Nick Clegg's first speech since the Lib Dems' disastrous election results is an attempt to respond to criticism from both the left and the right that voters no longer know what his party stands for. In the address at Bloomberg's London HQ today, he will say that the Lib Dems have a "unique mission" to advance "liberal values" and that he is "not interested in coalition at any cost". This is a qualification of the stance previously outlined by Danny Alexander, who earlier this year ruled out Lib Dems support for a minority government, a position which some in the party feared would make it harder to achieve its negotiation priorities (since there is no threat of a veto).
As part of his attempt to provide the Lib Dems with greater definition, Clegg will announce the rules that will govern his approach to tax and spending in the next parliament. Most significantly, he will say that while committed to reducing the national debt as a share of GDP (the "debt rule") and to eliminating the current deficit (the "balanced budget rule"), he supports borrowing for capital projects that enhance growth or financial stability.
It is a move that aligns the Lib Dems more closely with Labour than the Tories. Unlike George Osborne, who has pledged to achieve an absolute budget surplus by the end of the next parliament, Clegg has recognised the case for borrowing to invest in infrastructure programmes (such as housing, transport and communications) that benefit the economy. This puts him on the same page as Ed Balls, who has pledged to eliminate the current deficit and to reduce debt as a share of GDP by the end of the next parliament, but has left room to borrow for capital spending. Clegg's refusal to clear the remainder of the deficit through spending cuts alone, as the Tories propose, and to raise taxes on the rich, through measures such as a mansion tax, is another important point of agreement with Labour.
There are some differences that remain. Labour has pledged to eliminate the deficit by the end of the next parliament (2020), while Clegg wants it gone by 2017-18, and Clegg's stance precludes borrowing to invest in schools and hospitals, which Labour's may not. As he will say: "Gordon Brown used to slap the words 'capital spending' on anything and everything just so he could get away with borrowing to pay for it. That can never be allowed to happen again. Sound investment yes, reckless borrowing, no."
But it is the contrast with the Tories that is most notable. As he will say of Osborne's position: "We are not the Tories. We don’t believe in an ever-shrinking state. We are not so ideological about making cuts that we’ll deny people the things they need.
"We’re not so dogmatic about borrowing that we’ll jeopardise Britain’s economic health. Responsibility – yes; austerity forever - no."
We can now add borrowing for investment to the striking number of shared Labour and Lib Dem policy positions. As I've previously noted in the NS and the Times, both favour a mansion tax on properties worth more than £2m, EU reform without a guaranteed referendum, a voting age of 16, an end to the use of unqualified teachers in state schools, radical devolution to city regions and local authorities, a mass housebuilding programme, greater oversight of the intelligence services, a 2030 decarbonisation target, scrapping winter fuel payments for wealthy pensioners, reform of party funding and the maintenance of the Human Rights Act.
While the personal animosity between Clegg and some Labour figures, and the enduring tribalism of many in Miliband's party, means a coalition would not be smooth to assemble, it is far easier to see what a Labour-Lib Dem government would do than what another Tory-Lib Dem administration would.