At some point, Clegg will have to start thinking about the next election, not the last

If one sign of a good politician is the ability to learn from the greats that have gone before you, then Nick Clegg certainly hit the mark in at least one respect this week.

“You don't play politics at a time of national crisis, you don't play politics with the economy, and you never, ever, play politics with people's jobs," the Liberal Democrat leader told his party conference in Birmingham on Wednesday.

Westminster watchers of a certain age were instantly transported back more than a quarter of a century to Bournemouth, 1985, when Neil Kinnock tore into the grotesque chaos of Militant-run Liverpool.

“I’ll tell you – and you’ll listen!” he told the delegates as left-wing MP Eric Heffer stormed out of the conference hall. “You can’t play politics with people’s jobs, and with people’s homes, and with people’s services.”

But words aside, was there any parallel between Kinnock’s great oratorical tour-de-force and the Deputy Prime Minister’s rather more pedestrian
efforts of this week?

Well, up to a point. Kinnock’s words were of course solely directed at his own party, and so, to an extent, were Mr Clegg’s.

Coming as they did at the end of a lengthy defence of his party’s decision to join the Coalition, the words seemed primarily a rebuke to those Lib Dems who would rather they had sat on the sidelines.

That might have been better ‘politics,’ in that the Lib Dems would not now be languishing at 15pc in the opinion polls – but the whole thrust of Mr Clegg’s argument was that the national interest required him to set such considerations aside.

Currently, people views on whether the Lib Dems were right to join a Conservative-led Coalition will depend by and large on whether or not they agree with the Conservatives’ economic prescriptions.

In the North-East and other regions where the fragile recovery of 2010 appears to have been choked-off by the government’s public spending cuts, it is hardly surprising that many one-time Lib Dem voters think they were wrong.

But ultimately the question of whether Mr Clegg was right or wrong will be left to the judgement of history.

If Chancellor George Osborne’s great economic gamble ultimately succeeds and the economy returns to strong growth before 2015, it will look like a good call – but if not, he will be seen to have sold his birthright for no more than a mess of potage.

Thankfully, there are at some Liberal Democrats at least who already seem to be making plans for the latter eventuality.

In a widely-reported speech at the start of the conference, party president Tim Farron made it clear that the ‘marriage’ with the Conservatives, while currently good-natured, would inevitably have to end in divorce.

In one sense this was no more than a statement of the bleeding obvious from Mr Farron, who is widely expected to succeed Mr Clegg as Lib Dem leader.

Even if Mr Osborne manages to preside over an economic miracle, the Lib Dems cannot go into the next election hanging on to the Conservatives’ shirt-tails. Rather they will need, between now and then, to re-establish their identity as an independent party.

One of the fundamental rules of politics is that when you go into an election, you at least have to make a pretence of fighting to win.
People simply will not vote for a party that sees holding the balance of power within a hung Parliament as its explicit objective.

One thing you can be absolutely sure of is that the Conservatives won’t be going into the next election with the objective of another Coalition – explicitly or implicitly.

Many on the right of the party still blame David Cameron for failing to achieve an outright majority in May 2010 when faced by an exhausted, hapless Labour government. They will simply not permit him to aim for anything less next time.

How Mr Clegg ultimately handles this dynamic will, I suspect, determine whether it is he or Mr Farron who leads the Lib Dems into that election.

It is entirely possible that he may go down as one of those politicians – Ramsay Macdonald being another example – whose names become a byword for betrayal within their own parties.

This year’s conference was all about reassuring the doubters in his party that he did the right thing in May 2010.

The next one, however, will need to be much more about what he is going to do come May 2015..

Why Cameron is not out of the woods yet

Ever since the start of the crisis over phone hacking that has engulfed the worlds of politics, journalism and the police over the past three weeks, Prime Minister David Cameron had appeared to be stuck on the back foot.

Much as he himself once managed to make Gordon Brown seem leaden-footed in his response to the MPs' expenses crisis two years ago, Labour leader Ed Miliband had seemed to be making the political weather as the public backlash against News International intensified.

Fortunately for Mr Cameron, he is far too skilled a politician for it to have lasted forever and sure enough, this week saw him finally come out fighting.

Prime Ministers always have an inbuilt advantage in the game of politics in that, while opposition leaders can just talk, they can actually do – and this week it was an advantage Mr Cameron exploited to the full.

Cutting short his trip to Africa, he postponed the parliamentary recess by 24 hours, enabling an extra session of Prime Minister's Questions and an emergency statement on phone hacking to be squeezed in before the MPs' summer break.

But besides raising the morale of the Tory Party by showing a bit of grit and determination in the face of his Labour tormentors, did it actually do him any good?

Well, his admission that he should not have hired the former News of the World editor Andy Coulson as his press secretary will go part of the way towards defusing the issue which has dogged him since well before the start of the current media firestorm.

But as Mr Miliband was swift to point out, having regrets about the appointment does not get away from the fact that it was, as he put it "a catastrophic error of judgment."

Mr Cameron has still yet to satisfactorily explain why he chose to ignore so many warnings about the dangers of making Mr Coulson Downing Street communications director.

The suspicion persists that he adopted something of a wise monkey stance in relation to his trusted press adviser - 'see no evil, hear no evil, think no evil.'

The disclosure that his chief of staff Ed Llewellyn had refused a detailed briefing on phone-hacking from the police could be interpreted as wanting to protect the Prime Minister from any suggestion that he could influence the investigation.

But it could equally be the case that aides like Mr Llewellyn simply did not want to tell the Prime Minister what they knew he did not want to hear.

Wednesday's debate also provided a convenient platform for Labour MPs to raise some additional issues which have further muddied the waters in relation to Mr Coulson.

First, Labour MP Chris Bryant claimed that the Royal Family had raised concerns with Downing Street about Mr Coulson's appointment – which would be hardly surprising since most of them had had their phones hacked.

Then the highly-respected former local government minister Nick Raynsford suggested that Mr Coulson might actually have practised phone-hacking while in the role of Downing Street press secretary, with a senior government official as the victim.

The Cabinet Secretary denied it, but if this allegation were to turn out to be true, the situation would look very grave indeed for Mr Cameron.

But the biggest reason why the Prime Minister is not out of the woods yet on phone hacking is because the question of his longer-term political survival is not really about that.

It is, rather, about his relationship with his Liberal Democrat coalition partners.

Nick Clegg and his party had no option but to go into the coalition in May 2011. The arithmetic of going with Labour didn't stack up, and standing on the sidelines and inflicting another election on the public would not have been forgiven.

But having entered it, they have found over the past 14 months just what a rock and a hard place they were put in as a result of the inconclusive election outcome.

As I wrote at the start of this year, a team is only as strong as its weakest member, and such has been the slump in the Lib Dems' political fortunes since joining the coalition that they currently constitute a pretty broken reed.

It remains my view that, in order to stand a chance of holding onto its Southern power base in which the Tories are its main challengers, the party has to find a way to break up the coalition at a point of maximum advantage to itself and maximum disadvantage to Mr Cameron.

As the political season draws to a close, that essential dynamic that makes this such a potentially unstable alliance between the two partners remains unaltered.

Mr Cameron may think he is safe for now. But as Lloyd George found, in a coalition, you are only ever as safe as your partners allow you to be.

Murdoch's power has been broken. Could Cameron's be next?

For the past thirty years, the British political establishment has been in thrall to Rupert Murdoch - the 24th member of Tony Blair's Cabinet as he was once dubbed.

