Dave and Nick need to fake it now that the romance has gone

With the Prime Minister now attacking his deputy openly on the radio, it’s clear that the early truc

The Liberal Democrats are usually glad when the power they wield behind the scenes in government is advertised in public. It helps rebut the claim that they are helpless hostages of a Tory junta. So when David Cameron said in a radio interview on 20 June that the Lib Dems had watered down proposals on immigration and welfare reform, it might have been seen as a boost to the junior coalition partner. It wasn't. It was an attack and Nick Clegg knows it.

The Prime Minister chose two policy areas where opinion polls show a voracious public appetite for "tough" measures. It was a rehearsal of lines for the next general election. We are doing our best, Cameron seemed to say, but it's hard with these bleating Liberals on board. George Osborne has paid a more sincere compliment to the Lib Dems, only not in public and not to their faces. It follows Nick Clegg's campaign to disrupt the passage of government NHS reforms and then claim credit for taming the Tories' wilder free-market excesses. The Chancellor has told close colleagues that, if the roles were reversed, he would have done exactly the same.

That is praise from a man widely regarded - not least by himself - as one of the smartest tacticians in the game. But it is not a healthy relationship when partners cynically admire the innovative methods they use for hurting each other.

Flagship wreck

Clegg's agitation over the NHS has lifted the Lib Dems' morale but not their wretched poll ratings. Meanwhile, Conservative private poll­ing shows that the government's "listening exercise", which was meant to ease anxiety over the health reform, barely registered with the voters. People have come away from the whole episode with the impression of nothing but a policy shambles.

That is bad for both parties. Failure to pilot a flagship proposal smoothly through parliament has made Cameron look careless and weak, but Clegg can hardly build an electoral recovery by casting himself as an iceberg, lurking mostly beneath the surface and waiting to sink Tory boats. If the Lib Dems block too much legislation, the Tories will denounce them as unfit for office. "There's no advantage to us from stalemate government," says a senior Clegg aide.

The Lib Dem top brass and MPs met recently for an away day in a converted Gothic mansion in the Yorkshire countryside to discuss ways
of reasserting their identity. The message that emerged was "compassion and competence" - working with the Tories to get the public finan­ces in order while seeking definition through issues that appeal to liberal-minded voters: the environment, social care, social mobility. But there are no easy victories before an election. The Lib Dems won't avert climate change by 2015. There are also areas where differentiation from the Tories is a hazard. Clegg's pro-Europeanism is no electoral tonic.

Cameron's approach to coalition is also shifting, in a way that reflects competing philo­sophies and temperaments in the Prime Minister's inner circle. On one side are the romantics: Oliver Letwin, the minister in charge of co-ordinating policy across government, and Steve Hilton, Cameron's main policy adviser. They take a grand, holistic approach, urging sweeping change on all fronts. The ambition is to transform the way government works and permanently alter people's expectations of what the state will provide. Letwin talks about "shifting the centre" of politics, which means embracing coalition as part of a grand realignment.

On the other side are the pragmatists: Osborne and Andrew Cooper, Cameron's head of strategy. They prefer to look at policies on their individual merits, pushing the ones that advance the Tory electoral cause - such as welfare cuts - and ditching those that don't - such as Ken Clarke's prison-sentencing reforms. The Tory pragmatists are not hostile to coalition; after all, it has given the leadership cover to distance itself from the party's right wing. But they see the arrangement more as part of a two-term tactical operation. Osborne's relentless focus is on securing a majority in 2015.

Pragmatism is in the ascendant. Letwin has suffered from his failure to sound an early alarm about the danger posed by the NHS reforms. He has a reputation as an intellectual Titan but a tactical naif. "No one is under the illusion that he's a political animal," says a government adviser. Similarly, Hilton urged Cameron not to waver on health reform when it should have been clear the issue was harming the PM.

The Lib Dems are just as wary of romanticism for fear of looking like automatic allies of the Tories, thereby closing off the option of future collaboration with Labour. "We've signed up to this coalition on a pragmatic basis, not an ideological one," says a Lib Dem member of cabinet.

A project launched last November to map out joint ambitions for later in the parliament - "Coalition 2.0" - has been downgraded. Ministers still meet to discuss the project every few weeks, but the original notion that this might produce a successor to last year's formal coalition agreement has been shelved. Any such deal would have to be sold to backbench MPs, a prospect relished by neither party leader.

Life after love

Last May, Clegg and Cameron were pleasantly surprised at how easy it was to make two-party government work. At that stage they had a shared interest in presenting coalition as the answer to the nation's problems. Romance blossomed on the Downing Street lawn.

Such harmony masked conflicting views of what coalition means. The Lib Dems need to normalise multiparty government as part of the repertoire of British politics, one of the regular menu options at election time. The Tories increasingly want coalition to be seen as a one-off solution to a unique challenge - the need for a stable parliamentary majority to tackle a Budget deficit of roughly £150bn.

The two parties' interests still overlap but on a dwindling patch of turf. That means more ruthless competition to own - and disown - policy. Yet voters are unlikely to appreciate four years of infighting between the two governing parties. Clegg and Cameron both need to make coalition look like an effective and harmonious system of government again, but neither of them has worked out how to fake it now that the romance has gone.

Rafael Behr is chief political commentator of the New Statesman