Vince Cable has just hosted a farewell lunch for the former staff of his constituency office. “I’ve got quite a lot of things on the go,” he says. One is a sequel to his book The Storm, which was about the crash of 2007-8: the followup is somewhat imaginatively titled After the Storm, and is being readied for publication in mid-September. “And I’m taking my dancing quite seriously,” he adds, which means an inevitable mention of Strictly Come Dancing. In December 2010, he appeared on the show’s Christmas special, doing an admirable foxtrot alongside such celebs as June “Dot Cotton” Brown, and Fern Britton. So would he be up for being a proper contestant? “I haven’t been asked, but I could be,” he says, with a hint of his characteristic modesty.

So he is in the market? “I’m in the market … but they make their own choices.”

As, of course, does the British electorate. Until May this year, Cable was secretary of state for business, innovation and skills. But then he, Nick Clegg, and the rest of the Liberal Democrats experienced the complete electoral meltdown that had been looking increasingly likely since they entered coalition with the Tories. Cable lost Twickenham to the Conservatives by more than 2,000 votes; indeed, just about all the Lib Dems’ big-hitters were also losers. By some grimly ironic twist, the man who had led them to this disaster held on to his constituency in Sheffield, but Nick Clegg has kept a low profile since his resignation as leader (he has not tweeted since 1 June, and did not respond when asked to contribute to this article).

While their senior people tumbled, the Lib Dems’ vote-share dropped from 23% to just below 8%, and the number of their MPs fell from 57 to eight. You could now fit their entire parliamentary group in to one of those vehicles favoured by people with upwards of three kids: a Toyota Estima would just about do it, as would a Mazda Bongo.

“I think it’s very serious,” says Cable. “I don’t think it’s terminal: these things never are. But it’s extremely difficult, on two levels. One is that the values and policies that we stood for, and argued for, are currently out of favour with the public. That’s a problem that affects not just us, but the Labour party, too. There’s a big issue there.”

A pause. “And simply in terms of numbers … well, we’ve lost over half our councillors. We’ve lost almost all our MPs and MEPs, and almost all the people in the Scottish Assembly. So, you know, the institutional level of decline is dramatic, and the problems of rebuilding that are very substantial … Rebuilding from a rather shattered base is not going to be easy.”

Vince Cable: ‘I don’t think it’s terminal. These things never are.’ Photograph: Peter Nicholls/Reuters/Corbis

Gareth Epps knows exactly what that means. A member of the Lib Dems since 1992, he was until recently the co-chair of the left-leaning pressure group the Social Liberal Forum. In May, he stood for the Lib Dems in the West Yorkshire constituency of Keighley, got 2.7% of the vote, and lost his deposit. Until 2011, he had a seat on Reading borough council: at their local peak, the Lib Dems had nine councillors, but they are now down to two.

When the tuition fees car-crash happened, Epps says his local party “instantly lost half our student members. We’d started to lose other members over the simple decision to go into coalition – though we’d have lost some if we’d gone into coalition with Labour as well. A similar thing happened with a wider band of helpers, deliverers, people who take numbers on polling day … the pool of people you could rely on at elections shrank.” In most places, he says: “You just had people who said, ‘Sorry – I’m not going to deliver leaflets any more because of the bedroom tax’, or what was happening to the NHS, or any number of those things. And the party was completely unprepared for that.”

One question demands to be asked of those Lib Dems who served with the Tories in government: bluntly put, were the five years the Lib Dems spent as their junior partners worth it?

“Absolutely,” says Lynne Featherstone, the former Lib Dem equalities minister who also has a book on the go (about her piloting of the legislation for same-sex marriage), after losing her north London seat to Labour. “I think we’ve suffered unduly, and unfairly, but you can’t go into politics and shout from the sidelines. We delivered 80 or 90% of our manifesto. I’m the author and originator and architect of same-sex marriage. It wasn’t in the coalition agreement, it wasn’t in any of the major manifestos – and that’s now the law.”

She then falls into a familiar litany of achievements: “Raising the tax threshold, the changes to pensions, the green investment bank, free school meals, shared parenting ... there are so many Liberal things that we were able to do because we were government ministers, that couldn’t have happened without us. Let alone stabilising the economy.”

But even if that’s true, the price has been massive.

“It’s too high!” she shouts. “It’s very, very high. But you cannot be frightened in politics. You really, really can’t. You go into politics to change the world for the better, and that’s what you have to do. This was a new experience for the United Kingdom, and because we do politics à la United Kingdom, and we had a coalition à la Scandinavia, there was … a bit of a mismatch.” She lets out a mirthless laugh.