In the course of that period, his media empire has variously decided the outcome of elections, dictated the membership of Cabinets, shaped policies on a wide range of issues and even influenced whether or not the country went to war.

But this Wednesday, the worm finally turned as the Australian media tycoon's bid to buy 100pc of BSkyB was swept away in the storm that has engulfed him in the wake of the phone-hacking scandal.

It was as if three decades of pent-up resentment had suddenly been unleashed in a torrent , as the politicians who have been forced to kow-tow to Murdoch all that time finally broke free of his yoke.

There is a certain historical irony in the fact that it was the dear old House of Commons which finally delivered the coup-de-grace to Murdoch's dreams of further media expansion.

For those of us with long memories, it seemed a fitting reward for the way in which he conned Parliament into agreeing to his takeover of The Times and the Sunday Times in 1981 by giving 'editorial guarantees' he had no intention of keeping.

These undertakings enabled the then Trade and Industry Secretary John Biffen to sidestep a reference to the then Monopolies Commission.

Within a year, Murdoch had broken every single one of them, including sacking the Times' editor and transferring the two titles into a different part of his business.

I will give two small examples from the recent past of how the influence of his empire has distorted the political life of the nation.

In 2009, the now former News International chief executive Rebekah Brooks let it be known that David Cameron's Tories would not get their support at the ensuing general election unless Dominic Grieve was replaced as Shadow Home Secretary. He duly was.

Then, last year, James Murdoch made it clear he wanted the Labour government's plans for regional news consortia scrapped. When the Coalition came in, they duly were.

These, however, are relatively trivial examples compared with, for instance, his papers' routine character assassination of certain party leaders and consultations with Tony Blair in the days prior to the invasion of Iraq.

But if Murdoch was undoubtedly the biggest loser of the week, it's not been a great seven days for Mr Cameron either.

Because it was not the Prime Minister who finally led the fightback against the Murdoch empire, but the man who wants his job - Labour leader Ed Miliband.

Mr Miliband undoubtedly took a gamble by calling a vote on the BSKyB bid – but within 48 hours every other party had followed his lead.

His reading of the public mood in this crisis has been consistently ahead of the curve and, for now at any rate, he has drawn a line under the troubles that had beset his leadership earlier in the summer.

Deputy Prime Minister Nick Clegg, too, ends the week with his position enhanced, again at Mr Cameron's expense.

It was his threat to vote with Labour on Wednesday that forced the Prime Minister into his U-turn on the BSkyB deal, potentially altering the balance of power within the Coalition in the process.

Mr Clegg has also pointedly disassociated himself with the shadow of Andy Coulson's appointment as Downing Street's director of communications that continues to hang over Mr Cameron.

"It was his appointment and his appointment alone. We did discuss it... it was something that we didn’t see eye to eye on," he said.

This is where the phone-hacking scandal starts to play into the much bigger and wider issue of the Coalition's ultimate survival.

Some Lib Dems have started to speculate that Mr Cameron may emerge from the scandal so badly damaged that they could actually bring him down.

I have argued from the start of this Coalition that the Lib Dems somehow have to find a way of getting out of it alive, and this might just be their best opportunity.

We would then not just be looking at the downfall of a media empire, but the downfall of a government.

Are Lansley's health reforms now dead in the water?

First David Cameron announces a “pause” in the government’s plans to reform the National Health Service in order to listen further to the views of health professionals and the public.

Then the doctor’s trade union, the British Medical Association, reveals that it thinks the Health and Social Care Bill should be scrapped, and any changes achieved without legislation.

Finally, deputy premier Nick Clegg announces that the Bill is to go back before a committee of MPs for further scrutiny, setting back its likely passage through Parliament by at least six months.

The question on the lips of many Westminster watchers this weekend is: Are the government’s NHS reforms dead in the water?

Predictably, backbench Tory MPs are up in arms over Mr Clegg's intervention, claiming yesterday that he had "bounced" the government into delaying the Bill.

They made clear that whatever changes are ultimately made to the Bill, there are certain "red lines they wish to draw against Lib Dem encroachment on the original blueprint.

In an email sent to all Conservative MPs yesterday, backbencher Nick de Bois called on his colleagues to "reclaim the debate" over the NHS.

He said the "red lines" should include the requirement for all GPs to take on responsibility for primary care across England – ignoring the fact that GPs themselves oppose this provision.

The backlash against the reforms was growing long before the Lib Dems' hopes of changing the voting system went up in smoke, but it was nevertheless this that proved the tipping point.

Once the Tories decided to throw the kitchen sink at AV, it was obvious that Nick Clegg would have to be thrown some sort of bone to keep the Lib Dems in the government, and it was equally obvious that this would be it.

Politically, sacrificing a set of unpopular health reforms in exchange for keeping a voting system that kept them in power for most of the 20th century might seem like a smart move for Mr Cameron.

But the downside is that so much had been invested politically in these reforms that the now seemingly-inevitable retreat will be seen as a major blow to the Prime Minister's authority.

Even if the reforms are not dead in the water, the political career of Health Secretary Andrew Lansley surely is.

If the government ultimately decides to press ahead with the changes, Mr Lansley is likely to be replaced by someone who can more successfully sell them to the relevant stakeholders.

If on the other hand they are watered down or abandoned, his job is almost certain to go to a more emollient politician who can re-build bridges with the health professionals.

The latter scenario is surely the most likely one. Tory MPs want the new GP fundholding consortia in place by April 2013, but in the light of Mr Clegg's latest intervention, this is looking like an increasingly forlorn hope.

The danger for the government is that, if the measures do not reach the statute book this summer, the institutional upheaval will still be ongoing in the run-up to the next election, due in 2015.

Mr Cameron is nothing if not a pragmatist, and he will surely view the prospect of organisational chaos in the NHS as a risk he can do without as he prepares to face the country again.

In those circumstances, it would make more sense for Mr Lansley's proposals to go into the next Conservative manifesto rather than into a revised Health and Social Care Bill.

And who knows - if Mr Cameron can win an outright majority next time, the Tories might even be able to claim a mandate for them.

The gamble that paid off

And so the problems continue to pile up for Nick Clegg and the Liberal Democrats.

First it was the local elections and the loss of 700 council seats, then the overwhelming referendum 'no' vote to electoral reform, now the finding of 'serious breaches of the rules' in relation to rising star David Laws' expense claims.

And it's not over yet. There are serious question marks over the future of another of the party's leading lights, Energy Secretary Chris Huhne, following claims by his ex-wife that he asked someone else to take some penalty points for a speeding offence.

The allegations have been denied, but with further revelations expected in tomorrow's Sunday papers, some Westminster observers are rating Mr Huhne's survival chances as "less than 10pc."

Is this what happens when a party that has been out of power for the best part of a century finds itself struggling to adapt to its new responsibilities, or is it simply a run of bad luck?

Either way, it was hardly surprising that Mr Clegg should have sought to reassert his party's influence in government this week, with the government's NHS reforms likely to be the new battleground between the Coalition partners.

Mr Clegg at least has public opinion on his side as far as that one is concerned , but the harsh reality is that he dare not push the Tories too far.

If he gets too big for his boots, Prime Minister David Cameron can simply threaten him with a general election which would in all likelihood delivery a Conservative majority and a Lib Dem wipeout.

For all the initial focus on the council election carnage, it is the AV referendum result that will hit the Lib Dems hardest, setting back for at least a decade the cause of electoral reform that is closest to the hearts.

With the benefit of hindsight, the whole thing now looks like a car crash waiting to happen.

