For liberals, there are good reasons to be cheerful. For the first time in more than 60 years, a new year breaks with the proud and progressive Liberal Democrat successors to William Beveridge and Jo Grimond in the government of the United Kingdom. Although the electorate (and, to a lesser extent, senior people in the Labour Party) did not give us the chance to form a coalition of the centre left, which many of us had hoped for, we rose to last year's challenge and did not run away either from practising what we preach about pluralist politics or from taking responsibility at one of the most challenging economic and political times for this country since the Second World War.

We start the year not just in government but ensuring every week that progressive policy is agreed upon and implemented. Not every policy that we would wish to implement - nor for which we have fought - can be delivered. Not getting your own way on everything is the inevitable consequence of coalition.

Opportunity knocks

There are battles to fight and hard concessions to make - on areas such as schools, immigration caps and, above all, tax and spend. These issues can lead to intellectual and political struggles of conscience. But this is the hard reality of power, not the easier world of opposition. And even when we are not able to deliver the policies on which we campaigned, Liberal Democrats are perpetually striving to make new laws as progressive as possible.

The most recent example is higher education. The proposal put forward by the coalition government is a huge improvement on the recommendations made in Lord Browne's review, commissioned by Labour with support from the Conservatives. By our introducing a system in which both the total amount and the monthly contribution paid are entirely dependent on the level of earnings after graduation, university remains affordable. This is why, despite not being a supporter of tuition fees, I am happy to take a role in working to broaden access. Labour's reaction to a scheme that, in terms of repayment, is almost the same as the graduate tax it says it now supports is hypocritical and demonstrates why the responsibility of being the constructive party of progressive politics in Britain has moved from Labour to us.

In other areas, there are still huge opportunities to implement a liberal agenda in every year of this parliament. The opportunity will come this year to win the referendum for a fairer parliamentary voting system - a huge and important prize not delivered by Labour during its 13 years in power, despite manifesto pledges, and now resiled from by many Labour MPs who were elected on this very commitment only months ago. There is the referendum in March on further powers for devolved government in Wales, as well as the significant transfer of powers to local government in England contained in the recently published Localism Bill. Above all, there are the plans - never delivered by a Labour or Conservative administration in the past 100 years - for a predominantly elected second chamber of parliament. Liberals are delivering urgently on a progressive agenda where Labour has consistently failed.

Economic and social liberalism remains as important as constitutional and political reform. I believe in reversing the gap between the rich and the poor: economic fairness should not just be a mantra or an election slogan. In my constituency of "two cities" - which has a greater percentage of council property than any other in England and some of the most expensive riverside homes - restoring the earnings link between state pensions and average earnings matters (a link broken by Margaret Thatcher and not restored by Messrs Major, Blair or Brown). Taking people earning less than £10,000 a year out of tax altogether matters, as does ensuring that richer people pay higher capital gains tax. All three are now government policy. None would have happened without progressive Liberals in this government.

Coming of age

In education and health, there are undoubtedly changes proposed or under way that do not form part of a traditional Liberal Democratic prospectus but, as the chair of governors at an outstanding inner-city primary school with a new nursery class, I know the importance of investing in children under five and between five and 11 and we are doing that. I know, too, the importance of investing in further education and non-university training and apprenticeships and we are doing that. And as a civil liberties lawyer, I know the importance of abolishing identity cards, reducing detention without trial and having an independent inquiry into allegations of torture.

The huge Budget deficit means that we cannot do all that we would wish. But budget reductions nationally or locally are not ideological: they are a response to the legacy created by the international economic crisis, the greed of the banks and the decisions of the last government. So, ahead of the Oldham East and Saddleworth by-election and two referendums and elections in the spring, liberals and Liberal Democrats must never waiver in our commitment to a fairer and more liberal Britain - something not delivered by the Labour and Conservative governments of my lifetime.

It will be a five-year job. And we will be able to go to the next election proud of what we have achieved. The alternative to coalition was a single-party Conservative government. I have no doubt about which I prefer. And no progressive British voter should be in any doubt about which is preferable for Britain. This is the coming of age for Liberal Democrats. The coming of age has its challenges - but we will deliver.

Simon Hughes is deputy leader of the Liberal Democrat Party and MP for Bermondsey and Old Southwark