As recently as the Spring Forum in Gateshead, George Osborne was clinging closely to Labour economic policy. Tory strategists had decided to adopt the tactic of economic disarmament. By matching Labour on spending and by disavowing "unfunded" tax cuts the Tories hoped to prevent prevent Labour from presenting the party as an economic risk. By neutralising the economy as an issue the aim was to encourage voters to focus on the areas of policy where Conservatives are genuinely radical: crime, welfare, education.
In the middle of an economic crisis – with Britain the most poorly-positioned of nearly all the developed economies – that policy of economic decommissioning is no longer tenable.
Voters want to know how the Tories will get the economy going again. And they deserve better than ill-thought-out differences. The Tory idea of bringing Chapter 11 to Britain was a rushed idea that would only protect underperforming businesses.
Can George Osborne deliver? Some commentators are noting his inexperience but we are increasingly confident in his abilities. Last year, in Blackpool, George Osborne’s inheritance tax announcement transformed the electoral landscape. Mr Osborne has made a lion’s share of the pivotal political decisions of David Cameron’s leadership: recruiting Andy Coulson, rejecting über-modernisation, overhauling the Boris campaign.
But he now faces the biggest test of all: Can he overhaul his own economic policy? Does he have a plan to undo the errors of the Brown years? In recent weeks he has made a good start. He has signalled that the Conservatives will pursue a more prudent public spending settlement. Green tax hikes are likely to be kicked into the long grass. He has joined David Cameron and Boris Johnson in defending the City of London from those who want to over-regulate it. There is already a defining plan for social reform that will reduce the long-term demands on the public purse and there are good ideas on tax simplification.
Tories are divided on whether poor economic circumstances mean that tax relief is more necessary to boost the economy or less affordable because of Darling’s extraordinary levels of borrowing (much more on this tomorrow). Where there can be no doubt is that there has to be very serious spending restraint. A former economic adviser to Mr Osborne, Douglas McNeill, told yesterday’s FT that spending restraint was far too difficult and taxes would have to rise. That would spell economic disaster for an already overstretched corporate sector. We hope that Mr McNeill doesn’t speak for his former master. Most families in Britain are facing very strict constraints. After years of tax rises it is not a time for further taxation but for a "sharing of the proceeds of pain". The public sector is bloated and there must be discipline. A recruitment freeze in the public sector should be the starting point. We also need changes to procurement practices, IT projects and the budgets for quangoes. That’s the message we hope to hear from Mr Osborne in Birmingham.