Davey served as a Liberal Democrat spokesperson to Charles Kennedy, Menzies Campbell and Nick Clegg from 2005 to 2010, in various portfolios including education and skills, trade and industry, and foreign and Commonwealth affairs.

[5] Davey focused on increasing competition in the energy market by removing barriers to entry for smaller companies, and streamlining the customer switching process.

[14] He was closely involved in the development of Liberal Democrat policies such as an additional penny on income tax to fund education, and central bank independence, for the 1992 general election.

[26] In 1998, he was the primary sponsor of an early day motion supporting the repeal of the Greenwich judgment, which prevents local authorities from giving their own residents priority access to school places.

[25] In 2006, Davey was one of eight Liberal Democrat MPs, including Jeremy Browne and Mark Oaten, who opposed a total ban on smoking in clubs and pubs.

They suggested that councils could take in tax the difference between the land owner's asking price and the highest bidder's offer, claiming this would stimulate development and the revenue then used to lower other taxation.

Following Nick Clegg's election as Leader of the Liberal Democrats, Davey was awarded the Foreign Affairs brief, and continued to retain his chairmanship of the party's Campaigns and Communications Committee.

[45] Following the Conservative–Liberal Democrat coalition agreement, after the 2010 general election, Davey was appointed Parliamentary Under Secretary of State in the Department for Business, Innovation and Skills[46][47] with responsibility for Employment Relations, Consumer and Postal Affairs.

These reforms included cuts to red tape and easing dismissal laws, and were accompanied by reviews from the Institute of Economic Affairs into compensation payments and the TUPE.

[62][63][64][65] As Minister for Postal Affairs, Davey did not investigate the details of the Horizon Post Office scandal that had led to the wrongful prosecution of hundreds of sub-postmasters.

On the right, Conservatives Nigel Lawson and Peter Lilley were critical of Davey's environmental stances,[97][98] and he was lampooned by The Telegraph sketch writer Michael Deacon.

[101] Luxembourgish MEP and environmentalist Claude Turmes alleged in his 2017 book Energy Transformation that Davey's Green Growth Group was actually a front for British nuclear interests.

[75] Conversely, Davey's promotion to the role of Energy Secretary was hailed by The Economist, which viewed him favourably as a "pragmatic" and "free market liberal".

However, he ruled out standing over family concerns, but called on the Liberal Democrats to be "the party of reform" and "super-ambitious – just like radical centrists in Canada, France and the Netherlands".

[120][121] Following Jo Swinson's resignation as a result of losing her seat in the 2019 general election, Davey became interim co-leader alongside the party president (at first Baroness Brinton, and then Mark Pack).

[127][128] Alongside Clegg and many of the Liberal Democrats who served in the governing Conservative-Lib Dem coalition of 2010–2015, Davey is associated with the party's right-wing Orange Booker branch.

In his victory speech, Davey said that the Liberal Democrats must "wake up and smell the coffee" and "start listening" to ordinary people and those who "don't believe we share their values".

It’s clear that in many seats across the country, the best way to beat the Conservatives is to vote for the Liberal Democrats.Davey led his party in the 2024 general election, and was noted, with praise and criticism, for his campaign stunts.

[133] When visiting Windermere, Davey fell off his paddleboard, whilst campaigning to highlight the political issue of sewage discharge in the United Kingdom.

Responding to Keir Starmer and Rachel Reeves' first budget in October 2024, Davey described the government's plans on social care as “a good start” but inadequate.

"[147] He has said that he believes "in the free market and in competition",[148] and during a parliamentary public bill committee debate in November 2010 argued in defence of privatisation, deregulation, and the private sector against Labour MP Gregg McClymont.

He has argued in favour of both nuclear power and fracking as potential energy sources,[164][165] and natural gases as transitional fuels,[166] though he has warned that there should not be an over-reliance on them.

"[169] Davey does not support the United Kingdom rejoining the European Union in the short term, in 2020 stating that the idea that people would want to consider re-joining the EU in two or three years' time as "being for the birds".

[176][177][178] Davey criticised Boris Johnson after the 2021 North Shropshire by-election where a Lib Dem candidate, Helen Morgan overturned a Conservative majority of nearly 23,000 to win the seat.

Millions of people are fed up with Boris Johnson and his failure to provide leadership throughout the pandemic and last night the voters of North Shropshire spoke for all of them.

[180] Since the 2000s, Davey has been vocal on the issue of detention without trial, in particular Guantanamo and Bagram, which he believed required transparency and formal investigation of torture allegations.

[190][159] In November 2023, Davey expressed support for a ceasefire in the Gaza Strip following the Israel–Hamas war, saying that "it is increasingly clear that a military solution to eliminate Hamas is not possible.

With a devastating humanitarian catastrophe in Gaza, an ongoing hostage situation, and growing risk of regional escalation, we must urgently demand a different approach.

[194] In January 2016 Davey was appointed as a part-time consultant to MHP Communications, the public relations and lobbying firm representing EDF Energy.

[196][197] Davey's appointment as Global Partner and non-Executive director of private equity investor Nord Engine Capital was announced in February 2016.