The Tories have conjured a trick – appearing progressive and yet Thatcherite. What is the truth behind this illusion?

David Cameron is proving to be one of the greatest political conjurors of modern times. Cameron has studied that other recent magician, Tony Blair, and at times acts like Labour's former leader in ways that are so imitative, they must be deliberate. In terms of shaping the agenda, outmanoeuvring opponents and working the media, Cameron and his shadow chancellor, George Osborne, exceed even their New Labour predecessors in artful brilliance.

With a wave of his wand, Cameron has managed to claim the mantle of change and is widely hailed as a great modernising leader, even though most of his party's critical policies remain the same. Over the past decade the Conservatives have been defined by their hunger for cuts in public spending and tax, together with a rabid Euroscepticism. Cameron goes into his pre-election conference as the only leader of a mainstream party in the western world who has called for spending cuts during the recession. He declares his opposition in principle to the new top rate of tax on high earners, but suggests its abolition will have to "take its place in the queue", implying a long list of tax cuts; which in turn would mean that the axe on public spending would be wielded even more brutally than he has already pledged, with a conveniently vague machismo.

The Conservatives' approach to Europe is still more alarming. Having withdrawn their party from the moderate, centre-right European People's Party, Cameron and William Hague plan to renegotiate the Lisbon Treaty or play an active role in its demise. The treaty is the agreement that enables an enlarged EU to function. In theory the Tories were in favour of enlargement - but perhaps only in ways that made the EU unworkable.

It is a form of genius to personify crusading, energetic change while armoured with economic and foreign policies that chime neatly with the party's approach in the 1980s and 1990s. The genius is all the greater because the collapse of the lightly regulated financial system challenges the underlying anti-government, small-state assumptions that shaped those two decades. Cameron and Osborne have turned a crisis for bankers into one about the exorbitant public sector, which they are pledged to cut down to size.

How have they pulled off these mesmerising tricks when they are watched so closely in the 24-hour media world? Why do we not see what is in front of our eyes?

Part of the answer is that it is a myth that what we are seeing now is the real, hard Thatcherite Cameron, compared with the cuddly version who remarked that it was time to "hug a hoodie" and who discovered a sudden passion for the environment. During his victory speech after he had been elected leader in 2005, he coined that clever, Blair-like soundbite: "There is such a thing as society, but it is not the same as the state." Cameron's wariness of the state did not begin with the recession.

What he has done much more successfully than Blair and Gordon Brown managed to do in the mid-1990s is to apply his party's "traditional values in a modern setting". John Pres­cott used that phrase to explain Blairite revisionism, but sometimes New Labour's policies challenged left-of-centre values. Cameron's values remain rooted on the right, but he has applied them in at times genuinely innovative ways: from his cheeky drive to claim the co-operative tradition from the left to his support for a quality-of-life index, to be used when judging policies.

In policy terms, his means are familiar - public spending cuts, Euroscepticism, "choice" in schools, tax breaks for families - but there has been a shift in emphasis on objectives. The Cameron era has been as much marked by a focus on the NHS, climate change and ending poverty
as it has on the need for a drastic cut in public spending. Such an emphasis has given him the chance to claim that the Conservatives are now the progressive force in British politics.

The failure of New Labour to define clearly what it means to be "progressive" gives anyone the chance to make this claim - though a close look at Tory policies would show that even this woolly term was being stretched beyond credibility. There is, however, cause for some hope that a Cameron government might prove less bleakly Thatcherite than its attitude to public spending and Europe suggests.

Partly this is because of some of those working with Cameron and Osborne. Cameron's main adviser and friend, Steve Hilton, is an original, someone genuinely enthused by green issues and grass-roots schemes to bring local communities back to life, as well as by finding new ways of delivering public services. Charles Leadbeater, one of the founders of Demos - a think tank once associated with Labour - recalls meeting Hilton at a conference fringe meeting in the 1990s. Hilton told him he was excited by the ideas generated by Demos and was keen to join, but he was seeking a Tory seat at that time, and decided to keep his distance.

