Deputy PM Clegg defends planned cuts to welfare

Deputy Prime Minister Nick Clegg in Madrid June 11, 2010.

LONDON (Reuters) - Cuts to welfare spending are inevitable as part of coalition plans to tackle a record budget deficit, Deputy Prime Minister Nick Clegg said on Thursday, admitting reform will mean some are left worse off.

Liberal Democrat leader Clegg said the welfare system needed to be "an engine of mobility...rather than a giant cheque written by the state to compensate the poor for their predicament."

"In this tough fiscal climate, cuts to the welfare budget are unavoidable," Clegg said in an article in the Times newspaper.

"Welfare reform is not easy and bringing a semblance of sanity to the system inevitably creates losers as well as winners."

The coalition expects government departments to accept budget cuts of around 25 percent as part of plans to reduce a budget deficit running at around 11 percent.

Negotiations are ongoing and details of where the axe will fall are due in a spending review on October 20. Changes to the welfare system are of concern to the centre-left Lib Dems who fear that the poor could be unfairly hit by the austerity drive.

Clegg's party meet for their annual conference this weekend and will attract an unusual level of scrutiny for a party that, before this year, had been used to playing second fiddle to Labour and the Conservatives.

Analysts say the execution of the austerity measures could create strains in the Conservative-Lib Dem partnership and the coalition leadership has worked hard to soothe concerns on both sides since coming to power after an election in May.

"The welfare reforms that will be brought forward by a Conservative cabinet minister in our coalition government are profoundly liberal in intent and effect and underpinned by three liberal beliefs," Clegg said.

(Reporting by Matt Falloon; Editing by Stefano Ambrogi)