Budget: Lib Dems under fire as strains starting to show

Budget at a glance

Hear informed debate in a special edition of our BusinessTalk podcast, with experts from Deloitte in Leeds

The coalition Government is still just six weeks old and all eyes were on how Liberal Democrat MPs would respond to an aggressive package of measures that leant more towards the Tory side of the partnership.

Most Liberal Democrats were keeping any criticism to themselves, but Bob Russell became the first to voice dissent last night as he threatened to vote against the entire Budget because of the VAT rise.

Mr Russell said: "Less than 50 days ago, I was seeking re-election in Colchester opposed to a raise in the level of VAT. So I am not at all happy. I need to discuss with colleagues how it is we have got into this situation.

"You could argue that raising the level at which tax is going to be levied is a Liberal Democrat policy and we should rejoice at that, and clearly I do. But nevertheless, VAT is a tax which the low paid disproportionately pay more."

Liberal Democrat deputy leader Simon Hughes said: "I say to our colleagues around the country, to our supporters and to our members: of course we can't get everything we wanted – of course you can't – but we have protected the vulnerable and the Liberal influence on the Government will remain as strong as ever and today's Budget shows that."

Labour launched a concerted attack, dismissing coalition claims that it was a fair package of measures.

"This is a Tory Budget that will throw people out of work, that will hold back economic growth and will harm vital public services," said Ms Harman.

Addressing her criticism at the Liberal Democrats, she said: "How could they support everything they fought against, how could they let down everyone who voted for them, how could they let the Tories exploit them?

"The Liberal Democrat leaders have sacrificed everything they ever stood for to ride in Ministerial cars and ride on the coat tails of the Tory Government."

While unions were united in their criticism of the measures, most business leaders were generally positive.

David Frost, director general of the British Chambers of Commerce said: "The government's decisive moves to cut the deficit will have positive effects on business and investor confidence."