Campbell puts tax reform at heart of vision for a Lib Dem Britain

Sir Menzies Campbell declared that tackling global warming and economic inequality were at the heart of his leadership as he mapped out the future direction of Liberal Democrat thinking ahead of his first annual conference as party leader.

He published a wide-ranging policy document pledging to create a "free, fair and green" Britain, the key message that the Liberal Democrat high command wants to put before the voters during its showcase in Brighton this month.

The document, outlining the principles behind Sir Menzies' thinking, reiterated his commitment to a radical shift towards environmental taxation and redistribution of wealth.

Sir Menzies said that the framework would lay the foundations for policy in the run-up to the next general election. He faces his first real test of authority this month when rank and file delegates will be asked to approve plans to drop the party's "totemic" commitment to a 50 per cent top rate of tax.

Sir Menzies wants to replace the plan with tax cuts for low and middle-income families, funded by a sharp increase in tax on aircraft pollution and wealth taxes on the super-rich.

But he faces opposition from traditionalists in the party who would like to retain a policy that has become symbolic of Liberal Democrat commitment to redistribution.

Sir Menzies laid out the dividing lines with Labour, attacking the Chancellor Gordon Brown for taking a "centralist and paternalistic" approach to tackling poverty at home declaring: "We are ready to lead where Labour and the Conservatives have so clearly failed."

He announced the creation of a party working group to develop policies to tackle poverty and income inequality. Sir Menzies said: "Over the next year Baroness Liz Barker will be chairing a group looking to come up with practical proposals for creating an opportunity society.

We must break the cycle of poor children becoming poor adults. Our proposals must focus on simplifying the benefit system and be of substance rather than symbolism."

He said that the party's tax reforms were "at the very heart of our programme for fairness. But we want to go further, we want to make our society fairer by tackling the inequalities that exist within it."

He added: "I want everybody to have the opportunity to fulfil their ambitions. Poverty and lack of opportunity restrict freedom. Yet despite record growth and record City bonuses under this Labour Government, wealth inequality has increased, there is low social mobility and there are still pockets of extreme poverty and deprivation."