A Mazda Bongo … big enough to fit all the Lib Dems’ eight MPs. Photograph: Alamy

And regrets? Cable, for one, has a few. “I personally felt that we would have been better, from day one, to have just dealt with coalition in a businesslike way, and just made it absolutely clear to the public that we didn’t particularly like the Tories, and never had, and we were very different – but we were doing this in the national interest, and we would do what we had to do, and when we disagreed, we would make that abundantly clear,” he tells me.

“The problem was that we had this slightly cloying thing at the beginning, which alienated a lot of traditional supporters and people on the left. Later on, towards the end, we looked as if we were searching for excuses to have an argument, which alienated a lot of Tory-inclined people. So there was an unevenness. I’m not personalising it here, but I never thought we collectively struck the right tone.”

Even if he won’t personalise it, I have a go. In September 2010, Nick Clegg led the Lib Dems’ into their first conference since the signing of the coalition agreement, and – to paraphrase an Observer article from the time – insisted that the coalition would only work if his own party accepted it was a full and willing participant that jointly “owns the government”.

“Yes, well that was disastrously wrong. And I always took a different view, and managed to get myself presented as a member of the awkward squad. Actually, in my department, we had perfectly good working relations with the Tories, but it was on a businesslike basis, not love and fresh air.”

As with many senior Lib Dems, Cable and Featherstone are at pains to deny that coalition was the sole reason for their party’s disaster. The reason thousands of people switched from the Lib Dems to the Tories, they say, was because of the English fear of a Labour-SNP alliance, which the Tories brazenly used to their advantage. “People said, ‘We think you’re doing a great job,’” says Cable. “But then you got this big ‘But’, almost in capital letters, and a spiel about the horror story of Labour and the SNP: ‘David Cameron wrote to me personally to say that unless I voted for him and his party we were going to get chaos.’”

For the party that some people still think of as the Liberals, Westminster representation in single figures is not a new experience (in 1957, it dropped to five seats; at the election of 1970, a mere six Liberal MPs were elected). But it must still hurt, particularly when people hark back to better times. When Charles Kennedy died in early June, for example, it was endlessly pointed out in the media that he had successfully shaped his party into a left-of-centre challenger to Labour, whose USPs were its scepticism about the direction of British foreign policy (witness its stance on the invasion of Iraq), and a very Liberal hostility to the intrusive, bossy state. Such was the reason why millions of people felt OK about voting Lib Dem, albeit as a tactical option to keep the Tories out, and why in 2005, they won 62 seats, the highest number recorded by a third party since 1929.

Tim Farron: ‘When we went into a coalition, it was a good thing for the country, but a bad thing for the party.’ Photograph: Frantzesco Kangaris

HG Wells once said that British Liberalism was “a system of hostilities and objections that somehow achieves at times an elusive common soul”. Kennedy pulled off that trick; during the brief spurt of so-called Cleggmania at the 2010 election, so did the leader now said by many to have all but destroyed his party. So what now?

While the Labour leadership election plumbs the depths of tedium, the Lib Dems have their own contest. Tim Farron, the perky MP for the Lake District seat of Westmorland and Lonsdale (who remained a backbencher throughout the coalition) is battling it out with the North Norfolk MP Norman Lamb, who served in the coalition first as a business minister and then in the Department of Health – where he successfully pushed for improved care for people with mental-health issues. Lamb also has the rare distinction of having remortgaged his house to pay for Tinchy Stryder’s first album. His son, Archie, is one half of Stryder’s management team, Takeover Entertainment. They also look after Dappy, formerly of N-Dubz, who recently tweeted an endorsement for Lamb senior; thanks to the family’s shared love of British rap, Lamb says his mother is “is the only 90-year-old in Britain with a poster of Lethal Bizzle in her kitchen.”

The result of the contest will be announced on 16 July, and Farron is the favourite, by some margin. Why on earth, I say, does Lamb, 57, want the job? “I understand why you ask me that,” he says, with a dry laugh. “We’ve been through a complete trauma. But I think, perversely perhaps, we live in a liberal age. People’s attitudes and instincts are increasingly liberal, particularly young people.” Even in their darkest hour, he says, the Lib Dems should think of themselves as “a dynamic startup with a potentially big market”.

What does he think went wrong? “Fundamentally, we lost trust. And once a party loses people’s trust, they don’t listen to you any longer. They switch off. Through those five years, we kept hoping that it was going to nudge back up again, and it never did. Whatever you said or did, and whatever the achievements … none of that counts for anything if people think they can’t trust you.” On that score, he mentions what he calls the “unfolding nightmare of tuition fees”.

