Now Nick Clegg raises the stakes

Andrew Grice: Lib Dem leader’s ultimatum to rivals seeking party’s support: Only proportional representation will satisfy us
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Indy Politics

"Have you got any money?" Nick Clegg asks me as we stop to buy him a latte and French pastry in Marylebone High Street during a car journey to Camberley, in Surrey. Surely a sign he is in the big league, I joke; that normally happens to prime ministers and monarchs.

Mr Clegg is the man of the hour after his starring role in the first leaders' debate a week ago. But he insists the sudden adulation hasn't changed him. During our hour-long drive, he is repeatedly on his mobile phone, trying to book air tickets for his three sons, who have been marooned at their grandmother's in Spain for an extra week because of the volcanic ash crisis. Mr Clegg hasn't seen them for almost three weeks. "It's a really big wrench; I am cut up," he says. Antonio, his eldest, is angry with him because he hasn't gone on television yet to promote his son's pet idea for dispersing the ash clouds – dropping water on them from above.

He says he doesn't read the newspapers; he doesn't want to be distracted by tittle-tattle about his past life. His exhausted aides, running on adrenalin and coffee, complain that he can't remember alleged incidents that happened years ago and which have been disinterred by hostile papers. Press officers now spend much of their time fending off such personality stories. Mr Clegg shrugs his shoulders, confident that there are no skeletons to find.

The latest and most serious attempt to knock the Liberal Democrat leader from his perch came last night, with accusations that regular gifts from three party donors were paid directly into his personal bank account. The Daily Telegraph said the donations of up to £250 a month were paid into his account in 2006, before he was the party's leader.

The party says the donations were used to pay part of the salary of a member of his office staff. All the payments were declared. Bank statements submitted along with his expenses submissions listed the "automated payments" of Ian Wright, a senior executive at Diageo, Neil Sherlock, a senior executive at accountants KPMG, and Michael Young, a former mining executive.

"The donations were properly made and declared and were used to fund part of the salary of an additional member of Nick Clegg's parliamentary staff," a party spokesman said. "The Telegraph story is wrong in fact and we regard any implication of impropriety as unacceptable." However, on the eve of the crucial second debate, the headlines could hit Mr Clegg's bump in the polls.

At the time of the first debate, Mr Clegg thought all three leaders "did OK". He felt "quite nervy" at the start but relaxed after about 15 minutes. He was surprised to be declared the winner but not surprised at the public mood the TV debate exposed. "It was like taking a lid off a bottle that has been shaken hard," he says. "This has been going on for a long time – the gradual disintegration of the top-down grip of the two parties. A lot of people were switched off the choice presented to them. What happens next is very unpredictable."

He reveals the Liberal Democrats are pouring more of their still-scarce resources into both Tory- and Labour-held seats not on their original 100-odd target list. "We are being ambitious without being silly about it," he says.

One problem of success is that Mr Clegg is under more pressure to tell us which way he would jump in the hung parliament to which the opinion polls point. "We have to start thinking about a range of outcomes that would otherwise have been unlikely," he admits.

Several polls have suggested Labour could come third in the popular vote and yet win more seats, leaving Mr Brown still in Downing Street after "losing" the election. "Preposterous," snaps Mr Clegg. But true. "If anyone wanted evidence of our clapped-out electoral system, this is it. If anyone in the Conservative Party or elsewhere still believed after such an outcome that there is no case for electoral reform, they are even more out of date than I thought they were. If we have a result like that, what little legitimacy left in the present electoral system would evaporate altogether. Reform would not be a matter of choice. It would be a matter of necessity so we never have such a democratic outrage again."

Contrary to speculation, it seems Mr Clegg would not demand Mr Brown's departure as the price of supporting a minority Labour government – even if he had lost but won. He makes no secret of his dislike of the Prime Minister – "he cannot be an agent of change" – but insists it would not influence his actions in a hung parliament. "His record shows he is part of the problem, not the solution. But it is not my job to decide who every party has as their leader."

The Liberal Democrat leader knows he could have a dilemma in two weeks' time that could settle the future of his party and the direction of the country.

There has been a long-running debate in the third party on whether it should form a progressive anti-Tory alliance with Labour – favoured by Lord Jenkins, Tony Blair and Lord Ashdown – or go it alone in the hope of supplanting Labour as the Tories' main rival. Mr Clegg makes clear he is in the latter camp, and believes the dramatic events of the last week have made it more likely. "I don't think the Liberal Democrats should feel constrained. The two old parties have lost their moorings. The Liberal Party was overtaken by the Labour Party [in the 1920s]. There is no rule that says because one party is bigger than another, that cannot go into reverse," he says.

The Liberal Democrat leader is equally scathing about both old parties. Dismissing Mr Brown's call for a progressive anti-Tory alliance in The Independent yesterday, he says: "There is a peculiar desperation about the Labour Party apparently planning for defeat and thinking it can save itself by talking up precisely the reform of the political system it has sought to block."

Although senior Labour figures are encouraging anti-Tory tactical voting by Liberal Democrats in Conservative-Labour marginals, Mr Clegg will not join such "game-playing and nods and winks... It assumes there are fixed poles for people to choose between. The last week may have shown something bigger going on. People should vote with their hearts, not make tactical choices. For once, at this election, there is an opportunity to go with their instincts."

Mr Clegg's demand for a proportional voting system – strongly opposed by the Tories – suggests a deal with Labour is more likely. He condemns Mr Cameron for telling people to vote Tory to stop Labour clinging on to power under first-past-the-post while defending this "potty" system. He claims it reveals "a profound identity crisis", accusing Mr Cameron of using "camouflage" while claiming the mantle of change.

Unlike Mr Brown and Mr Cameron, Mr Clegg has not rehearsed for tonight's debate. He enters it with confidence but says: "I am acutely aware that what goes up can go down."

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