Although on the surface, British politics appears to have settled down a little in the last few months (Conservatives ahead, Gordon Brown in Michael Foot territory), underneath it all there is still a huge brittleness about it all.

You see it many weeks in council by-election results, where the Liberal Democrats often notch up dramatic swings from the Conservatives in by-elections in the southern-half of England.

You see it in research such as Newsnight’s focus group comparing Gordon Brown, David Cameron and Nick Clegg. At the start – few very had heard of Nick – but by the end – he was by far and away the most popular.

This brittleness is also there in the underlying dynamics of the big issue – the economy. Many of the most vocal and extreme exponents of the virtues of free markets, removing regulations and letting the financial markets roam free, have had their words turn to dust – and now want us, the taxpayers, to pick up the bills for their blunders. This discrediting of the deregulation zealots, added to the unappetising sight of managers crashing their firms into the ground, expecting the taxpayer to pick up the pieces – but still themselves personally walk away with large bank balances and pension pots – should be manna from heaven for those in political parties challenging the zealots.

Yet – here in Britain it is the Conservative Party riding high in the polls despite their policy proposals being so at odds with the reality of the times. Only last year – and after the turmoil in the world’s financial systems had started – the Conservative Party published an official policy review from John Redwood saying that, “We see no need to continue to regulate the provision of mortgage finance.”

Wiser heads in the Conservative Party may well now wish to back away from this – indeed, when I appeared on Question Time and Deputy Labour Leader Harriet Harman quoted these words at Conservative MP Alan Duncan, Alan denied any knowledge of where the words had come from!

But this gap between what our country needs – effective regulation, not blind faith in deregulation – and what the Conservatives want offers the Liberal Democrats an opportunity. It is the same story with tax – where our policies would focus on helping the least well-off, asking polluters and the extremely wealthy to pay more, whilst the Conservative tax cuts (in as much as they are willing to give any details) would focus on giving the most help to the most well-off.

Someone recently joked to me that just as in the US it is near-obligatory for Presidential candidates to say “God Bless America” in every speech, it is now near-obligatory for Liberal Democrats to bless Vince Cable every time – but there is a reason for this! Because Vince has helped steer the party to a very effective treble-response to these challenges: regulation where necessary (as with the banning of short-selling on financial stocks), efficiencies where possible (as with axing ID cards) and putting our priorities on helping the least, not the most, well-off.

That approach is one which I think not only commands very broad support within the party – as we saw in the votes at conference on parts of it – but also begins to give us that overall narrative which makes our policies hang together in a coherent and easy to follow way.

So – as we end our conference and wait to see how the rest of the conference plays out – I’m in a very optimistic mood!

This piece first appeared on Liberal Democrat Voice.

(c) Lynne Featherstone, 2008