More than a quarter of a century ago, with the economy in recession and the government in deep trouble, Margaret Thatcher and Geoffrey Howe, her chancellor, did a remarkable thing. Rather than populist tax cuts and big increases in public spending they did the opposite, concentrating on getting government borrowing down. The reaction to the 1981 budget was one of outrage; 364 economists wrote a letter of protest and the Thatcher era appeared over before it had begun. But Mrs Thatcher had done the right thing and helped to pave the way for the economic turn-around and rising prosperity of the 1980s.

Last week, faced with what is still an economic slowdown rather than recession and the kind of backbench protest that Mrs Thatcher used to enjoy slapping down, Gordon Brown and Alistair Darling also did a remarkable thing. To get the government out of its hole over Mr Brown’s abolition of the 10p tax band, the chancellor announced that he was giving away £2.7 billion that he had told us just a few weeks ago he did not have. The prime minister, who once paraded his prudence as a badge of honour, surrendered at the first sound of distant gunfire.

Tax cuts, in normal circumstances, are a good thing. Taking people out of tax by raising allowances and thresholds is the best way of helping those on low incomes. Lowering taxes sharpens incentives and puts money back in people’s pockets so that they, rather than ministers and civil servants, can decide how to spend it.

Tax cuts cannot be conjured up out of thin air. They have to be earned by reining back on the spending and chronic waste that characterise Britain’s bloated public sector. The Conservatives knew that in the early 1980s and nobody was keener on cutting taxes. Mr Brown appeared to know that, having regularly taunted shadow chancellors during his time at the Treasury over their “unfunded” tax cuts. Now that he has a big unfunded tax cut of his own under his belt, we can expect to hear less of that kind of thing.

The Brown-Darling tax cut confirmed that when faced with trouble both political principles and the fiscal rules go out of the window. Mr Brown had the gall to mock George Osborne when the shadow chancellor expressed his enthusiasm for a “flatter”, simpler tax system. But Mr Brown’s efforts to undo some of the mind-boggling complexity that he himself put into the system have ended in disaster, from the abolition of the 10p starting rate of income tax to the scrapping of the 10p capital gains tax rate.

The bigger issue is how much damage the prime minister and chancellor will do in Labour’s desperate attempt to cling to power. Cutting taxes at a time when Britain already has the biggest budget deficit in Europe smacks of a scorched earth policy. At a time when the public sector unions are flexing their muscles, can we rely on Mr Brown to stick to what are only moderately tough policies for reining back the growth in government spending? The evidence from the cave-in on tax is no.

Our poll today shows that David Cameron, 20 points ahead, is beginning to move into the kind of territory where Tony Blair was before his landslide victory in 1997. The Tory leader is sensible enough not to take anything for granted but the opportunity he has is considerable. His predecessors were constrained by the public’s apparent love of big government under new Labour and aversion even to fully-funded tax cuts.

That has now changed. Voters are fed up with a government that - last week aside - has taxed them harder and delivered little in better public services. Labour has lost its reputation for economic competence. Mr Cameron has a big speech tomorrow on controlling public spending and cutting waste. He needs to convince voters that he can improve public services through better use of taxpayers’ money while projecting a vision of smaller government and lower taxes. It is the only route to longer-term prosperity for Britain.