Clegg faces hung parliament dilemma

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By James Landale Deputy political editor, BBC News

For many Liberal Democrats, a favourite Christmas pastime is to sit down, load up on mulled wine and mince pies and watch the Wizard of Oz.

For a defining characteristic of any member of this party is an unshakable belief that, somewhere over the rainbow, their political dreams will indeed come true.

There have been false dawns before - but some Lib Dems are daring to believe that this time the party's yellowy-orangey brick road could just lead to power, at least of a sort.

Mr Clegg has had some successes but poor by-election results

Why? Because the result of the general election that must take place next year is not certain.

Labour could lose its majority in the House of Commons. But the Conservatives might not do well enough to form a government on their own. And in the ensuing chaos, there could just be a role for the Lib Dems.

But hung parliaments can be a mixed blessing for third parties. On the one hand some supporters will be more likely to vote Lib Dem if they think the party might enter some kind of coalition government.

Gurkha campaign

But others - who in the past have voted Lib Dem as a safe protest vote - might balk at the idea of giving them half a grasp on the levers of power.

So the challenge next year for the Lib Dems and their leader Nick Clegg is to find the right balance between campaigning for votes and seats regardless of the future, and preparing for the possibility of a role in the next government. Neither is an easy task.

This year the Lib Dems have had some success - campaigning for the rights of Gurkhas to live in this country, leading the calls for Speaker Martin to stand down over his mishandling of the expenses row.

But they have struggled for votes, doing poorly in by-elections where usually they excel. They have also struggled to find that elusive USP or unique selling point that says this is what the Lib Dems stand for, this is why you must vote for them.

Their Treasury spokesman Vince Cable has done well as an economic soothsayer, and the party has led the way in setting out tough spending cuts needed to restore the deficit.

Similarly too the Lib Dems have been bold on expenses and electoral reform. But the voters do not seem to have taken much notice.

So Mr Clegg's challenge is provide people with a firmer definition of what the Lib Dems might do if they have a sniff at power.

Price for power

His current pitch is a promise of fairer taxes, taking millions out of tax altogether by raising the point at which we start paying income tax to £10,000.

This, he hopes, will contrast nicely with the Tories' plans to cut inheritance tax for the better off and Labour's national insurance tax rise on the less well off.

As for a hung parliament, Mr Clegg's challenge is to acknowledge the reality of its possibility, without getting bogged down in the detail.

Traditionally the Lib Dems refuse even to talk about it. They know that if they start naming their price for power, talking of policies and seats in cabinet, the voters will not reward them for such presumption and hubris.

But this time failure even to discuss it would look absurd. That is why Mr Clegg has already hinted he will give a fair wind to the party with the strongest mandate.

So this Christmas Lib Dems are wishing upon a star or two that perhaps if they dare to dream of power, it might, just might this time, come true.