Bouyed by the prospect of success in this week's by-election in Eastleigh, the Lib Dems are on the attack as Nick Clegg savages his coalition partner for lacking fairness. Meanwhile, the Tories, still reeling from Moody's credit rating downgrade while being out-canvassed by Ukip, are showing alarming signs of midterm blues
The mood was buoyant, the rhetoric soaring. Addressing more than 200 party activists who had poured into Eastleigh on Friday, the Lib Dem deputy leader, Simon Hughes, said victory for his party in Thursday's by-election would "suddenly change British politics" and "encourage our troops phenomenally".
It would, he told cheering supporters, prevent the Tories becoming "cocky and assertive" in the second half of the parliament and make them realise they are not "in sole charge" of the coalition. His comments show how far the coalition parties have diverged since David Cameron and Nick Clegg sealed their vows in the Downing Street rose garden in 2010. "The thought of the Tories capturing this seat fills me with as much horror as anything else I can think of," Hughes said.
As relations between the coalition parties sink ever lower, the Lib Dems, with a bullish Clegg in the vanguard, are turning their fire on key parts of Tory economic policy at what is beginning to look like a moment of maximum economic weakness for Cameron and George Osborne.
The downgrading of Britain's AAA economic ratings on Friday night is a disaster for the chancellor, who nailed the coalition's economic strategy to the mast of austerity precisely to avoid such an outcome. A tough approach to deficit reduction, went the argument, would gain the respect of international markets and ratings agencies, ensuring the UK did not go the way of Greece or Spain. But though the cuts have hurt, the economy shows little sign of reviving and the ratings agencies appear to have lost faith. Next month Osborne will deliver one of the most eagerly awaited and hotly debated budgets of recent times. Siren voices from all sides are recommending a new dash for growth, even at the expense of cutting the deficit.
As the founding principles of the coalition's economic strategy are placed in question, a by-election that always promised to be a fascinating clash has assumed a seminal importance. Eastleigh was defended by the Lib Dems in 2010 when Chris Huhne, the former energy secretary, who resigned this month after pleading guilty to perverting the course of justice over a speeding offence, held on with a majority of 3,864. Clegg's party is increasingly confident of holding the seat – and believes victory in its Hampshire stronghold could instantly revive the party's morale, while denting that of the Tories – in the runup to the 2015 general election.
The Lib Dems believe that if they hold Eastleigh they will have demonstrated that they can hold on again against the Conservatives in dozens of other seats where they beat Cameron's party into second place in 2010, depriving the Tories of any realistic chance of securing a Commons majority in 2015.
And as the implications of the Moody's downgrade percolate through the body politic, Clegg and other senior Lib Dems today show they are prepared to attack the Tories on economic policy, highlighting what they see as the fundamental unfairness underpinning Cameron's approach to taxation.
Writing in today's Observer, Clegg says that while his party's approach to tax is "about lowering, not increasing, tax bills for millions of hard-working families" the Conservatives are driven by instincts "that prevent them from asking anything more from the very wealthy, even as people on lower incomes feel the pinch".
In Eastleigh on Friday, Hughes had the happy air of a man liberated to speak his mind. "Bluntly, the Tories are not the party that puts first those who are struggling most," he said, adding that they "always fail to understand" the positive effects of immigration. "Britain is what it is because of immigrants who have come here and made their contribution."
The Eastleigh poll promises to be the single most important event for his party in this parliament. Victory would restore self-belief while sowing discord in Tory ranks. It "will boost the confidence of Nick, his colleagues in parliament and his colleagues in the party," said Hughes, before casting his mind forward to the next prime minister's questions. "I know on that occasion who will have the bigger smile."
When Huhne stepped down, Eastleigh had looked a tough seat for Clegg's party to defend. The cabinet minister's disgrace offered itself as a gift to the Lib Dems' opponents. The party's joint responsibility for the economy was also seen as likely to boost Labour. And last week the scandal that has engulfed Lib Dem peer Chris Rennard, the party's longstanding election strategist, who now stands accused of inappropriate behaviour towards a string of female party members, was a further black cloud.
But the Lib Dems are nothing if not feisty and determined local campaigners. Where they put down local roots they are hard to unearth or dislodge. On Eastleigh borough council they hold 40 of the 44 seats and all 36 of those that fall within the Eastleigh parliamentary constituency. In and around the railway town they seem to have been able to insulate themselves, to a large extent, from the unpopularity of the coalition.
On Friday their campaign headquarters in a warehouse was packed with supporters writing out letters to be delivered by hand to voters this weekend. It is a campaign technique borrowed from the US and one the Lib Dems have perfected over years by getting to know every voter in the constituency. They stress issues such as the need for more houses and jobs. Their candidate, Mike Thornton, is a local councillor and the campaign behind him has a buzz not seen since the days of Cleggmania before the 2010 election. By contrast, the Tory effort in Eastleigh has struggled to get off the ground ever since candidate Maria Hutchings made a series of early gaffes, including a statement that none of the local state schools was good enough for her 12-year-old son, who wants to become a surgeon. Last Thursday, with Cameron in town, she failed to turn up for a BBC Radio hustings and was accused of running scared. The party HQ opposite the railway station was manned on Friday afternoon by only half a dozen workers as Lib Dems gathered to cheer Hughes in their hundreds just up the road. No one could say where accident-prone Hutchings was.
Calls to their press office to try to identify her whereabouts went unanswered. The first Tory volunteer found by the Observer on the streets was carrying a clutch of Ukip leaflets, which he hid when asked why he was not armed with Tory material. Another young Tory worker, when asked where Hutchings was, said "under lock and key, I expect". Another, Sophie Bolsover, insisted that things were going fine. "There is no abuse on the doorstep, just one aggressive dog," she remarked, showing a cut on her finger.
Ukip, on the other hand, was everywhere. Marching up and down the town centre wearing a big grin and a fedora, leader Nigel Farage said he was confident his party's candidate, Diane James, would beat Labour into third place. "I'll pack it in if we don't," he said, noting that while people were not that interested in "clause 138, subsection 4b, of the EU treaty" they did know that the EU meant "open door immigration and less jobs for local people". Ukip scored only 3.6% of the vote in 2010, but Farage reckons the party is up 20% on that ahead of polling day, with the Lib Dems and Tories both down 10% and Labour up around 5%.
Labour's candidate, the writer John O'Farrell, has done little wrong but has failed to make the headway necessary to stand a realistic chance of winning. Labour came a distant third in 2010. If O'Farrell gets pipped to third by Ukip, questions will again be raised about Labour's ability to make progress in south-east England, even at a time when the country is in the economic doldrums. "I am not going to lie to you and say it is like 1997," O'Farrell said. "But there are a lot of people who are still undecided. We have got a lot of dormant Labour voters here who have voted Lib Dem since 1992 to keep the Tories out. Our job is to wake them up."
From now until Thursday, the Lib Dems' official line will be that the race is "still very close" and that the Tories are not far behind. But Clegg's troops are already in victory mode. The canvassing returns are good, the money is pouring in, and rather than finding that their place in the coalition has hindered them the Lib Dems have used their unhappy marriage as a way to motivate their own troops. The mood on Friday was not so much one of complacency as sheer uncontrollable excitement. As Hughes put it: "For most of our activists, this is the first chance they have had to kick the Tories. It has reinvigorated the whole party."
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