Conservative tax cutters should not celebrate too much. Yesterday’s announcement by David Cameron that he will not match Labour’s spending plans from 2010-11 onwards matters more symbolically than practically. Whichever party wins the next election, taxes will have to go up. The argument now is about how large the Budget deficit is likely to be, and hence the size of tax increases.

Mr Cameron sought to depict the Tories as the party of fiscal responsibility and to please activists by taking a tougher line on public spending. It is a necessary act of repositioning.

Yesterday’s announcement brings forward by one year, from 2011-12 to 2010-11, the starting date for not matching Labour plans. Moreover, Mr Cameron said that spending would grow by less in real terms than existing government plans for increases of 2.3 per cent in 2010-11, 1.7 per cent in 2011-12 and an assumed 2 per cent in 2012-13 (though these figures are likely to be revised in next Monday’s PreBudget Report).

Any savings will not be large in the first two years, and will be dwarfed by the deterioration in public finances. So the Cameron pledge is about not adding to the borrowing, and future tax, burden rather than opening the way for early tax cuts.

The dividing line is between a fiscal boost raising borrowing, as planned by the Government, and what the Tories call funded tax cuts (offset by savings elsewhere). But how? This is very tricky as, despite calls to cut bureaucracy, it is unwise to count on specific amounts in advance. However, revealingly, the Treasury is revising upwards its estimated total of efficiency savings beyond the £30 billion already announced. This will help to make the borrowing figures less awful.

As Mr Cameron rightly argued earlier this year, the key to sustainable savings is public service reform and reducing demands on the State, not pretending that waste solves all.

Moreover, the Tories should now concentrate on broad strategic decisions such as these and shelve fiddly micro-initiatives, such as the “fair fuel-duty stabiliser” or the commitment to green taxes. Both are still official policy but have been downgraded. Indeed, some of the lively band of Tory ex-chancellors have been advising Mr Cameron and George Osborne to stick to the big picture, and to avoid detailed pledges that give ammunition to Labour and risk becoming outdated.

There is also considerable scepticism in this group about the much trumpeted Office for Budget Responsibility. This will only have an advisory role and is nothing like the Monetary Policy Committee. Firm rules, or nonpolitical wise men, cannot guarantee fiscal responsibility. Look at the breakdown in the 1990s of the allegedly firm Gramm-Rudman budget rules to limit the US budget deficit, which failed as the deficit continued to rise.

It is up to elected politicians to determine the levels of borrowing, taxation and spending. That is the essence of the party battle. Mr Cameron’s statement has sharpened these choices; not as much as avid tax cutters would like, but the days of a near-consensus on tax and spending policy are over.

Times Recommends

• Farwell to the stiff upper lip
• It’s about who runs the US, not health
• The Iron Lady and her blue felt-tip sympathy