Last week at Prime Minister's Questions I suggested to Gordon Brown that the real choice in British politics is now between the Conservatives and the Liberal Democrats.

The Labour front bench howled with joy, merrily dismissing the possibility that their party might be in serious decline as a laughing matter. The next day, the Labour Party's national vote in the local elections stood at 23 per cent and the Liberal Democrat vote rose to 28percent.

We destroyed the Labour vote in exactly the areas that we intend to win at the next general election - in Burnley, for example, a former Labour stronghold, we won five of the six county council seats from them. In a council division that we won in Cumbria the Labour vote collapsed from 1,900 to 185.

I have heard people claim that the local and European elections were a missed opportunity for the Liberal Democrats. I disagree.

Of course, as in all elections, there were losses as well as gains. In a contest when the voters wanted to give the Establishment a kicking, it is hardly surprising that we suffered some losses in the South West, where we have been the governing party for 20 years.

And in a Euro election in which many voters cast protest votes for fringe parties, no mainstream party leapt forward. But the Liberal Democrat and the Conservative vote remained broadly static, with both parties winning one extra MEP.

So I repeat my belief that the Liberal Democrats can replace Labour as the progressive party in British politics.

Political parties are not facts of life, cast in stone for ever. They change, waxing and waning with the times. It may not happen overnight: it took Labour 23 years from its formation in 1906 to become the biggest party in Parliament.

The Lib Dems are now the dominant political party of urban Britain, running the majority of big cities outside London, while the Conservatives remain invisible in northern city politics. And we are present throughout the South and South West just as Labour disappears from these regions altogether. This is the platform from which we can overtake Labour.

If it takes a little time to progress in the battle for numbers, we are already winning the battle of ideas: we were first to identify the dangers of an overleveraged banking system at the heart of the British economy; and the first to advocate radical political reform, changing the rotten system in Westminster for good. We have been consistent in our defence of civil liberties; outspoken about the need to clamp down on tax avoidance, to reduce the tax burden on low and middle-income earners, and so make taxes fairer. We remain radical on the need to make Britain environmentally sustainable; principled in our defence of the international rule of law; brave in standing up to failed populism on law and order; and progressive in pushing for new childcare and education policies, to break the cycle of deprivation that, after 12 years of Labour, is still handed down from one generation to the next.

These are the touchstone issues of progress, of reform, of conscience where Labour has proved such a disappointment. Perhaps it was Iraq. Perhaps it was the tortuous compromise at the heart of new Labour - sticking to hard-nosed Thatcherite economics while promising a gentler Britain, promising progress while out-toughing the Conservatives on crime and civil liberties. Perhaps it is simply the grinding struggle of day-to-day government after 12 exhausting years.

Whatever the reason, Labour has let down the millions of people who looked to it in the hope of a new progressive start in 1997. It has delivered, instead, unreformed politics, overcentralised government, diminished civil liberties, a confused approach to foreign affairs and the environment, and a society still disfigured by profound social injustice.

We must do better than this. And we cannot allow David Cameron to turn the clock back. He may talk a good talk, but the effects of a Conservative government are now becoming clear: they say that they want fairness, but advocate tax cuts for millionaires; they say that they want to protect the environment, but seek out allies in Europe who are climate-change deniers; they say that they want clean politics, but block any change to party funding.

So Britain desperately needs a strong progressive voice. Labour has run out of road, out of ideas, out of steam. Voters looking for a new home will only secure the fairer Britain that they want by uniting around a new centre of conscience and reform.

That is why I now say to anyone who supported Labour in 1997 because they wanted fairness; they wanted to support, not demonise, young people; they wanted political reform, they wanted the environment protected; or because they simply believed in a better future - turn to the Liberal Democrats. We carry the torch of progress now.

Nick Clegg is leader of the Liberal Democrats

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