Fraser Nelson

It was in the 1996 Budget that the Conservatives made a mistake they have yet to recover from, they began to say “investment” rather than “spending”. With that rhetorical shift  they accepted Brown’s logic that the more money spent by the state, the better. Now that Brown’s spendthrift, debt-concealing policies have led Britain into recession it is the perfect time for the Tories to think again – and start saying what they would cut. I lay out a few proposals in my cover piece for this week’s magazine, arguing that freezing the health and education budgets would free up £6bn and £4bn a year respectively.

“Cameron anger at Baby P” read the Evening Standard billboards in Westminster, setting the tone of the news coverage until about now. Now, all of a sudden, a full independent review has been announced by Ed Balls – rather rapid response, seeing as Mr Brown wasn’t able to announce or even hint at this at PMQs earlier. “That wouldn’t have been the right thing to do” Balls said – I mean, heaven forbid such announcements are made to Parliament. Balls continued: “We received the summary document [on the Baby P case] at 10am this morning. We studied this, and over the course of today we concluded this afternoon that over a proper reading we should now act.” Bunkum. Baby P died on 3 August 2006.

Much as I applaud the sentiment behind David Cameron’s plan to help employment by cutting taxes, did he have to claim he’d “create 350,000 jobs” that way? He may answer: yes, the media want such a figure, and just you see they’ll put it high up the story tomorrow. Plus we’re not in power, so we’ll never have to prove it. But to my nerdy eye, this figure spoils it. I mean, there are 940,000 on Jobseekers’ Allowance – is Cameron really proposing to reduce that that by a third? In a downturn? But my more serious objection is that cutting payroll tax at the margin has a heavy deadweight cost: would these employers take on staff anyway?

“Never hate your enemies – it affects your judgement”. This advice from Michael Corleone is very relevant to Gordon Brown, who makes his worst  mistakes when he thinks he’d destabilising Tories. He loved how scared they were about talk of an October election last year, but didn’t realise how stupid he’d look when he didn’t call one. The speculation rebounded on him. Same, I suspect, with his tax cut. Still no news today, but people are expecting £15 billion. This figure is actually a guesstimate from Robert Chote of the IFS,  who told the FT last week that he wouldn’t be surprised if Brown were to cut taxes by the tune of 1% of GDP.

I say in my political column this week that Cameron must “offer tax cuts before Brown does” – and seems I may not have to wait long before David Cameron repays my faith in him. Patrick Hennessy says in the Sunday Telegraph today that the Tories are planning an employment-orientated tax cut financed by spending cuts. As the FT said on Saturday that Darling could be mulling some £15bn of tax cuts, there was a danger that the Tories could be the only party in Britain not proposing to let people keep more of their money. Cameron was in danger of falling into the trap which ensnared John McCain. McCain didn’t think for a moment that the tax-cutting agenda could ever be stolen from the conservatives. He was wrong.

Jim Murphy deserves some credit for last night’s win. The new Scotland Secretary has become Labour’s patron saint of lost causes, tasked with selling the EU Constitution to Britain, Blairism to Labour, and Labour to his formerly-Tory constituents. Now he’s selling Brown to Glenrothes, and yesterday they bit with an increased share of the vote – a staggering achievement given the SNP backdrop. There is something humble about Murphy, a trait he has acquired since I first saw him in the early 1990s where he was a self-aggrandising leader of NUS Scotland. His new demeanour gives him a hearing, which the average voter would not give to the more arrogant and condescending Labour ministers.

Is inflation really falling? I am understandably taken to task by some CoffeeHousers for claiming that it is. When Brown claimed it was in PMQs yesterday, it was submitted to me as a possible Brownie. But what he says is perfectly true, and it's worth looking at in more detail - for this not only explains today's rate cut, but much about the nature of the deep recession we have now entered. It also underlines what I regard as a flaw in business reporting. You can pick up the papers and find the price of shares, bonds, wheat etc. But nowehere can you read forecasts – ie, where the markets think inflation, bank rates, forex etc will be in 6 or 12 months time. If the bank knows more than you, it can sting you for an expensive fixed-rate mortgage.

It’s strange hearing US pundits solemnly explain that the banking turmoil of the last month was always going to hurt the incumbent government, because it hasn’t hurt Brown. Yet the UK and the US both went through the same reign of error: profligate spending, huge deficits, a housing bubble created by underpriced debt. The Bush-Brown economic policy has led both countries into a painful recession, but leaders do not self-destruct. It takes an Opposition politician to hold them to account. Since Lehman's collapse, which put the economy at the centre of politics, Obama has succeeded - brilliantly. The Tories have so far failed, abjectly. Obama had both a critique, and a powerful alternative plan in his “tax cut” message. It became his answer for everything.