Nick on fantastic form on the Today programme earlier

He's been refusing their overtures for a few months now but Nick Clegg went back on the Today programme this morning - and was in a feisty mood. I thought his best performance for quite a while. (Although - as ever - we get pulled up on tuition fees, still easily the single biggest mistake made by Lib Dems in government)

(Update - post PMQ's, The Guardian would seem to agree with my analysis of Nick's performance - see below)

Here's the transcript - some diamond quotes in here...

James Naughtie: Coalition Government involves some pretty hard bargaining, some difficult compromises for both parties.  You might think therefore that the opportunity of a local campaign, local election campaign, would be quite welcome, party leaders being themselves, talking to their own parties without having to worry too much about the other lot.

But for Nick Clegg, leader of the Liberal Democrats, times are tough he doesn’t even need to look at the opinion polls to know that.  He said himself at the weekend that coalition life was a roller coaster and acknowledged that every Government, sooner or later, found itself in a rut where every potentially good story turned in to a bad one; he was obviously referring to the present.

So how does he breathe life in to the Liberal Democrat cam, campaign?  The Deputy Prime Minister is with us, good morning.

Nick Clegg (Deputy Prime Minister): Morning.

JN:  You obviously have to defend decisions of which you’re a part, in the course of this campaign are you going to claim credit for a Budget that you can describe as fair?

NC:  Oh I’m, I attach a great deal of significance to the fact that the centre piece change in the Budget, I acknowledge that it’s been perhaps somewhat lost by some of the recent coverage about the, the Budget since it was announced, but the centre piece remains a huge change in the personal Income Tax system which will benefit over twenty million basic rate tax payers to the tune of several hundred pounds.  It will take by next April over two million people on low pay out of paying any Income Tax altogether, namely the lifting of the Income Tax allowance.

And, and you know I think Budgets, you have small changes in Budgets which can be controversial or not and then you, then you have big changes in Budgets which …

JN:  Well …

NC:  … in my view can be judged whether they are significant or whether we believe that future Governments are going to change them or not.  My feeling is that what we’re doing on the allowance is one of the biggest, boldest and most …

JN:  … well …

NC:  … radical changes in the personal tax system in a very long time.

JN:  … the IFS judged immediately after the Budget that people who are going to lose out are middle income families with children and it pointed out that the burden was going to fall mainly on the twenty per cent lowest paid acknowledging what you’ve said about the rise in the allowances which will have an effect.

But you see Budgets are packages and if you look at what’s happened to this one, you talked about potentially good stories turning into to bad ones at the weekend, the stuff that’s unravelling is stuff that comes from your corner.  Charities are absolutely livid about what has happened on the proposed cap, that is absolutely in line with a speech that you made about tycoon taxes and so on to your party’s spring conference.  It comes from you.

NC:  I, I make absolutely no apology at all that we should seek to make changes in our tax system where you have a tax system which isn’t like a sieve with great big holes in it but everyone pays their fair share.  Now as it happens …

JN:  (Indistinct) getting tax relief on charitable …

NC:  … well as it happens I was talking to a …

JN:  … donations is abusive and evasive?

NC:  … no, no I’m not saying people that make a contribution to charities to avoid tax, of course not, of course not.  What I am saying is that it is very rare actually in the developed world to have allowances in your tax system which are completely unlimited, I fact I think only Australia of all the developed economy, economies I’m aware of has such a big exemption where there is no limit at all.

What we’re saying is yes there should be tax incentives to help charities, that’s a good thing, we should encourage philanthropy, I was with a number of philanthropists at an event just yesterday evening thanking them for what they have done.  No well hang on ...

JN:  You thanked them but did they thank you?

NC:  … (indistinct) well no what I explained to them, what I explained to them was look there is a simple principle at stake which is that you are, if you have an unlimited allowance you’re asking ordinary tax payers on much lower incomes to fund that tax break …

JN:  In other words you said to them we’re in the business of compromising on the figure?

