Sean O'Grady: The leader's team sighted an open goal but hit the crossbar

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"Liberal Democrats celebrate gains as Labour suffers severe setback" is the title of the "analysis" e-mailed to me at 6.20am yesterday by the party's chief executive and elections guru Lord (Chris) Rennard. That may have been taking "political activism" too far, but it was a characteristically clever piece of spin; Labour has indeed suffered a severe setback but there is no balancing adjective to describe the Liberal Democrats' gains.

"Liberal Democrats celebrate gains as Labour suffers severe setback" is the title of the "analysis" e-mailed to me at 6.20am yesterday by the party's chief executive and elections guru Lord (Chris) Rennard. That may have been taking "political activism" too far, but it was a characteristically clever piece of spin; Labour has indeed suffered a severe setback but there is no balancing adjective to describe the Liberal Democrats' gains.

The word that is missing is "modest". Of course, gains of council seats in three figures are pleasing. The projected Lib Dem national vote share too looks quite respectable - 29 per cent, the same as the party scored last year and up on the previous two years by a couple of points. The fact that almost one in three voters is prepared to back the party, albeit in the special circumstances of the local elections, is an achievement. Local strength can convert into parliamentary success, although it is a haphazard, inconsistent and glacially slow process. One day, the turnaround in a former Labour stronghold such as Newcastle may result in a Liberal Democrat MP in the city. Labour, like the Tories before them, disdain local politics at their peril.

All that is for the distant future. The immediate prospect is a general election in which the Liberal Democrats are challenged in their own strongholds in the South.

The plain and deeply uncomfortable fact for Cowley Street is that, while the Lib Dems have been holding their own nationally and making gains in the North, whichever way you cut it, a Conservative projected vote share of 38 per cent, their best for years, represents a swing from the Liberal Democrats to the Tories. That means trouble for Liberal Democrat incumbent MPs and wannabe MPs. The low-hanging fruits that once looked ready to drop into their laps under the ineffective Tory leadership of Iain Duncan Smith are moving out of reach.

And while the Lib Dems can take some comfort from the way the intervention of the UKIP will likely damage the Conservatives in the European elections, the UKIP is capable of taking votes from the Lib Dems as well, as that party uses populism and exploits the appeal of a protest vote, ironically, in just the way the Lib Dems once did. Europe is not that popular a cause in Devon, Cornwall and Somerset.

The abiding emotion Liberal Democrats should feel is not disappointment about how badly they and their leader have done, for they have not. Charles Kennedy's health seems OK and the gains were real. It is rather a sense of a wasted opportunity. Here is a country with an unpopular Labour government and with a Tory Party that, while not vilified, is far from distrusted on the issue of public services.

An election is fought under a system of proportional representation. It is, in other words, an open goal for the Liberal Democrats and they've hit the crossbar.

When Lord Rennard and his chums recover from their celebrations they should ask themselves whether it was really sensible to make the European elections a "referendum" on Tony Blair's policy in Iraq. They will need to wonder why the historic breakthrough of at least a second position in the London mayoral contest was squandered and why Simon Hughes' campaign never took off.

Next stop for Mr Kennedy's caravan is the Leicester South by-election, a seat that, despite looking unpromising on paper, they could certainly win. But they will need to have some more inspired campaigning if they want to repeat the famous victory they enjoyed in Brent East in London.

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