The solution was suggested by Scott Ferguson <prettyfly.productions@gmail.com>:
$ cp ~/.kde/share/config/khotkeysrc
~/.kde/share/config/khotkeysrc_before_I_had_a_fiddle
$ nano ~/.kde/share/config/khotkeysrc
change line 7 from:-
Enabled=false
to:-
Enabled=true
This solution works for me. Not sure why KDE4 is shipped with the default that disables shortcut keys.