Andrew Grice: Voters ready to mark Brown's holiday homework

Any Gordon Brown break has always been something of a busman's holiday. While he will have been away from Downing Street for most of August, mostly in his Scottish constituency, he has been thinking hard about the central issue in politics: how to curb public spending.

Mr Brown knows that most voters expect it to be reduced but he is reluctant to use the word "cuts". He fears that would play into the hands of the Opposition, which has has put clear blue water between itself and Labour by abandoning its decision to stick to Labour's spending limits.

Alistair Darling, the Chancellor, has been urging Mr Brown to change his tone, arguing that Labour needs a plan to reduce the deficit in public finances. Other ministers have privately moaned that Mr Brown is in "denial" and refusing to redraw his "Labour investment versus Tory cuts" mantra despite the new "era of austerity" caused by the recession.

Like Mr Darling, Lord Mandelson, the Business Secretary, has been more open than Mr Brown about the prospect of cuts and has been working out how to square the circle.

Mr Brown and Mr Darling will have further discussions when the Prime Minister's "holiday" is over but a compromise is taking shape. Mr Brown will try to establish a new "dividing line" with the Tories: Labour has intervened to limit the recession and preserved public services in a way the Tories would not. Once voters have "got" that message, Labour will produce a list of savings or cuts going further than the well-worn tactic of promising "efficiency savings".

Mr Brown will deny it is a U-turn, but it will be seen in the Westminster village as a significant change, a tacit acceptance that David Cameron and George Osborne were in danger of turning the tables on Labour on the public spending issue which has worked so well for Mr Brown at the past two general elections.

The rethink will be coupled with an attempt to shine a light on Tory policies – or what Labour claims is the absence of them. Labour's attacks over health, after the Tory MEP Dan Hannan described the NHS as a "60-year mistake", has given the party a much-needed vision of what an election campaign might look like.

Will the Brown plan work? It may depend on how convincing the "cuts" prove to be. It may also depend on whether the Tories' travails on health are a blip or replicated in other areas.

There is no magic bullet to enable Labour to transform its fortunes. It will probably need the Tories to make some mistakes; the election is the Tories' to lose rather than Labour's to win. Politics is unpredictable but one thing is certain: Mr Brown will not give up without a fight.