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Clegg dials up differentiation

Wounded over Europe, the Lib Dems are accelerating their strategy for looking and sounding unlike To

The Liberal Democrats are fighting back after a grim couple of weeks. Watching David Cameron pursue the most eurosceptic foreign policy for a generation and get an opinion poll bounce out of it was about as pleasurable an experience for Nick Clegg's party as seeing prospects for electoral reform killed off for a generation in May. That also coincided with a poll boost for the Tories.

The Lib Dems are seriously at risk of winding up in a situation where their defining policy positions are best remembered as the ones they were forced to abandon for the sake of coalition. Clegg knows his party's patience is wearing thin. The last few weeks have been "wounding", according to a senior aide.

The Lib Dem strategy has been to spend a period of time demonstrating that coalition could work - reassuring markets and voters alike that the two partners were committed for the long haul. Then, there would be a period of "differentiation", in which the junior partner sought to carve out some identity with distinctive policy positions, and finally "separation" ahead of a general election.

I'm told that the humiliation over Europe has been taken by Clegg as a licence to "dial up differentiation". It started with a semi-choreographed tantrum over David Cameron's veto of a new EU treaty. On Sunday, Vince Cable was on TV saying that the government would be implementing in full recommendations made by the Vickers Commission on banking regulation (in fact this is a coalition compromise position, but the fact that the Lib Dem Business Secretary got to announce it first counts as a mini-concession). And today Nick Clegg is making a speech in which he derides a cherished policy of the Tory right - the idea of promoting marriage with tax concessions. He also distances himself from Cameron's "Big Society" vision, preferring a liberal "Open Society" variant. There is even going to be a renewed Lib Dem push for House of Lords reform.

After the AV fiasco, Clegg's team had decided to tone down the party's enthusiasm for constitutional reform on the grounds that no-one cared apart from a tiny handful of reformist fanatics and they were the people most likely to be dismayed by Lib Dem compromises and defeat.

The fact that Clegg has gone back to the constitution is revealing in two ways. First, it is one of a few areas where there is some natural coincidence of interest with the Labour party. Lords reform is a test ground for future possible collaboration - feelers have already tentatively been put out. Second, driving through Lords reform would provide an answer to a crucial question for the Lib Dems when they are feeling marginalised by coalition: "What have the Tories been forced to do that they might not have done anyway?"

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