Centralisation of the public services has led to a mistrust of government, Matthew Taylor has warned.

On the second day of the Liberal Democrat party conference, the party's Treasury spokesman called for local services to be run by local communities.

"The debate has moved on and Labour has not," he told delegates.

"They have drifted so far out of touch that they cannot understand why millions of decent public service employees are up in arms, and taxpayers' money is wasted because of stifling centralisation."

"These people aren't Scargills you know. Nurses and teachers, dinner ladies and firemen can't all be dismissed as 'wreckers'," he added.

However, he accused ministers of adopting Liberal Democrat policies, such as the independence of the Bank of England and increased investment in the NHS.

Taylor also called on the government to clarify their position on the European single currency.

"The five economic tests are so vague the chancellor can say they are met, or not met, any time he likes. One man's caprice is no way to settle this great national issue," he said.

However, he argued that Britain should campaign for EU reforms: more scrutiny of the European central bank, deregulation and reform of labour markets and an EU constitution to limit Brussels' powers.

Taylor, MP for Truro and St Austell, also attacked the Conservatives' focus on the "five evils".

"Poor schools and healthcare. Crime. Child poverty and old age insecurity. You know what they have in common? They were the five evils of the last Conservative government. And given the chance, they'd be the five evils of the next one," he said.