Britain is on the eve of the most interesting general election the nation has seen in two decades. In the past three elections – 1997, 2001 and 2005 – it was clear from the outset that Labour would win with a strong majority in the House of Commons. But as Gordon Brown prepares to visit Buckingham Palace next week and ask Queen Elizabeth to call a May 6 election, uncertainty is in the air. The outcome of this contest is proving hard to predict.

Most political pundits, if pressed, will say they expect David Cameron’s Conservatives to win power for the first time since 1992. One opinion poll published last Sunday showed the Conservatives with a lead over Labour of eight points – a level that would give them a clear double-figure majority in the 650-seat Commons. The Conservatives’ core message to voters is that after 13 years of Labour it is “time for a change”. The message clearly resonates with many.

Yet victory for Mr Cameron is far from guaranteed. There is no doubt that much of the public is disaffected with the dour Mr Brown and few pundits imagine him walking back into Downing Street with a majority in parliament.

But nor is the public much excited by Mr Cameron either. The Tory leader does not exercise the same grip on voters that Tony Blair enjoyed on the eve of his landslide victory in 1997. As a result, the Conservatives’ poll lead over Labour fluctuates sharply and was last week as low as two points. At that level, a hung parliament – in which neither Labour nor the Conservatives have an overall majority of Commons seats – is almost a certainty.

Given their narrow lead, the question hanging over the Conservatives is whether they will panic. That, at any rate, is the thought that arises after their latest initiative on economic policy. For the past few months Mr Cameron and his allies have made clear that their overriding goal will be to tackle the crisis of Britain’s public finances, to cut the UK’s huge budget deficit and to eschew the Tories’ natural “Thatcherite” penchant for tax cuts.

“It’s not possible to go into this election with lots of lovely plans for tax cuts,” Mr Cameron declared last month. “If you’re going to announce a tax cut, you’ve got to show where the money is coming from.”

Yet lo and behold, what did the Conservatives announce on Monday but . . . a tax cut. George Osborne, the shadow chancellor and the man bidding to be the next UK finance minister, announced he would reverse a key element of Labour’s deficit-reduction strategy. He said the Tories, if elected, would not introduce a one percentage point rise in national insurance contributions, a payroll tax, that Labour has planned to levy in 2011. Instead, Mr Osborne said he would recoup the £6bn that the tax might have raised by making public expenditure efficiency savings worth the same amount.

Mr Osborne doubtless believes this tax cut throws some juicy red meat to voters. But the move runs two risks. First, critics of the Conservatives will argue that this is a panicky U-turn, given that the Tories have for so long emphasised the need for genuine fiscal consolidation. Second, it allows Labour to return to a favoured argument against Mr Cameron, namely that he is an unreconstructed Thatcherite at heart. Labour’s argument is that while Mr Cameron may pose as a centrist figure who would preserve Britain’s state-run National Health Service, his true goal is to cut taxes and slash public services to make ends meet.

We should not exaggerate the Conservatives’ problems. The challenges facing Mr Cameron are modest compared with those facing Mr Brown. The prime minister’s reputation for sound economic management has been hugely undermined by the budgetary crisis. Leading Labour MPs have made no secret of their hatred of their reputedly bullying premier. The country is in the grip of a string of transport strikes that remind older voters of the industrial strife that nearly destroyed Labour in the 1970s. But the Conservatives face a big challenge.

Many voters say they still have no clear idea what Mr Cameron stands for. Monday’s volte-face on tax policy may just add to those doubts.

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