I understand your frustration, and like many experiments, "the magic is in the details". While the experiment you described does in fact work, a little critical information was inadvertently left out. To my knowledge, this experiment will only work with Lecanora tartarea and Roccella tinctoria (only two of the more that 16,000 species of lichens found worldwide), both of which are extremely abundant in the Netherlands (the major source of litmus).

In litmus production, the lichens are pulverized, treated with potassium carbonate and ammonia and allowed to ferment. Mixed with colorless compounds such as chalk and gypsum, it is marketed as blue lumps, masses, or tablets. Litmus paper is paper impregnated with this substance. If you are still interested in attempting this experiment, you might try contacting your local biological supply house and inquiring about the availability of these two species. Also, as a general rule of thumb, it is always a good idea to try experiments such as these first before attempting to repeat them as a classroom laboratory exercise. Good luck.

The reason of your failure is that you are using the lichens as such, and in order to observe the color change you are looking for, you need to prepare the substance called litmus, that is extracted from the lichens, and that is the one that has the indicator properties (blue in base, red in acid).

Here is a recipe to make litmus out of the lichens:
Details are difficult to find because the processes were kept secret.
This summary of a modern manufacturing procedure is from The vanishing lichens, D H S Richardson, London, 1975.
The lichens are ground in a solution of sodium carbonate and ammonia.
Stir the lichens from time to time and the color changes from red to purple and finally blue after about four weeks. The lichens are then dried and powdered. At this stage the lichens contain partly litmus and partly orcein pigments. The orcein is removed by extraction with alcohol, leaving the pure blue litmus. This and a lot more information about the manufacturing of litmus can be found in litmus