1981 was the year when, at the age of 14, I went full throttle into supporting the SDP/Liberal Alliance. Shirley Williams was my absolute hero and will always stay that way. But I will never forget the sense of hope instilled by David Steel in his leader’s speech, especially that optimistic crescendo at the end when he instructed the assembled activists: Go back to your constituencies and prepare for Government.

We had to wait a long time for national government. It was nearly 18 years before Jim Wallace took the Scottish Liberal Democrats into a successfully transformative coalition at Holyrood which introduced, over 8 years, free personal care, free eye and dental checks, much needed land reform and STV for local government among other things.

It was 29 years before the coalition with the Conservatives at Westminster provided some stability for the country at a time of crisis but sent our electoral fortunes plummetting.

However, we did start making big gains in local elections and winning councils a lot quicker, so in a way he was right that we were ready for power. And we should never dismiss the difference that councillors, in charge of schools, housing, roads and bins, can make to people’s daily lives.

Steel’s speech from 40 years ago is online on the British Political Speeches website.

Here are some highlights:

On the newly formed Alliance – and some advice to the SDP – don’t just let anyone in:

It was inevitable that this 1981 Liberal Assembly should be dominated both by public debate and private discussion of our Alliance. This town used to be part of Lloyd George’s constituency. Two years before the great Liberal landslide of 1906, the years which introduced the People’s Budget, the old age pension, unemployment benefit, and the curbing of the powers of the hereditary Lords over the elected Commons, he gave advice which seems just as appropriate today two years or so before the next election.

We have arrived at one of the most important stages in the history of the Liberal Party. I believe the future of this country largely depends upon the foresight, conviction, courage and devotion to principle of the Liberal Party during the coming years.

Our debates have carried conviction, courage, principle and foresight in full measure in these last few days. The task of putting together our Alliance on the ground throughout the country is not going to be an easy one. We must secure a reasonable balance in our deployment of forces in every area. It will be immensely complicated. It will call for a high degree of vision, of trust and of forbearance both by our party and by the SDP.

It will require trust between our two parties. The members of the SDP who have been here this week have been greatly impressed in their first close contact with the Liberal Party. They have also enjoyed the warmth of their welcome, and we were right to treat them kindly since they’ve come from a broken home – the Labour Party. I hope they won’t mind if I give them one piece of advice: as the ship of the Labour Party sinks, be careful and be discriminating about who you let clamber on board ours. Ours is a ship on a voyage of adventure. Don’t let it become a lifeboat for those whose only real interest is saving their parliamentary or council skins.

It will also require trust within our party. I want to thank you for the very considerable trust you have shown me in what I realise must at times have been a tortuous and anxious period. Now it is my turn to trust you as you proceed to give effect to our Alliance throughout the country. And I do trust you to make a success of it.

What we would do in Government? Some themes there which are similar to what we are saying today about supporting small businesses, not wasting our natural resources and investment in infrastructure:

I turn first then to industrial reconstruction, for without that many of our other plans for Britain will remain but pieces of paper. First, an Alliance government will end the damaging nationalisation versus privatisation see-saw so beloved by the Labour and Tory parties. Our task will be to create conditions of maximum efficiency and morale in the public sector and maximum profit in the private sector, and to see each as complementary, not rival to the other. The remorseless trend towards unsuccessful merger, whether in the private or public sector, must be reversed. Smaller units can be more human, more imaginative and more profitable. The axiom that bigger is automatically better will find no place in the new government’s industrial policy.

Indeed, secondly, we must encourage the innovation of small businesses and co-operatives with positive fiscal discrimination in their favour. You remember the Tories’ pledge to help small businesses? Experience has shown that the only sure way to run a small business today in Tory Britain is to start with a large one.

Thirdly, in public spending we could reduce the waste of unemployment by selective forward investment on such essential items as our railways and telephone system and especially on home improvements which would help the building industry and increase our housing stock. I have in mind in particular the need to expand our programme of insulating buildings in the interests of saving energy. Far from saving energy, this government is determined to waste it. Already £500 million of North Sea gas has been burned off into the atmosphere. Another £25,000 million-worth is there to be exploited; and yet Mrs Thatcher has sacrificed the gas-gathering pipeline on the altar of the Public Sector Borrowing Requirement. That pipeline would have meant 3,000 jobs in British Steel, as well as assuring long-term supplies to British Gas and future revenue to the British government. What economic madness has gripped the Treasury, that it uses the revenues of North Sea oil to pay people not to work, but is incapable of devising a scheme which would not only put many of those people into work but would bring a profitable return to the Exchequer from one of the richest resources this country has ever possessed? This sheer waste of human and natural resources is downright immoral.

It’s the same story with the Severn barrage, which Liberals have long advocated. It was judged both feasible and economic in a study sponsored by the Department of Energy and published in July – which the government launched with a fanfare of one penny whistle. In contrast, Mrs Thatcher’s nuclear obsessions continue to escalate in price, and the new Pressurised Water Reactor is sanctioned, while fears about safety remain unanswered.

Back then, it was really difficult to complain about the Police, and Steel demanded “that police actions be made open to an independent complaints body, the present system having proved itself to be wholly and woefully inadequate.”

We aren’t the only ones who are consistent. Back then Thatcher’s Tory Government was getting tough on immigration with an ugly bill. Not quite as ugly as Priti Patel’s, but pretty shocking for the times. Steel was clear about the Liberal position on opportunities for people who had come for this country and about tackling racism:

Immigration itself is no longer the central issue. The era of massive immigration into Britain has clearly ended. An increasingly large proportion of the black and brown population of this country are native British, born and bred. We cannot allow them to grow up as second-class citizens. We need more positive action, in education, in employment, to ensure that they can enjoy the same range of rights and opportunities that the rest of us take for granted. A programme for citizen equality must begin with the rejuvenation of our inner cities, where so many of our more recent immigrant families still live; but must extend well beyond, to encompass recruitment and promotions within the government service, and encouragement for affirmative action in the private sector.

The fight against racialism is one of the most important concerns of my political life, and I could not be a member of any Alliance that did not have as one of its major commitments not just the removal of present racist legislation, but a firm and unequivocal determination to establish racial justice, without which racial harmony is impossible.

And he said we shouldn’t be shy about being liberals:

Liberalism is not just the creed of a political party. It is the expression of a profoundly moral view of human nature and its possibilities. For too long the Liberal values of tolerance, mutual respect and co-operation have been on the defensive against the zealots of right and left. Liberals themselves have sometimes been defensive, with the attitudes and concerns of a persecuted minority. There has even been a tendency to say: keep Liberalism out of politics.

But that time is over. The relevance of Liberalism, which has sometimes been drowned out by the clamour of the extremists, is sharp and clear today. It is time to assert our Liberalism proudly – and nowhere more so than in this new Alliance. We must provide the heart and soul of the Alliance, proud of being Liberals and glad to work with those who have come to agree with us

And that last, stirring section:

* Caron Lindsay is Editor of Liberal Democrat Voice and blogs at Caron's Musings