NC:  … and what, what I then said was that of course as we said at the Budget we will look at this detail, we’ve got time to, to get the details right.  We will look at in the round and we will do so with an open mind and very sympathetically because we don’t want to damage charities, we don’t want to inhibit philanthropy.  But that doesn’t mean that the principle of saying there should be some limit to what are, what are …

JN:  Well …

NC:  … tax payer, what are tax payer funded allowances in the tax system as a whole is something which is sensible and, by the way, it’s happening across the developed world as …

JN:  … yes …

NC:  … money is tight everybody is asking, particularly people those at the top, to at least pay their fair share in Income Tax.

JN:  … but answer reveals how far the Government has moved in the last few days because what you’re saying is we can, we can argue about the detail, there is a principle that there shouldn’t be an unlimited, you know, freedom …

NC:  (Indistinct).

JN:  … freedom but nobody is suggesting that that was ever going to be defended.  What you’re saying is we’ll change what we proposed in the Budget.  You see this gets to the heart of your problem doesn’t it?  You, particularly you, in the Government find yourself constantly on the defensive don’t you, every single day …

NC:  I am not in the slightest bit defensive Jim about the fact that …

JN:  Really?

NC:  … this very month, this very month I have launched a Youth Contract which will help every eighteen to twenty four year old who’s out of work to either earn or learn.  I’m not in the slightest bit defensive about the fact that pensioners have received the largest cash increase this month in the State Pension ever.  I’m not the slightest big apologetic that we’ve given the largest uplift in the allowance ever that we’re increasing the Pupil Premium to help …

JN:  What about the …

NC:  … no but, but …

JN:  … granny tax?

NC:  … this is very significant.  I know, I mean can trade, I can talk to you about the things I’m proud of and you can talk about the things that the Government’s on the back foot on …

JN:  Well hang on …

NC:  … and we can do it for the next ten minutes if you like.

JN:  … it, it is, it is hardly unfair to …

NC:  Well hang on …

JN:  … to put the Budget in the centre of the table.

NC:  … but I think, I think (indistinct) to be fair for a minute to the Government I don’t think it’s entirely unreasonable for me to take this precious opportunity to tell the other side of the story.

JN:  No okay.

NC:  There are things we’re doing for pensioners, for young people in school, just this last week I was talking about the massive expansion that we’re doing, never happened before in this country, of pre school support and child care support for two year olds, hundreds of thousands of two year olds from the most deprived families in this country.  That has never happened.  Of course I accept that Governments get in to situations where you have bumps and scrapes and media squalls where it’s difficult to get your side of the story across but we’re doing …

JN:  Well …

NC:  … we’re doing not only difficult things to rescue and repair the economy we’re doing good things which I believe will last, will work for the long term and will help the young, the old and people across the country.

JN:  With respect it’s not a media squall that’s engulfed the Budget it’s the fact that it has unravelled before our eyes.  It appears to be an incompetent package.  You know I needn’t mention pasties.  The granny tax, the charities which you’ve acknowledged yourself a few minutes ago you’re having to sort of deal with with philanthropists who don’t know what’s going on.  This appears to be a Government that’s characterised in many of its actions by incoherence.

NC:  No I think the Budget, if you look at the big judgements in the Budget and, and you know I think this always happens in politics generally and particularly in a slightly sort of frenzied high velocity media environment we work in, people get absolutely swept up by some specific issues and they lose the bigger picture.  The bigger picture on the Budget is that firstly we, unlike many other Governments in the developed world, are able to hold steady on our plan of dealing with the deficit, we’re not changing that.  It’s very important that, other Governments are constantly having to run around re-invent budgets at every turn because of deteriorating situation in our economy.

We have pulled back this country from the brink, we have made our economy safer than it is in many other parts of Europe and the developed world and that was reflected in the Budget …

JN:  But you see …

NC:  … and at the same time what we did was we made some very major reforms, worth about three and a half billion pounds a year to the benefit of over twenty million Basic Rate tax payers on the route to making the tax pay, tax system as a whole fairer …

JN:  … well …

NC:  … and I believe that in the long run it is those big changes which will be the legacy of this Budget not some of the other issues.

