Still reeling from a third successive electoral defeat, the ensuing leadership election offered the Conservative Party opportunity to revive the once dominant force in UK politics. The party of former Primes Minister Winston Churchill and Margaret Thatcher widely acknowledged that a new approach would have to be adopted, in order to once again appeal to Labour’s “Middle-England” and avoid further years of political obscurity. Up stepped Mr Cameron. The former advisor to Prime Minister John Major, Chancellor Norman Lamont and Home Secretary Michael Howard, took up the post promising to make people “feel good about being Conservatives again" and said he wanted, "to switch on a whole new generation”.

Cameron presented himself and his party as the party of the environment and of social reform. He often reflects on Britain’s “broken society”, striking a chord with a majority of the country who feel that the burden of increases in violent crime and anti-social behaviour over the past decade has left them feeling isolated and threatened.

Plans unveiled by the Conservatives at their Blackpool party conference in 2007, to raise the threshold on Inheritance Tax to £1 million, were met with a rapturous response. The extraordinary rise in the value of homes had left millions whose estates were now worth far in excess of the then £300,000 threshold, making them liable for a tax that was originally meant as a levy on the super-rich. In 1997 the Treasury raised £1.68 billion from the tax. In 2007 this rose to £3.6 billion. According to George Osborne (the Shadow Chancellor) "When inheritance tax was first introduced it was designed to hit the very rich. But the very rich hire expensive advisers to make sure they don't pay it. Instead, thanks to Gordon Brown, this unfair tax falls increasingly on the aspirations of ordinary people”.

Further populist proposals at this time included a promise to abolish the stamp duty for homes whose value is less than £250,000. As a result, the Tories claimed, nine out of 10 first-time buyers would not pay the levy, saving an average of £2,000 for some 285,000 people. There was also a 2-year freeze on council tax, a termination of income tax on savings and a 5% reduction in corporation tax.

These policies proved extremely successful for Cameron, as he saw a complete reversal of fortunes in the polls. Shortly after Mr Brown took office, the Prime Minister’s lead was as wide as 10 points and many expected a snap election. A range populist policy announcements from the Conservatives closed the gap just enough to deter Brown from going to the country and the collapse of Northern Rock and beginning of the “credit crunch” allowed Cameron to paint Brown as the root cause of the nation’s problems. By May 2008, Cameron was a staggering 26 points clear of the Labour Prime Minister.

Yet, with the onset of recession and the lack of available credit in the market, the concern for most Britons swung from the environment to the economy, from anti-social behaviour to their job security - from populism to realism. The Conservatives were thrown off message, forced to focus on an area upon which their credentials had not yet been tested. Whilst the Prime Minister led the world in responding to the global crisis, Mr Cameron was forced to review his strategy and searched for the Tory response.

Cameron’s assertion is that “We (the UK) are in this mess because of too much debt – too much government debt; too much corporate debt; too much personal debt; and it becomes clearer all the time that the scale of Britain’s debts puts us in a much weaker position than other countries.” He takes a pre-keynesian approach towards a solution - “an economy where Government and its citizens live within their means, save for a rainy day, waste not and want not. It’s an economy where everyone has the chance to own their own home with space to live and breathe – and where we work to live, not live to work.” His two-pronged attack on Gordon Brown is that, under his tenure as Chancellor, he failed to save for a rainy day and that he shouldn’t be plunging the UK further into debt to solve the crisis. What he fails to note is that public sector net debt was 36 per cent of gross domestic product (GDP) at the end of 2007-08, down from 43 per cent in 1996-97 – and that this downturn is surely the definition of a rainy day.

Mr Cameron argues, again, that everyone should own their own home. Yet it was this idea – coupled with controls on house building supported by his party and the liberalisation of finance it promoted – that formed the housing bubble and explosion of household debt.

Mr Cameron argues for improving the tax treatment of savings. But an excessive private desire to save is now a huge danger. He also fails to note the already favourable treatment of home owners, savers for pensions and investors in “individual savings accounts” (ISA). He is pandering to current complaints about low returns. Low returns are an alternative to debt deflation and mass bankruptcy, which would wipe out many financial assets.

Mr Cameron’s latest attack - that the Government’s autumn bail-out of the banks has since cost the tax-payer some £21bn – follows in the same vein. Such rhetoric risks breeding national insecurity based on inherently fallacious (or at the very least deceptive) data. Cameron’s assertion is based upon the fact that the bank’s share price has fallen some 85% since the initial bailout, amid fears of total nationalisation. However, this share price will, inevitably, rise once again as the banking sector begins to stabilise. The Government could even sell the shares for a higher price than was originally paid. At this stage it is too early to judge the decision. Whilst Cameron’s politics can often be extremely effective and indeed impressive, the downturn in the economy has exposed Cameron’s vulnerability – his lack of judgement.

The challenge for any opposition party is to balance the constitutional requirement of providing the checks and balance, with the desire to display the qualities necessary to run the country when their time comes. In times of crisis, the distinction should become less apparent…