BY-ELECTION defeats are the price political parties pay for general election victories, so it would be unwise to begin writing Prime Minister Mr John Major's political obituary on the basis of the Conservatives' crushing defeat in Newbury and setbacks in local council elections on Thursday. Nonetheless, Newbury is hardly the sort of constituency the Conservatives can afford to start losing. The party had held the seat for 70 years, and won it by an 18.6 percentage point margin in the general election of April last year. Although another election is years away, the ''bloody nose'' that voters gave Mr Major indicate he would be well advised to reflect on what is going wrong. The defeat followed the Government's humiliating retreat on Wednesday over an opposition amendment to the bill to ratify the Maastricht Treaty on European unity, the latest in a series of embarrassments for Mr Major. It would have been difficult for any politician to fill the shoes of Lady Thatcher as Prime Minister, but the number of missteps Mr Major has taken suggest ineptitude rather than mere bad luck. Her comments on polling day about the Government living in cloud cuckoo land over Maastricht will be seen as another blow to Mr Major and his shaky leadership. The Government's monetary and economic policies often appear directionless, despite its success in bringing inflation down to two per cent from 11 per cent, while on foreign policy, Mr Major seems to have hitched himself firmly to the European Community bandwagon, just when that appears to be going nowhere in particular. Yesterday's defeat was a clear signal from the electorate that it is not to happy with either Mr Major or his policies. Unless quick and drastic action is taken, Mr Major may not survive to the next general election.