Nick Clegg speaks at Bloomberg's London headquarters on June 9, 2014. Photograph: Getty Images.
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The smaller coalition party nearly always gets smashed – but all is not lost for the Lib Dems

To cement its identity in future coalitions, the party needs to own departments.

Shortly before the 2010 general election, aware that the Conservatives were unlikely to win a majority, an anxious David Cameron asked Angela Merkel what it was like to lead a coalition government. “The little party always gets smashed!” she mischievously replied. As he met the German chancellor in Sweden in recent days, Cameron could have been forgiven for recalling her remark. Like their sister party in Germany, the Free Democrats, which lost all of its seats in the 2013 Bundestag election, the Liberal Democrats have indeed been smashed.

Since 2010, they have lost a third of their members, 1,500 of their councillors, all but one of their MEPs, nine by-election deposits and more than half of their previous opinion-poll support. The Tories, by contrast, have retained most of their 2010 vote share of 36 per cent and have consistently exceeded expectations in local elections. “We knew we would pay a price for working with the Conservatives,” said Nick Clegg in his recent speech at the Bloomberg headquarters in London.

In these circumstances, one might expect there to be little optimism among the Lib Dems. But the shifting plates of British politics have given them hope. With both the Tories and Labour doubtful of winning a majority in 2015, many Lib Dems believe that they will once again act as kingmakers in a “balanced parliament” and extract significant concessions for doing so.

Some are even more sanguine. At a recent parliamentary party away day in Wyboston, Bedfordshire, Danny Alexander declared that the Lib Dems could become the largest party in British politics by 2025. “We were all rolling our eyes, even Clegg’s spads,” one of those present tells me. David Steel’s 1981 exhortation to Liberal activists to “go back to your constituencies and prepare for government” looks modest by comparison.

Though it is now rarely recalled, there were those who argued that coalition would enhance, not diminish, the Lib Dems’ popularity. The standard explanation offered for the party’s recurrent midterm slumps was that it failed to receive the media attention devoted to the Conservatives and Labour, a defect rectified by equal treatment at the time of the general election. But with Liberal Democrats in government, this disadvantage would be removed permanently. The more the public saw of the third party, the logic ran, the more it would like it.

That the reverse proved to be the case was partly because of their alliance with the Tories. As Tony Blair shrewdly observed, a party that ran to the left of Labour for three successive elections could not hope to avoid punishment for entering government with a party to its right. Long before Clegg and his fellow Lib Dem ministers walked through the division lobby in favour of higher tuition fees, their poll ratings had collapsed.

The party’s “contamination” by the Conservatives encourages the thought that an alliance with Labour could have a cleansing effect. Clegg’s pledge in his Bloomberg speech to borrow to invest in infrastructure was the latest example of policy convergence between the two parties. But a partnership with the opposition would pose dangers of its own kind. Such is the degree of policy overlap that the Lib Dems would risk becoming indistinguishable from their centre-left rival. The existential question that stalks Clegg – “What is the point of the Lib Dems?” – would become more rather than less insistent in coalition with Labour.

It is in anticipation of this fate that the former Lib Dem minister Jeremy Browne has called for the party to embrace an “unbridled, unambiguous” programme of free-market liberalism. Browne considers the left-leaning party president, Tim Farron, and the Business Secretary, Vince Cable, to be examples of what Keynes called “watery Labour men”: social democrats who would be better off with Ed Miliband.

What Browne’s position boasts in intellectual rigour, it lacks in electoral nous. Outside the City of London, there is little appetite for turbo-Thatcherism. Rather than veering to the right, the Lib Dems should adopt other means of differentiating themselves. An increasing number in the party, including on its federal executive, believe it was a mistake for Clegg not to demand control of entire government departments in 2010. His decision instead to spread the Lib Dems across Whitehall made it harder to claim credit for policy achievements and left the party’s junior ministers looking like the helpless hostages of their Tory superiors. The next time parliament is hung, the party should learn from the approach of its Scottish sister, which took control of justice and agriculture in its first Holyrood coalition with Labour in 1999 and prospered in the subsequent election. Far from being wiped out, the party retained all 17 of its seats in 2003 and most of its vote share.

