The race for cuts

The following correction was printed in the Guardian's Corrections and clarifications column, Monday January 31 2005

In Book III of his travels, Gulliver visits the Grand Alchemy of the city of Lagoda in Balnibarbi and there witnesses an experiment to extract sunshine from cucumbers. He had been lowered there from the flying island of Laputa. In the leader below, we said in error that it was the Laputans who had chased this goal.

The Laputans tried to extract sunbeams from cucumbers and Oliver Letwin wants to fund tax cuts from government waste. Both schemes expect an unlikely formula to work. When Gulliver arrived in Laputa its scientists had been searching for eight years and got nowhere. The shadow chancellor has only been looking for his savings for a year but despite his efforts yesterday to add substance to his plans the Tory promise of something for nothing is not much more convincing than the Laputan search for unlimited sunlight. By offering to sustain spending on most areas of government activity from health and education to defence and transport while both cutting taxes by £4bn and the budget deficit by £8bn Mr Letwin is trying - unpersuasively - to have it both ways. His theoretical £35bn of savings, £23bn of them reallocated in departments, could not remain painless for long.

Yet the striking feature of yesterday's interim announcement is not what the Conservative party plans to cut but what it plans to keep. In effect the package concedes victory to Labour after a decade-long battle to set the terms of political debate. In the 1980s and early 1990s, Labour was on the back foot, forced to deny it would tax the economy out of existence. Now it is the Conservatives who are the deniers, promising yesterday that they would leave Labour's spending increases on core public services in place. The parallels between John Smith's shadow budget ahead of the 1992 election and Mr Letwin's statement yesterday are uncanny. Both saw an anxious opposition party attempt to close off a weakness - then tax, now cuts - but in doing so both gave the party in power a chance to hit back. Labour was pummelled 12 years ago for its tax "double whammy". Now Labour will pummel the Tories in return for proposing to slash and burn the welfare state.

Mr Letwin protests, with justice, that this is not what he plans to do. He would like to be seen as a caring surgeon, trimming back the fat of the state to revitalise the muscle that lies beneath. The trouble is that on yesterday's evidence his planned surgery is neither very well thought through nor severe enough to support the reductions that many MPs in his party want to see. Labour was quick yesterday to jump on what it said was a weakness in the plans: that they claim as part of £35bn in new savings most of the £21bn identified by Gordon Brown. The Tories deny this but more fundamentally there is an intellectual inconsistency in attacking the government for wasteful increases in spending since 1997 while entering a general election promising to keep almost all of those increases in place.

The Conservatives hope that they can bridge the gap by painting themselves as better guardians of the public purse than the chancellor. They still plan to spend most of the money - 41.5% of GDP by 2006-07 against Labour's 42% (and 39% in 1997-98) - but, they claim, they would spend it more sensibly. Voters might just accept this from a tightly run opposition as they did from New Labour in 1997. But the chances of the electorate seeing the Conservatives as fiscally competent with the party in its current state must be minimal. Robert Jackson's quixotic defection can only have reinforced the impression in many voters' minds that with the Tories it is shambles as usual.

That leaves open the question of whether the party can ever escape from decline. Charles Kennnedy yesterday claimed his party was "the real opposition" (though on spending it remains much closer to Labour than the Tories are). Mr Jackson was right to point out as he left that the Conservatives will not succeed until they can decide what they are for. The party's have-it-every-way equivocation yesterday was a symbol of its weakness, not a route back to power.