Andrew Grice: The Week In Politics

Lib Dems can still be the future of British politics

As 70 founders of the Social Democratic Party (SDP) celebrated the 25th anniversary of its launch at David Owen's Limehouse home on Wednesday, they had reason to be both cheerful and fearful.

Their cheers were for a symbolic reconciliation between the original Gang of Four - Dr Owen, Shirley Williams, Bill Rodgers and Jennifer Jenkins, the widow of Roy Jenkins - which healed the wounds left by Dr Owen's refusal to join the merger in 1988 that formed the Liberal Democrats.

The SDP pioneers allowed themselves a few smiles of satisfaction that their new party at least cracked the mould of British politics. They did not reap the rewards themselves, but helped to pave the way for New Labour to espouse much of what they stood for.

Their fears were for the miserable plight of Britain's third party today. Over ham salad and wine, the phrase "headless chickens" could often be heard as the SDP founders surveyed the shambles of the Liberal Democrat leadership contest. Several of the SDP diaspora, now scattered among Labour, the Tories and the Liberal Democrats, said the third party had taken leave of its senses by assassinating a fellow member of the SDP club, Charles Kennedy. "He made a few mistakes," said one. "But the Lib Dems may have made a catastrophic mistake by getting rid of him."

The Liberal Democrats are in a sorry state. A year ago, their hopes were high that they could win more than 80 seats at the forthcoming general election. Next time, they will be lucky to hang on to the 62 seats they won last May. They could lose a whole swath of them: a YouGov poll yesterday put them on just 13 per cent, down 10 points on the general election.

The third party is in danger of being crushed in a vice operated by the two main ones. As the SDP founders noted, David Cameron is hoovering up their support. Several of his early initiatives - highlighting the environment and Third World poverty and scrapping subsidies for private health care - are designed to appeal to Liberal Democrat supporters. And a Labour Party led by Gordon Brown would be well placed to woo back the disaffected anti-Blair voters who switched to the Liberal Democrats last year.

The new Liberal Democrat leader will face a much harder task than he imagined when the contest began. Senior party figures hoped to move on swiftly from the difficult circumstances surrounding Mr Kennedy's departure. They believed they could turn the leadership election into a positive showcase as the Tories had done. Instead, a party which usually has to fight hard for any publicity is getting acres of terrible coverage about the messy private lives of its prominent members. Its credibility hurdle at general election time is already high because it suffers from wasted vote syndrome under our unfair electoral system. The incoming leader will now have to start from an even lower base: his first task will be to persuade people his party is not a joke.

The irony is that, while the Liberal Democrats may look like a bunch of amateurs, they possess some bright rising stars who could turn the party into something else: David Laws, Ed Davey, Nick Clegg, who are all backing Sir Menzies Campbell, and Chris Huhne. This next generation must now be wondering whether the events of the past three weeks will permanently cloud their career prospects.

Who will be the new leader? I suspect the lights have gone out on Mr Hughes's campaign - as they did, literally, when he launched it in Manchester yesterday. Mr Huhne cuts an increasingly impressive figure, but the contest may have come too soon for him. Sir Menzies' appeal as the safety-first candidate is even greater now that the party is in such a mess. He is more than a safe pair of hands, and showed his passion in a BBC Radio 4 debate with his rivals this week.

The two big beasts should not dance on the Liberal Democrats' grave just yet. The third party won the support of one in four voters last year and plenty more surely share its values. In fact, there is little crowing in Labour's ranks about the third party's troubles. Research presented to the Cabinet this month showed that two out of three people deserting the Liberal Democrats are switching to the Tories and only one to Labour. "If the Lib Dems implode, it's bad news for us," one minister told me.

Labour and the Tories may well crave the support of the Liberal Democrats in a hung parliament - a perfectly possible outcome at the next election. Interestingly, sensible folk in both parties are quietly putting out feelers. The Liberal Democrats may be staging a farce but, like their SDP co-parent, they can still shape the future of British politics.

a.grice@independent.co.uk