Gordon Brown has said as plain as plain can be that he will refuse to take a penknife, let alone an axe, to public spending after the next election. Labour’s indecisive Hamlet has resolved on action at last. In defiance of his chancellor’s own budget arithmetic, he will fight the next general election on the theme of “Tory cuts” versus “Labour investment”.

Is there method in his madness? For despite his Guardian interview on Saturday, he’s not prepared to retire and become a modest teacher. Perhaps he fears Tory education cuts.

Late last year, it was the prime minister who scored points with his accusation that David Cameron and George Osborne advocated voodoo economics. Labour claimed to be part of the great consensus of western governments that had decided to pump money into the economy to save us from a new Great Depression. Briefly the Tory lead wobbled.

Now the tables have been turned. It’s Brown who appears isolated. Every independent, non-partisan authority from the Institute for Fiscal Studies to the International Monetary Fund tells him he’s living in cloud-cuckoo-land: debts must be repaid or taxes will have to rise.

But the prime minister appears to have taken a leaf out of George Orwell’s Nineteen Eighty-Four: “The keyword here is blackwhite. Like so many New-speak words, this word has two mutually contradictory meanings. Applied to an opponent, it means the habit of impudently claiming that black is white, in contradiction of the plain facts. Applied to a Party member, it means a loyal willingness to say that black is white when Party discipline demands this. But it means also the ability to believe that black is white, and more, to know that black is white, and to forget that one has ever believed the contrary.”

In a Sunday Mirror article last week, the prime minister couldn’t have been more explicit about his strategy, if not his figures. “We now know that the Tories want to cut public spending by a savage 10%. They have finally revealed what their true priorities are: a cuts plan that is wide, deep and immediate in order to fund a £200,000 tax cut for the 3,000 richest families.”

This could have been the dismal rhetoric of a general election campaign circa 2001 or 2005. It would have been more honest to relate these cuts to the size of our public debt rather than the Conservatives’ inheritance tax measures, which Brown ordered his hapless chancellor to emulate 18 months ago.

Last week Ed Balls, his chief ally, joined the fray. He promised a re-elected Labour government would increase spending on schools. Andy Burnham, the health secretary, echoed him on hospitals, though the Treasury quickly told him to pipe down. The schools secretary, however, can’t be silenced so easily – he was slated to become chancellor until Alistair Darling refused to budge from No 11 in the reshuffle.

The anger with which these statements were greeted at the Financial Times – where Balls as a young journalist had once been hailed as one of the best and brightest – was impressive. The senior in-house economics writer Martin Wolf accused Brown and Balls of concocting a strategy on the lines of President George W Bush’s merry quip that “you can fool some of the people all the time, and those are the ones you want to concentrate on”.

But what if Wolf, Vince Cable, the Tories and the commentariat are right on the sums but wrong on the politics? The cynics’ response is to believe that nobody lost an election by underestimating the public’s intelligence, yours or mine. An unpleasant thought – but one we should not dismiss undissected.

Here is the calculation of worldly wise men around Brown: the critics can only repeat the mantra that “Labour is lying” for so long: they will have to give up, stunned into silence by the barefaced cheek of it all. Recollect that even Cameron looked stupefied at prime minister’s questions on Wednesday when Brown charged on regardless of the facts. And he’s a professional. Ordinary voters won’t be able to distinguish between spending on servicing the interest on Britain’s debt and ordinary spending on services. They will become confused by claim and counterclaim and soon switch off.

Labour strategists will talk up recovery in the City. The banks are already paying back money lent by the taxpayer – Lloyds recently repaid £2.5 billion. The Treasury’s figures about a black hole were too pessimistic, ministers will say. Sustained economic recovery, now underway, will make up for lost taxes. The chancellor cautions prudence behind closed cabinet doors, but in public, he will pretend there isn’t a cigarette paper’s difference between him and No 10.

Focus group and opinion poll evidence supports this line of attack. Labour lags behind on almost every indicator, save one: it is still regarded as the party more likely to protect public services. An Guardian/ICM poll last week revealed that 48% of voters think Labour will protect services, whereas 46% think the Conservatives will do the same. Labour has a positive score of 1%, ie, more people believe Labour will protect services than harm them. The Tories have a deficit of 3%.

An architect of new Labour whispers in my ear, and Gordon’s, that people do not yet have full confidence in the Tories. The position of Cameron is much better than that of his party; the opposition’s lead is shallow. “If you do not trust them on the public services,” he says, “it’s a reflection of a deeper distrust that they have not really changed.”

Cameron has laboured mightily to prove that the Conservatives are no longer the nasty party. It was therefore a considerable reversal on Monday when his shadow chancellor, George Osborne, publicly accepted that spending cuts had to be made. For years he had resisted fighting Labour on precisely these grounds, but decided honesty was the best policy. Brown’s advisers smirk this was an error: the voters will say “same old Tories” when their propaganda has finished with him.

One seasoned campaign planner close to No 10 points to Blair’s first triumph. At the equivalent time in 1996, the voters were much more enthusiastic for Labour than they are now for Cameron, and its leader did a much better job of convincing the electorate that Labour had changed its ways and wouldn’t raise tax. “A cuts campaign will be more effective than people think,” says Brown’s tactician.

The clincher for Labour strategists will be a second campaign theme: Gordon really was the man who saved Britain, if not the entire world, by stabilising the banks. He led us out of economic darkness; now you owe him your thanks and your ballots.

On Labour’s right, the PM’s critics see the cunning of the argument but say it’s impossible to deny that the government will have to impose cuts of its own. The public won’t believe the Big Lie. They don’t believe that 12 years of spending billions has delivered a corresponding shift in the quality of public services. They don’t believe Brown after he claimed that the abolition of the 10p tax band wouldn’t hurt the poorest earners. They don’t trust him after his refusal to take a stand in the great expenses scandal.

“We should call the Tories’ bluff and set out our values in public expenditure cuts,” says a former Labour minister. “We can show we will protect the services we most care about for the majority. The Tories will do the cuts that favour a minority.”

To my mind, however, the trouble with reviving memories of Tory cuts is that in the process Cameron can retaliate with the powerful political myth of Labour’s tax bombshell. If Brown won’t offer cuts, then the Tories can outline the tax rises he will have to make in compensation – 12p in the pound in income tax rises, by some estimates.

The real question is: have people changed enough to accept the Tories’ logic that you can cut public services without them suffering directly? Labour thinks they would rather suspend disbelief. The gamble is on us, but Brown has made his choice.