By James Hamilton

THE Liberal Democrats have laid down a challenge to the first minister, Alex Salmond, saying: "If you are serious about a local income tax, work with us."

While the SNP and LibDems are both committed to replacing council tax with a local income tax, Salmond's party want the level of the tax to be set centrally and to apply across Scotland. The LibDems, meanwhile, want a level that is set locally.

LibDem leader Nicol Stephen delivered his public challenge to Salmond during a speech to his party's conference in Aviemore, saying: "Bring together now, in good faith, those in Scotland who want to see the council tax scrapped and replaced by a local income tax. Start now, to build a majority in the Scottish parliament."

Stephen also tore into Labour, attacked "obscene" power company profits, and announced a flurry of policy initiatives.

He also set his party the target of doubling their tally of MPs and MSPs over the next two elections. They also aim to double the number of children from the poorest backgrounds who go into higher education, and double it again in a generation.

The conference also heard that the inventor of wave power devices Dr Richard Yemm is to advise a commission on renewable energy and another group is to be set up to get more young people involved in local life.

Former party leader Lord Steel is to reconvene his Steel Commission, which was set up three years ago and produced a report on constitutional change. The commission will now turn those proposals into what will become the LibDems' submission to Labour's promised review of Holyrood's powers.

Stephen also mounted a savage attack on Labour, saying: "Everything they do and say now has the look of a prime minister and a party on the way out."

He went on: "At Holyrood they are simply unable to comprehend the position they are in. They are in no fit state to mount a challenge to the SNP. That part has fallen to us. In a democracy, someone always had to stand up to governments - and in Scotland, nobody else can or will but us."