The Liberal Democrat leadership appears to be winning crucial battles with its Tory partners over immigration and the renewal of Trident.
Senior Liberal Democrats are increasingly confident they will secure a delay to approving the renewal of Britain's £20bn Trident nuclear weapons system until after the general election, which is due in May 2015. The final Government go-ahead for Trident is scheduled for 2014 under current plans.
"It is very important for us that the issue is still alive going into the election," said one senior member. "We want to go into it with a clear difference on this. It makes sense for us, but also for David Cameron, to show he is leading a modern Conservative Party."
Nick Harvey, the armed forces minister, prepared the ground for a delay to take place, openly talking about a postponement at the Liberal Democrat conference in Liverpool yesterday and rejecting Tory suggestions it would drive up the cost of the project.
"If it were to be delayed until just after the May 2015 election, it is of no great financial significance, it is of no great military significance, it is of no great industrial significance," he said.
The party leader Nick Clegg backed his minister. Speaking from New York where he is attending a UN summit, he said: "I have always argued we should be looking at alternatives to a like-for-like replacement for Trident. It's a perfectly sincere, level-headed debate about what are the security threats the country faces in the coming period." The issue is almost bound to claim political casualties before it is resolved. Tessa Munt, a Liberal Democrat whip, said she would quit over Trident if necessary. Some Tories, however, have given warning that Liam Fox, the Secretary of State for Defence, could resign if such a move was taken.
It also emerged yesterday that leading Liberal Democrats are confident of persuading Downing Street to modify the Coalition Government's strict cap on immigration after a member of David Cameron's inner circle signalled his support for their cause. Vince Cable said he was "optimistic" of securing a compromise over the policy from his Tory Cabinet colleagues. He said his concerns over the policy echoed remarks made by Oliver Letwin, a key adviser to the Prime Minister.
During a fringe event at the Liberal Democrat conference, Mr Letwin admitted the Government had to be "very careful" in deciding how the policy would operate. "We have to be very sure that the caps we set are consistent with what our economy needs," he said. "That's exactly what we are trying to do."
His comments risk provoking a stand-off with Theresa May, the Home Secretary, who is sticking by the original policy. Several major companies have now broken cover to protest about the quotas they have been given under the temporary cap, which was introduced in July. The first permanent limit will be put in place in April.
Mr Cable, the Secretary of State for Business, Innovation and Skills, used a combative speech yesterday to reassure worried activists that he would not allow the party's identity and "authentic voice" to be subsumed within the Coalition Government.
Mr Cable won an enthusiastic standing ovation for the final major address of the party's conference in Liverpool, as he underlined the party's political differences with the Tories and insisted that the Liberal Democrats "punched above our weight in Government".
His remarks were designed to reinforce Nick Clegg's plea to the party's foot-soldiers to remain optimistic about its long-term prospects, despite sliding opinion ratings and the prospect of a hammering in next year's local council elections.
Mr Cable, who began his speech by addressing delegates as "comrades", said the Coalition Government's formation in May had given the Liberal Democrats the chance to demonstrate that they had "the political maturity to make difficult decision and wield power with principle".
Coalition politics was exhausting and "not much fun", he admitted, and he acknowledged there were daily tussles with the party's Tory partners. He added: "To hold our own, we need to maintain our party's identity and authentic voice."
He maintained the power-sharing agreement was "good for government and good for Britain", but admitted: "We must make sure it is good for the Lib Dems as well."
He ridiculed suggestions the party could eventually merge with the Tories and stressed: "We will fight the next general elections as an independent force with our options open, just like 2010.
"We have punched above our weight in government because we have a democratic party which has clear principles and policies," Mr Cable told delegates. "In a few short months, we have shown how we can advance our party's policies and principles while serving the wider national interest."
He pointed to Liberal Democrat "gains" in the Coalition, such as moves to raise income tax thresholds for low earners and to raise the rate of capital gains tax. He again made the case for a "graduate tax" to help tackle the university funding crisis, which would also help to fulfil the party's commitment to oppose student fees.
Immigration: Companies complain that cap on work permits stops them hiring senior staff
A number of major companies have now raised concerns about Britain's new immigration cap, which they claim was put in place too hastily by the Coalition Government.
PricewaterhouseCoopers (PWC), one of the UK's "big four" auditing firms, said it had been handed only 50 permits under the temporary cap, unveiled in July. It said it needed 63 just to renew the visas of workers already here.
General Electric, the engineering firm, also said it had been given a "very small" quota, adding that it had been unable to hire a senior stem-cell researcher from India and several gas-turbine engineers because of the policy, which limits companies from recruiting even highly skilled workers from outside the European Union. Eon, the energy firm, and several smaller companies have also complained.
The new permanent cap will be put in place in April. PWC hopes the new system will be an improvement on the current restrictions. However, the Home Office is insisting that the immigration cap policy will not be loosened.