Question: What do you think will be the key features of the forthcoming conference?

Mark Oaten: I think the overriding aspect the party needs to get across is the change in British politics to a three-party system.

Some of the most recent opinion polls have shown just nine, 10 points between all three parties and we go into this conference having had our best poll ratings nationally for decades, consistently over 20 per cent, 30 per cent in the local elections, and also with a by-election pending in Brent where we are hoping to do very well, so I think one thing which we ought to get across is that this is the most successful conference period that we're entering into.

In policy terms, I'd say there are two or three things. The first would be high focus on terrorism both from an international perspective and a domestic perspective, with a focus on the economy and how the chancellor is beginning to fail, and we're going to want to talk about the environment more than we often do at conferences now, those are the three policy things.

Question: How do you react to the media attention towards the monarchy debate that will take place at your conference?

Mark Oaten: I don't think it would be a Lib Dem conference without there being a focus on some kind of cavalier issue. I think in the party we like to have a genuine debate at our conferences rather than too much central control. Some of these issues that we've discussed in the past are actually issues that make for lively discussion and I see no reason why the party shouldn't do the same thing.

Question: You are addressing a fringe event on the issue of crime - what will be your key message?

Mark Oaten: We will launch a document, which looks at the whole question of prison and education and it basically says that the so-called path policy of sending them to prison, locking them away, giving them 23 hours in one cell is completely failing.

The re-offending rates are between 60 and at worst 80 per cent, depending on which prisoner category you've got. A situation where something like 80 per cent of prisoners can't fill in a job application form when they leave, but that approach on prisoners is just completely failing, and the impact on crime and impact on prisoners is to tackle this re-offending rate and to start getting prisoners to pass more exams, take more courses and to be in a position to fill in job applications and actually making prison work and there are a lot of things, a lot of issues around that which we're going to be launching ideas about.

Question: What about the investment needed to carry out this kind of education programme in prisons?

Mark Oaten: At the moment the prison service is bust - we've got record levels of overcrowding and we're heading towards the 100,000 figure for people held in prison.

That is costing society billions, let alone the cost of all the crime that those prisoners then go on to recommit and one of the biggest ways to reduce the costs of both prison and the culture of crime is to stop the people re-offending.

And it would be more than value for money to invest in proper education and training in prison to help cut those re-offending rates and to then cut the numbers of people going to prison.

Question: Have you got an idea of the cost of this policy?

Mark Oaten: No. These are blue-sky ideas, there is going to be all sorts of radical ideas in there, so it's not a detailed, costed document.

Question: After the last election the Lib Dems launched a major review into key policies such as your approach to public services - two years on and it appears nothing substantial has emerged from it yet?

Mark Oaten: Well, at last year's conference we had a major debate on restructuring public services, we talked about the whole concept of devolving local services down, we talked about giving patients more choice, we talked about the party getting slightly less hung up on whether it's a public or private provider, we talked about setting up these forums of delivery such as mutuals and cooperatives and we talked about setting up a new health tax to replace National Insurance so there's stacks of ideas bubbling through the party.

The next stage is to narrow it down as you get towards the general election, you start developing policies to go in the manifesto.

Question: Which do you think will bubble to the top?

Mark Oaten: I think that one of the ideas that Charles has said recently is this whole idea of getting rid of and removing league tables, central targets, and even going as far as abolishing certain government departments having left central government and that would emerge as a very strong theme.

I suspect that the public will feel they have been taxed more under Labour but haven't seen where that money's gone, and because of that our idea of having a designated health tax will emerge as being one of the good headlines for the party.

Question: You appear to be at a crossroads in terms of political strategy - how should the Lib Dems present themselves against Labour and the Conservatives?

Mark Oaten: Well, we need to step aside from talking the language of relative to other parties. We seem to be much prouder about our liberal tradition.

I think society is becoming much more liberal with a small "l", I think we've got a lot more tolerant on issues to do with gay rights, for example, I think that a lot of the average people's views are actually liberal and I think that as a liberal party, we could find that society is moving in our direction.

And at a time when they're still very uncomfortable about the language of central control at Whitehall, of spin, which we get from Labour, and the other mistrust of the Conservatives, particularly on the public services, dislike of leader Iain Duncan Smith and the fact that they don't really believe that the Conservative party is modern, or tolerant or of this generation.

That gives a great opportunity for a modern, liberal-looking party to capture that dissatisfaction, and I think that's where we should be rather than trying to position ourselves to the left or right of the other two parties.

Question: What impact do you think the Hutton inquiry will have on the government?

Mark Oaten: I don't think that Tony Blair will recapture the level of popularity, which he's had before. This is not a fatal wound, but it's a beginning of the end for Tony Blair and his special relationship with the electorate. I don't see him being able to turn around and say, "trust me, I'm Tony" again.

But I don't think it's just damaged Labour, I think it's damaged the business of politics itself, but it will mark a turning point in Tony Blair's premiership.

Question: Iain Duncan Smith's is still there, his poll ratings are rising, have the Lib Dems underestimated him?

Mark Oaten: Well, I'm delighted he's still there, I think that the poll ratings are not rising for the Conservative Party, they have in recent polls gone down again, they seem to be stuck at the 30, 32 mark and for a party that pretends to be on the verge of getting into government at the next election, they're very short of their target, and they have a leader who is seen to be very out of touch with ordinary folk, and a party which is unable to reform.

Question: What is the feeling within the parliamentary party about your third party status?

Mark Oaten: We are ambitious and I have never felt more optimistic, having been in politics for 20 years.

I feel a real sense of momentum and opportunity for the party, to such an extent that nearly all MPs have consistently said they have people come up to them saying - they're not really Lib Dems but they could be and "you guys stand a really good chance at the moment" - and the extent to which the public are looking for the party to step up a gear, and I think you'll see at conference Charles stepping up the pace and the ambition of the party wanting to get to a point where we can overtake the Conservatives and then lead on to get into government, really coming across from the 53 parliamentarians.

Question: How do you think the parliamentary party will react if the Lib Dems are still stuck in third place after the next election?

Mark Oaten: Well, that depends on how many seats are gained and - I'd personally be disappointed if we didn't make a number of considerable gains at the next general election.

That's why I'm in politics, I want the party to progress. And I'm sure that's where our colleagues want to get to.

Now whether we will rise in seat numbers or percentage wise of the popular vote we're able to take over from the Conservatives, who knows, we're still several months away from it. But at the moment we are setting it in our sights.

Question: Are there any parallels with new Labour here. If you are stuck in third place after the next election you need to undergo a transformation - a New Lib Dems party just like New Labour with Blair?

Mark Oaten: I think that we are very happy where we are at the moment, and the concept of liberalism in terms of the 21st century, is something that I think we should perhaps develop.

But there are no parallels with Labour, when Michael Foot led their party, and it was full of militants, or a Conservative party on the way out led by Hague or IDS, both parallels are not where we are, which is the party which is steadily growing and in a sense, more of the same, steady as she goes, it's stepping up a gear and getting that sense of ambition that we have across to the public as well.

Question: What is your message to Labour or Conservative voters as to why they should switch their vote to you?

Mark Oaten: I think if you want a party that does its politics differently, is prepared to say things that you don't like, is straight-forward, unstuffy, wants to trust a little bit more in you and a little bit less dictatorship from government and wants to get the reforms in place to make sure that our schools and hospitals are working better, that believes passionately in Europe and believes also in the whole of the international institutions, then you are a Liberal Democrat and you should join and vote for us.