The year of the liberal moment

Part 2 of Paskini's Alternative History files. Part 1 is here.

Guardian Review of the Year, December 2010:

As an extraordinary political year draws to a close, one thing is beyond dispute. 2010 has been the year of the Liberal Democrats. It is easy to forget, however, how differently things might have turned out.

With hindsight, Chris Huhne's decision to reject a formal coalition with either the Conservatives or Labour looks obvious. But there were those in his party at the time who urged a "Rainbow Coalition", and even a few who argued for a formal Coalition agreement with the Conservatives.

In those first few weeks after the inconclusive election, the turning point was the deal which Vince Cable and George Osborne struck to make public spending reductions in the current financial year calmed the markets. The fears of those, including some in Mr Huhne's own party, who feared that the UK could go the way of Greece if there was no overall government majority, now seem laughable.

The Liberal Democrats cemented their reputation for economic competence with a devastating response to the government's Comprehensive Spending Review. David Miliband's crushing leadership victory over Ed Balls was followed by a decision to appoint Alan Johnson as Shadow Chancellor and set out Labour's plans for public spending cuts in detail, to head off accusations of "deficit denial". But after a weak and uncertain response from Johnson to the Spending Review, it was left to Vince Cable to make a passionate and authoritative case for an economic policy which put economic growth, not an ideological assault on the public sector, at the heart of Britain's economic recovery.

The dramatic showdown over the government budget, in which the Conservatives were forced to modify their proposals and accept policy after policy which the Liberal Democrats proposed, was perhaps the turning point. The list of concessions which the Liberal Democrats fought for and won - raising capital gains tax by 10%, keeping the 50p top rate of tax and forcing the Conservatives to abandon their plans to cut inheritance tax and winning a commitment to introduce a multi billion pound pupil premium to boost educational attainment for poor children and a major new green energy programme - established them firmly in the centre ground of British politics. The attempts of Education Secretary Michael Gove to claim that the pupil premium was in fact a Conservative idea was met with ridicule.

The negotiations over the Budget highlighted the dilemma for the Conservatives. Some argued for a dissolution of parliament rather than agreeing a deal with the Liberal Democrats which forced them to ditch so many of the cherished policies of the Right Wing. But polls at the time showed clearly that the electorate would prefer to see politicians compromising rather than inflicting another election on them. Like Gordon Brown in 2007, David Cameron decided not to take the risk of serving as Prime Minister for just a few months. With his party sinking in the polls, the window of opportunity for holding an election has now definitively passed.

Indeed, some within the Conservative Party suspect that Cameron has been making use of the need to secure confidence and supply from the Liberal Democrats in order to abandon some of his party's policies, and watched with suspicion as he praised the work of Liberal Democrats such as the party's Home Affairs spokesman, Nick Clegg.

But it was the student fee protests which, in Mr Huhne's words, showed that the Liberal Democrats had replaced Labour as the main party of the centre left. With tens of thousands of young people rallying behind the Liberal Democrat demands to scrap fees, the Conservative policy of uncapping student fees was in jeopardy.

The fateful decision of Labour leader David Miliband to agree a deal on student fees which led to them being doubled was praised by some newspapers as "a bid to regain the centre ground", but provoked fury amongst many of Labour's supporters. The vote showed Labour's divisions, with over fifty left wing MPs joining the Liberal Democrats in voting against, the majority following the Leader and abstaining, and a few such as Tom Harris voting with the government.

With all opinion polls in the past month now showing the Liberal Democrats in the lead, buoyed by substantial support from ex-Labour voters as well as centrist voters impressed by the party's role in moderating the Conservatives, the chances of a Liberal Democrat government seem greater than ever before. With both Labour and the Conservatives looking exhausted and divided, it is clear that 2010 was the year when the liberal moment came.