As one pundit put it: "Here is a referendum recipe for disaster. Choose an issue that no one cares about, get the most unpopular man in Britain to champion it, and hold it on a day when everyone will use it to kick the most unpopular man in Britain."

Yet it's too simplistic to blame the failure of AV entirely on Mr Clegg, and in any case the outlook at the start of the campaign looked very different, with the 'yes' camp seemingly comfortably in the lead.

In this and other respects, the referendum reminded me of the one that took place in the autumn of 2004 on whether the North-East should have an elected assembly.

On that occasion, too, the 'yes' camp seemed to have a fair wind to start with, but lost the initiative once people started to take a closer look at exactly what was on offer.

Just as the people of the North-East might have supported a less lily-livered version of regional government than the one actually put before them, so the UK public might have supported a genuine form of proportional representation given the opportunity.

Instead, they were offered what appeared to many as a non-choice between the status quo and the 'miserable little compromise' – Nick Clegg's words -that was AV.

In the days following the general election last May, there was a perception that Nick Clegg had emerged as the big winner of a contest that seemed initially to have produced only losers.

If I'm honest, I may have bought into some of that myself, but the result of the AV referendum forces us to revise that view of history.

The truth is that Mr Cameron's great gamble of offering the Lib Dems a referendum on the voting system in return for handing him the keys to Number 10 Downing Street has handsomely paid off.

Twelve months on, the Conservative leader has finally proved himself the real election victor.

Is Clegg's only option now to join the Tories?

Ever since the Coalition government was formed a year ago with the intention of governing for five years, a single overarching question has hung over its ultimate long-term survival.

It is what would happen if and when membership of the Coalition became a political liability for one or other of its partners.

Well, to no-one’s great surprise, least of all mine, that question has now assumed a certain degree of urgency.

The Liberal Democrats’ calamitous performance in Thursday’s council elections will surely lead to fresh unease among party members over just how long they can go on being David Cameron’s fall-guys.

Even leaving aside the result of the referendum on the voting system, still to be officially announced as this column goes to press, it was a bad, bad night for Nick Clegg and his party.

The loss of Newcastle City Council to Labour after seven years was not the half of it.

That result merely restores what has always seemed to be the natural order of politics in the city after a Lib Dem interregnum which was initially a consequence of the post-Iraq backlash against Tony Blair.

More damaging by far was the slump to 15pc of the national share of the vote, some 22pc behind their Coalition partners whose support held steady from last year’s election.

There will doubtless be some bemused Lib Dem activists who wonder why they, rather than the Conservatives, are currently taking the political hit for the government’s spending cutbacks.

There are several reasons. For starters, while those who voted Tory last May were by and large supportive of the cuts, that is not necessarily true of Lib Dem voters.

It stands to reason therefore that Conservative support is holding up better in the wake of the cuts than that of a party whose supporters were more in sympathy with Labour’s more gradualist approach to deficit reduction.

More specifically, the cuts are disproportionately affecting many of the areas, particularly in the North, where the Lib Dems were doing quite well until Thursday night.

But the biggest and most fundamental reason for the Lib Dem collapse is that the decision to enter the Coalition, and the way Mr Clegg had handled the relationship with the Tories, has left many voters confused about the party and what it stands for.

Ever since Paddy Ashdown abandoned “equidistance” between the two main parties in favour of a closer relationship with Labour, it has been perceived as a centre-left party – a perception strengthened by its opposition to the war in Iraq.

In the light of this, Mr Clegg should perhaps have taken more care to appear as a reluctant participant in the Coalition, emphasising that he was joining it purely in the interest of providing stable government rather than out of any sense of policy convergence.

But by making it appear instead like he and ‘Dave’ were enjoying some kind of ideological love-in, he has alienated that segment of Lib Dem support for which the Tories have always been the enemy.

The end result is that Mr Clegg may well now face a leadership challenge, if not from fellow Cabinet member Chris Huhne, then quite possibly from someone outside the Coalition such as former deputy leadership candidate Tim Farron.

Given the Lib Dem collapse on his home territory of Sheffield, he may struggle even to remain an MP at the next election.

On the face of it, probably his best chance of retaining his seat would be to do something which many of us think he should have done a long time ago.

It is to join the Conservative Party.

A listening government - or a government in retreat?

Of all the changes introduced by the Coalition government since it took office last May, it is fair to say that its proposed reforms to the National Health Service have been the most politically controversial.

What about the cuts, I hear you say? Haven't they caused much more widespread public anger and made a much deeper impact on local communities?

Well, yes. But there was a broad political consensus dating back to well before the general election that spending cutbacks needed to be made – the only real disagreement being about the extent of them.

More importantly, the Coalition had a mandate for them. Labour lost the election primarily because, rightly or wrongly, the party was seen to be in denial about the size of the deficit and the remedial action needed to address it.

By contrast, the NHS reforms were not even spelled out in the Coalition Agreement, which infamously promised that there would be "no more top down reorganisation of the NHS."

Indeed, the agreement implicitly accepted that Primary Care Trusts would remain, promising a stronger voice for patients locally through directly elected individuals on the boards of their local PCT."

However when the legislation was published, it turned out that health secretary Andrew Lansley was proposing the abolition of PCTs and the transfer of their entire commissioning role to GPs.

Much of the anger felt by Liberal Democrats over the reforms can be traced back to this piece of perceived duplicity on Mr Lansley's part.

There is said to be anger in Number 10 at the way Mr Lansley has handled the reforms – but to my mind the fault lies more with Downing Street for not paying sufficient attention to their likely political impact.

As with the Forestry Commission sell-off debacle, No 10 seems to have been so focused on deficit reduction in the government's early days that it took its eye off the ball in other, seemingly less contentious areas.

Deputy Prime Minister Nick Clegg must bear some of the blame too, for not realising the strength of feeling in his own grassroots against the proposals.

It is only since his party's Spring conference delivered a huge thumbs-down to the reforms that Mr Clegg has started to argue for changes to the legislation.

So it was no great surprise that, this week, the government was forced to announce it was taking a raincheck on the implementation of the reforms while it conducted a further "listening exercise" with the public and health professionals.

It amounted to an admission that the reforms had been introduced without the necessary buy-in from either the public or, more importantly, those people who will be charged with making them work.

Should we see it as the prelude to a dramatic U-turn? Or is it simply a belated effort by Prime Minister and ex-PR man David Cameron to 'sell' the proposed changes?

Time will tell….but Mr Cameron's apparent openness to changes in the legislation suggests this is more than mere window-dressing.

The backbench health committee of MPs, for instance, wants to see the new fund-holding commissioning bodies drawn from a much wider membership, including councillors and hospital doctors.

Although this is more in tune with the spirit of what was in the original Coalition agreement, any weakening of the central proposal to hand power to GPs will be seen as a major political reverse for Mr Cameron.

The political commentator Benedict Brogan said of this week's events: "The underlying impression was one of an administration in retreat, forced to trim on policy because it got the politics wrong."

Mr Cameron is finding that the line between being a "listening government" and a "weak government" is sometimes a very fine one.

Labour has future of electoral system in its hands

When Liberal Democrat leader Nick Clegg took the historic gamble of joining the Tory-led coalition government last May, he created for himself an excruciating political conundrum.

By forcing the Conservatives to grant a referendum on reforming the voting system, Mr Clegg opened up the tantalising prospect of turning the Lib Dems from a party of permanent opposition to one of moreorless permanent power.

Yet at the same time, by aligning himself with what was bound to be an unpopular administration, Mr Clegg simultaneously ran the risk of seeing the prize of electoral reform swept away on a tide of anti-government protest votes.