Having named his coalition negotiating team for 2015, Clegg should already be targeting politically attractive departments. A Lib Dem minister could win control of the housing portfolio and take credit for a Macmillan-style building programme, or secure home affairs and act as the guardian of civil liberties. Tim Farron told me: “There’s a lot of wisdom in that . . . When you’re a smaller party, identity is everything. Being known for one or two and, if you’re really lucky, three good things is what you’re after in terms of getting traction with the voters.”

A few days ago, Clegg received a consoling text message from his friend Jan Björklund, the leader of the Swedish Liberal People’s Party (currently polling at 6 per cent). “Us liberals,” he wrote, “must never accept that we can only survive in opposition.” An admirable sentiment – but if the Lib Dems are to avoid being continuously smashed in a new era of hung parliaments, they need to wise up and ensure they are better prepared.

George Eaton is political editor of the New Statesman.

This article first appeared in the 11 June 2014 issue of the New Statesman, The last World Cup

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Cabinet audit: what does the appointment of Andrea Leadsom as Environment Secretary mean for policy?

The political and policy-based implications of the new Secretary of State for Environment, Food and Rural Affairs.

A little over a week into Andrea Leadsom’s new role as Secretary of State for Environment, Food and Rural Affairs (Defra), and senior industry figures are already questioning her credentials. A growing list of campaigners have called for her resignation, and even the Cabinet Office implied that her department's responsibilities will be downgraded.

So far, so bad.

The appointment would appear to be something of a consolation prize, coming just days after Leadsom pulled out of the Conservative leadership race and allowed Theresa May to enter No 10 unopposed.

Yet while Leadsom may have been able to twist the truth on her CV in the City, no amount of tampering will improve the agriculture-related side to her record: one barely exists. In fact, recent statements made on the subject have only added to her reputation for vacuous opinion: “It would make so much more sense if those with the big fields do the sheep, and those with the hill farms do the butterflies,” she told an audience assembled for a referendum debate. No matter the livelihoods of thousands of the UK’s hilltop sheep farmers, then? No need for butterflies outside of national parks?

Normally such a lack of experience is unsurprising. The department has gained a reputation as something of a ministerial backwater; a useful place to send problematic colleagues for some sobering time-out.

But these are not normal times.

As Brexit negotiations unfold, Defra will be central to establishing new, domestic policies for UK food and farming; sectors worth around £108bn to the economy and responsible for employing one in eight of the population.

In this context, Leadsom’s appointment seems, at best, a misguided attempt to make the architects of Brexit either live up to their promises or be seen to fail in the attempt.

At worst, May might actually think she is a good fit for the job. Leadsom’s one, water-tight credential – her commitment to opposing restraints on industry – certainly has its upsides for a Prime Minister in need of an alternative to the EU’s Common Agricultural Policy (CAP); a policy responsible for around 40 per cent the entire EU budget.

Why not leave such a daunting task in the hands of someone with an instinct for “abolishing” subsidies  thus freeing up money to spend elsewhere?

As with most things to do with the EU, CAP has some major cons and some equally compelling pros. Take the fact that 80 per cent of CAP aid is paid out to the richest 25 per cent of farmers (most of whom are either landed gentry or vast, industrialised, mega-farmers). But then offset this against the provision of vital lifelines for some of the UK’s most conscientious, local and insecure of food producers.

The NFU told the New Statesman that there are many issues in need of urgent attention; from an improved Basic Payment Scheme, to guarantees for agri-environment funding, and a commitment to the 25-year TB eradication strategy. But that they also hope, above all, “that Mrs Leadsom will champion British food and farming. Our industry has a great story to tell”.

The construction of a new domestic agricultural policy is a once-in-a-generation opportunity for Britain to truly decide where its priorities for food and environment lie, as well as to which kind of farmers (as well as which countries) it wants to delegate their delivery.

In the context of so much uncertainty and such great opportunity, Leadsom has a tough job ahead of her. And no amount of “speaking as a mother” will change that.

India Bourke is the New Statesman's editorial assistant.