Richard Grayson: Leader still needs to show that he is the man for No 10

Mr Kennedy still has work to do in persuading the country that he is a potential Prime Minister. Without that, the party will find it difficult to challenge for government - and it can only happen if he makes a difficult journey into unfamiliar terrain.

Two new paths must be followed. First, Mr Kennedy needs to tell the country what Kennedy's Britain would be like by communicating a distinctive personal vision. That, particularly, means stamping his personal authority on the strategic direction of the Liberal Democrats rather than allowing debates on key policy issues to go on around him. Second, he needs to show that he can be Prime Minister by personally inspiring people to believe that he can lead as well as respond.

In the party's debates, much attention is focused on tax, including both a "flat tax" proposal and the current policy of a 50p tax on incomes over £100,000. Mr Kennedy could do himself a favour by setting out his views on the subject.

In a speech in July, he expressed concerns about the effects of the 50p rate on aspirant high earners. But what did that mean? Newspaper headlines suggested that the 50p rate would be ditched - and one had to suspect background briefing from party insiders to this effect. However, figures close to Mr Kennedy appear to believe that the 50p rate is a popular and effective policy, and one with a future. Moreover, Mr Kennedy was elected leader in 1999 on a platform of "social justice" and appears to be wedded to policies such as scrapping tuition fees, policies which would be funded by the 50p rate.

Mr Kennedy needs to take the policy debate by the scruff of its neck. Mastery of policy would help him to meet his second big challenge -convincing people he can lead the party to greater achievements.

Ever since Mr Kennedy became leader, there have been grumblings over his leadership style. Much of that is just politics. What is different now is that the next election is a long way off, and there is a general sense in the party that greater energy is needed between now and 2009-10.

There is the added discontent of campaigners who believed, fuelled by expectations from high up in the party, that more than 62 Liberal Democrats would be returned to Parliament.

Not only is an outstanding conference performance necessary from Mr Kennedy, but it also has to be sustained. He must communicate what makes him passionate and angry in a way which excites and inspires the rest of the party.

Building on that, more than just telling the party that it must raise its game (which he has done repeatedly without suggesting how), Mr Kennedy needs to set out precise challenges for activists so that they feel they are being led.

Charles Kennedy is an enormously talented politician who is popular with the public. But he must reinvent his leadership for the party's next phase by persuading people that he is a potential Prime Minister. If he fails to do this, then some of his parliamentary colleagues may soon find it easier to imagine themselves inside No 10 Downing Street.

The writer is a former speech writer for Charles Kennedy