tough, and everyone will make a contribution, but those with the broadest shoulders will bear the biggest burden. That’s why we’ve reduced taxes for the low paid, and increased them for the richest. It’s why we introduced a banking levy – and we’ve made it our aim to extract the maximum sustainable tax revenues from the banks that got us into this mess.

The worst thing to do would be to burden future generations with the debts that Labour left us. We have made the tougher choice, no doubt, but we should be proud of the way we have taken responsibility and we have done the right thing.

Danny Alexander MP
Chief Secretary to the Treasury

Today is a defining moment for the Liberal Democrats. Today we show what can be achieved as a party in power – that we can deliver on a promise that we put on the very front page of our manifesto: giving a fair chance to every child.

The Liberal Democrat’s purpose in Government is to make Britain a better, fairer nation. And ahead of next week’s comprehensive spending review, today we set out our plans for a four-year, £7 billion investment in improving opportunities for the most disadvantaged kids in this country.

Every disadvantaged two year-old will be entitled to 15 hours free early education – in addition to the existing entitlements at the ages of three and four. Every poor school child will get additional help from a Pupil Premium paid to their school. Every young adult who wants to go to university will be able to do so, undeterred by financial barriers.

By the end of the spending review period, we will be investing £3 billion a year on this Fairness Premium – including £2.5 billion on the pupil premium alone, £300 million on the extra help for two year-olds and £150 million on the university fairness scheme. From next year, we will he helping poorer children from two to twenty: from a child’s first shoes to a young adult’s first suit.

Given that we are having to cut spending these are sizable new commitments. But even as we cut spending, we are determined to invest in fairness.

Whatever Labour say, we have no choice but to tackle the deficit. Ed Miliband thinks otherwise. He says he represents a ‘new generation’. But he seems happy to saddle the next generation with the debt that his Government racked up. I am not.

Every day we lose more in interest payments to the financial markets: the amount we pay in interest is enough to build a new primary school every hour. Let me be absolutely candid: we have a hard road to recovery ahead of us. But also let me assure you, that as Liberal Democrats we are determined to ensure that road leads to fairness, too.

For me, this is personal. A decade ago I argued in favour of a pupil premium to help children and close the educational gap. Under Labour this gap has been left to widen and for too long the achievements in life have been dictated by the circumstances of birth. I represent a constituency in Sheffield where, for all Labour’s promises, inequalities still scar the community.

All of us are having to work hard in order to make the spending review fair. We’re all having to accept difficult cuts in many areas of public spending that we would very much rather avoid. Both parties in Government are having to negotiate and compromise. We’re all having to change our positions on some issues when the arguments demand it.

But all of us in this government, including the Prime Minister and myself, are not willing to compromise on a better future for the poorest children.

None of this would have been possible without all the hard work done by members up and down the country at the last election and over the many years before that. We should all be proud that we are delivering in Government the changes for which we have campaigned for so long.