JN:  But you see the Government seems not to be able to see things coming.  The granny tax, the charity row which, you know, you’ve acknowledged that you’re having to repair, or try to repair now, and this gives the impression of a Government that is not confident of which step, you know, which foot it’s putting forward.  And that’s why I use the word defensive because, you know, you talk for example about coming in to this job to produce fairness, that was the theme of your election campaign all that long time ago, two years ago, and the trouble is that you’re constantly finding yourself, you’ve acknowledged this, in a position where people say whatever this is it isn’t fair.  Do you understand that that’s why you’re lagging in the polls so badly and that’s why …

NC:  I, I totally, I totally accept …

JN:  … your party is …

NC:  … I totally accept at a time when we as a Government, and by the way whoever was in power would have to do this, are taking very big controversial decisions to help our country recover from one of the largest economic shocks.  It’s like a great big heart attack at the centre of our economy which occurred in 2008 which will have aftershocks and after effects which will last for years.   That to do that does mean that you have to take controversial decisions and of course that generates anxiety, of course it may even generate anger, but at the same time we are doing things which help millions of ordinary people.

And just look, if I may for a minute …

JN:  Well …

NC:  … just cite what Liberal Democrat councils are doing.  Liberal Democrat councils are the, we are the only party that have either frozen or cut Council Tax in areas where we are in, in control neither the Labour or Conservative parties can say that.  We are much more likely than either Labour or Conservative councils to also give real help to public sector employees, council employees on low pay.  So that is an example of us being committed not just rhetorically but in action to fair taxes and fair wages.

JN:  Can I suggest to you that one of the reasons why you find it difficult, and you admit this, find it difficult to get your, you know, your message across is because people remember for example that highlight of your first period in office when having said that you would come in to Government to put an end to broken promises you broke a very famous promise on tuition fees?  You defended it but people said well if we can’t believe him on that why should we believe him on anything and that still hangs round your neck …

NC:  There are …

JN:  … doesn’t it?

NC:  … there are two things which I’ve always been very open about which, of course, I need to explain over and over again.  First thing is I didn’t win the election, the Liberal Democrats came third.  I represent a party which had …

JN:  Doesn’t stop you sticking to promises.

NC:  … no, no but can I , can I, can I finish no hang on.  I lead a party with eight per cent of MPs in the House of Commons, I’m flattered that people think I should lead a party which has over fifty per cent. We do not.  If you want the Liberal Democrat manifesto in full vote for Liberal Democrats in larger numbers.  It didn’t happen and I have to deal with the world as it is not as I would like it to be, and I’d love to be Prime Minister and I’d love this to be a Liberal Democrat Government, it isn’t it and no one can accuse me of never being up front about the fact that that means that there are painful compromises where you can’t do everything.

It so happens to be the fact that on the four big pledges we made on the front of our manifesto; Pupil Premium, fairer taxes, sorting out the economy, reforming politics we’re delivering on all four but, of course, we weren’t able to and most notoriously on higher education reform.

And the second thing is all of those difficult compromises are made even more acute by the fact that as Liam Burn kindly informed us after Labour left office there is no money.  And if you have no money you are faced with difficult choices and I suppose as a politician the easy route would have been two years ago, this is all too difficult I’m going to retreat to my tribal corner in politics and just throw lots of sort of bricks at the other parties and be terribly holier than thou about it.  Or we get stuck in and sort out the problems this country faces, they are big problems we are, we are sorting out a monumental mess left by Labour.

What happened in 2008 is almost without precedent in the post war period and it will take some time to sort it out, it requires courage, it requires resilience and it requires a Government that is bold and I’m proud of the fact that Liberal Democrats in this Government are being courageous and are being bold.

JN:  So you’re enjoying it?

NC:  Yes it’s a great privilege, of course it’s tough but it’s a great privilege but I am, I feel genuinely lucky that I’m playing a role as other people are in making sure this country is strong, prosperous and safe in the future.

JN:  Nick Clegg thanks.

NC:  Thank you