Lamb – whose backers, besides Dappy, include Featherstone and former leaders Paddy Ashdown and Menzies Campbell – wants the Lib Dems to somehow turn themselves into an “intellectual powerhouse”, by grappling with issues that most timorous politicians tend to go nowhere near. “We should advocate radical reform of our antiquated drug laws,” he says. “We should be completely radical on the criminal justice system … [and] We should be very clear on the right to assisted dying.” He also wants to revive the ghost of William Beveridge, the Liberal who came up with the blueprint for the modern welfare state, and devise a fresh plan, better suited to now. His big thing, he says, is the idea of “people power against the overbearing state”.

As Farron – who is 45, and numbers ex-MPs such as Simon Hughes and the ex-minister Jo Swinson among his fans – sees it, in too many seats at this year’s election, the Lib Dems “didn’t get people in the gut; we were not seen as being relevant to more than a handful of people. To a degree, that’s because we did the right and noble thing when we went into a coalition. It was a good thing for the country, and a bad thing for the party. It doesn’t mean we did everything right, but we did the right thing.” On tuition fees, whereas some Lib Dems have sounded ambiguous on whether the mistake was breaking the famous pledge or making it, he’s clear: “Breaking it. The pledge was actually not that ambitious.”

As the leadership campaign has gone on, Farron has been regularly accused of taking less than Liberal positions on certain issues, thanks to his Christianity (in response, he has pointed out that Kennedy, a practising Catholic, spent seven years leading the Lib Dems, and “nobody looks back and thinks that was some kind of theocracy”). Nonetheless, thanks to his allegedly patchy Commons voting record, his support for equal marriage has been questioned, though he insists he is fully supportive of it. But what of another source of controversy? Not long after the 2005 election, Farron told the Salvation Army magazine that “abortion is wrong. Society has to climb down from the position that there is nothing morally objectionable about abortion before a certain time. If abortion is wrong, it is wrong at any time.”

Norman Lamb: the Lib Dems should think of themselves as ‘a dynamic startup with a potentially big market’. Photograph: Paul Ellis/AFP/Getty Images

Some people, I suggest, would say that wasn’t a Liberal position. “I totally disagree with you,” he says. “Because I also take the view that the law is about right as it is. I have never called for anything other than abortion to be safe and legal. But I also think it’s perfectly reasonable to express a view when you are asked, as to what one thinks about abortion as a thing. I’ve spoken to many people who’ve been through the experience, shall we say, and I use the phrase ‘a tragedy’. I don’t point the finger at anyone.”

Using the phrase “morally objectionable” does point the finger, though, doesn’t it?

“No it doesn’t. I don’t think it does at all. We as a society, from my perspective out of complete compassion, believe that abortion needs to be safe and legal ... The expression of a view is not something I go out of my way to do, but if I’m asked, I tell people what I think.”

In the face of the Lib Dems’ apparent disaster, Farron thinks these might actually be exciting times. “There’s a clear space in the market,” he enthuses. “The time since the election has demonstrated, more than ever, how important we are. The attack on human rights and internet freedoms, anti-extremism orders, the sell-off of housing association houses, £12bn out of welfare – these are all things where the Labour party will, at best, fence-sit, and we are going to have to be the only force that makes a noise about those things, and show who we are in a very clear way. There’s no point being depressed about what’s happened: it’s about being positive and inspired about what’s to come.”

Defeat has brought some consolations. Since the election, around 18,000 people have joined the Lib Dems, increasing the party’s membership by around a third (21,000 had joined Labour within a week of 7 May). On Twitter, the hashtag #libdemfightback is used to badge the party’s supposedly revived energy; one issue that comes up time and again is the Tories’ plans to scrap the Human Rights Act. “I think Liberalism is seen as being really valuable, under serious threat, but never more essential,” says Farron. “And if a whole bunch of people perform the same action at the same time, without anybody asking them, that definitely constitutes a movement. Our job now is to build on that and turn it into a bigger movement.”

Older Lib Dem heads may quite like the sound of that, but perhaps don’t seem quite so breathlessly enthusiastic about their party’s prospects. The Lib Dems’ predicament “could turn around quite quickly”, Cable tells me, before his optimism seems to slightly fail him, and what he says heads off in a slightly more fatalistic direction.

“I can’t currently put up a plausible scenario in which that would happen,” he says. “But it could, you know?”

• This article was amended on 14 July 2015 to clarify that Gareth Epps is no longer co-chair of the Social Liberal Forum.