Their large lead in the opinion polls makes it all too easy to assume that the Conservatives will win a clear majority at the next General Election. But the polls also show that the lead is based more on dislike of Labour than on positive approval of the Conservatives.

The support for the two largest parties is fragmenting — Labour’s victory in 2005 was supported by a mere 36 per cent of voters, and an increasing number of MPs sit for smaller parties, such as the Scottish Nationalists, Democratic Unionists and, particularly, the Lib Dems. Furthermore, some MPs who have abused the allowances system may lose their safe seats. For all these reasons, combined with a distorted constituency map, it is possible that in May the country will wake up to find the Conservatives don’t have an overall majority. What then?

The country rightly senses that the middle of a deep fiscal crisis is not the time for delayed economic measures and political opportunism, which were the characteristics of the last hung Parliament in 1974. This means the Liberal Democrats must convince centrist voters that they can handle a hung Parliament. If they don’t, many centrists fed up with Labour will vote Conservative — or alternatively stick with Labour on the basis of “better the devil you know”.

Nick Clegg, the Liberal Democrat leader, and his deputy, Vince Cable, need to position themselves as ready to shoulder the burden of responsibility for hard economic choices, and help to provide, with one of the big parties, the principled, practical government that the country so sorely needs. That means talking to voters about participating in a government of national unity.

The Liberal Democrats, from now until the election, should repeatedly assert not that they are going to form the next government — which is not plausible — but that they intend to be part of the next government. They should also establish a principled position that they intend to negotiate with whichever party has the largest number of MPs after the election.

A government of national unity must have one essential building block: immediate legislation to ensure a fixed term for Parliament. Only with the certainty of a four-year Parliament can Liberal Democrat MPs risk the unpopularity in the early years of helping to take the tough economic decisions. The right of a Prime Minister to ask for a dissolution would end, and calling an election before the four years are up would need Parliament’s approval. A dissolution would occur only on a Prime Minister’s motion if it was carried by a sufficient number of the same MPs who voted for the last Queen’s Speech — this would in effect give the smaller party a veto.

In return for supporting a government of national unity, the Liberal Democrats would have the right to demand a firm commitment to a referendum on proportional representation. If the electorate approved of changing the voting system, PR would be introduced for the following general election.

Nick Clegg was right to reject at his party’s conference Labour’s crude suggestion of timing a referendum on PR to coincide with the next general election. This would have been an undemocratic fix that would have discredited the case for fairer voting.

Both the Labour and Conservative conferences attempted to woo Liberal Democrat voters to their side. David Cameron chose to emphasise his party’s green credentials, its civil liberties record and its proposals on decentralisation, which carry a hint of more fiscal autonomy for the devolved parliaments. Mr Cameron has already expressed an interest in fixed-term parliaments, a concept to which Mr Clegg is also committed. Gordon Brown tried to woo Lib Dem voters by stressing his international economic expertise and concerns about poverty and social problems.

On the surface, Liberal Democrats would find it easier to deal with Labour on Europe. But scratch below the surface and one sees that Labour’s record is hard to defend. Tony Blair’s readiness to give up a substantial part of Margaret Thatcher’s negotiated rebate without any radical reform of the Common Agricultural Policy or Common Fisheries Policy (CFP) was a costly blunder, which appears motivated by his wish to be the first president of the European Council. His appointment, after Labour’s reneging on its manifesto commitment to a referendum on the Lisbon treaty, would be a democratic disgrace.

The challenge for a government of national unity led by the Conservatives will be whether Liberal Democrats can be party to a Queen’s Speech that contains a promise to have a referendum on the next EU treaty. This will have to be ratified in 2012-13 and will deal with the entry of Croatia and Iceland, which would involve large reforms to the CFP.

The Irish government will also want to put into the next treaty all the verbal assurances about the Lisbon treaty that it extracted from other member states. It would be a big prize if the Liberal Democrats, as part of the Government, negotiated improvements to the Lisbon treaty and then won a “yes” vote in a referendum on the new treaty.

Liberal Democrats will have to do better in the polls if they are to bring about the situation where we could have a government of national unity. But only if they constantly advocate such a government will they gain in relevance. Championing a new and radical pattern of government would appeal to centrist opinion.

But some Liberal Democrats fear losing their identity. They might prefer at first just to sustain the Government in votes of confidence. This would leave some of their backbench MPs freer to vote down specific legislation. Some Liberal Democrat MPs could take office within a government of national unity, while Nick Clegg stays out of office to hold his party together.

There is a widespread feeling in the country, after decades of political incompetence, spin and sleaze, that there must be root-and-branch reform of British politics. Only a few of our politicians have yet grasped the gravity of the challenges we face. Yet many voters believe that a continuation of the failed one-party system of government — with the adversarial language and attitudes that it engenders — should not continue in the 21st century.

This is an edited extract from Lord Owen’s new autobiography, Time To Declare: Second Innings (Politico’s)

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