'Tarnished for good', Kennedy says of Blair

Charles Kennedy made a clarion call to Liberal Democrats yesterday to build on their by-election victory in Brent East and go forward to "fight for a renewed, improved and united Britain".

Mr Kennedy, in a confident speech to a packed conference hall, urged the party to seize "an unprecedented opportunity" to gain seats from both the Conservatives and the Labour Party. The Liberal Democrat leader launched a two-pronged attack on both the Tories and Labour and warned them: "We are coming after you both."

In a speech which tapped into the party's euphoria over rising poll ratings, Mr Kennedy claimed his party was "overtaking the Conservatives" and was now "the only credible challenge to the Government".

He warned Labour that its strongholds were vulnerable to Liberal Democrat incursions. "Labour had better watch out in places like Newcastle, Huddersfield and Sheffield," he said. "And the Tories had better watch out everywhere."

In a speech which attacked both Iain Duncan Smith and Tony Blair, he claimed "time is running out for our opponents". Mr Kennedy said he wanted to take advantage of the "disarray" of Labour and the Tories to make electoral gains at the expense of both. "Be in no doubt, we are overtaking the Conservatives. Be in no doubt - we are the only credible challenge to the Government," he said.

In a sign of a breakdown of relations between the Liberal Democrats and Labour, he said Tony Blair's time as Prime Minister was limited and that people should "think of Tony as a future former prime minister". He criticised Mr Blair for acting in a presidential style, and said that although he began as Prime Minister with grand ideals he was "tarnished, tarnished for good".

The Hutton inquiry, he said, had already proved "a devastating indictment" of Labour in power. "The Government has lost its way. It's tired and fractious, and trust in the Prime Minister sinks by the day."

The Liberal Democrat leader also indicated that he wants to move the party into classic Liberal territory and away from his own SDP roots. His speech was peppered with the word "liberal" and he highlighted the liberal ideals of personal freedom, slimmed-down government and tolerance. "Britain is steadily becoming a more liberal country," he said. "Social attitudes as a country are changing and changing for the better. Acceptance of the right to be gay has increased, and a good thing too in a liberal society. Racial prejudice is alas still with us but it's diminishing - a good thing too in a liberal society. There's less discrimination against women. A good thing too in a liberal society."

He said voters wanted a different approach to politics and "a more liberal and modern political attitude". He acknowledged that the party had been criticised for opposing the war on Iraq but said it was "liberal principle" that led his MPs to vote against it.

He said the Liberal Democrats wanted "less government and less interference" in people's lives. "We favour more choice and a better chance for people. Social liberalism and freedom must also be about harnessing the power of the market to do good," he said.

The party leader, who drew an ovation from delegates despite complaints from some that the speech was "too long", argued that the Government had been corrupted by power. He called for proportional representation in local and national elections. "Absolute power when secured on the back of massive parliamentary majorities, which don't reflect the balance of political opinion in the country, can and does corrupt absolutely,' he said. He said the Government's instinct was to "shroud itself in secrecy".

Mr Kennedy did not mention the euro, which was interpreted as a deliberate attempt to play down his party's enthusiasm for the single currency.