Steve Richards: If the Tories want power, they'll have to get their sums right

A successful opposition party requires the skills of an artist. A party out of government cannot be judged by the impact of its policies as it has no powers to implement them. Instead an opposition must create an impression and sometimes an illusion of unity, credibility and excitement. There is nothing else it can do.

Until the recent financial crisis David Cameron had performed the illusionist's art with aplomb, taking over an ageing ramshackle party with fewer seats than Michael Foot won for Labour in 1983 and transforming its prospects. The result of the subtle and yet modest repositioning of the Conservative Party can be discerned at its Birmingham conference.

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After years of bewildered anger the party is more or less at ease with itself. Now Labour is the troubled party, a torment reflected in its weird introspective gathering in Manchester last week. Cameron makes the point with some justification that his party is healthy enough at the moment to look outwards compared with the traumatised mood that hovered over Labour.

But responding to new circumstances is never easy for a party out of power. With banks being nationalised to the left and right of them these are uniquely challenging events for a Conservative leadership that yearns for a less active and smaller state. After all a gentle nudge from a smaller de-regulated state would not have been enough to prevent banks and building societies from collapsing.

In such a daunting context the shadow Chancellor, George Osborne, delivered a speech of perfect pitch yesterday, placing the blame skilfully on Gordon Brown without appearing too overexcited at a time of "national anxiety", a wisely understated phrase. Osborne pointed out the inconvenient dimension to this drama as far as Labour is concerned: Brown was in charge of the economy for the past decade.

The fearful inactivity of timid New Labour over recent years gave him the ammunition to argue that when debt soared the Government did not act. In contrast Osborne plans to set up an independent body to monitor what he calls budget responsibility, a proposal aimed at proving that prudence will be her natural self under a Tory government.

This is where the problems begin for the Conservatives. Ever since Messrs Cameron and Osborne took to the helm the message and the policy detail have not always danced in harmony. Now they seem to be on two different sides of the dance floor. In building up a powerful narrative against Brown the shadow Chancellor makes a case that he must answer too.

The Conservatives are armed with an ambitious programme of public service reforms and several other spending commitments. If the economy is in such a parlous state how are they going to be paid for? At yesterday's Independent fringe meeting Oliver Letwin insisted that the changes would not cost more money even in the short term. In fairness he gave a very detailed answer to back up this assertion.

But having followed the development of their policies closely I still do not see how the transition from one policy to another will not cost a lot of extra cash, especially in relation to their plans for schools. The leadership identifies some sensible cuts from the Government's agenda such as scrapping ID cards and the Heathrow extension. But the spare cash is immediately allocated elsewhere on other spending programmes.

Where are spending cuts going to fall in order to repay debt and cut taxes? Three cheers for their commitment to an era of high-speed railways. But what will they do if the new Office for Budget Responsibility turns around and insists that borrowing and spending are still too high and that they should wield the axe? Although the new office will have no powers I suspect the high-speed trains will be delayed. Or else of course a Conservative government could ignore the new office but that would make its introduction almost pointless.

As matters stand the Conservatives plan to spend at least as much as the Government on the NHS, and possibly a lot more if they want to make "choice" more of a tangible reality. The prospect of 3,000 new schools commanded the headlines in Sunday's newspapers. More money is to be spent on defence. An increase in prison places is promised. High-spending Sweden is hailed often as an admirable model in the delivery of services. Meanwhile tax cuts are in the offing along with a pledge to address what Osborne regards as reckless borrowing of recent years. The proposed office of budgetary responsibility would have a nervous collapse if it contemplated such a package.

I suspect the quango will not be faced with such a contradictory set of ambitions. Probably there would be substantial spending cuts under the Conservatives in order to meet the approval of their new independent body. Not all of them will come about through cutting the cost of consultants and advertising, the easy bit in any attempt to reduce spending. Even if severe cuts are implemented it is not at all clear there will be spare cash for tax cuts, but that is what a substantial section of the Conservative Party is looking for.

At yesterday's fringe meeting the questions to Letwin seemed to confirm the recent survey of the Conservativehome website which suggested most activists want tax cuts even in the current precarious economic circumstances. At The Independent's meeting there were demands for tax cuts on small businesses, more robust pledges on government spending in order to cut taxes and much more along similar lines. Yet if Osborne is right about the degree of indebtedness it is possible a Conservative government will have to put taxes up, or once more face the wrath of its new body.

A theme of recent electoral defeats for the Conservatives is that their sums did not add up. If the figures did not add up in economically buoyant times they do not do so now. But politically the Conservatives are much cleverer now. There are few specific sums to overwhelm them en route to the general election.

There are no promises of precise overall tax cuts either, an equally astute omission. They have discovered they can get headlines through other means, such as the freeze on council taxes which might or might not happen and might cost central government quite a lot of additional cash. But there again it might not. The figures are elusive. The headlines are concrete.

Some Labour MPs with sharp antennae have been pleading with ministers to act on the increasingly unpopular council tax bills, but this Government moves slowly if it moves at all. Now it can do nothing without looking as if it is weakly copying the Conservatives, clever politics from Osborne, like his cut in inheritance tax promised a year ago.

The Tories have learnt the arts. They need to do much more to explain how they will pay for the performance if they win power in bleak economic times.

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