If you think Tories are in a panic now, imagine what they'd be like in power

Iain Duncan Smith is in danger of losing his job for the wrong reason. His immediate future depends on the verdict of a parliamentary investigation into what has become known as "Betsygate". Once more there is a whiff of sleaze in the air. If the investigation raises doubts about the work rate of Betsy Duncan Smith when she was being paid out of public funds, he is finished. Obviously this would be something of a catastrophe for Duncan Smith. It would also be disastrous for the Conservative Party and, to some extent, for the rest of British politics as well.

The question of whether his wife did more than arrange the leader's Christmas card list is tiny, trivial stuff compared to the monumental folly of the policies the Conservatives are currently espousing. A leadership contest sparked by Betsy's alleged inactivity would reinforce the widespread impression that British politics is corrupt when it is not and more or less leave unchallenged the cliche: "Whatever you think of Duncan Smith, he has put together some good policies. If only voters paid attention to them".

If the voters had paid much attention to his policies, they would get the shock of their lives. The Conservatives' latest proposals are superficially attractive, linked by the theme that they "trust the voters" to run their own services. As I suggested last week, voters like to hear that they are trusted to look after their own affairs. But this does not mean they actually want the responsibilities implied by the flattery. To take one example, 30 per cent of parent governor places in schools are unfilled at the moment. Under the Tory proposals, parents would be expected almost to run the schools themselves for most of the day - having appointed a chief superintendent before breakfast to supervise their local police force.

In different ways the three main parties have succumbed to the self-flagellating fashion in which national politicians declare a passionate desire to give away their power. They are desperately trying to devise policies that make them weaker, allowing "the people" to take the reins. The IDS saga, the supposedly devolutionary policies and the misplaced whiff of sleaze, is emblematic. Knowing they are not trusted to buy a round of drinks, let alone to run the NHS, national politicians have all adopted the populist slogan "Power to the People".

Achieving the right balance between the responsibilities of national politicians and various local bodies is one of the most difficult and sensitive challenges in British politics. Which local institutions should acquire new powers? What happens if they not up to job? There are no easy answers. Yet with virtually no public debate the Conservatives have come up with a range of extreme solutions. They include the proposal that patients and parents should have passports which would give them the "power" to take their custom to a school or hospital of their choice. For those wealthy enough to attend a private hospital, taxpayers would make a substantial contribution. This is a perverse form of targeting: increasing public expenditure on the most affluent. Such subsidies would also encourage more NHS doctors to head for the lucrative, expanding private sector, creating a shortage of staff for those unable to afford private treatment. Giving NHS patients a passport to choose their hospital is of little use to those in urgent need of treatment: "Mr Jones, you have just had a massive heart attack. You could go to the overcrowded hospital just around the corner or travel 150 miles to an excellent hospital that has a spare bed. Alternatively, if you have a few thousand quid spare, you could go private and the Government will pay some of the bill - Mr Jones, are you listening ...? Mr Jones ...?" Some choices are only theoretical.

The idea that on every front national politicians should let go of the strings has become one of the most irrational fashions of our times. Tony Blair's government has done little to actively defend its own role in the provision of services, or explain precisely what its role has been. Foundation hospitals are a muddled attempt to give away power, without really giving much away at all. The Liberal Democrats have yet more sweeping proposals to devolve power, relying on the electorate to punish those who fail to deliver good local services by booting them out of office.

This was one of the worthy motivations behind the poll tax, one of the more disastrous domestic policies of the last century. In theory, councils were free to set their bills and were expected to face the wrath of the voters if they raised them too much. It did not work like that. The government got the blame for the high poll tax demands. Duncan Smith proposes to introduce eight or nine policies as anarchic as the poll tax: let the people decide how they are policed, educated and treated when they are ill. The quality of policing would vary across the country. Some schools would flourish and others would flounder. NHS hospitals would struggle to hold on to staff heading for the private sector. Ministers would protest there was nothing they could do about it as they had given away their powers to the people. Thatcher panicked over the poll tax. She did not trust the people for very long, capping the level of the bills charged by some councils, intervening in a way that defeated the entire purpose of her policy. A Conservative government under IDS would be panicking most hours of the day as one local crisis erupted after another. Ministers would be capping and intervening all over the place to save their political skins. As David Blunkett candidly observed last year: "Too often, ministers have responsibility without power."

Oddly, in one of his policy documents, Duncan Smith "guarantees" that public services will improve under his party. How can he make such a guarantee when he plans to give even more power away to others?

Leaders tell us much about the state of their parties. They may be seen increasingly as presidential figures but, in reality, they are linked to their parties. The election of Tony Blair in 1994 demonstrated that Labour was hungry for power. The Conservative Party elected IDS because he was close to it in his political outlook. If the Tories now convince themselves that all they have to worry about is some minor sleaze and choose another leader with roughly the same views, they will not get very far. The first staging post on the Conservatives' route back to sanity must be a clear understanding as to why they want to get rid of IDS. This should be straightforward: his policies are an incoherent and iniquitous muddle. I do not hear that answer very often. They are still some way from sanity.