The Kingmaker: Don't laugh – Clegg may be Britain's key politician in 2010

It sounds like a joke – after all, his party is struggling in the polls. But Nick Clegg attends his first annual conference as leader convinced a hung parliament is likely. Jane Merrick reports

The Lib Dems, as we all know, are Westminster's perennial also-rans. Historically they play the important constitutional role of having their fresh new policies routinely pinched by the two biggest parties. Tories and Labour squeeze their centre-ground space, depriving them of any real distinctiveness. They sustain themselves on new (and invariably false) dawns about "the big breakthrough" every four or five years. And what's worst is that, with their poll rating stuck at 18 per cent, even their current leader admits party members are "still getting to know" him.

But – and here the reader is invited to suspend disbelief – there is a real chance that the morning after the next general election, Nick Clegg could be transformed overnight into the most powerful person in British politics.

His opponents – publicly, at least – will laugh at the notion of the Lib Dems making major strides at the next election, but the experts say that this time it really could happen. The chances of there being a hung parliament (in which no party has an overall majority) in 2010 could be as high as one in three, according to the psephologists.

In that case, Mr Clegg – if he hangs on to the post that has had three occupants in less than three years – would suddenly become the "kingmaker" who could decide whether to prop up a tired and unpopular Labour government, or join a David Cameron-led Cabinet and help form the first Conservative administration in more than a decade.

As the Lib Dem leader prepares for his first speech to his party's autumn conference this week, voters will have a right to know more about who he is and what his party stands for.

Latest polls point to a Conservative landslide, but the electoral system is biased against Mr Cameron's party. Professor John Curtice of the University of Strathclyde said if the current 20-point Tory lead is halved by polling day, it could leave Mr Cameron with no overall majority.

Mr Clegg has dismissed questions about who he would lean towards if there were no outright winner, attacking Gordon Brown for failing the electorate and the Tory leader for being "illiberal". But since becoming his party's leader nine months ago, he has struggled to be heard.

In Bournemouth, the Lib Dems will attempt a major rebranding of their image – shifting the focus away from foreign affairs and Europe to tax and other domestic issues.

George Osborne announced last week that a Conservative government would not remain committed to Labour's spending plans beyond 2011.

Mr Clegg will echo this message that, despite massive spending on health and education, voters, as a recession looms, want more choice and flexibility to manage their own finances.

The Lib Dems, desperate to appear distinct from the Tories, will go further by promising a 4p cut in the basic rate of income tax. Lower- and middle-income families will pay less, while tax avoidance measures will be stepped up against City fat cats. Public spending will be cut by £20bn by axing the Department for Business and ID cards.

While higher green taxes will be introduced for the airline industry and motorists, the Lib Dems will announce that they would reduce the overall tax take, in a move bound to unsettle the high tax-and-spend sentiments of party activists in Bournemouth.

Mr Clegg told The Independent on Sunday that he hoped "we can offer further tax cuts for people from the bottom up", possibly through raising the lower threshold for income tax to lift more out of paying tax altogether. He said the policies were "not about a shift to the right" but about fairness. Last week he put forward controversial proposals to allow patients who could afford it to "top up" their NHS care, while in an interview with The Guardian yesterday, he claimed the middle classes were deserting state schools and the NHS because the doubling of spending on public services under Labour has failed to improve standards.

While the Lib Dems remain committed to Britain as strong members of the European Union, as Mr Clegg outlines in this newspaper today, there has been a little-noticed but highly significant ditching of the policy to campaign for entry into the euro.

The European single currency has been off the Government's agenda for five years, but Mr Clegg and his home affairs spokesman, Chris Huhne, were passionate campaigners for the currency when they were MEPs, and continued arguing the case when they became MPs in 2005.

Mr Clegg said last night that the debate on the euro was "neutered". The Lib Dem leader insisted Europe was still an issue for the party, but that tax and crime had to be top of the agenda.

In an interview with the IoS, Mr Huhne went further, saying: "The truth is [that] within the British debate it's completely off the radar and therefore there is simply no point in regarding it as a runner worth investing political time in."

Mr Clegg will tell his party that Mr Cameron may be riding high in the polls, but he has "not yet closed the deal" with the electorate on becoming Prime Minister.

The history of Liberal Democrat deals with other parties is a troubled one. Paddy Ashdown held talks on a Lib-Lab pact with Tony Blair in the run-up to the 1997 election, before being dumped after it.

"I am not in the business of crystal-ball gazing or playing footsie with other parties," Mr Clegg said last night.

Yet Mr Huhne, in his interview, said if Labour or the Conservatives offered fixed-term parliaments and proportional representation, then this could lead to co-operation "across parties in a multi-party system".

Mr Clegg has a target of doubling the number of Lib Dem MPs from 63 to more than 120 within two elections.

Professor Curtice said: "We should not forget that the electoral system is still heavily biased against the Conservatives. If the current 20-point lead falls to 10 points by polling day, we cannot be sure that the Conservatives would have a majority. Just remember that we have seen huge leads before that did not materialise at the time of an election."

Mike Smithson, founder and editor of Politicalbetting.com, said: "The betting markets suggest that the chance of a hung parliament is about 26 per cent, and there are reasons for thinking that this is an under-estimate. If Gordon Brown is still Labour leader, it is difficult to see anything other than a Conservative majority at the next election, but a new Labour leader is more likely than we think.

