Kennedy struggles to explain flagship policy

Charles Kennedy yesterday slipped up on one of the Liberal Democrats' flagship tax policies as he unveiled the party's manifesto.

Launching the 20-page document, titled The Real Alternative, he underlined the party's promise to introduce a 50p top income tax rate for the 1% of people earning more than £100,000 a year and to replace council tax with a "fairer" local income tax.

He also highlighted the party's commitments to scrap personal care charges for the elderly, axe tuition fees, and add £100 a month to the pensions of those over 75. He promised that the Lib Dems would fund 21,000 extra teachers and 10,000 more police officers.

Mr Kennedy claimed his party was "in tone with the instincts and rationale of the British people". He added: "It is a programme based on fairness and opportunity, dignity for older people, real opportunity for our children and a fair deal for families."

But he stumbled over details of the local income tax, allowing the Tories to brand the Lib Dems "a shambles". A senior Lib Dem judged Mr Kennedy's comments "irritatingly wrong".

The party's Treasury spokesman Vince Cable admitted there had been some confusion. Challenged on BBC2's The Daily Politics that Mr Kennedy did not know his own policies, Mr Cable said: "He does, but that did not come across."

The leader later admitted that he had erred on a "key issue". "Quite clearly, I did not convey it properly. It may be something to do with the fact I'm a bit short of sleep," he said. Yesterday was his first day on the campaign trail since the birth of his first child, Donald, earlier this week.

Heading towards New Forest East, one of the party's target seats, in his brilliant yellow battle bus, he added: "I could have put it a bit more crisply and clearly, as I have done a hundred times before. It was just a slip of the tongue. As simple as that."

The confusion arose because Mr Kennedy said the total sum raised under the new tax would be "no more than the total sum that is presently being raised by council tax, full stop".

Then he added: "But not less and we are not saying less."

In fact, it would be £2.4bn less. The gap would be subsidised by the 50% top tax rate.

Mr Kennedy said that switching local taxes would leave half of all households better off, a quarter unaffected and a quarter worse off.

But he struggled when pressed to define the threshold at which people would pay more, eventually suggesting, "If you take a double income couple of £20,000 each, that's what you are talking about - £40,000."

The party's projections show the loss would be more likely to kick in at a higher level: around £38,000 for a single earner and somewhere in the low £40,000s for a dual income household.

His error is particularly galling for the party because it has been at pains to cost all its policies thoroughly, publishing its spending figures in a separate 16-page document to prove it can be trusted to handle power responsibly.

But tax appears to be fast emerging as a key issue in the election, with both Labour and the Tories coming under attack this week over their tax and spending plans. That may reflect the fact that, with low unemployment and interest rates, other economic issues seem less important to voters.

Mr Kennedy stressed that the Lib Dems had opposed the government on issues from Iraq to student top-up fees, while the Conservatives "have either lined up with Labour or flip-flopped".

But the deputy prime minister, John Prescott, said middle income couples would be worse off under a local income tax. He said a couple with a combined income of £41,000 would lose more than £260 a year. The median household income in the UK is £22,900.

The Tory co-chairman, Liam Fox, described the Lib Dems as a "shambles", adding: "They do not even know the details of their own tax proposals."

Dr Fox was launching a bill board poster attacking Mr Kennedy's party for being "soft on crime" because of its proposals to end mandatory life sentences for murder.

But the Lib Dems regard such assaults as an indication that the other parties are rattled. The Tories have not run attack ads against them in previous general elections.

Television ratings offered the party more optimism. Their election broadcast on Wednesday attracted 13.2 million viewers across the five terrestrial channels, compared with 12.8 million for the Tories on Tuesday and 11.9 million for Labour on Monday.