The fact that he then went on to make himself the most hated man in Britain in some quarters by breaking a 'solemn promise' on university tuition fees only served to underline the point.

For make no mistake, Mr Clegg is set to become the central figure in the May referendum that was finally given the go-ahead this week following a last-minute game of parliamentary ping-pong between the Lords and Commons.

At the moment, the 'no' campaign is not talking about him, trying instead to make the argument against the proposed new Alternative Vote system on the grounds of cost and complexity.

But don't be fooled – these are just the opening skirmishes, and before too long, this is going to get personal.

'Don't give Nick Clegg a permanent seat at the Cabinet table' is quite simply the no camp's most potent message in this campaign, and it's one we will be hearing a lot more of in the run up to the 5 May vote.

Perhaps understandably, Mr Clegg has so far been nowhere to be seen in the 'yes' campaign, even going so far as to tell Radio Four's Today programme yesterday that the referendum was "nothing to do with" him.

Instead, in the week that The King's Speech swept the board at the Baftas, the pro-reform camp wheeled out the film's much-decorated stars Colin Firth and Helena Bonham Carter to voice their support.

While Ms Bonham Carter, as the great grand-daughter of the Liberal Prime Minister Herbert Henry Asquith, does at least have some family political tradition to maintain here, one could be forgiven for asking 'who cares?'

But that is not the point. The point is that here are two high-profile personalities supporting electoral reform whose names are not Nick Clegg.

On the Labour side, several prominent ex-ministers have already got involved on the 'no' side, including John Prescott, whose track record in referendum campaigns should probably make opponents of electoral reform somewhat wary.

But what should Labour supporters of AV like party leader Ed Miliband do – stay out of it and let the luvvies do the talking, or seek to provide a measure of leadership themselves?

In a sense, it's a win-win situation for Mr Miliband. If the referendum results in a 'yes' vote, the evidence of recent elections suggests it will benefit his party.

But if the country votes 'no', the coalition will be destabilised, perhaps even to the extent that an early general election could result.

The attitude of the Labour leadership will ultimately be crucial, in that it will almost certainly be Labour voters who decide the outcome of this.

Conservative supporters will by and large vote to keep first past the post, as David Cameron urged yesterday. The Lib Dems will vote en masse for change.

The great temptation will be for Labour supporters to vote tribally against AV in order to give the Coalition a bloody nose, but given a strong enough lead from Mr Miliband, my hunch is that most of them will back the change.

That is, of course, assuming they can overcome their dislike of Nick Clegg.

Relief for Ed...but just what will David do next?

And so after all the hoo-ha, a relatively easy win for Labour and a creditable second place for the Liberal Democrats, with Nick Clegg's party staving off the post-tuition fees meltdown some had feared.

Both Mr Clegg and Labour's Ed Miliband went into Thursday's Oldham East and Saddleworth by-election on something of a hiding to nothing - but both appear to have got away with it.

Instead, it is Prime Minister David Cameron who may have the most difficult questions to answer after appearing to soft-pedal the party's campaign in the final week.

After their party's share of the vote was more than halved while the Lib Dems' went up, Tory backbenchers already unhappy about the direction of the government will want to know why their coalition partners were given such an easy ride.

For Mr Miliband, a result which saw Labour's majority increase from 103 to 3,558 will take the pressure off – for now.

After a decidedly lacklustre start to his leadership, Mr Miliband moved to sharpen up his press operation in the weeks before Christmas and this appears to have had pretty instantaneous results.

Victory in what was already a Labour-held seat should leave little room for complacency, however.

His appointment of the economically sub-literate Alan Johnson as Shadow Chancellor appears to be unravelling, while his own appearance on a Radio 2 show a couple of weeks back ended in embarrassment, with Middle England listeners quizzing him over his unconventional private life.

The by-election also saw a fleeting return to the political fray for elder brother David Miliband, one of 40 Labour MPs who travelled to the constituency on Thursday for some frantic last-minute door-knocking.

It concluded what to say the least has been an eventful week for the South Shields MP, with his surprise appointment as vice-chairman of Sunderland Football Club.

At the same time, reports emerged that he was being lined-up a possible new role as a TV presenter with the BBC.

Cynics might be tempted to pose the question: What next? An appearance on 'I'm a Celebrity, Get Me Out of Here' maybe?

In fairness to David, he has made clear his intention to continue as a constituency MP at least until the next election, while in an interview with this newspaper before Christmas, he signalled that he has still not given up hope of leading the Labour Party one day.

He has also appeared to set out his stall as a backbench 'Voice of the North' – although his new role at the Stadium of Light scarcely seems designed to endear him to all corners of the region!

But taken together, the two stories highlight the difficulties which can face politicians when they lose their main raison d'etre – climbing the greasy pole.

And while he is not about to join the 'Z-list' of those who are famous for being famous, Mr Miliband needs to give careful thought to what he does next if he is to remain a serious political player.

The prospect of him becoming a TV presenter inevitably drew comparisons with Michael Portillo – and not for the first time.

Mr Miliband's somewhat cack-handed attempts to unseat Gordon Brown in autumn 2008 echoed Mr Portillo's botched coup against John Major in the summer of 1995 when his supporters were caught installing phonelines for a leadership campaign HQ.

Mr Portillo was regarded by many in the Conservative Party as its natural leader, but partly through circumstance and partly through lack of judgement, he ultimately became its lost leader.

There are many still hoping that David Miliband, so long seen as the 'heir to Blair,' can avoid a similar fate.

One of them, possibly both, is going to end up a loser

Given that the British electorate as a whole only gets to vote once every 4-5 years, it is perhaps inevitable that by-elections tend to wield a somewhat disproportionate influence on our political process.

Usually they follow a fairly predictable pattern. The public – or the media – identifies which of the two main opposition parties is most likely to give the governing party a good kicking, and the 'protest vote' does the rest.

But we are in unchartered waters now. There are two governing parties, only one main opposition party, and the new-ish leader of that party is something of an unknown quantity to most voters.

All of which is what makes Thursday's Oldham and Saddleworth by-election possibly the most fascinating such encounter since the Darlington contest of 1983 which, to Labour's ultimate detriment, saved the leadership of Michael Foot.

On the face of it, it ought to be plan sailing for Labour. In a few short months, the Con-Lib coalition has slashed public spending, put up VAT, and scrapped much of the regional aid budget that was helping former industrial towns like Oldham to find a new role.

Not only that, but the seat was won by Labour in the general election last May, before MP Phil Woolas was disqualified from Parliament for having lied about his Lib Dem opponent on his election literature.

One of the many imponderables in this contest is whether the fate of Mr Woolas will help or hinder Labour's cause here.

The fact that he was actually quite a popular local MP might appear to favour the party, but some voters may feel he was too readily hung out to dry by the Labour establishment, and punish the party accordingly.

Inevitably given its status as a three-way marginal, 'Old and Sad' is being viewed as something of a mini-referendum – not just on the Coalition, but on Labour leader Ed Miliband.

If Labour cannot even win by-elections in seats it already holds, serious questions will start to be asked as to whether it can win anywhere else under Mr Miliband's leadership.

But for Lib Dem leader Nick Clegg, too, a defeat on Thursday would be seen as a significant blow.

His party's candidate, Elwyn Watkins, may well feel the seat is his by moral and indefeasible right having been on the wrong end of Mr Woolas's misdemeanours, but politics doesn't work like that.

Undoubtedly the leader with the least to lose and the most to gain here is Prime Minister David Cameron.

