Liberal Democrats have a noble tradition, but it needs redefining

The party will be on a hiding to nothing if it seeks to occupy territory Labour abandoned a decade ago

IN THE end, the right man won. And those who point out that it was a narrow victory should remember that even Tony Blair didn't get more than 57 per cent of the vote when he took over the leadership of the Labour Party, admittedly on a first ballot. But a win is a win.

What's more, pragmatism triumphed over adventurism. In one fell swoop Kennedy signalled, entirely sensibly, that he is not going to rule out expanding links with the Labour Party, while continuing to criticise. There will be opposition. But there will be constructiveness too.

However, there's more to this election than that. After Paddy Ashdown, who sometimes made the party look as if it was a one-man band, Kennedy will need to put his own stamp on the party. Part of this means reaching deep into the roots of the traditions of an illustrious heritage and redefining Liberalism - or, if you prefer, liberalism - for the 21st century as Blair continues to define modern social demo- cracy. This means being the guardian of liberal causes such as racial equality and - topically - a tolerant, open attitude to asylum and immigration. It means a commitment, as Kennedy reminded his supporters yesterday, to constitutional reform that enhances and strengthens democracy rather than merely appearing to do so.

The Liberal Democrats stand necessarily for a House of Lords reform that contains a substantial democratic element, and results in more than an appointed quango. One of the problems Lords reformers are now confronting is that a new vested interest has replaced the hereditary peers; the life peers who, once having been appointed, or even expecting to be appointed, are deeply reluctant to give up their rather cosy existence to fight elections. Inside or outside Tony Blair's big tent, it is the historic task of the Liberal Democrats to ensure that they do not get their way.

Being the conscience of the left and centre left of British politics is a job that definitely needs doing, and which the Liberal Democrats remain especially well qualified to do. But liberalism is defined by what it is, as well as by what it was. In one sense, we are all liberals now.

Even Margaret Thatcher sought to usurp the term by being (in a Milton Friedman rather than a Gladstone sense) an economic liberal. But you don't have to be a hard-faced, socially divisive, grind-the-faces-of- the-poor, economic liberal to recognise that to the extent that she won the economic argument in the Eighties, she was on to something.

The electorate does now, for example, believe that markets, properly regulated, deliver competition in the interests of the consumer better than the old Morrisonian nationalised industries did. They also increasingly accept that genuinely free trade spreads prosperity, internationally as well as nationally, better than either protectionism or colonial exploitation ever did. And these are hardly ideas that large-L Liberals or Liberal Democrats should be frightened of. It would be odd if the Liberal Democrats turned back towards some form of Seventies social democratic statism in order to goad the Labour Party.

For a start, this isn't their natural role. Some years ago, the one-time Liberal MP Michael Meadowcroft described in a speech a conversation he had had with an old member of his party, in which he asked him how the party had kept the flame of Liberalism alive in the - for the party - dark days of the late Forties and early Fifties. "We couldn't stand the Tories," the veteran replied, "and we didn't trust the state."

That entirely healthy distrust of the state is what gives Liberalism so much of its lifeblood. It's why, to mention just one topical example, the Liberal Democrats are entirely right to seek to shame Jack Straw into a Freedom of Information Act that is much closer to the White Paper that he has now forsaken.

But it's also why it would go against the party's own grain to become the champions of a wholesale return to the tax and spend policies regarded as automatic by early-Eighties Labour.

That doesn't mean that there isn't a lively debate now to be had on whether increased - and transparently increased - taxation shouldn't once again be part of the dialogue about how the centre left achieves more fairness and equality of opportunity in British society, or that the Liberal Democrats and their new leader, a Highland radical as well as a pragmatist, have no crucial part to play in that debate. But it does mean that the party will be on a hiding to nothing if it merely seeks to occupy territory that Labour abandoned a decade ago. And that applies whether it continues its links with Labour, as Kennedy strongly hinted it would, or it doesn't.

In the meantime there will be tough, worldly decisions to take. Kennedy should not - and will not - be deflected from his pursuit of Commons electoral reform.

This will in itself be a daunting task. Kennedy will know, because he is nothing if not realistic, that despite its intrinsic merits, Lord Jenkins's hybrid formula of the alternative vote system - which institutionalises tactical voting - and a top-up to make it more proportional, is looking even more elusive than it did six months ago.

First, there is a receding possibility of a referendum on Commons electoral reform this side of the election; and secondly, even some of those in the Labour Party who are keenest on maintaining co-operation with the Liberal Democrats doubt whether their own party would wear, at least as a first stage, more than a shift to the Alternative Vote. One of the thorniest questions Kennedy will face over the coming months will be whether, with the flexibility naturally afforded a new leader, it is worth his pursuing a historic compromise to achieve a solution which on the one hand falls short of full PR, but on the other cannot fail to increase his party's strength in the House of Commons.

If he were to do so, there would be arguments in his favour. One is that a change to a full PR system - now likely to be modified by the Labour Party to make it more voter- and probably more Liberal-Democrat-friendly - did not deliver the holy grail of electoral triumph in the recent elections. Another is that a bird in the hand may in the end be worth two in the bush. Thirdly, there is every possibility that the adoption of AV could in turn lead to a further, more proportional change. And fourthly, while he remains absolutely committed to full proportional representation, Kennedy, to his credit, has never behaved as if he believes the achievement of PR is an end in itself, as if the Liberal Democrats existed only to maximise their own support, and nothing else.

Kennedy's campaign has been open to the criticism of being all things to all men. But in fact he has steel. If he hadn't, he wouldn't 12 years ago have taken the step of forsaking David Owen and opting for merger with the Liberals. He showed that he understood where the future lay then. There is every sign that he still does.