The Liberal Democrat Conference: Bruce taxes the brain on his debut: Cannabis vote and confusing tax presentation make it a difficult day for Ashdown

THE Liberal Democrats threw their tax plans into confusion yesterday by comprehensively recasting detailed proposals finalised only a month ago.

This, coupled with the unexpected vote for the decriminalisation of cannabis, compounded a difficult day for Paddy Ashdown. The uncertain presentation on tax by Malcolm Bruce, his new Treasury spokesman, came as the party leader failed to keep the lid on a vigorous debate over the party's future relationship with Labour.

In a clear effort to present a distinctive stance on economic policy while seeking to dispel the party's high-tax image, Mr Bruce abruptly sliced 10p off the planned maximum income tax rate of 60p. At the same time he proposed diverting revenue from planned anti-pollution taxes to help fund a new 10 per cent band for the lowest paid. Such a move could bring significant benefits to up to 6 million people - but could cost at least pounds 17bn a year. And the proposals leave the critical question of tax rates for middle-income groups yet to be resolved. Mr Bruce said the party was still committed 'in principle' to lifting the earnings ceiling on employee National Insurance contributions.

Mr Bruce emphasised that no other party was focusing on the fact that the poorest-paid people had been hit disproportionately hard by Tory tax increases. The net effect, none the less, was of a policy in confusion.

He effectively rewrote part of a policy document on the environment, released a few days ago, which said consumers would be compensated for an energy/carbon tax, urban road pricing and other environmentally friendly measures by a cut in VAT on household fuel to 5 per cent.

Revenue from the carbon tax would be 'reinjected into the economy' via subsidies for home insulation, better pensions and cold-weather payments, compensation for rural residents with little or no public transport and a reduction in employers' National Insurance. But in a budget presentation to the conference yesterday, Mr Bruce suggested some of the proceeds could 'help us cut the tax levels of the lowest-income earners - perhaps to as low as 10 per cent'.

Mr Bruce suggested some middle-income earners might pay less tax, but also conceded that some were likely to pay more. He insisted they would be prepared to do so to safeguard health and schools 'they cannot afford to pay for privately'.

On the party's relationship with Labour, more Liberal Democrat MPs said they could not contemplate a deal in a hung Parliament which would keep the Tories in power. Alan Beith, the deputy leader, dismissed 'frenzied speculation' about pacts, but said 'while it was almost impossible to imagine anyone . . . wanting to preserve John Major's government', a lot could happen in two years. The wisest course was to continue putting forward independent policies.

Jack Straw, Labour's environment spokesman, appeared yesterday to flout the less confrontational stance towards the Liberal Democrats by the Labour high command, when he said on BBC Radio's Today programme that the Liberal Democrats were 'the scavengers of British politics'.

(Photograph omitted)