David Steel

In 1976, after the downfall of Jeremy Thorpe, and a short period in which Jo Grimond acted as caretaker leader, he won the Liberal leadership by a wide margin over John Pardoe. At only 38 years old, he was one of the youngest party leaders in British history. In March 1977, he led the Liberals into the "Lib–Lab pact." The Liberals agreed to support the Labour government, whose narrow majority since the general election in October 1974 had been gradually eroded and left them as a minority government, in power in return for a degree of prior consultation on policy. This pact lasted until August 1978.[9]

Steel has been criticised both then and since for not driving a harder bargain. However, Steel's defenders contend that the continuing scandal surrounding Thorpe left the party in a very weak state to face an early general election and Steel was wise to buy himself some time from Prime Minister James Callaghan. At the same time, the growing unpopularity of the Labour government impaired the Liberals' performance, and Steel's first election as leader, the 1979 general election, saw a net two-seat loss for the Liberals.

In 1981, a group of Labour moderates left their party to form the Social Democratic Party. They were joined by the former Labour deputy leader, Chancellor and Home Secretary Roy Jenkins, who had previously had discussions with Steel about joining the Liberals. Under Jenkins' leadership, the SDP joined the Liberals in the SDP–Liberal Alliance. In its early days, the Alliance showed so much promise that for a time it looked like the Liberals would be part of a government for the first time since 1945. Opinion polls were showing Alliance support as high as 50% by late 1981. Steel was so confident that he felt able to tell delegates at the Liberal Assembly that year, "Go back to your constituencies, and prepare for government!"[10]

Steel had genuine hopes at that stage that the Alliance would win the next general election and form a coalition government. However, the beginning of the Falklands War the following spring radically shifted the attitude of the electorate, and the Conservatives regained the lead in polls from the Alliance by a wide margin.[11] The Alliance secured more than 25% of the vote at the 1983 general election, almost as many votes as Labour. However, its support was spread out across the country and was not concentrated in enough areas to translate into seats under the first past the post system. This left the Alliance with only 23 seats—17 for the Liberals and six for the SDP. Steel's dreams of a big political breakthrough were left unfulfilled.[12]

Shortly afterwards, the former Labour Foreign Secretary David Owen replaced Jenkins as leader of the SDP, and the troubled leadership of the "Two Davids" was inaugurated. It was never an easy relationship—Steel's political sympathies were well to the left of Owen's. Owen had a marked antipathy towards the Liberals, though he respected Steel's prior loyalty to his own party contrasting it with Jenkins' lack of interest in preserving the SDP's independence. The relationship was also mercilessly satirised by Spitting Image which portrayed Steel as a squeaky voiced midget, literally in the pocket of Owen. Steel has often stated that he feels this portrayal seriously damaged his image.[13] This portrayal of Steel as weaker than Owen was also present in other satires, such as Private Eye's Battle for Britain strip. The relationship finally fell apart during the 1987 general election when the two contradicted each other, both on defence policy and on which party they would do a deal with in the event of a hung parliament.

Steel addressing the Liberal Party assembly in Harrogate on merger in 1987

Steel was convinced the answer to these difficulties was a single party with a single leader, and was the chief proponent of the 1988 merger between the Liberals and the SDP. He emerged victorious in persuading both parties to accept merger in the teeth of opposition from Owen and radical Liberals such as Michael Meadowcroft, but badly mishandled the issuing of a joint policy document. Steel had often been criticised for a lack of interest in policy, and it appeared he had agreed to the document – drawn up by politically naive SDP advisers – without reading it. His colleagues rejected it immediately and demanded a redraft, fatally wounding his authority.

Steel was briefly joint interim leader of the Social and Liberal Democrats (as the new party was at first called) in the run-up to elections in which he did not stand, before becoming the party's foreign affairs spokesman. In 1989, he accepted an invitation from Italian Liberals to stand for the European Parliament in the 1989 election as a Pan-European gesture. Although not elected, he polled very well.

He became President of the Liberal International in 1994, holding the office until 1996.[14]