But in a new report from CentreForum, the liberal think tank, we argue that the two parties’ similarities are being wildly overstated, as are the chances of them working together in a formal coalition if the Tories are returned as the largest party in a hung parliament.

In the early days of David Cameron’s leadership, the prospect of a thawing in Lib Dem – Tory relations looked plausible. The election of a self-styled ‘liberal Conservative’ should have increased the likelihood of meaningful co-operation between the two parties. But four years on, that co-operation has been conspicuous only by its absence.

In part, this is down to a deep rooted mutual mistrust – policy positions may be ever changing, but the culture of a party, and the core instincts of its members and supporters, are not. In part, this is a simple result of electoral imperatives – as long as the success of each party depends on the failure of the other, co-operation will prove difficult.

But it is also the result of something more fundamental: the belief, held by virtually every Liberal Democrat, that the Conservative party has not been engaged in as fundamental a re-invention as David Cameron would like voters to believe. The Lib Dem view is that the Conservatives – with their regressive inheritance tax policy, their ardent Euro-scepticism, their failure to translate their rhetorical commitment to the environment into hard policy, and their refusal to countenance far-reaching constitutional and political reform – are simply not as liberal as they claim.

For all these reasons, it is almost impossible to imagine a scenario in which the Lib Dems could enter a formal coalition with the Conservatives. Not only would they have to exact a political price (in the form of electoral reform) that the Tories will never pay, but Clegg and his colleagues believe that, in the absence of fixed term parliaments, the conditions needed to give a coalition even a fighting chance of survival are simply not in place. The threat of Prime Minister Cameron calling a second election at any stage, blaming the junior coalition partner as he did so, would hang over every negotiation the parties entered into.

It would be a mistake to assume from this that the Lib Dems would, in a hung parliament in which the Conservatives were the largest party, simply revert to ‘business as usual’ opposition. With politics set to be dominated for the foreseeable future by the need to tackle the UK’s massive structural deficit, the over-riding objective for the Liberal Democrats will be to demonstrate that they are part of the solution, not the problem. In a hung parliament, the Lib Dems would wield significant political power, but would have to use that power sparingly. They would almost certainly remain on the opposition benches, but would increasingly have to think and act like a governing party.

The rules of the game could be about to change dramatically.

Julian Astle is Director of CentreForum, the liberal think tank.

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This superficially attractive proposition ignores two important facts, however.

First, there is no such thing as free tuition – someone, somewhere has to pay, and under the Liberal Democrat plan that ‘someone’ is the taxpayer. And since most taxpayers are non-graduates with relatively low lifetime earnings, the policy involves a significant redistribution of resources from poor to rich.

Second, the abolition of fees will do almost nothing to get more poor students into university as the Liberal Democrats claim. Why? Because the gap between the HE participation rates of rich and poor students was not created by the introduction of tuition fees. Indeed research suggests that the gap actually narrowed slightly in the years after fees were introduced in 1998.

The real reason why students from low income families are not going to university in greater numbers is because too few are achieving the exam results they need to apply. This fact is borne out by a recent study showing that, although the poorest 20% of students are six times less likely to go to university than the richest 20%, there is almost no difference between the participation rates of poor and rich students with the same A-level results.

The Liberal Democrat policy on fees is therefore both regressive and ineffective. It is also becoming increasingly expensive. As student numbers and average fee levels have grown, so has the cost of the Liberal Democrat policy: abolishing fees would have cost £280 million at the time of 2001 election and £1.5 billion at the 2005 election. In 2010, it will cost £2 billion. If the £3,000 fee cap is lifted, that figure will go up again.

The current economic downturn should help to focus minds on whether or not this represents an intelligent use of scarce resources. With a lengthy period of fiscal contraction (and £37 billion of spending cuts) waiting on the other side of the recession, the party needs to decide whether it really wants to spend an additional £2 billion subsidising relatively well-off university graduates. After all, every pound it spends reducing graduate debt is a pound that cannot be spent enhancing services, or reducing the tax burden, for families further down the income scale.

If the party is serious about widening participation in higher education, it should concentrate its efforts on driving up pupil attainment levels, not bringing down graduate debt levels. It could do this by taking the £2 billion it would cost to scrap fees, and using it to increase the ‘Pupil Premium’ – an innovative new system of deprivation funding designed specifically to improve educational outcomes for disadvantaged school children.

* Julian Astle is Director of CentreForum, the liberal think tank. His latest paper, ‘Time’s up: why the Lib Dems should end their opposition to tuition fees’ is available here.  And coming up later today, Paul Holmes MP responds to arguments.