The prime minister’s political honeymoon is over. New and free are the best two words in marketing, say the pollsters. But you can only do new once. After calling off the election Gordon Brown is definitively old: a harder sell.

The volatile polls have swung back to the Tories with a vengeance. From an 11-point deficit they now hold a three-point lead. Mr Brown looked into the icy water and decided not to take the plunge. What made his decision? A united Conservative conference capped by a fine speech by David Cameron, up to a point. An error of judgment by the prime minister, very likely. A ruthless offer of Tory tax cuts, yes, spectacularly.

Field Marshal Gordon Brown’s plan A had ground on for a fortnight. Election speculation by his lieutenants was meant to force the Conservative high command to launch its tax cuts prematurely at their Blackpool party conference. The idea was that the financial maths behind the Tory figures would be shot to pieces by the Treasury, casting doubt over the ability of Cameron and George Osborne, the shadow chancellor, to run the economy – and leaving them little to offer the electorate during an election campaign.

Plan A included a string of relentless government feel-good announcements; a high profile visit by Brown to British forces in Basra to announce troop withdrawals (tick); the final go-ahead for the long delayed Crossrail scheme – so important to those southeast marginal seats (tick); the caring, healing Brown opening a brand new hospital (tick); all topped off by the eminent doctor Lord Darzi unveiling his National Health Service plan to get GPs to work at weekends (tick).

Tomorrow Brown was due to give another statement on Iraq. The government had brought forward to Tuesday the preBudget report from December for the first time in over a decade. The comprehensive spending review on the same day would promise more billions for the health service. A swift election campaign would then destroy the Tories. Labour dreamt of “decapitating” Cameron, a crushing defeat-making it impossible for him to hold on to the leadership.

A Tory jeers: “Gordon only does one campaign whether it is the Tories, the Scots Nats or anybody else. First he shreds our figures and warns that our proposals are uncosted and must lead to hospital closures. He will then cite some bogus victory in Brussels – fighting off the threat of a single European stamp, for instance. Then he’ll dream up a Save the Third World pledge fronted by a young boy reading out a touching poem about African poverty on the tv. That’s the Brown formula.”

Except this time plan A was not working to plan. Osborne’s audacious linkage of inheritance tax cuts and stamp-duty reductions for first-time buyers to a £25,000 levy on non-domiciled City slickers held the line. Labour says it will raise only £650m rather than the £3.5 billion that Osborne claims. Last week the Treasury failed to smash Tory sums.

To make a bad situation worse, Brown broke one of his own key rules. As “Not flash, just Gordon”, he was supposed to make important announcements to parliament. But by announcing British troop withdrawals on a PR tour of the army and double counting them before Cameron’s speech, he invited the charge of spinning to upstage the Tories. Cue John Major all over the TV denouncing playing politics with soldiers’ lives.

The needle of Brown’s famous moral compass was spinning wildly: the hospital that he opened turned out not to be new after all and his big speech to the Labour conference owed a big debt to one written earlier by Al Gore and a Yankee spinmeister.

Cameron’s bravura 67-minute speech without notes in Blackpool was like a performance by the Royal Shakespeare Company. But it was Brown who was cast as Hamlet – to call or not to call an election. Brown was putting a brave, strained face on it all when I spoke to him on Thursday night but he knew that three polls thundering in held black news. What was plan B?

By backing out now Brown is bound to lose face. The Tories were already hooting “bottled it” by Friday. That is par for the course. It will be the smirks and sniggerings of the Blairites that Brown will find insupportable. “So much for the great strategist,” caws one. Others will say he has done a “Jim Callaghan” after the Labour prime minister who ducked an election on favour-able terms in 1978 and went down to defeat the following spring.

Talking up the election was approved at the highest level – you can’t claim it was all media hype. The Labour party conference at Bournemouth spoke of nothing else. The tough young men in his inner circle puffed out their chests. Extra staff were hired at HQ. The Queen was ready to receive her prime minister to grant him a dissolution of parliament.

One of the “big three” shadow cabinet ministers says the election should have been called weeks ago when Brown was rampant. Another wonders why it wasn’t announced on Monday or Tuesday to steal the headlines and break up the gathering of the Tory faithful. If you are going to be accused of a cynical dash to the polls, at least make it a timely cynical dash.

Instead, the prospect of hanging concentrated the Tory mind wonderfully, producing a strong display of unity. Cameron’s speech and Osborne’s bribes for the middle classes were the main event. But, as our polling shows, David Davis, the shadow home secretary, is winning on crime and immigration. William Hague’s gift for oratory was never in doubt and Liam Fox, the shadow defence secretary, barked fiercely. The media likes a real fight.

Osborne’s inheritance tax sweetener for the affluent middle classes worked its magic. Labour’s polling and focus groups prove that. In 17 key marginal seats in London and the southeast, inheritance tax is a hot button issue. Men, statistically, may not care much about handing property down to their children but women do. In key constituencies, female voters who had deserted Cameron flocked back.

Brown had factored in a good Cameron speech. He is a realist. What he had not reckoned on was the effect of a ruthless tax cut targeted at the better off in the very marginals that he needs to win. On schools and hospitals, most people are now cynical – they have heard it all before and seen nothing change. Even talk of ordinary tax cuts is incredible.

However, in key marginals where the money of Lord Ashcroft, the Tory vice-chairman and billionaire, has been at work, Labour were terrified that a Conservative canvasser would turn up on the doorstep and greet the homeowner with a cheery “Good morning, madam, do you realise that your house is worth almost £1m? Under our inheritance tax scheme you will save £280,000.” That is a winner.

No 10 ritually curses the media for failing to explode a “Tory tax bombshell” story that undermines Osborne’s arithmetic. The boys at the Treasury will have to stay behind after school and do their sums again. “We wouldn’t have had time during the course of a three-week election to destroy their tax plans,” said one intimate of the prime minister.

Brown’s men know they are on the back foot. “Gordon was always cautious about holding it [an election]. But if we went now we would win on authority,” said a cabinet minister. “But we want a positive, a bigger mandate.” As for Cameron’s triumph, he sneered: “Iain Duncan Smith was seven points ahead after his conference speech in 2003.” That was a few weeks before the Tories got rid of him.

Yet the PM’s job now gets harder. “The past couple of weeks have beena virtual election campaign and we came out on top,” one triumphant Tory strategist boasted, adding: “This is immensely damaging to Brown’s reputation for strength and authority.”

For a start, Cameron’s difficulties with his party will diminish and his coherent political vision of change – although by no means complete – is coming along nicely. The Conservative leader is the most dangerous opponent that Labour has faced since the exit of the Iron Lady.

That is the risk that Brown has incurred: no longer flush, just Gordon.

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