Amid growing anger at record increases in bills, the Liberal Democrats yesterday voted to scrap council tax.

The party's local government spokesman Ed Davey told the Brighton conference that the tax is working against the poor and the elderly. He said council tax, which has risen by 70 per cent since Labour came to power, is unfair and should be replaced with local income tax.

Delegates also approved plans to abolish the Department of Trade and Industry, cut business regulation and consider privatising the Royal Mail. Vincent Cable, the trade and industry spokesman, called for a cultural change in the party to embrace liberal economics.

Education spokesman Phil Willis called on Labour MPs to rebel against plans to impose university top-up fees, reminding them of a 2001 manifesto pledge not to make higher education students pay for their tuition.

Elsewhere, responding to attacks from the government, the Conservatives and the Sun, Charles Kennedy said his party was now being taken seriously.

"We are just going to have to be robust about those personal, as well as political, criticisms," he said.

"I think that at the end of the day, people form their own conclusions on a whole mass of material put in front of them, and if you look at the polls we are in a very healthy position as a party."

And writing in the Guardian today, Kennedy says he is looking forward to "savouring" his party's Brent East victory.

He argues that the by-election shows that the "handy jargon" of the left-right political spectrum is now increasingly flawed.

"I believe that Brent was a swipe at some sacred cows of political thinking," he says.