Michael Brown: The Lib Dems have thrown down the gauntlet

There is clear evidence to suggest that the party is growing up

At the Independent fringe meeting during the Liberal Democrat conference, the party's chief executive, Lord Rennard, prayed in aid Martin Luther King to describe the current state of his party. "We aren't where we want to be, we aren't where we are going to be, but we sure as hell aren't where we were." Lord Rennard was addressing the question posed by this newspaper: "How do the Liberal Democrats move closer to power?"

Yesterday's vote on the party's proposal to reduce the standard rate of tax by 2 per cent, increase thresholds and abolish the long-standing commitment to raise the top rate of tax to 50p on incomes in excess of £100,000 moves the party closer to providing an answer. The commitment to a higher rate of tax was largely totemic, but it was claimed by the new leadership to have hindered the electoral prospects at the 2005 general election. It is not so much the tax plans in themselves that will put a spring in the step of Sir Ming Campbell when he gives his leader's speech tomorrow but the fact that, at a stroke, the mutterings about his hitherto lacklustre performance will be stilled. Sir Ming's authority has been significantly strengthened and his credibility has received a much-needed boost.

The sometimes quixotic decisions of the party conference often result in a bloody nose for the leadership. But in a sober debate that lacked the heckling which often accompanies difficult decisions for the membership, there is clear evidence to suggest that the Lib Dems are growing up. It was a defining moment. The party that once stood for higher taxes now claims to be the party of fairer taxes. The influence of an older leader, working quietly behind the scenes with the Treasury spokesman Vince Cable, played a crucial part in delivering an economic policy where the simple arithmetic appears to add up. More important, the party has stolen a march on both Labour and the Tories with an economic policy that also addresses the green agenda.

Lib Dems have thrown down the gauntlet on both green politics and the structure of taxation, and it will be the Tories who will now be under the greatest initial pressure. One speaker even claimed that the Lib Dems would now be the only party offering tax cuts at the next election. This is certain to increase tensions within the Tory party, where this week Edward Leigh, the Tory chairman of the Public Accounts Committee, spoke out against the Tory leader's efforts to move his party towards the centre ground.

The planned reductions in the standard rate and the increases in tax thresholds are offset by potentially swingeing increases in vehicle and airline duties, but these potentially painful increases in indirect taxes will at least burnish the party's green credentials. Lib Dems still aspire, rather preposterously, to move closer to power by winning enough seats to form a government in their own right. What they are really doing, but cannot state overtly, is aspiring to move closer to a share in power. But if the implications of The Independent's poll of polls are considered, the Lib Dems are on course to lose seats at the next election. Our findings suggest that although the Tories are on 37 per cent, they would only end up with 270 seats. Labour on 33 per cent would still get 299 seats, and the Lib Dems (20 per cent) would get only 50 seats, compared with their current tally of 63.

The Lib Dems resolutely refuse to say whether, if such circumstances occur, they would support a Brown-led Labour government or a Cameron-led Tory government. Their market for new votes appears to be disgruntled Labour supporters, but the latest Populus poll suggests that should Gordon Brown become the next Labour leader one in seven Lib Dem voters will vote Labour. In addition, 49 per cent of Lib Dem voters will find Labour more attractive once Tony Blair retires. The brutal truth for the Lib Dems, from these polls, is that in order to move closer to power they need to lose seats in order to win. The more seats they lose to the Tories, the greater their prospects of being able to share power.

At the Independent meeting our chief political commentator, Steve Richards, conducted a straw poll of the 300 delegates. Barely anyone was prepared to support a Cameron government, and only six would prop up a Brown minority government.

The suspicion remains that Sir Ming would do an "alternative vote" proportional representation deal with Mr Brown. But if the Tories have won the popular vote and yet been penalised by the perversities of the very electoral system that currently penalises the Lib Dems, it would seem strange for the Lib Dems to prolong a fag-end Labour government.

mrbrown@talktalk.net