Kenny Farquharson: Tories take a backward step

ALEX Salmond has been unwell all week (get well soon, First Minister), and I sincerely hope he has been avoiding the news bulletins as he tries to make a full recovery.

I especially hope he managed to miss reports of David Cameron's extraordinary U-turn on the Tory attitude to tax. If Salmond did happen to catch this, I bet the groans from the Bute House sickbed were all the louder.

Cameron has spent the past month standing loyally by Gordon Brown's side as Britain wrestles with the financial crisis. The Tory leader expressed quibbles about the detail, but rightly judged that what the country needed was singularity of political purpose. It was no great sacrifice. After all, Cameron had already pledged to stand by Labour's broad economic strategy when in Government, including matching its spending plans until 2011. Last week Cameron abandoned this. In doing so, he did spectacular – perhaps irreparable – damage to his chances of moving into Downing Street.

Until this past week, Cameron seemed reluctant to differentiate the Tories from Labour to any great extent. He even gave the impression of wanting to be a kind of Tony Blair Mark Two, taking every opportunity to echo the former PM's nostrums. Cameron's hopes rested on a simple belief that voters would feel that he – rather than the dour and unsympathetic Brown – was more in tune with their hopes and instincts. Polls suggested he was right.

So why change tack? I suspect we need look no further than the US election. Just as Barack Obama had the presidency sewn up when he bested John McCain on the banking bailout, so Cameron has come to realise that if he cannot beat Brown on the economy he has zero chance of seizing power. And to beat Brown on the economy, the Tories have to offer something both distinctive and appealing. Hence the return to those golden oldies of Tory manifestos from yesteryear – fiscal restraint, low spending and low taxation.

British politics has a decidedly retro feel this weekend. It's Labour Keynesians versus Tory Monetarists. They'll be bringing back clackers and ra-ra skirts next. The Tory right is delighted. They haven't been so happy since Iain Duncan Smith beat Ken Clarke for the leadership and the party was characterised by its rabid anti-Europeanism and it's sourness towards immigrants. And we all know how well that went down with the great British public. The real Tory party has Cameron back in its clammy clutches. I'm reminded of that scene in Shaun Of The Dead when the zombie mob drags the character played by Dylan Moran out of the safety of the pub and devours him alive.

Just a few months ago, Cameron looked like a prime minister-in-waiting. All he had to do was stay alive, stay smiling and avoid any black-tie reunion dinners of the Bullingdon Club. Now, he finds himself having to re-sell Thatcherism to a sceptical public.

For Salmond and the SNP, this is a disaster. The more "clear blue water" Cameron puts between the Tories and Labour, the more difficult it is for the Nationalists to claim the two parties are actually one and the same. The more the next election becomes a genuinely ideological battle between left and right, the harder it is for Salmond to argue that it should be a vote on Scotland's constitutional future. And the SNP's back-of-an-envelope strategy for independence (Britain votes Tory; Scots are disgusted at Tory rule; Scotland opts for full sovereignty) becomes a far harder sell.

The Tories are right to believe that tax is the touchstone issue in politics. You can talk yourself hoarse about civil liberties, the constitution and privatisation, but it's remarkable how voters start paying attention when the debate gets round to how much cash the Government is taking from their pay packets. Since 1991 the Adam Smith Institute has worked out when we should celebrate Tax Freedom Day, the day of the year when we start working for ourselves instead of working to pay into the Treasury coffers. This year it fell on June 2, a full week later than it did in 2002. Politicians ignore this at their peril. Just ask Salmond, whose 'Penny for Scotland' rise in income tax is often identified as a contributory factor in the SNP's failure to win power at Holyrood in 1999. No party is more attuned to this public mood than the Tories.

Yet there are flaws aplenty in Cameron's reasoning. All the evidence suggests that people are happier paying tax if they have a clear idea of where the money is going. When Gordon Brown raised National Insurance by 1p in 2002, he promised the 40bn it raised would be devoted entirely to the NHS. This 'hypothecation' took some of the political sting out of Brown's raid on our wallets.

The tax hike we'll be suffering in two or three years' time will be surely be seen in a similar light. We'll be footing the bill for the emergency measures that were necessary to stop Britain's recession turning into depression. Seems like a pretty good cause to me. Are the Tories really going to argue that the tax cuts shouldn't have been so generous? Or that the subsequent attempt to balance the books shouldn't be so prudent?

Cameron last week appealed to voters to ignore Labour "propaganda" that the new Tory strategy meant cuts in public spending. It was, he insisted, simply a slower rate of growth. This is true – but unsellable. Labour isn't in the clear yet, but Cameron is now in danger of being yet another Tory 'nearly' man.