The planning minister Nick Boles wants to revive the National Liberal Party. This breakaway faction of the Liberal Party formed in the 1930s and survived (in theory at least) till 1968, when it merged with the Conservative Party. Boles seems to believe this would represent a severing of classical liberals from the ‘statist’ Liberal Democrats.
However, were that to be the case Boles’ new party would not be quite unlike the original National Liberal Party. Far from being more free market than the rest of the Liberals, they were actually the Liberals who stayed in the Tory dominated National government when the rest of the party walked out over proposals to levy import tariffs. That was not to say that the Liberals outside the National Government were to the right of the National Liberals. This was after all a movement that would soon count amongst its members Beveridge and Keynes. Rather because the Conservative party is hardly a paragon free market party, it is possible to oppose it from both economic and social liberal standpoints simultaneously.
The history of the National Liberal Party does not look like an appetising precedent for liberals. Not only did they find themselves opposing cherished liberal values like free trade, they were subsequently disappeared without a trace into the Conservative Party. While this happened officially in the 1960s it was de facto the case long before that. The inference for present day liberals is that any alliance with an illiberal party like the Conservatives will not be a meeting of political souls. Rather it should be a temporary measure entered into pragmatically to achieve specific goals before getting the hell away from Tories.