For one, the Conservative candidate Kashif Ali started the contest in third place. For another, the Tories have been accused of soft-pedalling their campaign in a bid to help their Lib Dem partners.

Perhaps realising he is in with an outside chance of a stunning victory Mr Cameron is now doing his best to dispel that impression, becoming the first premier to campaign in a by-election for 13 years.

Yet ironically a Tory win, in a seat where the Lib Dems began as the main challengers, might end up being more destabilising for the Coalition than a Labour triumph.

Mr Clegg would then face more tough questions from his own activists and MPs as to what exactly the Lib Dems are getting out of the Coalition.

A Tory victory would simply reinforce the idea that it is the Lib Dems who are taking all the political pain while Mr Cameron reaps the political dividends.

But whoever wins on Thursday, at least one and possibly both of Mr Cameron's fellow party leaders are going to be waking up to some difficult headlines on Friday morning.

And for either or both of them, that could set the tone for a tricky political year ahead.

Why 2011 is the Coalition's make-or-break year

Two weeks ago I concluded my review of the political year 2010 by posing a question which will, in my view, determine how the next 12 months in British politics ultimately pan out.

It was: can the Coalition government as a whole withstand the dramatic loss in popularity suffered by the Liberal Democrats since their decision to go into partnership with David Cameron’s Tories.

As Ricky Ponting can no doubt testify, a team is only as good as its weakest link, and with public support for the Lib Dems now barely registering in double figures, Nick Clegg’s party are clearly the weakest link in this government.

The big question for Mr Clegg is how much lower he can afford to allow that support to drop before continuing membership of the Coalition simply becomes politically unsustainable.

If any further proof were needed of the Coalition’s inherent instability, then the Vince Cable affair in the run-up to Christmas surely provided it.

There were several ironies about this episode, not least that a newspaper which shared Dr Cable’s hostility to Rupert Murdoch’s takeover of BSkyB managed to shoot itself so comprehensively in the foot.

But surely the biggest irony of all is that, for all the humiliation he heaped upon himself, Dr Cable turned out to be correct in his estimation that he was, in effect, unsackable.

Whatever you think of the methods used to ‘entrap’ him, any other minister who displayed such appalling naivety and lack of judgement would surely have been out of the door.

But because Mr Cameron dare not weaken the Lib Dem element of the Coalition for fear that the whole edifice will collapse, he survived - thought not without having his wings severely clipped.

So much for the events of the week before Christmas. What of the year ahead?

Well, since this is traditionally the time of year for crystal ball gazing, I’ll make a prediction. If the Coalition gets through the next 12 months, it will more than likely achieve its ambition of serving a full five-year parliamentary term.

Why is 2011 likely to prove the Coalition’s make-or-break year? Well, for starters, it is likely to become significantly more unpopular as the cuts bite, unemployment continues to rise, and the full implications of some of its more radical experiments become clear.

I have in mind here Andrew Lansley’s NHS reforms and Michael Gove’s de-municipalisation of schools, neither of which can claim much of a popular mandate.

But the biggest single threat to the Coalition’s survival is the time-bomb that is due to detonate underneath it on Thursday 5 May – the referendum on the alternative voting system.

If, as many now expect, the referendum is lost, it will remove the Lib Dems’ main incentive for having entered the partnership in the first place.

For Labour leader Ed Miliband, too, this will be a critical 12 months, as he seeks to demonstrate to a sceptical public why he, and not his elder brother, is the right man for the job.

At least he now has a clearer opposition strategy, seeking to brand this a Conservative-led government supported by reluctant Liberal Democrats rather than the marriage of true minds Messrs Clegg and Cameron would like to portray.

Yet for all that, Mr Miliband is probably no more keen to bring the government down right now than Dr Cable: his party is broke, he hasn’t had time to overhaul the policies that lost it the last election, and the public doesn’t really know him.

If the Coalition does manage to survive the year, it might simply be because none of the three main parties really wants to have another election just yet.

Review of the Political Year 2010

When future historians come to assess the political events of 2010, two big counterfactual questions are likely to loom large in their minds.

They are: what if Labour had ditched Gordon Brown before the General Election, and what if the Liberal Democrats had refused to go into coalition with David Cameron's Conservatives?

The second question is probably the easier one to answer. Mr Cameron would have formed a minority government, David and not Ed Miliband would have become Labour leader, and both would now be gearing up for a fresh election in the spring.

But the more tantalising question is whether Mr Cameron might never have become Prime Minister at all had Labour gone into the election under a more popular leader.

The political year 2010 began with Mr Brown's survival once again hanging in the balance.

Former Labour ministers Geoff Hoon and Patricia Hewitt attempted to get MPs to demand a leadership contest, but rightly or wrongly, the consensus in the party was that by then it was too late to change horses.

As it was, the election turned into a slow-motion car crash for Labour, dominated by televised debates in which Mr Brown was predictably outshone by his two younger, more charismatic opponents.

Then, in the final week of the campaign, came 'Duffygate' - the kind of incident which could have happened to any of them, but which seemed somehow fated to happen to the luckless Mr Brown.

In terms of issues, the campaign centred mainly on the question of how to deal with the country's biggest budget deficit since the 1930s.

Here Labour was on an equally sticky wicket, with voters clearly concluding that the party was 'in denial' about the extent of the problem and crediting the Tories for being at least partially honest about the scale of the forthcoming cuts.

For all that, though, the public remained largely unconvinced by Mr Cameron and his team, and the eventual result saw the Tories falling some 20 seats short of outright victory.

Days of frantic bargaining followed, but with the parliamentary maths in favour of a Lib-Lab deal failing to stack up, it was always likely that a Lib-Con coalition would be the outcome.

Faced with the task of finding a successor to Mr Brown, Labour managed to saddle itself with the lesser-known of the Miliband brothers, courtesy of a crazy electoral system which gave the unions the decisive say.

For David Miliband, brother Ed's leadership election victory came as a bitter blow and the South Shields MP stood down from his party's frontbench.

Then, in one of his first acts as leader, Ed sacked former Minister for the North-East Nick Brown from his Shadow Cabinet team, leaving the region somewhat leaderless in Whitehall.

Indeed, with the new coalition busily taking the axe to every regional institution in sight, the North-East seemed in danger of losing its political voice altogether.

Initial excitement about the coalition soon faded. The 'new politics' spoken of by Lib Dem leader Nick Clegg in the TV debates soon regressed into the old politics of broken election promises.

Chancellor George Osborne had expected that the £80bn programme of cuts unveiled in his October comprehensive spending review would swiftly make him the most unpopular man in Britain.

Instead, it was Mr Clegg who became the government's fall-guy, completing his journey from hero to zero by backing the rise in tuition fees against which he had so vehemently campaigned in April and May.

The Lib Dems' decision to trade principle for power has clearly come at a huge political cost. The key question for 2011 is whether the coalition as a whole can survive it.

Clegg will come to regret broken promise on fees

The cry of 'betrayal' is one of the most oft-heard in politics. Labour faced it on numerous issues between 1997 and 2010, not least when it introduced university tuition fees despite a manifesto pledge not to do so.

"We have no plans to introduce university top-up fees, and have legislated to prevent them" actually translated as "We have no plans to introduce them during the 2001-2005 Parliament, but we will legislate to bring them in thereafter."

The subsequent backbench revolt came close to bringing down Tony Blair, whose government only survived when a few MPs switched sides at the last moment on the orders of Gordon Brown.

One potential North-East rebel was told to support the measure with the words: "I'm not asking you, I'm [expletive deleted] telling you" - an interesting illustration of the way the Brownites used to do business.

