Nick’s not for moving – but Liberal Democrat policy is

In the annals of political farce, Matthew Oakeshott has now secured himself a special place, managing to run a plot that was so counter-productive it left his party leader more secure and himself the one ousted from the party.

But whilst the saga may have strengthened Nick Clegg’s position as party leader, it still leaves the party with some major questions over policy and strategy in the wake of the European and local elections.

Even those elections left the psephological experts predicting a Liberal Democrat Parliamentary Party of 40 or so at the general election and likely holding the balance of power in another hung Parliament. That makes any future shifts in Liberal Democrat policy not just of interest to political geeks but also of interest to anyone whose business can be affected in significant ways by changes of legislation or spending plans.

Over the next couple of months, the party will be putting the finishing touches to its pre-manifesto document, due for debate at the autumn Liberal Democrat party conference.

A big question yet to be settled is the party’s fiscal policy for the 2015-20 Parliament. Along with the Conservatives and Labour, the party is going to go into the next general election calling for the structural deficit to be eliminated, but what then? Will the party want to run up further surpluses in order to cut the country’s accumulated debt and reduce the size of the state? Or once the structural deficit is gone, will the party prefer to emphasise extra spending on public infrastructure and key frontline services?

Fiscal hawks such as Danny Alexander in the party will, after the European elections, find it much harder to argue for the former position. Their own position has been weakened and they know the high stakes risks of picking a fight with the party’s grassroots. Much more likely, then, is a shift away from the sort of continuing cuts the Conservatives love towards a policy of boosting public investment once the structural deficit is cleared.

Expect investment in green infrastructure to feature heavily for it brings a triple political win to the party – a policy that is about jobs, a central concern of the public; a green policy that helps the party stand out from both the Conservatives and (on many days) Labour; and a fiscal approach that makes very clear the Liberal Democrats do not share the Conservative desire for an ever-smaller state. And it is also a policy very popular with party activists – just what Nick Clegg needs at the moment.