There is no need for such formalities now. George Osborne and David Willetts are on the advisory council of Demos. Hilton has close ties with one of Osborne's advisers, Rohan Silva, who briefly worked for a Labour MP and switched sides on the assumption that the current Tory leadership was serious about its proclaimed progressive objectives. Both Hilton and Silva have shown interest in the work of Phillip Blond, the so-called Red Tory who is about to launch his own think tank. Ed Llewe­llyn, who runs Cameron's office, also gives cause for optimism. Previously he worked for Paddy Ashdown in Bosnia as well as for Chris Patten. As Ashdown has observed, Patten is one of the few Tories who is a genuine liberal, a pro-European internationalist. Llewellyn is a pragmatic One-Nation Tory in a similar mould.

The Conservatives' media team is decent and reasonable. Granted, it has faced the most docile coverage in recent history, but it has a lot to be reasonable about. There is none of the angry swagger that characterised New Labour's worst attempts at media manipulation. Perhaps these influential figures, especially the policy advisers with access to Cameron and Osborne, will provide a counter to a right-wing, liber­tarian, Eurosceptic parliamentary party and media that will be screaming for more and more cuts (until consequences are felt, when they will scream that something should be done about the state of hospitals - like a lot of Conservatives, they will not recognise the connection between cuts and the subsequent decline in services).

The other cause for hope is that what is said in opposition does, to a surprising extent, determine what happens in power. Cameron has declared that the NHS is his main priority. He has made much of his green credentials. He claims to care passionately about poverty. He has said he wants state schools to be improved, especially in poor areas. He has opposed selection. These words cannot be unsaid, although, no doubt, some of them were said for reasons of cynical positioning. He had shown no interest in the environment before he became leader, and made no use of his close working relationship with his predecessor Michael Howard to press for urgent modernisation of the party.

But he is stuck with the positions he has taken as party leader. To some extent, they will bind him in. He will have to deliver. Blair discovered in power that what had been said previously was a huge constraint. For example, in the 1997 election he declared that he loved the pound. After such an unequivocal declaration there was no way he could dump sterling a few months later. That is the complicated part of the Tory illusion: a hint that the conjurors are performing no trick at all. It is real. What you think you see is actually what you are seeing.

There are other, less worthy reasons which explain why Cameron and Osborne are master choreographers. They have been lucky. Since Cameron has been leader, he has faced a Labour Party in disarray. He has caused some of the identity crisis by his astute public positioning, but cannot claim credit for most of it. Labour was in crisis long before Cameron became leader, with MPs calling on Blair to resign within hours of the 2005 election. Since then there have been the September 2006 coup against Blair and two attempted coups against Brown. Labour's turmoil has helped to obscure the flaws of a Conservative Party that is, by several measurements, including the likely composition of the next parliamentary party, well to the right of its European counterparts.

Cameron has been fortunate in his media coverage. On the eve of Labour's pre-election conference, in 1996, the BBC broadcast a scathing Panorama on the party's so-called spin machine. Back then the corporation was in a permanent state of fury that Labour had been able to present a positive message in the media; the BBC would become obsessed by the issue of "spin". Although Cameron and Osborne are much better at spinning than New Labour used to be, there is no focus from the BBC on how the Conservatives have managed to project a message that is reassuringly progressive yet still has a Thatcherite tinge. There is no Pano­rama on the Tories and the media on the eve of their pre-election conference. Elsewhere there is little scrutiny of Tory policies and how these will be implemented.

It is not true that the Conservatives do not have many policies. They have ambitious ideas for the NHS, the devolution of power and for schools. But there is little evidence so far that they have been as rigorously thought through as were New Labour's plans for devolution, Bank of England independence, the minimum wage and the restarting of the Northern Ireland peace process. In advance of an election, they should be telling us more, and what they say merits more intense scrutiny.

Policymaking is the hardest, least glamorous part of politics, but in the end it is much the most important. It is the ultimate test of lead­ership and one in which the conjuror's wand plays no part.

Steve Richards is chief political commentator of the Independent and a contributing editor of the New Statesman

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