In politics, as sometimes in life, there can be nothing more disappointing than a dream that comes true. It was the decades-long yearning of Lib Dems that Britain’s traditional two-horse race would give way to a pluralistic, multi-party politics. The grip on power of the big two would be broken and supplanted by a rainbow of choices. Now that Lib Dem wish appears to be close to fulfilment. The old blue-red duopoly is fragmenting under the multiple and interwoven pressures of austerity, insecurity, anger with traditional politics and questions of identity. The combined polling share of Labour and the Tories has rarely been so low. The Nationalists are on a roll in Scotland. The Greens are enjoying a surge. Ukip has just bagged its second byelection victory. Multi-party politics has arrived with a bang. And who is that lying on the floor? Why, it is the Lib Dems. We’ve got the multi-party politics they dreamt of, but it has come in a form that is nightmarish for them.

The past masters of the sensational byelection upset have just suffered the worst ever byelection result for a major party. If “major party” is still an appropriate description for the Lib Dems when they now languish in fifth place in some national polls. They achieved less than 1% of the vote in Rochester and Strood and suffered their 11th lost deposit of this parliament.

As Stephen Tall, the co-editor of Liberal Democrat Voice, wittily puts it: “At £500 a pop it’s one other way the Lib Dems are helping to slow down the spiralling national debt.”

They were relieved that they just squeaked ahead of a dominatrix who was standing as an independent and competing with them for the masochist vote. The number of crosses in the Lib Dem box came to a grand total of just 349. Nick Clegg could spend this weekend penning a handwritten note of thanks to each of his voters in Rochester and Strood and he would still have plenty of time to play with his children.

This does not mean that there is now no purpose for the Lib Dems. One of their continuing roles is to offer comfort to Labour and the Tories that, however badly they are both struggling, someone else is doing even worse. Whatever they say about winning the seat back at the general election, it was a bad night for the Conservatives. Back in October, Tories spoke about this contest with relish. At the Conservative conference in Birmingham, I heard very senior figures at the heart of Conservative campaign strategy express bullish confidence that they would beat Ukip in Kent and by doing so burst the purple balloon. When Mark Reckless revealed that he was jumping into bed with the Farageistes, David Cameron declared, in one of his descents into the demotic, that he would “kick his fat arse” out of Westminster. He also promised to “throw the kitchen sink” at the contest and duly did, hurling himself at the fray five times, an unusual amount of campaigning by a prime minister for a byelection. Yet they still lost a contest they had constantly said they could win and they are reduced to finding solace in being defeated by a narrower margin than the final polls indicated.

What ought to have been the most agonising night for the Tories turned out to be an even more excruciating one for Labour. The reason why is very instructive about the panic spreading through the party that Ukip is turning into as big a menace to Labour as it is to the Tories.

Was Emily Thornberry foolish to tweet a picture of a house in Strood draped with St George’s flags and a white van parked outside? Obviously, it didn’t show the judgment that you might hope to find in someone with ambitions to be attorney general. She dug a deeper pit for herself with her initial explanation that she had found the sight “remarkable”. But most revealing of all about the state of the Labour party was the manner in which it reacted. Some of her colleagues swiftly joined, and thus validated, the attacks on her by agreeing with critics from the right that the tweet was an expression of smug metropolitan snootiness towards the working class. She was then sacked by Ed Miliband in an act of late-night panic.

A leader in a strong position would have ridden out a Twitter storm; it tells us just how embattled Mr Miliband feels that he felt forced to sacrifice one of his earliest supporters. His subsequent interviews about blokes in white vans, in which he solemnly spoke of his “respect” for them as if they were D-Day veterans, was also a display of vulnerability. It showed us how much he fears the charge that he is out of touch.

The only good thing for Labour about this surreal episode was that it managed to distract attention from how badly the party performed in Rochester and Strood. On slightly different boundaries, this seat was held by Labour for 13 years until 2010. Its candidate in the byelection was, by pretty much common consent, the most impressive. A Labour party powering back to office would have won here. At the very least, it would have mounted a potent challenge, not finished a poor third. Byelections are usually a highly unreliable predictor of what will happen at a general election, but there is a troubling dynamic for Labour about this one if it is at all indicative of what could happen next May. They had assumed that Ukip, by splitting the vote on the right, would gift some Labour/Tory marginals to Mr Miliband’s party. That’s still very possible in some places, but see what happened in Kent for why Labour is now getting so worried. Some previous Labour supporters were seduced by Ukip while others hated Ukip so much that they switched to the Tories as the traditional party best placed to stop the Farageistes. That double-whammy is also probably part of the explanation for the evaporation of Lib Dem support.

Nigel Farage has long complained that the media-political complex has not given him and his party the attention it deserves. Well, he can’t say that now. He revels in wall-to-wall media coverage. He has both Tory and Labour MPs deeply spooked. He has their strategists desperately working to try to find a vaccine for Faragebola and so far failing. Some of the most distinguished of our psephologists declare that the Ukip effect is so disruptive that they have no idea what will happen at the general election.

Though Ukip complains that it is wrong to see them as just a protest party, it has actually been a great advantage to them in this age of rage. Sometimes what sounds like populist leftism comes out of the mouth of a leader who once declared himself to be the greatest fan of Margaret Thatcher. The general of this self-styled “people’s army” is a former broker in the City. His turbo-Thatcherite, multimillionaire backers include Stuart Wheeler, a man who made his fortune from spread betting and lives in a Jacobean castle. Yet the claim that Ukip is the champion of the ordinary man is rarely challenged and constantly indulged by those endless TV images of Nigel supping at pints.

You sometimes can’t help being awed by their sheer cheek. In his victory speech, Mark Reckless claimed to be the modern-day equivalent of the Chartists and the suffragettes.

“The radical tradition, which has stood and spoken for the working class, has found a new home in Ukip,” declared this privately educated barrister and banker.

The party’s myriad contradictions, splits and flip-flops have been treated as if they do not matter. Ukip has been for massive spending increases and for massive spending cuts; it has been for ultra-low tax for the rich and for higher taxes on luxury goods until it wasn’t again; it has been for privatisation of the NHS and against privatisation of the NHS. During the byelection campaign, the Ukip position on whether they would forcibly repatriate migrants from the EU changed in the space of 24 hours. Immigration and withdrawal from the EU are supposed to be their specialist subjects and they can’t hold to a consistent line even about that.

This has often escaped the fierce scrutiny that is applied to the traditional parties because Ukip was not seen as a party of potential power.

Well, now it could be. No one from the other parties laughs when Mr Farage conjectures that he could have 20 MPs in the next parliament and hold the balance of power. He won’t be prime minister, but there are scenarios in which he could get to choose who is prime minister. With that potential power ought to come the responsibility to explain in detail what he might do with it.

The traditional parties and much of the media are still struggling with how to treat Ukip. Here’s an idea. Subject them to the robust interrogation of policies and postures that is applied to every other party that aspires to decide how we are governed. Fewer pictures of Nigel down the pub, more questions about what he would do with power. Ukip wants to be taken seriously. So it should be. But as the Lib Dems have painfully discovered, ultimately there may be nothing more disappointing for Ukip than having its dream come true.