Now that Lords reform is entirely off the agenda, Nick Clegg faces the complicated task of negotiating a policy battle to keep his party happy. Pursuing AV and an elected House of Lords were core to Clegg's justification to his party for power, so he now has to find something significant to avoid 'going naked' to his conference in September. We'll find out more in the next hour about what the Lib Dems' intentions are for the boundary reforms, which they have linked with Lords reform, but Clegg will want other policy victories, not just battles, to show he is delivering. These are some of the likely policies the Lib Dems may now push for:
More representation in the government
Likely. As James reported yesterday, David Laws is set to return in a policy capacity that will beef up their representation in the Cabinet. But don't expect to see any more Lib Dem ministers, which would surely annoy already anxious Tories who remain concerned about their career advancement opportunities.
Quite likely. The Treasury has been consulting with rough ideas on a tax for expensive properties, so this may appear in one form or another. However, the Tories previously blocked such a tax during the 2012 Budget so introducing it now would be a significant concession to the Lib Dems. But after the loss of House of Lords, it may be necessary.
Party funding reform
Semi-likely. Along with constitutional reform, this is one of the great Lib Dem causes. Reforms have already been discussed between the partners but party funding is a can of worms that has been kicked down the road many times. If pursued, it may look overly venal by stitching up Labour with a deal that primarily aids the Lib Dems. After the cash for access scandal earlier this year, the Tories been under pressure to reform the current system, but it's unlikely their already disgruntled financial backers feel the same.
Beefing up Green taxes
Quite unlikely. Another key Lib Dem policy that would please the grassroots. However, the current coalition environmental policies are frequently attacked by Tory backbenchers, so introducing more taxes them would send them into apoplexy. George Osborne is convinced they would hurt growth and even Vince Cable sees them as a block to rebalancing the economy.
Clegg has to accept that even if he manages to win any of these policies, they lack the gravitas of Lords or AV — does a new tax really make up for a defeat for constitutional change? But winning just one or two these is far better than standing up in Brighton empty handed. And Cameron knows whichever of these policies are granted, he will come under attack for giving in to their weaker coalition partners.