The Liberal Democrat leadership will be feeling pretty pleased with itself this week. A formal coalition with the Tories, which includes five cabinet posts and a commitment to a referendum on voting reform, appears, on the face of it, a decent deal.

However, on managing the budget deficit, Trident and immigration, three major Lib Dem policy planks during the election campaign, Nick Clegg has given the Tories a pass, whilst an open letter from Liverpool Lib Dem leader Warren Bradley articulated the thoughts of many grass roots activists when he basically stated that Nick had ‘sold out’.

The whiff of power, access to the red ministerial boxes and the opportunity to play a role in government decisions has been enough to seduce Clegg and his parliamentary colleagues, but it is hard to see how this brokered alliance can last beyond eighteen months – whatever ‘contracts’ have been signed.

The Lib Dem leadership may argue that, without a genuine offer from Labour, they had no other choice. This, however, is not the case. Their other option, and a better one in the longer term in my view, would have been for them to establish a much looser agreement with the Tories, allowing them to get through a Queen’s Speech and first budget, and then dealing with a minority Conservative government on a policy by policy basis.

Our new Prime Minister David Cameron has been accused by a fair number from his own ranks of giving too much away in the coalition deal, which has been described by some as the ConDem alliance! On the contrary, the deal enables him to accelerate his modernisation of the Tory party, cementing its position as a centre ground, consensus political organisation, and marginalising his right wing rump even further. Although the new partnership with Clegg may fall apart in the medium term, it is hard to imagine longer term damage to his party, however this coalition performs. The Conservatives were the clear winners of the election, comfortably winning the largest number of seats, and were duty bound to form a government. They can claim that they did the deal in the ‘national interest’.

Ironically, Labour have come out of all this in better shape than they had dared hope for six weeks ago. They were not wiped out, have a healthy number of seats in the new parliament, and have got rid of Gordon Brown without an ounce of bloodletting. They can claim that they are now the only genuine opposition party in the country, and they have an impressive line up of leadership candidates to choose from; David Milliband, Ed Milliband, Ed Balls and, perhaps, Andy Burnham. Personally, I would like to see Yvette Cooper throw her hat in the ring, but doubt it will happen.

Putting together a rainbow alliance of ‘progressive’ parties would have been a disaster for Labour. They had lost any legitimate right to govern, and the Brown government looked tired, out of ideas, and frankly, had run out of people too. Under a new leader, they can renew their offer; have great fun in the commons chamber baiting the new unholy alliance, knowing that they have a genuine chance of being back in office at the next General Election. They were expecting a long period in the wilderness. Nick Clegg may well have saved them from that.