It was a vote on replacing FPTP with Alternative-Vote (not STV). It was a Referendum which got zero support in Parliament other than the Lib-dems in the Lib-dem Tory coalition. The Referendum was mandated by the Lib-dems as a condition of coalition.
This lack of support feeds into your ending point. The current system benefits the two-party system (arguably now one-party) and by opening it up, it reduces their power.
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