Nick Clegg’s office already has a Downing Street feel to it. Since becoming leader of the Liberal Democrats, he has had it redecorated so that portraits of old party leaders hang on the staircase up to his room, as portraits of former prime minsters do in No. 10. It starts plausibly enough, with portraits of Palmerston, Gladstone and Asquith. The gravitas is somewhat lost when we get to Charles Kennedy and Ming Campbell. But neither came as close to power as Mr Clegg is now. If the polls are right, then he might be just weeks away from government.
The idea of a Lib-Con coalition is not one any Conservative relishes. But there is a limit to how long even the most optimistic Tory can keep ignoring opinion polls. For the past three months most polls have pointed to a hung parliament — and the trend is, if anything, reinforcing this view. Soon, Mr Clegg will be granted what his predecessors dreamt of: a platform in televised election debates where he will be given equal status to the Prime Minister and Leader of the Opposition.
If Mr Clegg is to govern with the Conservatives, or simply win seats from them (most Lib Dem targets are Tory-held), then he must learn to sing the blues. He is in good voice in his Westminster office, with a blue tie, saying that his liberalism is more Tory-friendly than one might think. ‘I like to think that Conservative voters who feel there is something flakey about the Cameron-Osborne leadership might feel there is a consistency and conviction in my leadership. I do understand that they feel it’s their turn, that they feel a sense of entitlement. But what has surprised me is this ideological vacuum at the heart of the Conservatives.’
The words ‘pot’ and ‘kettle’ may well spring to the mind of any Conservative listening to a Liberal Democrat talking about a lack of principles. So I ask Mr Clegg for some specifics. What sound policies might a Spectator reader find in the Lib Dem manifesto that would be absent from a Tory one? He has a list. It is, he says, ‘what my liberalism is about’: civil liberties, freedom from tax, smaller government. But his starting block is the biggest question in politics: how you deal with the deficit.
Each year, the government is borrowing £180 billion. Mr Clegg thinks that, once the economy recovers, the gap will be ‘to the tune of £80 billion or so’. So how do you fill this gap? Labour would do so with one third tax rises and two thirds cuts. The Tories would have one fifth tax rises. But Mr Clegg says the Lib Dems are the most radical of the lot: they propose no tax rises at all.
‘We’re saying “purely spending cuts”, and for a number of reasons. If you want the economy to grow, you must stimulate demand. Any economist will tell you that the best way to do this is by giving tax breaks to the people who tend to spend more of their money they receive. That is to say, people lower down the income scale.’ He is adopting proposals first advocated by Lord Saatchi when he was Tory Treasury spokesman in 2001: taking anyone who earns below £10,000 out of tax altogether.
‘Even Norman Tebbit thinks it’s a good idea,’ says Mr Clegg, enthusiastically. ‘A lot of people on the conventional right have told me that they believe in tax freedom. Well, our proposal will take 3.6 million out of paying tax altogether. It appeals to people who believe in hard work and initiative. And in people not being held down below the water line by a tax system which hammers the poorest fifth much more heavily than people at the top.’
The other side of his plan, on which Lords Tebbit and Saatchi are not so keen, is abolishing pension contributions for higher-rate taxpayers and a ‘mansion tax’ on properties valued at over £2 million. The Tory inheritance tax cut, he said, would help people who ‘don’t actually spend their money, they just squirrel it away’. Here, Mr Clegg conforms far more to the soak-the-rich Lib Dem stereotype, talking about ‘unearned income’ rather than investment income and saying that capital gains should be taxed as income is now.
But he justifies this by pointing to an unlikely lodestar: the Thatcher government. ‘If the Conservatives had any imagination or verve, they would look back at their own history and realise the last time capital gains and income was equalised was under Nigel Lawson,’ he says. ‘What I am advocating is a Lawson policy.’ From someone who used to denounce Baroness Thatcher with some passion, this sounds remarkably odd.
But, he claims, age has taught him the point of Lady Thatcher. And, indeed, he now seems to see her as something of an inspiration. ‘I’m 43 now. I was at university at the height of the Thatcher revolution and I recognise now something I did not at the time: that her victory over a vested interest, the trade unions, was immensely significant. I don’t want to be churlish: that was an immensely important visceral battle for how Britain is governed. And what has now happened to the British economy? It has gone belly-up because, once again, we have allowed a vested interest to run riot.’
He is talking, of course, about the banks. ‘They represent a vested interest. This is what I sometimes don’t understand about the Cameron-Osborne act. A real liberal believes in genuine competition, a genuine level playing field and he is unremittingly hostile to vested interests.’ As Thatcher was to Scargill, so Mr Clegg intends to be to the banks. ‘What I find so striking is that the spirit — dare I say it — of the battle against the dominance of one vested interest, the trade unions, is exactly the same spirit we need now.’
Hearing him lay claim to the spirit of Thatcher, it is easy to forget that the Lib Dems still propose a local income tax and have spent most of the last decade attacking Labour from the left. But if there is such a thing as Cleggism, this is it: a mosaic, rather than a fusion, of policies. Some red, some blue. Tax cuts for the poor, to please Lord Tebbit. Tax rises on the rich, to assuage Labour voters. And this approach is not so entirely dissimilar to Tory policies: George Osborne proposes to keep the 50p tax coming in next month. The question which much of Westminster is asking is whether the Lib Dems and the Tories are so similar that they could work effectively together.
Mr Clegg says he has form on making common cause with Conservatives. Referring to his time as the Lib Dem home affairs spokesman, he says, ‘David Davis and I were driven into a corner by John Reid’s shameless authoritarian populism.’ While he disagrees with Mr Davis on many things, ‘I think he has a genuine commitment to an agenda on liberty, and some of the issues that my party has been campaigning on for years.’ The Lib Dems also support Michael Gove’s ‘Swedish schools’ policy, especially the principle of making the least advantaged pupils more lucrative to teach. Mr Clegg’s main quibble with the policy is that he proposed it first ‘in a pamphlet I wrote nine years ago’.
And the price of his support in government? He says he has a fixed list of ‘principles we will stick to in whatever circumstances: opposition, government, hung parliament or whatever’. He lists them. ‘It’s four things. First, tax reform. Then education — the pupil premium, smaller class sizes. Third, transformation of our whole economic outlook away from serving the interests of one Square Mile to serving the interests of 100,000 square miles of the United Kingdom. And finally very, very radical political reform.’
One potential dealbreaker between the Lib Dems and the Tories has been foreign policy. During the last election, the Lib Dems were advocating withdrawal from Iraq — and picked up much support as the only anti-war party. But Mr Clegg says he will not repeat this by advocating withdrawal from Afghanistan. ‘It would be morally wrong for a party like the Lib Dems who supported the engagement in Afghanistan to pull the plug on that support while Barack Obama is trying to do something different.’ The Obama troop surge, he says, needs to be given time. ‘And that’s exactly what we will do.’ So will he give it, at least, until after the election? ‘Yes, definitely.’
Those with an eye to see it could detect the foundation stones of a Lib-Con alliance being formed. No disagreement on Afghanistan, unity on radical school reform, a battle of the axe-men on public spending and a bit of squeeze-the-rich for good measure. Quite what Mr Clegg means by ‘political reform’ is an open question: the Tories would not agree to proportional representation voting system. But Mr Clegg sounds very much like a man who is going back to his constituency to prepare to steer a Tory government.