It is true that we have a notional third party who are no use, and their prominence in the coalition actually seems to have helped precipitate the current nightmare. And the emergence of UKIP as a force was also a big factor in the way the country has been polarized and rhetoric has become aggressive and simplistic. So while I appreciate what you're saying, a third party alone might not help.
The Lib Dems had the problem that the right wing press hung all the bad stuff of the Coalition on them, absolving the Tories. Plus the press hammered the thing about the students ignoring that compromise was required. I still think the coalition was one of the better Govts we've had.