A Fair Electoral System?

Not if this is correct. The BBC have a page where you can input vote proportions and it will estimate how many seats each would win with that proportion of the vote.

If the three main parties had an equal share of 90% of the vote, with the remainder going to "other", this is what would happen (click on it to enlarge):



I kid you not. Labour would still win an overall majority. And the LibDems would still be a pretty puny force. If you don't believe this screenshot is genuine, go and check it out for yourself, by clicking here.