Strange times. Someone who dropped into the Labour conference from outer space would have concluded from the rather drawn and grey faces in Manchester that they were looking at a party bound for humiliating defeat at the election. Which was a bit bizarre when Labour has been ahead, if not by all that much, in nearly every opinion poll for more than two years and most experts agree that Labour could even slip behind and Ed Miliband might nevertheless stagger over the threshold of Number 10 because his party enjoys a considerable advantage from the electoral system.

To continue with the inverted nature of this conference season, had our visitor then steered his starship south to the Tory gathering in Birmingham, he might have concluded from the shiny and excited visages on the humanoids and other lifeforms (Jacob Rees-Mogg was performing on the fringe) that he was looking at a party heading for a landslide victory. Champagne was swigged. The austerity ban on Tories being seen with bubbly seems to have lapsed along with any continued pretence that we’re all in this together. Fringe meetings on the theme of “Tories unchained” discussed what a Conservative majority government would do once liberated from their manacles to those pesky, nay-saying Lib Dems. At the end of the week, the conference gave a cheering standing ovation to David Cameron and many commentators cooed over the Tory leader’s speech as if he had just won another five years in Downing Street.

Ed Miliband’s failure to remember to mention the deficit in Manchester was wittily lampooned by Boris Johnson: “The baggage handlers in his memory went on strike and refused to load the word ‘deficit’ on to the conveyor belt of his tongue.” At the Tory conference, the amnesia was collective. With a supreme effort of will, they blotted out the many reasons to be doubtful that they can win a parliamentary majority next May. You would not have known that their conference week had begun with a minister being forced to resign for “sexting” a snap of his dishonourable member and another defection to Nigel Farage’s gang. You would not have known that the Tories are about to be hammered by Ukip in the Clacton byelection. You would not have known that economic recovery is stubbornly refusing to translate into the sort of uplift in the Tory poll rating that they thought they would be seeing by now.

Among the more sober Conservatives present in Birmingham, there was quiet, private acknowledgement that the confident appearance of their conference was deceptive. As I discussed with one minister how the Conservatives would lay their hands on a majority, he remarked: “I think we will win. Certainly biggest party. But, you’re right, the maths is very difficult. It is the sort of places that we’ve got to win that most troubles me.”

It has been widely and accurately remarked that David Cameron’s speech was well-crafted, touched a lot of bases and rehearsed some quite effective attack lines against his opponents. A compare and contrast with Ed Miliband’s speech would make an excellent advertisement for the manufacturers of autocue. Yet while the Tory leader pleased his crowd with assertions that the Conservatives deserve to and will prevail next May, I smelt considerable desperation lurking just below the veneer of braggadocio.

First, the Conservatives are clearly feeling highly vulnerable to Labour attacks on Tory intentions towards the NHS. Both parties have been studying the Scottish referendum and seeking to draw lessons that can be applied to the general election campaign. Both have noted how the Nationalists whipped up support for a yes vote in the final phase of the independence battle by accusing the Tories of planning to privatise the NHS. Mr Cameron’s conference response was to renew the ringfencing of the health budget and make it exempt from the £25bn of additional cuts that his chancellor is saying will be necessary in the first two years of the next parliament.

Combined with pledges not to touch the big slice of the welfare budget that goes in pensioner benefits, and the likelihood that the Tories will promise to protect education and defence as well, this represents a defeat for those ministers who know that it means the next round of cuts will fall again in the areas that took the brunt of them the first time around. It foreshadows an excruciating squeeze in non-protected budgets such as the police, transport, science and local government.

When Mr Cameron got personal about the NHS, it was possible to be moved as he talked about the care given to his disabled son and at the same time to note that it says something about the depths of voter distrust for the Tories that their leader felt it necessary to invoke his family’s tragedy to try to establish his credentials as a trustworthy steward of the NHS. A whiff of panic was also evident in the decision to unveil a hazy promise to renegotiate freedom of movement within the EU and to (sort of) scrap the Human Rights Act: a wheeze instantly denounced as “puerile” by what remains of the liberal wing of the Tory party. The anxiety displayed here was to pander to the Conservative base and try to arrest any further leakage of support to the Ukip insurgency.

To my mind, the biggest tell of Tory desperation about their election prospects was the decision to commit a Conservative government to reductions in income tax at some unspecified time in the future. Not jam tomorrow. Not even jam next year. But jam on the never-never. Anyone with any sort of familiarity with how British politics works had expected some sort of pre-election bribe. That is what governments nearly always do and with Tory governments it traditionally comes in the form of a tax cut. Labour’s most senior figures have been expecting it and nervously debating how they ought to respond. Like most people, they had expected the Tories to flourish a tax cut at the moment of maximum impact, which would be George Osborne’s pre-election budget. They had also expected that the Tories would make at least some effort to show how it would be paid for and to dress it up as fair.

From the Tory leadership’s decision to start talking tax cuts seven months out from the election, I can only conclude that the prime minister and the chancellor are much more worried about their listless poll ratings than they like to let on. They also don’t care much about being seen to be consistent. Mr Osborne used to excoriate those on the right of his party when they called for unfunded tax cuts. Now the prime minister is promising what his chancellor used to call a “con”. This is taking a risk with the Tory party’s two most valuable electoral assets. They have the more preferred leader when people are asked who should be in Number 10. Mr Cameron’s lead over Mr Miliband on the “best prime minister” question may or may not be as decisive as they hope, but they are relying on it to shift at least some swing voters their way. They also hope that the leadership question will play a crucial role in squeezing voters who have gone over to Ukip back into the Tory column. “Go to bed with Nigel Farage and wake up with Ed Miliband,” as the Tory leader joked with his conference.

David Cameron is now telling 30 million people that a tax cut will be their reward for giving their vote to the Tories, but he can’t tell them when they will receive it or how it will be paid for. This undermines his claim to be the more credible candidate for Number 10. In this anti-politics age, when the public are intensely distrustful of politicians and their promises, the voters are in a mood of: “Don’t tell, show.” Telling them they can have a tax cut, but being completely incapable of showing how it would be delivered, is an invitation for the public to be even more cynical than they already are.

The Tories’ other big advantage over Labour has been on fiscal credibility: their lead when voters are asked who is the better custodian of the nation’s finances. It is the most precious piece of political capital that the Conservatives have. So I was a bit surprised that they should want to gamble with it in this way. So are their rivals. In the interview with Vince Cable, which we publish elsewhere in today’s Observer, the Lib Dem jokes that the Tories make “Nigel Farage look like a bastion of Gladstonian fiscal responsibility. When the dust settles, people will realise this is just not deliverable”.

If it is deliverable it can only be so at the expense of even deeper cuts to public spending, plans for cuts that they are concealing from the public. Senior Tories I’ve spoken to assume their advantage on economic competence is so established that it gives them licence to make unfunded pledges that they would ridicule as recklessly irresponsible if they came from their competitors. We’ll see if their punt pays off. It’s illuminating that they felt the compulsion to take the gamble. It tells us that, for all the bravado they displayed in Birmingham, they are very, very nervous. From a distance, they may swagger. Up close, the Tories are sweating.