‘It’s the economy, stupid.” So read the sign on President Bill Clinton’s desk to remind him not to repeat the mistake of the man he defeated. George Bush Sr was thought to have spent too much effort on foreign policy, to the neglect of the home base. But the triumph of Gordon Brown is that the economy has hardly featured as an issue in British politics since Labour was elected a decade ago. Last week the Conservatives tried to revive it.

Perhaps with markets in turmoil, interest rates high and house prices faltering they have a better chance. Still, growth has been continuous for 15 years and may well yet be sustained. So the Tory critique is not that the economy is going to the dogs. Rather it is much the same as Labour’s would be if we had a Conservative government: growth has been accompanied by mounting social inequality and the nation’s infrastructure, both physical and educational, has been neglected.

The snag with that line of attack, as Labour discovered to its frustration throughout the 1980s and well into the 1990s, is that the social casualties have little interest in politics. They do not believe those who promise them remedies; they may simply not vote. The middle classes say they care, but rarely enough to switch their votes. Perhaps they did in 1997 when Labour won its first landslide, but with youth unemployment and child poverty still at appalling levels they have evidently now lost interest. Having voted for social justice 10 years ago, the middle classes have done their bit.

When Labour is in office it is hard to pump up public indignation. The lobby groups become toothless and the BBC goes limp. If social injustice persists or even increases under Labour it must be because the problems are intractable, whereas under the Tories it would be clear evidence of a callous government.

The report on national competitiveness from the Conservative study group, chaired by John Redwood, the former cabinet minister, brings together damning evidence against the government. The real level of people out of work and claiming benefit is more than 5m. The number of young people not in work or education — at 1.2m — has grown under Labour despite a couple of billion pounds spent on the so-called New Deal. There are 600,000 more people living in severe poverty now than when Tony Blair was first elected, and 2.2m pensioners are below the poverty line. Unicef found that the quality of life for children in Britain was the lowest in the developed world.

Redwood has worked assiduously. His data base should provide the foundation for Tory attacks and Tory remedies. But there is simply no chance that the Conservatives can enlist a sense of public outrage, justified though it might be.

In any case, with the Tories anxious to shed their “nasty guy” image, when it comes to solutions even Redwood pulls his punches. Welfare isn’t Working is the title, not of a Conservative publication, but of a pamphlet co-authored by Frank Field, Labour’s former social security minister. The Tories would not dare to articulate such a thought. Whereas in much of the United States and across the spectrum of American thinking, “something for nothing” welfare has been abandoned because it does not work, in Britain it remains entrenched despite equally compelling evidence.

The Redwood report is bolder in other respects. It proposes a scheme to encourage saving (modelled on America), addressing Britons’ alarming propensity to borrow and spend without a thought for tomorrow. It suggests huge extra investment in the railways and the end of the separation between owners of trains and tracks. Those policies have the extra benefit of being unexpected from Conservatives.

The government will not find it hard to attack the ideas on grounds of affordability. What Britain can afford is a function of priorities as well as growth and tax rates. This country’s infrastructure deficiencies are so glaring that any future administration must find money to tackle them, as most neighbouring countries have in recent years.

A similar point can be made about Redwood’s tax proposals. Labour will bleat that cutting corporation tax, or stamp duty on share transactions, would leave a hole in public finances and betrays the Tories’ concern with the wealthy, not the poor. But those taxes damage British competitiveness severely. It would not be surprising if Brown announced a cut in both (perhaps without implementing it) before the election.

That goes, too, for Redwood’s proposal to exempt most ordinary homes from inheritance tax and to raise the threshold for higher rate income tax. Brown is at least as concerned as the Tories are about middle-class votes. So Redwood’s suggestions may meet with Labour sneers now, but Labour will surely address those issues before facing the electorate.

Most ridicule will be poured on Redwood’s suggestion that the Tories should save £14 billion a year on efficiency gains by the end of their first parliament. The scorn is unjust. Three years ago the Treasury published the results of Sir Peter Gershon’s report on efficiency, which promised to cut 80,000 government posts. Little has been heard of it since but Gershon’s work remains valid. Brown favours big government but that does not make it implausible that David Cameron could implement the savings.

Redwood’s work is competent but it won’t lift the Tories out of the mess they are in. His reappearance centre stage is a mixed blessing. He unhelpfully reminds uncommitted voters of the Major government, but reassures Tory faithful that the party is still Conservative. His policy ideas, although they will be vilified, blunt the attack on Cameron for lacking substance.

The risk is that proposals for cutting taxes, a traditional Conservative stance, coming so soon after Cameron’s careful work to make the Tories seem new, may befuddle the voters. The modernising Tories had a four or five-year plan. They could spend half a parliament showing all the ways they had changed and, having established that firmly in the public mind, in the second half could offer new interpretations of traditional positions. It might well have worked had the party remained ahead in the opinion polls. But the possibility of an early election is forcing the leadership to rush the second phase.

Brown’s heavy hints that Labour is preparing for an autumn poll may be designed simply to throw the Conservatives into turmoil. They have not reached the point where people accept that the party has changed. Indeed, its rebellion against Cameron over grammar schools demonstrates that it has not. George Osborne’s cautious approval of the Redwood report may seem like policy incoherence rather than the well planned second phase of a joined-up strategy.

The Tories are right to continue with serious work on policy but this will play little part in refloating them. With Brown ahead in the polls, Cameron has lost the credibility vital for any leader of the opposition. If the Conservative party could behave itself that would help, and if Cameron could find ways to look strong that did not seem contrived, that would assist, too. But much the most likely scenario for the Tories to regain the lead is that the government sustains some catastrophe. Any time, something could happen that would wreck Brown’s prestige and set Labour back to where it was at the start of May.

The Redwood report proves two things. While it is possible to lambast Labour for many failures and hypocrisies, the Tories cannot argue that the country is in meltdown — not yet anyway. Second, after 10 years of serious intellectual effort, the Conservatives have not found a reason why life would be better under them. They have not thought up the equivalents of Margaret Thatcher’s council house sales and trade union reform.

Put like that, it is easy to see why Brown might rush to an election. If the opposition does not possess the means for its own recovery, why should the government hang about risking its own destruction?

michael.portillo@sunday-times.co.uk

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