CHARLES KENNEDY was celebrating a series of dramatic victories over Labour today as the Liberal Democrats pulled off a series of dramatic election upsets.

His party overhauled five-figure majorities in seats such as Hornsey & Wood Green and even Manchester Withington, which was not even on the their list of top target seats.

But a strategic dilemma was opening up for Mr Kennedy amid signs of Conservative gains at his party’s expense, particularly in the South and the South West.

The Liberal Democrats lost Newbury, which they gained in a by-election victory in 1992, and saw their majority cut significantly in Torbay, although Liberal Democrats held the seat. Theresa May also saw off the so-called Lib-Dem “decapitation strategy” by holding Maidenhead for the Tories.

However the Liberal Democrat candidates fought off Conservative challenges with increased majorities in Norfolk North and Cheadle, their most marginal seats where the candidate Patsy Carlton had been seriously ill.

There early declarations showed a series of big swings from Labour to Lib Dem in urban Britain, particularly in the North of England and Scotland. Lib Dems gained Cardiff Central, Birmingham Yardley and Cambridge and were watching with increased interest the result in East Dunbartonshire.

In a more significant longer term shift, the Lib Dems leapfrogged the Conservatives to end up in second place to Labour in a series of inner-city constituencies in the North.

This put Mr Kennedy’s party in a strong position to challenge Labour in such seats as Newcastle Central, where the Lib Dems cut the Labour majority to about 4,000, at the next election.

However, the trend of big swings from Labour to the Lib Dems but slipping back against the Conservatives is likely to trigger a heated internal debate about future Lib-Dem strategy. This may be further complicated by geographical pressures within the party.

MPs and local parties who are fighting Labour in inner-cities, the North of England and Scotland, may urge Mr Kennedy to continue with his policy pitch of higher taxes for the very wealthy and universal provision of public services, especially university tuition, higher pensions and long-term care for the elderly.

But Lib Dems in the southern shires, whose chief rivals are the Conservatives, may feel he has taken the Liberal Democrats too far to the Left and so exposed the party to a Tory revival.

But the campaign had got off to a shaky start. Campaign staff barely had time to settle in at the Commonwealth Club off Trafalgar Square, with its polished wood floors and white walls, when David Dimbleby broke the news via a series of giant television screens. None dared say so, but many were clearly thinking such a result would be a crushing disappointment.

After a moment’s sombre reflection Lord Rennard, the Lib-Dem chief executive and elections wizard, tried to look on the bright side, seizing on the projected Lib Dem vote share of 22 per cent.

After some furious scribbling and punching into his mobile phone’s calculator, he announced: “We would get 143 Liberal Democrat MPs if we had PR.” A drowning man will clutch a serpent, as they say. Up in the gallery, a party technician sat by a computer screen with an orangey-yellow notice saying “LIB DEM GAIN” to be pinged on to the giant television screens.

He looked listless. But rapidly the anxiety was matched by angry, all of it aimed at Peter Snow, the BBC’s polling pundit.

Lib Dems have never liked him; his swingometer has, to them, symbolised the oppressive grip of two-party politics.

Charles Kennedy’s campaign staff, who stood out by sipping water and walking around with earpieces to counter the venue’s rotten mobile phone reception, began muttering about Snow’s methodology: he assumed they’d gain 13 seats from Labour but lose 11 to the Tories.

The mood began to lift as these reports from the front began to filter through. Instead of hanging around nervoursly, young researchers began laughing and chatting in groups, sipping from bottles of beer.

Peter Snow appeared forgotten, for now.

It grew merrier as word came from the counts: Bristol West looked good, even Manchester Withington appeared too close to call.

“We don’t even have a biog for the candidate,” a Lib Dem official said, a little nervously.

Lord Rennard bounded up to the gallery where many of the watching media, waving his arms in excitement as he claimed Lib Dems were now the challengers to Labour in urban Britain.

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