The answer's obvious: cut taxes and spending

Politics is about both measures and men. Labour is over-obsessing about one man instead of asking whether our measures make sense. Any prime minister in office today would feel the voters' anger as they see their cherished plans to spend their own money as they see fit destroyed by rising prices combined with the insatiable greed of the state in all its manifestations to take the people's money for its own, often incompetent and counter-productive ends.

When trade unions and the Fabians invented what became the 20th-century Labour Party, no working man or woman paid any tax. It was easy to call for higher taxes because only the Tory-voting bourgeoisie paid them. Now working people are faced with massive deductions from their pay. There is some compensation for those on low incomes with young children, but a third of the voters in the London mayoral elections were single or childless people. The tired references to "hard-working families" upset all the voters who live by themselves, do not have children at home and are denied tax credits.

And how can tax cuts be funded? By cutting spending. Take Labour-run Bolton Council. It decided on a zero council tax rise this year and was rewarded, rightly so, at the ballot box. When Mrs Thatcher imposed rate capping and told town halls to curb spending, a new generation of Labour council leaders rolled up their sleeves and worked within cost-cutting rules. Unlike their tax-greedy comrades of the Left in London councils, the municipal socialists of Leeds and Manchester, of Birmingham and Salford created a new style of local government by making less money go farther and finding innovative partnerships with the private sector to begin the renaissance of the great cities of England.

I do not know of a single minister who privately does not despair at the waste of money on pointless projects, publications, or legions of press officers that add no value.

I was baffled as Europe minister to be told I had to waste 90 minutes being quizzed by a consultant when the kindly but shrewd tea ladies in King Charles Street knew what needed to be done. How much was paid to the consultant? What happened to his report? No one in Whitehall knows or cares. When I suggested using easyJet to cut flying costs in Europe, fellow ministers and senior officials looked at me as if I had left a nasty mess on their doorstep.

Can I be the only MP outraged that town clerks - even dressed up with fancy titles such as chief executive - can now get paid £200,000?plus for running rubbish collection services in small towns? Labour prides itself on filling Tony Blair's promise to bring NHS spending up to European levels. But as Hugh Bayley, MP for York and a former minister, says: "If you increase health expenditure without increasing the supply of health services you simply fuel NHS inflation." Bayley had the fatal flaw of being a leading health economist before he became an MP and so did not last long as a minister. His kind of can-do delivery style never fitted in with the Paul Smith suits that pullulated in New Labour's higher reaches.

Labour should not be frightened of being a party that leaves more money in the pockets of hard-working individuals, starting with those at the lower end of the income scale. A Labour government that got serious about weaning its bureaucracy and clients off dependency on the citizen's money would find itself popular again.

Labour should break free from Cameronomics and put itself alongside the citizens of Britain, who are better able to spend their money than Whitehall and town- hall bureaucrats. The early Gordon Brown understood that when he fashioned Labour into a party that pledged not to raise income tax. He also held down public spending, despite the howls of the Left. Today's Prime Minister should seek to lead a more modest state. He might care to call it a prudent state which leaves more money with the citizen so that social justice is not confused with state aggrandisement. Can Gordon do it? Watch this space.

Rt Hon Denis MacShane is Labour MP for Rotherham