The Liberal Democrats could be holding the fate of the nation in their hands. Political Editor Jonathan Walker looks at the real possibilities of a hung parliament.

The Liberal Democrats are often overshadowed by the two larger parties, but they will be the centre of attention when they arrive in Birmingham next week for their annual Spring conference.

All eyes will be on party leader Nick Clegg when he delivers a keynote speech at the International Convention Centre, because he could very well be the person who holds the fate of the nation in his hands.

With opinion polls showing the gap between Labour and the Conservatives closing, a hung Parliament is a real possibility.

And if neither Labour or the Conservatives can command a majority in the House of Commons without Liberal Democrat support, Mr Clegg may decide who gets to be Prime Minister.

But unlike his predecessors as Lib Dem leader, who spent election campaigns fending off questions about hung Parliaments, he is more than happy to discuss what his approach would be.

Speaking to the Birmingham Post as he prepared for his visit to the city, he was even willing to speculate about the possibility of joining a Government – led by either Gordon Brown or David Cameron.

He said: “I think it is a very natural question, particularly given that the polls suggest all bets are off at this election.

“My view is really very pragmatic. Firstly, I am not a kingmaker. David Cameron is not a kingmaker. Gordon Brown is not a kingmaker. There are 40 million-odd voters in this country and they give us our instructions, and I want to hear what they have to say before any politician can decide how they want to respond.

“Secondly, there are no deals, undertakings arrangements, undertakings between ourselves and any other party – until the voters, the real kingmakers, have had their say.

“Third, and probably most importantly of all, are our four priorities. Fair taxes, which means no tax on the first £10,000 you earn. Smaller class sizes. A complete change in the way we run the economy. And cleaning out the rotten state of politics in Westminster, giving people for instance in Birmingham the right to sack their MPs if those MPs have been shown to be corrupt.

“Those are the four things that I will fight for, campaign for, insist upon, in whatever context I find myself; hung parliament or not a hung Parliament, in Government out of Government.

“And I think that’s a really clear guide to people. It’s a kind of copper-bottomed guarantee that if you like those four things, those are the things I will fight for in whatever way the Liberal Democrats can exercise influence.

“And that I think is actually very far in revealing my hand about how I would act in the future.”

These four issues will be at the top of the Liberal Democrat list of demands if they are approached form a coalition government, and also at the heart of their spring conference in Birmingham. But Mr Clegg’s arrival at the ICC, in the Ladywood constituency, may also draw attention to controversy surrounding the party’s candidate in the seat, Coun Ayoub Khan.

Elections Commissioner Timothy Straker QC concluded in April 2008 that Coun Khan misled an election court with a “sordid story” about a Labour rival. And Coun Khan, a barrister, may now face an inquiry from the Bar Council, which could end his legal career.

But Mr Clegg said: “We have done our own investigation, and I am satisfied that he is not guilty of the things he was accused of. I think he has one outstanding issue with the Bar Council. But it not my job to prejudge that.”

Voters in Birmingham already have experience of a Liberal Democrat administration, with the party helping to run the city council as junior partner to the Conservatives.

But it means Mr Clegg’s party has been involved in some difficult decisions – including axing 2,000 jobs, as part of a £69 million saving programme.

The Liberal Democrat leader insists the Government is to blame for job cuts, because it is ordering authorities to take on more duties without giving them the funding they need.

Supporting his Birmingham councillors, he said: “I think it’s really tough for them. They’re having to take very difficult decisions. I don’t for a moment want to in any way diminish the anxiety and insecurity that is created for anyone who works for the council, not only in Birmingham by the way but in councils up and down the country run by whatever party, Labour, Conservative or Lib Dem, for whom there is some real insecurity because of the way the Government is shortchanging councils.

“By our estimate, Birmingham is being shortchanged by £30 million this year alone, because of the way that the government is constantly asking local councils like Birmingham City Council to do things and not providing the money to do it.

“A classic example is the deeply cynical plan for long-term care announced by Gordon Brown, which actually if you scrutinise the details will mean that less care is being provided to people in Birmingham. Guess who is going to pick up the pieces? It is the council.

“So given how much Birmingham City Council and councils up and down the country are being asked to perform miracles with less money from Gordon Brown and Alistair Darling, it is no wonder that very difficult questions are now being asked about how money is spent by the council itself. I hope that any change in the number of people employed by the council can be done through natural wastage on a voluntary basis and is as painless as possible.”

All three major parties now are promising to support manufacturing, and arguing Britain can’t depend on London-based banks to generate wealth.

Mr Clegg insists he has a real understanding of manufacturing, as a Sheffield MP, and says his party has drawn up plans to boost industry. “We have a plan to identify very significant savings and cuts in Government expenditure, amounting to something in the order of £16 billion. And the vast bulk of that will go on paying off the deficit.

“But some of that money, about a third of it, will go on two objectives. Firstly, smaller class sizes and one-to-one tuition, so that kids in Birmingham, from whatever background, get the headstart they need in life.

“The second major thing is investing in transport, affordable housing – for instance we have a plan to convert 250,00 empty properties that are presently standing empty – and boosting renewable energy.

“In other words, we have a plan where we use about £3.5 billion in a one-off boost to the green infrastructure this country needs. That would be a massive shot in the arm for manufacturing.

“We are the only party with a plan to sort out the banks and have them lend money again, which is half the equation, but also a plan to put money in on the first year after this election, in to a one-off boost in to the kind of green infrastructure we need for the future.”