But Labour's shameless U-turn created a huge political opportunity for the Liberal Democrats, which they subsequently sought to exploit to the full in constituencies with large student populations.

Among the seats they targeted in 2005 was Newcastle Central, and it was probably only the personal popularity of the then MP, Jim Cousins, that stopped them winning it.

The Lib Dems were again making the most of the issue during this year's campaign, which they fought on a pledge to abolish the fees in place of a 'graduate tax.'

As one Sheffield student told the BBC's Question Time on Thursday: "Nick Clegg was never out of our student union during the election. Now we can't even get a meeting with him."

The reason for that, of course, is that the Lib Dems are now part of a Tory-led coalition that is set to remove the current £3,000 cap and raise it to a maximum of £9,000.

They point out that the coalition agreement does not commit them to supporting the measure, allowing them to abstain when the proposal comes before the Commons.

But if party leader Mr Clegg saw this is some great concession wrung from his Tory partners at the height of those tense negotiations following the election in May, I suspect he has since been disabused.

In fact the public sees it for what it is – a fig-leaf to enable the Lib Dems to stand aside holding their noses while the Tories introduce a two-tier system of higher education.

The purpose of this column is not to go into the rights and wrongs of how universities should be funded and how that fits into the larger question of how to tackle the deficit.

My own personal views on the matter are inevitably coloured by my own experiences as a student in more benign economic times.

As someone who would certainly not have been able to go to university without the state support that was then on offer, I find it very hard to argue that the next generation should be denied the same benefits.

That said, alongside a 'free' university education, in those days you also used to be able to buy houses in the West End of Newcastle for a few hundred quid. It's a different world now.

No, the main point I am trying to make here is that this is yet one more example of the coalition's inherent instability.

It seems likely that a number of MPs, possibly including the former leaders Sir Menzies Campbell and Charles Kennedy, will rebel rather than abstain on the measure, calling into question Mr Clegg's control over his own party.

As the Lib Dem leader has frequently reminded us, compromise is a necessary part of politics, especially in a hung Parliament scenario, and some political promises are seemingly made to be broken

With hindsight, however, I suspect he will come to see this as one that really should have been kept.

Clegg cannot ignore his social democratic wing

Back in 1999, in his first keynote conference speech, Charles Kennedy insisted that the Liberal Democrats under his leadership would never become a "left-of-Labour party."

Nobody quite took the statement at face value, and neither, I suspect, did Mr Kennedy himself.

Sure enough, over the ensuing two elections, the man then known as 'Chatshow Charlie' succeeded in taking the Lib Dems to their highest-ever parliamentary representation by consistently taking left-of-Labour positions.

In 2001, it was the extra penny on income tax to pay for additional education spending that won over the voters, while in 2005, it was the party's opposition to the Iraq War.

Fast forward eleven years, and current Lib Dem leader Nick Clegg is making what at first hearing sound like similar noises about the party's positioning vis-à-vis Labour.

Interviewed before this week's conference in Liverpool, he said: "The vocation of Liberalism is not to be a leftwing ghetto for people who are disaffected by the Labour Party."

The difference between Messrs Kennedy and Clegg, though, is that Clegg means it.

Not only has he gone into coalition with the Tories. He is almost saying 'good riddance' to those left-of-centre voters who have helped keep the party afloat over the past decade as New Labour continued its rightward drift.

He said in his interview: "I'm not denying there is a chunk of people who turned to the Liberal Democrats at the height of Blair's authoritarianism and his fascination with Bush…that was always going to unwind at some point."

True up to a point….but unless he is genuinely relaxed about his party losing more than half its support at the next election, the logic of Mr Clegg's position – if you can call it logic – is very clear.

It is that, between now and 2015, he is going to have to find himself an entirely new set of voters - particularly in the North where the 'disaffected ex-Labour' vote makes up a fair slice of Lib Dem support.

Which in turn begs the question: where on earth are they going to come from?

Before delivering his two-fingered message to his left-of-centre supporters, Mr Clegg would perhaps have done well to consider his party's recent history.

The Liberal Democrats, it should be remembered, are a fairly recent amalgamation of two parties with very different philosophical strands – the Liberals, and the Social Democrats.

The party is therefore itself a coalition of economic liberals such as Mr Clegg who feel naturally comfortable as part of a Tory-led government, and social democrats like Mr Kennedy to whom it is anathema.

Perhaps this goes some way to explaining why one opinion poll this week showed that more than half of Lib Dem voters regard the coalition as a sell-out, while 40pc said they voted Lib Dem specifically to keep the Tories out.

In his speech on Monday, Mr Clegg made an impassioned plea to his party to "stick with" the coalition, promising it would "change Britain for good."

Well, they'll stick with it as far as the referendum on voting reform next May. But after that, all bets are off are far as I can see.

I'll make another prediction, too. Mr Clegg will not find an army of new Liberal Democrat supporters waiting around for someone to vote for, and he will therefore be forced in the end to try to hang on to his existing ones.

And he won't be able to do that unless he can somehow first find a way of getting his party out of this coalition alive.

Blairite, Thatcherite - or maybe both?

The milestone of a new government's 100th day in office is one of those political landmarks which is perhaps given undue significance by commentators.

After all, it would be a pretty poor sort of government that failed to reach the target, even one cobbled together from two wildly differing parties in the wake of an inconclusive general election result.

Nevertheless, while the first 100 days of a government's life do not necessarily determine its character, they do provide significant pointers to what sort of administration it is likely to become.

In the case of the Con-Lib coalition, it is reasonably clear that the dominant theme thus far has been what its critics would call the "Tory cuts" agenda rather than "Liberal reform" one.

Lib Dem deputy leader Nick Clegg, minding the shop this week and next during Prime Minister David Cameron's holidays, is understandably keen to disabuse the voters of this notion.

He insisted yesterday that being in government meant the Lib Dems were able to make progress with a "liberal agenda"- but few believe him.

In a different way, Chancellor George Osborne, who by contrast has provided the dominant voice of the coalition thus far, was also at pains to emphasise this week that the government is about more than cuts.

Although his big speech on Tuesday was focused on the continuing need for spending reductions, it was tempered with talk of creating a 'fairer society' in the longer-term.

For what it's worth, my own view on the coalition is that it probably has over-emphasised its determination to cut spending at the expense of its reformist credentials.

What reform proposals there have been, notably on education and the NHS, have been largely about shrinking the size of the state – something that is intimately bound up with the spending cutbacks.

There has been much less talk of political reform besides the announcement of the date of the referendum on the voting system, something which is likely to turn into the hottest of potatoes for the coalition.

What, for instance, has become of the much-vaunted 'Freedom Bill' to abolish hundreds of unnecessary regulations brought in by New Labour? Has the coalition belatedly decided they were necessary after all?

The debate over what sort of government this really is was thrown into relief by the decision of the former Darlington MP Alan Milburn this week to become its 'social mobility tsar.'

It inevitably led to cries of betrayal from some of his more tribal ex-colleagues, Andy Burnham and John Prescott among them.

A more charitable interpretation of his actions, though, would be to see the coalition as a Blairite continuity administration, implementing the public service reforms Mr Milburn himself advocated when in government.

Although he would never use these words, the former health secretary might well echo the sentiment: "I never left New Labour, New Labour left me."

Since Mr Cameron is on record as claiming that he is the true 'Heir to Blair,' I have no doubt that this is how the Prime Minister sees his own administration

Others, though, see it differently. To many on the left, Mr Cameron is not so much an arch-Blairite as an arch-Thatcherite, taking the axe to areas of the state even she would have seen as sacrosanct.

