The Lib Dems are the big losers in the coalition

I wish the new Government well. There are some good policies in the Coalition agreement, some on political reform like PR for the Lords - though not the absurd 55% requirement in a vote of confidence - and on education (if Michael Gove uses the right levers). But one thing is clear: despite all the rantings and ravings of the Tory right, it is the Liberal Democrats that have been the clear losers. Cameron has played a blinder by convincing the world and the Lib Dems that he has had to make huge sacrifices to win this agreement.

First, the Lib Dems' power is limited. Nick Clegg as Deputy PM has settled for a desk in the Cabinet Office, but no real job. David Laws has a poisoned chalice implementing the cuts as chief secretary. Vince Cable has been sidelined on banking reform in the business department without the influence of Lord Mandelson. Danny Alexander has Scotland, a non-department. Only Chris Huhne has some influence at energy, but on nuclear power is stymied by his own party's opposition. The Lib Dem junior ministers are unlikely to have much of a role to play in each department, though they may prevent the wilder excesses of right-wing Tory ministers. Bizarrely, the Lib Dems accepted all this in preference to insisting on even one major office of state or spending department like education or health.

Second, on policy, as John Rentoul has pointed out, Clegg has been royally outmanoeuvred by Cameron. The pupil premium was Tory policy anyway: Michael Gove will be pleased to have some money for it. The £10,000 tax threshold will mean a middle class tax cut paid for by public sector savings, not a more progressive tax system (though economically a better approach, this is hardly what the Lib Dems wanted). The fixed term parliament suits Cameron as it ties in the Lib Dems. On the abstention votes on tuition fees, marriage tax or nuclear power, the Tories will win anyway with a 307-286 majority. And whether or not an AV referendum succeeds, the Tories will still be able to push through their gerrymander of English constituencies to make more of them Conservative. Cameron will be delighted to neutralise his right-wing, ditch crazy policies like the inheritance tax cut and avoid a distracting row in Europe.

Third, in return for the happy couple pix and a host of ministerial cars, they have destroyed their credibility with many of their own voters, particularly in areas like the South West where they were seen as a repository for anti-Tory votes and in Northern cities where their council base had already started to crumble. Many Lib Dem members are already joining Labour.

None of this is to suggest that the Lib Dems weren't right to enter a coalition deal. Indeed, they deserve some praise for being prepared to sacrifice their party for the sake of stable government. But anyone who thinks that they are the winners from the whole deal has been spending far too much time watching 24 hour news and reading the papers.

This post has been picked up by Iain Dale.