Make or break week for Clegg's Lib Dems

Political Editor Graham Dines previews the Liberal Democrat conferenceTO tax or not to tax - that's the big question behind the rebranding of the Liberal Democrats while the party is in conference in Bournemouth over the next few days.

Graham Dines

Political Editor Graham Dines previews the Liberal Democrat conference

TO tax or not to tax - that's the big question behind the rebranding of the Liberal Democrats while the party is in conference in Bournemouth over the next few days.

In past years, the Lib Dems have not been afraid to go out on a limb and call for higher taxes to fund the major public services.

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Just three years' ago, they went into the General Election with a policy of raising the 40% tax rate on incomes in excess of £100,000 a year. Amazingly, they actually gained some seats in high earning areas.

Now with the economy faltering and families struggling to pay for higher fuel, transport, holiday and fuel days, the party will be attempting to convince voters that it, too, is a tax cutting party par excellence.

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But first of all, he has to woo his party that a lower taxes agenda is the right course to follow.

Conference delegates are traditionally centre left, even though it is centre right voters who increasingly have switched to the Lib Dems in recent years.

Without these voters, the party would never have won Colchester, Cambridge and Norfolk North in 2005 - especially the latter, where the retirement villas of Cromer, Sherringham, Cley, and Holt are plastered with orange posters at election time.

As befits a former elected member of the European Parliament, party leader Nick Clegg is a fully signed up free marketer. With that goes the obligation of reducing the citizens' tax burden.

His ill-fated predecessor Sir Menzies Campbell reversed the 2005 election commitment. He stood up to the tax-and-spend wing of his party and forced through a commitment to a 4p cut in basic income tax funded by a big hike in green taxes and a crackdown on loopholes for the super-rich.

That move, which included dropping the policy of a 50p rate for high earners, was tax-neutral - involving no reduction in public spending.

Mr Clegg wants to take the party a significant step further - seeking £20 billion of savings, from areas such as the National Health Service IT scheme, the Eurofighter project, identity cards and Government advertising.

The big problem for Mr Clegg is that the Lib Dems are being squeezed hard as a genuine contest takes shape between an unpopular long-term government and a resurgent main opposition party.

The Liberal Democrats have sunk below the 20% poll ratings which would guarantee them 50 seats MPs at the next election, largely because Mr Clegg is not getting the media attention which is being poured on David Cameron and the Tories.

After the Lib Dems' spectacular by-election victory in Fife soon after the General Election, they performed badly in the Crewe & Nantwich, Henley and Glasgow East contests.

Traditionally, the Liberal Democrats are an optimistic bunch. They have to be because of the iniquities of the UK electoral system - in 2005, they polled 5,982,045 votes and won 62 seats while Labour's 9,556,183 votes gave it 356 MPs.

Encouraged by advances in local government in a number of northern cities, party strategy chiefs believe they can exploit the Government's unpopularity to snatch Commons seats there as well.

They deny writing off losses to the Tories in the south but the strategy is bound to provide a serious flashpoint between activists there and Mr Clegg, an MP in Sheffield.

When he speaks to his conference next week, Mr Clegg will spell out in stark terms the consequences of not retreating on tax and spend. If the Lib Dems are to be successful in their ambition of doubling their number of MPs - an ambition which seems highly improbable given the Tory revival - they must convince the electorate that the party is on their side in these depressing financial times.

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