Unveiling a central plank of the next manifesto, he said the “muscle of the state” must be put behind house building.
That will include the State borrowing to fund house building. In the years before 2018, when the public finances are forecast to run into a surplus, it could mean taking funds from elsewhere in the infrastructure budget.
How the funding will be used will be set out in the manifesto. However, Mr Clegg has previously called for three new garden cities in southern England.
Action is needed because the IMF and the Bank of England have warned that an overheated housing market, caused by a shortfall in supply, could be the “seeds of the next crisis of financial volatility”, he said. Current Coalition measures – including liberalising planning laws – are a mere “pin-prick”.
“There are lots of very authoritative people saying you have got to deal with this issue of a lack of housing supply in this country. If you don’t, it’s not only fair to future generations but it creates the seeds of the next crisis of financial volatility. If you accept that as the challenge, how do you do it?
“Unless someone comes up with a better idea, I just don’t see how you can do it without the muscle of the state… and if necessary borrowing some public money in order to get that done.
“Just relying on private developers and just relying on reducing the red tape of planning is just not going to build a quarter of a million homes a year. It’s just not. We should be open about that.”
He added: “I have found it frustrating that the Conservatives talk the talk on housing but don’t walk the walk. I don’t think they seem to acknowledge if you’re trying to build 250,000 homes a year that you can’t just do it by… Fine, you can liberalise planning measures, give an extra tax incentive here and there to local authorities, give but to really crack it on that scale, that is a perfectly justifiable
use of the muscle of the state to build the houses that we need.”
Mr Clegg said the Liberal Democrats will fight the next general election on a pledge to start borrowing again once the Government’s books are balanced, a position that puts them closer to Labour.