The third man

My taxi driver sums up the Liberal Democrats' dilemma neatly. "Who?" he asks, when I tell him I'm interviewing Nick Clegg. "He's the Lib Dem leader," I respond incredulously - or credulously as it turns out.

"I know who he is," he laughs. "That's why I said 'who?'."

Unfortunately, the taxi driver is not alone in thinking Clegg a political irrelevance. As the leader of a third political party that in the best case scenario will only become a stronger third party in the next election, Clegg - or Cameron-lite, as some critics have cruelly dubbed him - has his work cut out to come across as a political heavyweight.

He hasn't helped his cause by adopting what one senior industry figure describes as "a very poorly focused" food policy. Even with political attention now squarely on the economic crisis, Labour has found time to unveil its high-profile £30m Healthy Towns initiative and the Tories their responsibility deal. Clegg, by contrast, has limited his comments to binge drinking and the power of the supermarkets.

So just where does he stand on the wider issues facing the industry? On firmer foundations than you may think, it emerges in an exclusive interview at his office in the Houses of Parliament. Clegg has just returned from speaking at the Association of Convenience Stores' Heart of the Community event, where he gave a typically abrasive assessment of the power of the supermarkets, berating Tesco et al for establishing a "trolleygarchy" and setting up "hugely complex tax avoidance schemes" while the Chancellor "sits idly by". The speech, not surprisingly, went down well.

"They took the point about the lack of a level playing field with the large retailers being able to, in effect, pay very expensive accountants to avoid paying tax," he says. "It's legitimate, but there's something wrong about being able to set up off-shore companies or special vehicles to avoid tax at a time when the priority is to get customers buying things on the high street."

If pan-industry tax avoidance loopholes were closed, the Government would be able to recoup some of the estimated £40bn lost in tax avoidance and re-invest it in tax cuts for families, believes Clegg. "We are very conservatively saying it is possible to recoup about £5bn of that per year towards a big income tax cut for people on lower and middle incomes. That will have a direct effect, particularly on the people who run convenience stores for the elderly and vulnerable," he says. "You've got to avoid the tinkering that the Conservatives are doing and the kind of one-off bribe the Government seems to be heading towards, which is borrowing today for tax cuts that are going to have to be paid for tomorrow. Now is the time to re-balance the tax system, get demand going, get money in people's pockets so they go and spend it in shops."

More specifically, in small shops - though Clegg is quick to stress he is not on a mission to discredit the big four. They play a valuable role in increasing choice, he says. "But there has to be a level playing field and that is more important at a time of recession than it is at any other time."

The Lib Dems are particularly keen to hold supermarkets to account over food pricing, it seems. Last week, deputy leader and Shadow Chancellor Vince Cable accused supermarkets of profiteering after a study showed staple foods had increased in price. "There is clear evidence oil, food and commodity prices are falling. These should be passed on by retailers," he said.

Somewhat paradoxically, Clegg takes a polar opposite view on alcohol pricing. In September, he called for minimum pricing to be introduced on the grounds that cheap alcohol sold in supermarkets was exacerbating the nation's binge drinking. Senior figures in the alcohol industry were not impressed. "It's odd to say that a party committed to cutting taxes now wants millions of consumers to pay more for their weekly shop," said a bemused Jeremy Beadles, CEO of the WSTA, at the time.

But Clegg is resolute. "I'm not going to apologise for focusing political attention on alcohol. The binge-drinking crisis is producing a knock-on effect on the health system, the criminal justice system, how people feel about their own communities and safety in the community," he says.

"Of course, minimum pricing is not the only solution, but there is something wrong when I can go to my local Tesco store and buy a bottle of vodka for about £6.50 when duty and VAT [at 17.5%] are about £7.12. We're spending huge amounts of money in A&E departments handling what in some towns and cities is alcohol-fuelled mayhem. Yet you have responsible major retailers selling alcohol - strong alcohol -for less than duty and VAT. Something is very out of whack."

Embarking on an alcohol pricing crusade as the UK heads into recession is questionable enough, say critics. But how would such a complex system be implemented?

"Minimum pricing would actually be a very straightforward system," claims Clegg. "A board, like the one that decides the minimum wage, would decide on the price, and their decision could be as simple as banning retailers selling at below-cost price. We already have Trading Standards officers in local councils to enforce this kind of measure."

Given that the Home Affairs Select Committee is toeing the same line, alcohol could well become the new cigarettes in terms of restrictions on trade - something Clegg clearly isn't averse to. Labour has been responsible for some equally Draconian food legislation, however. This is where Clegg objects to the heavy-handed intervention that has become the hallmark of Labour's tenure. "Labour still doesn't seem to realise that introducing more red tape doesn't lead to positive changes," he says. "It has put rules for the sake of rules above common sense. Look at the bizarre junk food advertising ban, which meant bran flakes and raisins couldn't be advertised during children's TV but ready meals and fizzy drinks could."

That's not to say Clegg is opposed to intervention per se. "Just around the corner from where we have our home in Sheffield, there's a farm - the Whirlow Hall Farm Trust," he says. "It gets children from the other side of the tracks in Sheffield to come and look. A lot of these children don't know where an egg comes from."

This lack of engagement urgently needs to be addressed, but in a holistic way, he argues. "My wife's Spanish. In Spain, people on modest incomes take an interest in the quality of their food and the price," he says. "That engagement is missing here. I'm not suggesting for one moment that this is something that can be sorted out by the supermarkets. I think cultural change can be aided, however, by more information, how food is presented and processed, how it's talked about in school, how it's labelled, and also by guidance. That's clearly where we need to go."

Though he supports the principles of Labour's Healthy Towns initiative, he is sceptical it will have a lasting impact. "Schools and local authorities get quite enthused by these new schemes and then suddenly find they're having to carry the can for their implementation after the central Government seed financing has dried up. You need a much more co-ordinated cross-department approach - and to share responsibility with local authorities, schools, parents, retailers."

Nevertheless, he feels retailers and suppliers have a duty to merchandise HFSS foods more responsibly. "There are real tensions. Obviously you've got food manufacturers that produce both healthy and unhealthy products," he concedes. "But improvements have been made - a year or two ago if you went into a store, all you would see around the cashier's desk was banks of high-sugar-content food. That's changing now, slowly."

Some experts predict the obesity agenda will be sidelined in the recession, others that the problem could get worse as consumers opt for cheaper foods. Clegg appropriately hints at a third possible outcome: that consumers will, with encouragement, re-engage with diet as something they can control - unlike the state of the economy.

"I don't think that any one part of society should take sole responsibility for obesity," he says. "But I do think the grocery industry can have a positive influence on how healthily people eat. It is in a unique position to reach out to people. In smaller shops that may mean helping your customers when they have questions about food and, for bigger retailers, advertising and in-store magazines are a good way to get the healthy-eating message across."

However, while he's hopeful obesity won't be sidelined, he warns that it will inevitably be overshadowed, no prizes for guessing by what. "Recession, recession, recession. We've already seen people changing their retail patterns. The next thing will be joblessness. We need to take much more radical action than is being entertained by either Labour or the Conservatives to get demand going again. You do that by providing significant tax cuts. That's the way to get people spending."

With that, I'm ushered out to make way for the Afghan foreign minister and his entourage. Clegg ineffectual? They don't think so. n