"The nearer the election they make the change, the better for the Labour Party. Then a hung parliament is much more likely. You could see a narrative developing in which a new, relatively unknown leader dramatically changes the race."

Senior Lib Dem figures are so concerned about being taken seriously that they have mounted a campaign to prevent Lembit Opik, the MP and one-time boyfriend of a Cheeky Girl, from becoming party president. The "Stop Lembit" campaign, which includes several senior MPs, is backing Baroness (Ros) Scott, a Lib Dem frontbencher in the Lords, who has grassroots support. A senior party source said: "If Ros pulls it off, the collective sigh of relief at the top of the party will be deafening."

But last night there were signs that Mr Clegg faces a battle to convince everyone in his party, let alone win over more voters in the country. Marc Godwin, a former Lib Dem parliamentary candidate in the Crewe and Nantwich by-election, defected to the Conservative Party.

Mr Godwin, who stood for the seat of High Peak in 2005, said: "I've been listening carefully to what David Cameron and the Conservatives have been saying. While the Liberal Democrats are going nowhere and drifting, I believe that the Conservatives are the party of fresh new ideas, appealing to people right across the country."

The shadow Chancellor, George Osborne, said: "I'm delighted that Marc has decided to join us. Under David Cameron's leadership we have seen more and more Liberal Democrats coming over to support our party and help us deliver the changes our country needs.

"They like what the modern Conservatives have to say on progressive issues like poverty and the environment, and our opposition to ID cards. It is further evidence of the change taking place as the Conservatives occupy the centre ground of British politics."

In a letter to The Guardian yesterday, 19 former Lib Dem councillors who have defected to the Tories brought further discomfort for Mr Clegg.

They said: "On a wide range of issues, the Conservative Party is now providing a progressive, liberal, modern alternative to Labour."

So what can they do for me?

Why should people who've given up on party politics care about the Lib Dems? Cole Moreton finds out:

The biggest political force at the next election will be the (entirely unofficial) Nowhere Party, made up of all those fed up with party politics. We do care – deeply – about certain issues. Schools. Hospitals. The planet. Wages and tax. The poor and suffering, here and abroad. But our way of showing it is to join a campaign, sign an online petition, support a charity... anything but trust a politician. So as the Lib Dems confer, we ask: who on earth are you, and what can you do for us?

The leader

Gordon's grumpy. Dave's smooth. Nick is... well, exactly. What is distinctive about Nick Clegg? He's not boring, actually, just off the radar for a lot of people. The most they can remember is that he's young (41), he doesn't believe in God (as he said at Christmas) and he told a magazine he had slept with "no more than 30 women".

The members

Beardy weirdie tofu-munching sandalistas. That was the stereotype in the old days, when conference dictated policy and made some wacky, unelectable decisions (not that there's anything intrinsically absurd about facial hair, veganism or sandals. Oh no). Now they want us to think of them as young, suited high-achievers. The shadow (Shadow) Cabinet has an economist, a PR man, a company director and a couple of teachers. Supporters include John Cleese and Rabbi Julia Neuberger: clever, sensitive, caring types. There are only 75,000 others, so they wouldn't fill Wembley.

The theme song

Should be 'Stuck in the Middle with You' by Stealers Wheel. "Clowns to the left of me, jokers to the right, here I am." Their big dilemma has been whether to attack Labour or the Tories. Instead, both parties have moved towards them, stealing policies and putting on the squeeze. At least a song associated with ear chopping in 'Reservoir Dogs' might give them a grittier image.

The heartlands

Cornwall, the South-west and cities like Sheffield and Leeds, where people would rather vote for anyone than a Conservative. The Home Counties, too, although the Tories may hurt them there next time. Scotland is a problem, as the nationalists gain ground. Clegg wants 100 more seats in the next two elections (they already have 63). He may get none.

The promises

These depend on how Nick Clegg gets on with David Cameron or whoever the Labour leader is after the next election. The Lib Dems can't win, but for the first time in a very long time they may actually have serious power. If neither of their rivals have enough seats to govern, they will look to form an alliance. Clegg has promised:

Money

More of it in your wage packet, unless you earn more than £100,000 a year, in which case, watch out. Income tax to be cut by 4p in the pound – and more for the very poor. Council tax replaced with a local version based on income.

Travel

Driving a car or lorry would cost more. So would a domestic flight, as these things will be taxed to pay for a shiny new high-speed rail service. Mind you, we've heard that before.

Power

More renewable energy, and incentives to put up your own windmill. No new nuclear power stations.

House prices

The Bank of England would have to consider the state of the housing market when setting interest rates.

Old age

Pensions to be increased in line with earnings. Guaranteed care for the elderly, so Granny wouldn't have to sell the family house.

Schools

Extra funding and help for pupils who are disadvantaged or struggling.

Politics

The number of MPs to be cut by 150. Parties not allowed to accept donations of more than £25,000.

The jokes

Are hard to find. Does Lembit Opik count? If not, here's the best we can do. The Lib Dems are on a rally. "What do we want?" calls out their leader. "Proportional representation in a general election!" they reply as one. "When do we want it?" he thunders. "In due course!" Hmm.