Bringing back Peter Mandelson is the last nail in Gordon’s coffin

Later this week new figures on unemployment will add to the growing sense of gloom about the economy. The recent drastic rate cut was a sign of how worried the Bank of England must be. Its concern is borne out by the new independent forecast from the International Monetary Fund. Far from Britain being well prepared to weather the economic storms, as Gordon Brown has repeatedly claimed in recent months, both the IMF and the EU now predict that the recession in Britain is likely to be deeper than in any other major economy in the world.

As our Prime Minister heads off on yet another foreign visit, he leaves behind him at home the innocent victims of his economic mistakes. There is the father who has just lost his job, the small business that has had its loan called in, the family whose home is being repossessed and the pensioner whose income has plummeted. Many thousands of Britons struggling to cope in this recession are living proof that Gordon Brown's claim to have "abolished boom and bust" was one of the cruellest political frauds of all time.

As you would expect in a democracy, the harsh economic facts of life will create new political debate. The outlines of that debate are becoming more apparent and they offer Conservatives the chance now speak for the country at a time of national anxiety. It is right for us now to be the party of change and of responsibility.

There is now an overwhelming popular demand in Britain for change. Change was the theme of the American election and it will be the theme of the next British election. That is no coincidence. In both the US and the UK a near identical, and overwhelming, proportion of voters believe that their country is on the wrong track.

Mr Brown was acutely aware of the hunger for change when he became Labour's leader last year. It was always going to be a problem for the man who had been Chancellor for 10 years but "let the work of change begin" was his message on the steps of Downing Street. He forfeited his claim to be the agent of change when he cancelled the general election and tried his old stealthy tricks on the 10p tax rate.

Bringing back Peter Mandelson to the Cabinet for the third time, and attacking his opponents for being novices was the final nail in the coffin. He has made his fundamental strategic choice for the next election. He will be the candidate offering more of the same. And by deciding not to ditch him this autumn, the Labour Party has also made that choice. I believe together they have made a huge mistake.

The country doesn't want more of the same. The Conservative Party can now answer that desire by being the undisputed voice of change in British politics. We are doing that with our radical social agenda in areas such as education and prison reform. Now we will show that Conservatives, too, can offer change for people suffering from recession.

We have already said that we will help freeze the council tax for families. To help small businesses we would introduce a VAT holiday for small firms, reverse Labour's rise in their corporation tax and cut employer national insurance for the smallest businesses.

But much much more needs to be done. We will not stand by as jobs are lost and homes are repossessed. In the next few days you will see a modern Conservative Party offering real help and positive change to the innocent victims of Mr Brown's recession.

If the next election is clearly going to be a battle between change and more of the same, it also looks like being a battle between fiscal responsibility and gross irresponsibility. Mr Brown has again made a big strategic choice, and a huge economic mistake. He has abandoned not just the reality of prudence but its language, too. Gone is the talk of fiscal rules and the evils of unfunded promises. Government spin these days is all about spending splurges, unfunded tax cuts and the virtues of ever higher borrowing.

Don't underestimate what a departure this is for the man who for 15 years made prudence his rhetorical companion. Everyone now sees that it was never matched by reality. At the end of a 10-year boom, Britain finds itself with the highest budget deficit of any major world economy and the fiscal rules unceremoniously dumped. Given the state of the public finances, borrowing beyond what the recession requires without being clear how the bills would be paid would, in the words last week of Mr Brown's first Treasury Permanent Secretary Lord Burns, be "very dangerous". That is not language mandarins use lightly.

What should the Conservative response be? Some think we should follow Mr Brown down the road of irresponsibility. If we did, we would give carte blanche to the Prime Minister to risk still further Britain's reputation in financial markets, burden this country with a mountain of debt that could take a decade to pay off and strangle any future recovery with huge tax rises. That is the wrong thing for our country.

Starting three years ago, we have argued against unfunded promises, insisted that tax cuts such as inheritance tax be paid for and have proposed an independent Office for Budget Responsibility. Now we will become the only party of fiscal responsibility and prudence. We argue that borrowing has its limits, that spending splurges never work and unfunded tax promises mean higher taxes later.

And we can rely on the common sense of the British people who can spot the difference between a tax cut and a tax con. Lower taxes would help families and businesses in these difficult times but they should be properly funded. We should do the hard and honest work of identifying how lower taxes can be paid for.

This autumn the Conservatives can become the undisputed party of "change" and "responsibility". In doing so we will speak for a country crying out for both.