Something interesting is happening to the Liberal Democrats. Because they are in office, their policy-making has become tougher. At their conference in Glasgow starting on Saturday, there are fewer glib and wishful utopian motions and more serious proposals that have survived a long, hard march through the institutions of government. Hence the party's plan to extend free childcare to all one- and two-year-olds, which we report on today, is no well-meaning wishlist, but a battle-hardened piece of legislation-ready policy.

The plan emerges from the struggle between the coalition partners over the last spending round, which was announced by George Osborne, the Chancellor, in June. Nick Clegg pushed for a better childcare deal, but eventually had to concede that NHS, schools and infrastructure spending were higher priorities. However, the result is that Lib Dem ministers were forced to refine their ideas, which means that the motion from the party's Federal Policy Committee has been thought through.

This is part of a wider preparation for the election, now just 20 months away. One of the little-appreciated decisions made by the Lib Dems at an early stage of the spending round was that it would cover one year only, 2015-16. That frees the coalition parties to set out different tax and spending priorities for the next parliament. Thus we can see the Lib Dem manifesto for the election coming into shape. Extending taxpayer-funded childcare will be one plank of the platform. Another is the mansion tax, for which Mr Clegg pushed but which David Cameron ruled out emphatically. A third example is that the Lib Dem leadership has admitted its error in allowing the extension of secret courts in the Justice and Security Act to go through and now wants to pledge to reverse it if it were returned to government.

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The hardening of Lib Dem policy-making, which is still more democratic than that of the other main parties, means that disasters such as the tuition fees U-turn would be less likely. It also provides a more solid basis on which to conduct coalition negotiations, should there be another hung parliament. And what is interesting about the childcare policy and the mansion tax is that they are both subjects on which it is easier to imagine Labour and the Lib Dems reaching agreement than a continuation of the present coalition.

Indeed, The Independent on Sunday could support both policies. Good quality childcare, free at the point of provision, is a liberating option to offer parents. And it should be universal, to ensure that it does not become a poor service for poor people – unlike the current provision for two-year-olds, which is restricted to families on low incomes.

In one respect, the bad old days of Lib Dem policy persist, in that the childcare proposals are not costed. They would be expensive, but by allowing more parents to return to the workforce they would produce higher tax revenues and lower benefit costs – and the party is also proposing tax increases, such as the mansion tax, that could pay for it.

It has sometimes been suggested, most recently by the Labour peer Andrew Adonis, that the Lib Dems have been suckered by the coalition and have had their credibility destroyed in government. These childcare proposals suggest that the party has matured in office and will still have a distinctive and attractive programme to offer at the next election.