Perhaps, though, he is both. Such is the extent to which these two former Prime Minsters have dominated the politics of the past 30 years that it is hard for the current one to escape their influence.

After just 100 days, it is far too early to give this government an 'ism.' But if I had to, 'Blatcherism' would perhaps be the one I would choose.

The coalition will collapse long before any lasting realignment of the right

A FEW weeks back, I wrote about the new government's attempts to construct a new political narrative in which the blame for the forthcoming spending cuts is laid firmly at Labour's door.

Any casual observer of the political scene might be tempted to regard this as the kind of routine knockabout that is only to be expected in our adversarial system.

But make no mistake, the coalition's concerted efforts to rubbish the reputation of Gordon Brown and his government is no mere idle politicking.

It is rather, absolutely crucial to the longer-term survival of David Cameron's Con-Lib administration.

For now, the political honeymoon that the coalition has enjoyed since Mr Cameron and Nick Clegg tied the knot in the Downing Street rose garden in May continues moreorless unabated.

But surely not for long. The cuts will soon be coming thick and fast, and the flak will then be flying equally fast in the government's direction.

Hence the coalition's determination to deflect the coming opprobrium by building as broad a consensus as possible that Labour's mismanagement of the economy is to blame.

This week's "Labour legacy love-in" between Lib Dem Energy secretary Chris Huhne and Tory chairman Baroness Warsi was but the latest phase in the strategy, and we are promised more to come.

As I have also previously noted, the government is in serious danger of over-egging the pudding here.

The voters are no fools, and if the coalition is seen to be protesting too much about the previous government's record, they are all the more likely to smell a rat.

Very little of it washes with me, I'm afraid. The Lib-Cons are choosing to go faster than Labour did in cutting the deficit not because there is no alternative, but because they hold a different economic viewpoint.

Mr Huhne in particular sounded very unconvincing at Wednesday's joint briefing, which is hardly surprising given that before the election, he shared Labour's critique of the Tories' planned austerity measures.

But for me, the really interesting thing about the Huhne-Warsi press conference was not what it says about the past but what it could signify for the future.

Inevitably, it sparked speculation that the coalition partners could agree not to fight eachother at the next election, which Lady Warsi hardly discouraged by failing to give a straight answer to a straight question about it.

Talk of a 'coupon election' - LibCons v the rest – is surely wildly premature, but it wouldn't be the first time that coalitions have led to more lasting political realignments.

Back in the 30s, the 'National Liberals' were ultimately absorbed into the Conservative Party after joining the Tory-dominated national government that ruled the country from 1931 to 1945.

So could this present-day coalition ultimately lead to the formation of a new, centre-right grouping, further marginalising the Tory right and reducing the Lib Dems to a social democratic rump?

You can see why a centrist Conservative like Mr Cameron and a right-leaning Lib Dem like Mr Clegg would be comfortable with such a scenario.

But the problem is that both the Tory right and the Liberal Democrat centre-left have a compelling interest in seeing the coalition collapse long before the two parties get anywhere near that point.

For that reason, it remains my view that, sooner or later, one or other of them will ensure that it does.

The coalition fractures start to show

Prime Minister David Cameron committed something of an historical gaffe this week when he referred to Britain having been the Americans' "junior partner" in 1940 in the war against Hitler.

Given that the US did not even join the war until 1941, it was not even historically accurate, quite apart from the, probably unintended, slight on our own WW2 heroes.

But while Mr Cameron was busy making friends across the pond, his own 'junior partner' was committing a possibly more serious gaffe in regard to a more recent conflict.

Standing in at PMQs, deputy premier Nick Clegg allowed himself to be goaded by Labour's Jack Straw into declaring the 2003 invasion of Iraq "illegal."

The comment was interesting on both a personal and a political level. It demonstrated that, for all his polished performances in the TV election debates, Mr Clegg hasn't yet quite made the transition from leader of a protest party to statesman.

While many voters will applaud his honesty in speaking from the heart, ministers sometimes have to be more circumspect.

More broadly, the comment also highlighted the fact that the Tories and the Liberal Democrats are very different parties, one instinctively pro-establishment, the other instinctively anti.

As we come to what is generally considered to be the end of the political year, the talk at Westminster is inevitably that the coalition is showing its first signs of fracture.

If the truth be told, the tensions were there from the start, but they really only began to come to a head once the scale of George Osborne's Budget cuts became clear.

If there were protests on the Lib Dem side about that, they were then more than matched by the mutterings on the Tory benches following the announcement of the electoral reform referendum to be held next May.

Then, this week, came Mr Clegg's PMQs outburst and a separate row over the Lib Dems' proposed graduate tax to pay for higher education, which the Tories have now turned their backs on.

Still to come in the autumn is a party conference season in which I expect to hear Lib Dem activists sounding-off loudly about the Tories' plans to reform education and the NHS.

With an election theoretically five years off, no-one is currently paying too much attention to opinion polls, but they nevertheless paint an intriguing picture of how the public mood has shifted since 6 May.

Leaderless Labour are up an average five percentage points for the loss of Gordon Brown, which tells its own story of what might have happened had someone else been leading them on election day.

Meanwhile Mr Cameron's Tories are up around eight percentage points at 44pc, while Mr Clegg's Lib Dems have slumped to around 13pc.

The worrying conclusion here for the Lib Dems is that while the public seems to generally approve of what the government is doing, it is currently only benefiting the Tories rather than them.

One of the most prescient questions of the week was posed by the blogger Henry G Manson, writing on the excellent PoliticalBetting.com website.

In a neat reworking of the title of an old club anthem from the late 1980s, he asked: "Clegg: How low can he go?"

Henry's point was that there has to come a point beyond which Lib Dem MPs and activists will not allow the party's support to slump before they are finally moved to act.

I suspect that this is a question which will not only help shape the politics of the next 12 months, but one which may ultimately determine the fate of the government.

Troubled times for Clegg and Co

After the initial thrill of seeing Liberal bums occupying ministerial seats for the first time since the wartime coalition of the 1940s, the past couple of months have proved something of a reality-check for Britain's third party.

First, there was the loss of their rising star David Laws from the coalition Cabinet after just 16 days following revelations in the Daily Telegraph about his expense claims and his private life.

Then the Climate Change Secretary, Chris Huhne, was forced to do a Robin Cook and swiftly dump his wife for his mistress after their affair was exposed by the News of the World.

Mr Huhne kept his job, although conspiracy theorists would doubtless see a pattern in this double embarrassment for key Liberal Democrats at the hands of Tory-supporting newspapers.

But of course, the unease currently being felt across Nick Clegg's party is not just about the personal difficulties of individual Lib Dem ministers. It goes much deeper than that.

The first two months of the coalition have been dominated by the Tory 'cuts' agenda, with Chancellor George Osborne emerging as the dominant figure in the government much as Gordon Brown did under Tony Blair.

For the Lib Dems, it has meant the humiliation of being forced to eat their pre-election words, when they warned that cutting too deep, too fast could cause another recession.

More and more grassroots Lib Dems, and even some of the party's more left-leaning MPs, have started to ask the question: What's in this for us?

Well, this week came the answer – news that a referendum on changing the voting system from first-past-the-post to the alternative vote is to be held next year, probably on 5 May.

For Deputy Prime Minister Mr Clegg, who will formally announce the move next week, it represents perhaps a once-in-a-lifetime chance to achieve the Lib Dem Holy Grail of electoral reform.

There are strong practical arguments for having the vote this early on in the Parliament, in that if it were held any later there would be little chance of getting any changes through in time for the next election.

