Editorial: Just when the Lib Dems looked set for victory...

The Eastleigh by-election was already on a knife-edge. After yesterday's shock admission from Nick Clegg that he had, in fact, known his party's former chief executive faced accusations of behaving inappropriately towards female activists, Eastleigh could even be lost – and more than a single parliamentary seat will go with it.

The most immediate question, of course, is why the allegations against Lord Rennard – which were sufficiently widespread to earn him the nickname "the human octopus" – were not followed up in the first place. Mr Clegg may protest that he was aware only of "general concerns" and that, without an official complaint, he could make no official move.

But such sophistry is wholly inadequate. It is incumbent upon the head of any organisation to follow up suggestions of impropriety among their staff, however nebulous. Even more so on so tricky a matter as sexual harassment. Indeed, one can only wonder whether Mr Clegg would have responded with such delicacy had the tittle-tattle suggested an official with their hand in the till.

Nor do the Liberal Democrats' problems end there. Until yesterday, Mr Clegg's office had repeatedly denied the party had any knowledge of the allegations. Indeed, Vince Cable re-stated his leader's ignorance just hours before the admission finally came. At best, such inconsistency smacks of a worrying degree of incompetence among Mr Clegg's staff. The Liberal Democrat leader's more hostile opponents will no doubt cry outright mendacity.

Where, then, does all this leave Eastleigh? It is difficult to overstate the significance of Thursday's by-election. Never mind that the southern Hamp-shire electorate will vote, to a large extent, on such close-to-home issues as plans for a gravel pit. The contest is still a hard-fought scrap between the Coalition partners with far-reaching implications for Britain's political landscape, up to the 2015 election and beyond.

And after an initial wobble – given that the vote was triggered by Chris Huhne admitting that he passed speeding points to his then-wife – the Liberal Democrats had seemed to be on course to win. Initial high hopes for the Tory challenger were faltering. Despite the roll call of party luminaries who descended on Eastleigh to help with the canvassing, Maria Hutchings's much-touted "plain-speaking" looked, on the stump, more like unruliness. By the weekend, the Conservatives' central concern was no longer winning, but rather avoiding being beaten into third place by Ukip.

Now, however, all is uncertain once more. The furore over Lord Rennard, and Mr Clegg's involvement (or lack of it), cannot but overshadow the last three days of campaigning. And the furore over a senior Liberal Democrat behaving badly, and another apparently looking the other way, is particularly damaging so soon after the revelations of Mr Huhne's decade of deceit over his speeding fraud.

David Cameron will be rubbing his hands at the whiff of a chance he could steal Eastleigh and buy some time with his sceptical backbenchers. Meanwhile, the risk to the Liberal Democrats is sky-rocketing. Defeat would leave Mr Clegg's leadership hanging in the balance, dire forecasts of electoral meltdown in 2015 difficult to gainsay, and the prospects of another hung parliament rapidly receding. The outcome is far from certain. Two decades-worth of local campaigning may still win out. But the ballyhoo over Lord Rennard has made an already fraught task that much harder.