The Week in Politics: Kennedy feels squeeze in the phoney campaign

The two sides of the Liberal Democrats were on display this week. On Monday morning, I watched the New Liberals, as Charles Kennedy and his Treasury spokesman Vincent Cable gave an impressive presentation on the party's economic strategy to a City audience. It went down well, a sign that the party has matured.

The two sides of the Liberal Democrats were on display this week. On Monday morning, I watched the New Liberals, as Charles Kennedy and his Treasury spokesman Vincent Cable gave an impressive presentation on the party's economic strategy to a City audience. It went down well, a sign that the party has matured.

On Monday evening, the Old Liberals came out of the woodwork. Having made the running against the Government's proposed anti-terrorism laws, Mr Kennedy's party blew a golden opportunity to defeat them. Seventeen Liberal Democrat MPs, including the leader himself, did not vote as the Government's 161 majority was cut to just 14. Remarkably, the chief whip, Andrew Stunell, was in his constituency. An inquest has been held and lessons learnt. But it was hardly a performance that lived up to the party's self-styled label as "the real opposition". It was a reminder of its sometimes shambolic past.

Nevertheless, Mr Kennedy could feel pretty upbeat as he arrived in Harrogate yesterday for the Liberal Democrats' spring conference. His message is that the party has a unique selling point as an independent, distinctive force in British politics. He is right: as Labour and the Tories scrabble for the centre ground and key swing voters, the Liberal Democrats are not afraid of wider horizons.

They called the Iraq war right when it would have been safer to go with the flow. They openly support redistributing wealth and a 50p top rate of tax on earnings above £100,000. Labour attacks the policy, even though most of its own MPs would back it in a free vote. The Liberal Democrats won't join the Dutch auction on immigration policy. Unlike the Tories, they will probably stick to their guns on the terror laws - which, incidentally, some cabinet ministers regard as unnecessary since the existing powers could be renewed until Parliament debates an already planned Prevention of Terrorism Bill after the election.

For Mr Kennedy, the moment of destiny has arrived. At the last election, his policy and strategy had been inherited from Paddy Ashdown. This time it is all his own work. He stands to get the credit, or the blame.

He has always seen the election as a marathon, not a sprint - sometimes to the dismay of colleagues who felt he could have run a bit faster in the past four years. Now the last lap looms, and Mr Kennedy changed into election gear during what he described in advance as his "day of hell" on channel Five programmes throughout Tuesday. He ended up enjoying it, and 74 per cent of respondents in a viewers' poll thought he would make a good Prime Minister.

The mood in Harrogate is pretty upbeat. The party's performance in parliamentary by-elections suggests it can threaten Labour as well as Tory seats. But there are nagging doubts.

The row over immigration has been a two-party fight and the Liberal Democrats have been pushed out of the ring. This may explain why some recent opinion polls show the gap between Labour and the Tories narrowing. "The real story is a faltering Liberal Democrat campaign from which both Labour and the Tories have profited," said John Curtice, professor of politics at Strathclyde University.

This week's dogfight over health could compound the problem. The Liberal Democrats have a higher profile and bigger platform than four years ago. But they cannot wait for the campaign proper, when the broadcasters must give them equal time with the two main parties. The test will be to drive up their poll ratings, as they did in 2001.

A squeeze on the third party suits Labour and the Tories very nicely. Labour's attitude to Mr Kennedy's party has been ambivalent, describing it as both "crypto-Thatcherite" and a high-tax, soft-on-crime party.

Mr Blair is reluctant to attack the Liberal Democrats head-on. The charitable explanation is that they are part of the anti-Tory family. The more prosaic one is that a full-scale assault would give them the oxygen of publicity: far better to keep them off the public's radar.

Labour has dispatched around the country senior figures who know how to stroke the erogenous zones of turned-off Labour supporters - Peter Hain, Hilary Benn and Robin Cook. They are telling voters tempted by the Liberal Democrats that they could let Michael Howard into Downing Street by the back door. Mr Blair issued the same warning in his speech in Dundee yesterday.

In theory, the Tories could deprive Labour of its majority without winning more votes if Labour supporters go Liberal Democrat in Labour-Tory marginals. The Liberal Democrats insist they can leapfrog the Tories and go from third to first place, as they did in the Brent East and Leicester South by-elections.

What will disenchanted Labour folk do? It is one of the big questions and is certainly exercising anxious Labour minds. The Liberal Democrats are not relying on Iraq. They sense the war is fading as an issue after the Iraqi election and do not want to be a one-trick pony. So they will focus on their potentially popular policies on pensions, tuition fees, care for the elderly and replacing the council tax. But they do hope to benefit from a wider "Iraq effect" - the public's loss of trust in Mr Blair.

The Liberal Democrats have turned from a third party into a genuine third force. That is why Labour and the Tories will conspire to write them out of the election script. The electoral system means the Liberal Democrats cannot win the war. They may not make a big breakthrough. But they will win many of the arguments.

a.grice@independent.co.uk