Against that, though, is the obvious danger that it could shorten the coalition's life by about four years if the referendum is lost.

Were that to happen, of course, there would be little incentive left for the Lib Dems to remain in the government, and Mr Clegg would come under pressure from his party to obtain a swift divorce.

This might, in turn, provide a perverse incentive for the Conservatives not to campaign too hard against the change to AV, although premier David Cameron has insisted that he will.

The referendum poses a dilemma for Labour, too. The logic of opposition suggests it is in their interests to get a 'no' vote in order to try to bring down the government and force a 2011 election.

But many Labour MPs favour AV, and both Miliband brothers have made clear the party will campaign for a 'yes' vote if they win the leadership.

Whether or not Mr Clegg succeeds in his ambition will depend at least in part on whether the coalition can retain the broad popular support it currently holds.

As the North-East knows all too well, referenda held at a time when the government is unpopular tend to result in resounding 'no' votes.

The biggest danger for the 'yes' campaign is that the public comes to view this as an irrelevance when set against the economic problems facing the country – as many Tory MPs already do.

Not for the first time in recent months, the Lib Dems are finding themselves having to negotiate uncharted – and shark-infested – political waters.

Where is the mandate for 'Canadian-style' cuts?

Are the Tories economic saviours - or are they just opportunistic ideologues using the deficit crisis as an excuse to finish Thatcher's work. Here's today's Journal column.

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One of the shortest-lived and least successful political advertising campaigns of recent times was Labour's general election poster featuring David Cameron as fictional 80s TV cop Gene Hunt.

"Don't let him take Britain back to the 1980s," said the catchline, as the Tory leader was depicted astride Hunt's famous red Audi Quattro.

The campaign, which was swiftly pulled, ignored two important facts. Firstly, most people thought Gene Hunt was quite cool. Secondly, many would jump at the chance to go back to the 1980s were it really possible.

For all the bitter folk-memories of the 1984/5 miners' strike, unemployment topping 3m in 1981 and the Toxteth and Brixton riots that summer, it was an altogether gentler age than the one we live in now.

If anyone is in any doubt about this, Mr Cameron's speech on Monday in which he sought to prepare the public for spending cutbacks the likes of which have never been seen before ought to disabuse them of it.

Lib Dem leader and Deputy Prime Minister Nick Clegg is insistent that it won't mean a return to "Thatcher-style policies," and he's quite right. It’s going to be far worse than that.

For all that the Tories still worship the Iron Lady as the premier who began the rolling-back of the state with her 1980s privatisations, there are some parts of the public sector she would have never dared touch.

That is emphatically not the case now. The message coming out from Mr Cameron and Chancellor George Osborne is that no item of public expenditure can now be considered sacrosanct.

Is this a bad thing? Well, not necessarily. All parties are agreed after all on the need to reduce the country's £156m budget deficit, and however many reviews of government 'waste' are carried out, it seems there are always new savings to be found.

But for me, the biggest question mark against the government's plans to adopt the 'Canadian Solution' and radically shrink the size of the state concerns its lack of political legitimacy.

It should not be forgotten that the Tories did not win an outright majority at the election, and that most people who voted Lib Dem certainly did not vote for huge public spending cuts.

While the coalition partners can claim a strong policy mandate in areas such as civil liberties where they fought the election on similar ground, that was decidedly not the case when it came to economic policy.

History is written by the winners, of course, and the government is already busy constructing a political narrative which seeks to justify the drastic economic remedies it now proposes.

Gordon Brown's government, we will be told again and again over the coming months, has left the country practically bankrupt and on the verge of 'doing a Greece.'

It already seems forgotten that Mr Brown's additional spending 'stimulus' designed to get the economy moving again in 2008/09 was met with widespread public approval at the time.

Such rewriting of history is nothing new. The Tories ensured the Callaghan government was remembered not for repaying the 1976 IMF loan within two years and stabilising the nation's finances, but for the Winter of Discontent.

What, if anything, have Labour's five leadership contenders got to say about all this?

Well, the fact that they have thus far been uncharacteristically muted in their criticisms of the coalition's plans goes to show how far it has already succeeded in shifting the terms of the debate.

The truth is that the deficit crisis has presented the Tories with a chance to do something some of them have wanted to do for decades, and take the axe to large parts of the state.

Is it the harsh medicine the country needs? Or is it rather just a blatant piece of ideology-driven opportunism?

Is this what Cameron wanted all along?

Two things are holding the new Lib-Con coalition government together. The first is liberalism, economic and social. The second is a mutual loathing New Labour and all its works. Here's today's Journal column.

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Last week, I suggested that the enthusiasm with which Prime Minister David Cameron has embraced his new Liberal Democrat partners hinted that coalition might have been the election outcome he wanted all along.

If I’m totally honest, I don’t think there is any ‘might’ about it. As several other commentators have remarked over the past week, Mr Cameron is clearly more at ease with his Lib Dem deputy Nick Clegg than he is with most of his own backbenchers.

Had he succeeded in gaining a narrow overall majority on 6 May, Mr Cameron would now be at the mercy of a bunch of hardline right-wingers, much in the way that John Major was throughout the 1992 Parliament.

As it is, he can now safely tell them to get stuffed in the knowledge that the Lib Dems’ 57 MPs give his government a near-unassailable parliamentary majority – unless of course, they themselves rebel.

There is no sign of that happening at the moment. Granted, Business Secretary Vince Cable looks less than chuffed to be playing second fiddle to Chancellor George Osborne, and well he might in view of the latter’s relative lack of economic expertise.

But that apart, there seems to be a remarkable degree of cohesion between the two sides over the coalition agreement that was finally published in its full, 34-page format this week.

Some critics have said the coalition is merely held together by the desire for power, but for me that is way too simplistic.

I think the glue that is holding it together, for the time being at any rate, is rather a mutual loathing of what New Labour perpetrated in office, coupled with a mutual determination to address those perceived mistakes.

The economy is the most obvious example. Whatever their differences during the campaign, there is general agreement between them that deficit reduction is the coalition’s No 1 priority.

The new government’s unfolding narrative in this area is essentially that the previous administration had been spending far too much and it is this one’s job to balance the books.

The revelation that former chief treasury secretary Liam Byrne had left a note in his drawer saying “sorry, there is no more money” has hardly helped Labour’s cause in this regard.

That said, his Lib Dem successor David Laws appeared to have suffered something of a humour collapse in his account of the discovery of the infamous document.

Or take civil liberties. Here too the narrative is already clear – that Labour came close to turning us into a ‘surveillance society’ and it is the coalition’s task to unpick that.

Doubtless Labour was dealt a difficult hand in having terrorist outrages like 7/7 happen on its watch, but its response to those terrible events is increasingly seen as having been too authoritarian.

Some past Conservative leaders have also had a distinctly authoritarian tendency – and some of those right-wing backbenchers still do – but Mr Cameron’s own worldview is very different.

The Prime Minister is, and always has been, a liberal Conservative. Hardly surprising then that he should have described his government as such on its first full day in office.

In embracing partnership politics to such an extent, it is tempting to think Mr Cameron might be paying heed to a lesson from history.

Before the 1997 election, Tony Blair and Paddy Ashdown held extensive discussions about a coalition, but the sheer size of Labour’s majority eventually rendered the idea untenable.

Mr Cameron was dealt a rather different hand on 6 May – but has actually managed to turn a perceived setback into an opportunity.

If the new Prime Minister is already showing a determination to learn from the mistakes of previous ones, then that can only be an encouraging sign.