The Liberal Democrats need a distinctive electoral identity. The party has plenty of policies and is proud of its green, libertarian and all-round progressive credentials. But something is missing: an ability to differentiate itself amid the clamour of the Tory-Labour battle.

Opposition to the Iraq war and to tuition fees gave the Lib Dems at least a negative appeal in the 2005 general election and enabled them to win several university seats. The current situation is very different. The key issue for all parties is the credibility of their plans for economic recovery and sorting out the public finances.

Nick Clegg and Vince Cable are determined not to fail the toughness test. They trumpet their candour, however painful its implications: freezing public sector pay and even putting off the abolition of tuition fees, in effect, for ever. These plans, and Mr Clegg’s loose reference to “savage” cuts, have predictably unsettled many in his party.

Brutal frankness about the fiscal mess, however, is only a necessary — and not a sufficient — condition for creating an electoral strategy. It is about establishing seriousness and realism to reinforce the positive images in the recent Populus poll, where the Lib Dems were ahead of the other two parties on “sharing my values”, being “honest and principled” and being for “ordinary people not just the best off”.

These qualitative factors need to be backed up by policies. David (now Lord) Owen in his SDP days and Paddy (now Lord) Ashdown cultivated a hard-edged image but backed it with substance.

Being tough on public finances is hardly a rallying cry. The Lib Dems will not win any electoral contest from being honest on fiscal soundness. Nor are the party’s green or civil libertarian policies an alternative: they appeal mainly to the converted. The party leadership is becoming more critical of the war in Afghanistan but that is a long way from outright opposition.

There is potential for the Lib Dems in the current anti-politics mood. This is not about the details of proportional representation. It is more about articulating public discontent about the political system. The party is just ahead of the Tories in its response to public anger over MPs’ expenses, from which the Lib Dems have so far suffered only small damage. There is a big agenda here, going well beyond populist gestures about cutting the cost of politics.

The Lib Dems face a tough fight to retain anything like their current number of MPs but they may still benefit from tactical voting in seats that the two big parties have no hope of winning. First, they need some positive themes.

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