Tory joy as 'slow-burn' strategy pays off

David Cameron had planned to go back to sleep after the Crewe and Nantwich by-election result was announced at 2.27am on Friday. But the enormity of the 17.6 per cent swing to the Tories from Labour kept the party leader awake at his Kensington home until dawn.

After congratulating Edward Timpson on his sensational victory, Mr Cameron spent the next few hours contemplating the shaken political landscape. It must have been hard to resist capturing the moment as a "new dawn" for the Conservatives, just as Tony Blair had done for his party on 2 May 1997.

Part one of the Conservatives' "slow-burn revolution" – to "decontaminate" the Tory brand – was finally complete. Part two – to build and consolidate the trust of voters across the country – had begun.

But this was not a time for complacency or triumphalism. The final part of the "slow burn" strategy – to set out the platform for a Tory government with the key themes of empowerment, social responsibility and family – has two years to run.

Nevertheless, when the Tory leader addressed the TV cameras from his doorstep shortly before 8am, he declared that the by-election victory marked "the end of New Labour". The claim was so bold that it triggered a mini-wave of alarm among more cautious Tory MPs and supporters. Those close to Mr Cameron insisted that the party's 7,860 majority, with nearly 50 per cent of the vote, was still a "shock".

George Osborne, the shadow Chancellor, confirmed that the first phase of the slow-burn revolution, detoxifying the party from its "nasty" image, was over when he declared on the Today programme on Friday morning that Labour was the "new nasty party" in British politics.

The word "trust", the key to the second phase, will be repeated again and again over the next few weeks. Mr Osborne, one of the party's main strategic thinkers, has spoken of the "bond of trust" the people of Crewe and Nantwich formed with the Tories. That bond, a precious commodity in politics, which was destroyed nearly two decades ago, must now be built up in the rest of the country.

The third and final phase of the party's plans to win the next election will be played out over the next few months. The themes will include the traditional Tory values of a smaller state, empowering individuals in their own lives, and encouraging stronger families and social responsibility. But there are other proposals that show how Mr Cameron is trying to monopolise the centre ground and push Gordon Brown to the margins.

Mr Osborne said: "Labour has abandoned the centre ground of politics. What this shows is that people are coming to the new coalition that David Cameron has established in this country."

The Tories are committed to an increase in "green taxes" and to the creation of a "family fund" to pay for tax breaks for married couples,although these are yet to be fleshed out. They have promised to save local hospitals and would create an independent board to run the NHS.

On education, Mr Cameron wants to close failing schools and widen choice by sweeping away restrictions on opening new ones. Money will follow pupils in disadvantaged areas to promote good schools.

On immigration, which the Tories feel they can now tackle, an annual limit on economic migrants has been proposed.

Concrete tax policies include increasing the inheritance tax threshold to £1m, at a cost of £2bn; scrapping stamp duty for first-time buyers on homes up to £250,000, at a cost of £400m; a £25,000 levy on "non-doms", which would raise £2.8bn; and cutting the main rate of corporation tax from 28p to 25p.

Mr Cameron is committed to matching Labour's spending plans until 2010-11 – which has left very little room for manoeuvre. But critics from the right of the party want him to scrap this framework and be bolder.

Jill Kirby, director of the centre-right think-tank the Centre for Policy Studies, said yesterday: "The biggest reason for voting against the Government in Crewe was the fact that Gordon Brown has made a mess of taxation, particularly for those on low incomes.

"The Tories haven't yet said what they would like to do, other than solve that problem in a Tory government. So probably we need a bit more detail."

However, Anthony Browne, director of Policy Exchange, said: "The Conservatives need to make the case for lower taxes, but would not want to offer upfront tax cuts."

Labour MPs admit that the Tories have created "great touchy-feely emotional language", which is being picked up subliminally by voters.

For Mr Cameron, Friday morning's tentative new dawn followed two and a half years of slow burn, involving a battle with his party over grammar schools and environmental repositioning. But after promising to end "Punch and Judy" politics, he now believes the party has shrugged off its "nasty" image.

The personal attacks against Mr Brown have begun to creep into Prime Minister's Questions, the most controversial being the accusation that he is "a loser, not a leader". It is a high-risk strategy, but senior Tories are now so bullish they believe they can win the next election. They are also cheered by the fact that Mr Brown's attempts to respond by highlighting Mr Cameron's involvement in Black Wednesday in 1992, when he was special adviser to the Chancellor, Norman Lamont, can be neutralised by pointing out that Jeremy Heywood, principal private secretary to Mr Lamont at the time, is now chief of staff at No 10.

In the next few weeks, a fundraising drive will be launched as the party focuses on Mr Cameron becoming Prime Minister in 2010. One figure long-associated with Tory decline, John Major, is said to have agreed to be involved.

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