Jeremy Warner: Tories lack credibility on the economy

Outlook: I'm not a political columnist, but that's not going to stop me commenting on the abject failure of the Tories to make political capital out of Britain's economic woes, a failure which is almost as remarkable, given how dire things are, as the crisis itself. Here is a God given opportunity for Her Majesty's opposition to make hay at the Government's expense, yet the impression is of a party still flailing around in the undergrowth with a mixed up and often confused policy agenda which fails to hit the mark and has little credibility as an alternative to what the Government is already doing.

David Cameron, the party leader, said this week that he wanted a less materialistic society based on "save, save, save" rather than "spend, spend, spend", which in the best of all possible worlds is obviously what everyone would aspire to.

Yet it is entirely the wrong prescription for the crisis of the moment, which desperately requires counter-cyclical spending to prevent the economy sliding into a prolonged slump and needs "save, save, save" like a hole in the head. The Tories have been poor on the economy and show few signs of getting any better.

A poll of leading businessmen this week for The Independent showed that trust in the Government was once again on the slide after something of a revival around the time that the Prime Minister, Gordon Brown, saved the banks with a massive programme of recapitalisation. This was indeed the PM's finest hour, when he was lauded around the world for seeming to have the solutions and acting decisively to implement them.

Yet, as we now know, this was only a sticking plaster remedy which, though it may have saved the banks from oblivion, has failed to halt and reverse the pervasive process of credit shrink-age or to restore consumer and business confidence. As the Government itself now seems to admit, this is going to be a much longer and deeper recession than the Treasury was forecasting just a few months back.

The National Institute of Economic and Social Research estimates that the UK economy contracted by 1.5 per cent in the final quarter of last year, following a 0.6 per cent reduction in the third quarter. Several City forecasters are now predicting a further year-on-year contraction for this year of 2.5 per cent, putting the economy on course for the worst recession of the post-war period. Whether it surpasses the previous record of the early 1980s depends on the degree to which the economy returns to growth in 2010.

Yet if the Government seems powerless to stop the rot, the Tories have wholly failed to offer a credible alternative. Indeed, the best they seem capable of doing is attempt to pre-empt the Government by suggesting policy remedies which are in any case likely to be enacted, shamelessly on one occasion after being pre-briefed by the Treasury on what it was intending to do.

For students of political history, the comparison is with Neil Kinnock's Labour Party, which astonishingly managed to lose the 1992 general election to an incumbent government even though the economy was in the midst of a deep recession.

Is David Cameron doomed to a similar fate? Kinnock made lots of mistakes which so far Cameron has avoided, such as going to the country on a manifesto commitment to tax rises, which may have been honest (the Tories eventually put up taxes by even more) but was not what the electorate wanted to hear. Worse, he failed to command respect – remember the famous Sheffield rally? A bottom-clenching stage performance may have ended up doing him even more harm than the promised tax hikes.

Mr Cameron cuts a more credible figure, but there is still a sense that the Tories are at the same intermed-iate stage of electoral recovery as Labour was under Mr Kinnock. In winning the subsequent election, Labour under Tony Blair said as little as possible about what it would do with the economy and instead concentrated simply on attacking the incumbent government's record.

One of the main planks of planned economic policy – independence for the Bank of England – was kept deliberately under wraps for fear it would make the electorate think Labour was planning to join the euro. Otherwise, there were commitments not to raise the higher rate of tax, to a minimum wage and to Tory public spending plans for the next two years, and that was about it.

There's a long way to go in this recession, and plenty of time for the electoral fortunes of the two main parties to swap places again. But three million unemployed doesn't automatically spell electoral disaster for the government, as John Major's victory in 1992 demonstrates. What's more, all developed countries are fast sinking into recession, so the idea that Gordon Brown is somehow the cause of our economic ills, or rather that his policies have made us particularly vulnerable to the crisis, becomes harder to make stick.

In any case, the Tories need urgently to improve their authority on the economy to make further electoral headway.