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Lib Dems threaten to rebel over cuts

By Nigel Morris and Richard Garner

The unity of the coalition Government was under strain last night as the deputy leader of the Liberal Democrats threatened to try to rewrite parts of George Osborne's austerity Budget.

Simon Hughes spoke out amid growing fears on his party's backbenches that the poorest families would bear an unfair share of the dramatic squeeze on public spending and benefits.

Plans to raise VAT to 20% in January and a fresh threat to the winter fuel allowance paid to pensioners have intensified the jitters among Nick Clegg's MPs over the tough economic medicine being administered to the country.

Mr Hughes told the Commons there would be “trouble” if ministers in the Tory-Lib Dem alliance attempted to renege on their commitment to protect allowances paid to the elderly.

He said: “The coalition deal is a deal and what has been agreed must stand — and there cannot be any unpicking of items in that deal, otherwise the whole thing risks falling apart.”

He made clear his qualms about the rise in VAT, which he said was “less progressive” than income tax. He said the increase was necessary to “fill a huge gap Labour has left us” and would support George Osborne's package in next week's Second Reading vote on the Budget.

But he warned that backbench Lib Dems could attempt to amend key parts of the Budget later when it faces line-by-line scrutiny in the Commons.

“If there are measures in the Finance Bill, where we can improve fairness and make for a fairer Britain, then we will come forward with amendments to do that because that is where we make the difference,” he said.

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