There was talk in Westminster tearooms afterwards that the Tory leader had rather gone over the top. This just goes to show you what political types know. Cameron's rage was entirely proportionate; rage, in this unspeakable case, was perhaps the only civilised response. Sometimes, gut instinct is more important than a calculated attack. Sometimes, political positioning is secondary to the need to say simply what is wrong.

It was over cases such as the Baby P tragedy, of course, that Cameron once hoped to fight the next general election. The party felt that the question of Britain's "broken society" would be the dominant theme. In less turbulent times, Cameron might have been right. But these are not such times and now the economy is all dominant.

What many voters are surely finding increasingly peculiar is that while Cameron and the Conservatives feel able to display such boldness when it comes to societal issues like the death of Baby P – hardly seen as the party's traditional strong suit – they appear so timid in the field of the economy, their supposed home territory.

Take last week's announcement of a plan to give tax breaks to firms that take on new staff. Perhaps it passed you by – which would be entirely understandable as it managed to be both infuriatingly complex and instantly forgettable.

The core reason for this timidity is that Cameron's response to the economic crisis seems to be the reverse of what he decided to do about Baby P: on the economy, he appears to be putting political positioning before instinct.

The problem for the Conservatives is image. Cameron has rightly ingrained into the souls of his party's MPs the received truth that they must never, ever give Gordon Brown the opportunity to portray them as the party of slash and burn. Three general election defeats have proven to them that the public do not want to vote for "the nasty party".

Furthermore, in Brown, Cameron now has an opponent who positively dribbles at the prospect of being able to dawb primary colours all over the Tories' pastel shades. The word "cut" in the Tory lexicon has thus become as forbidden as the word "socialist" was once to New Labour.

In the good times, perhaps this made sense. But now, in the bad times, this fear is stopping the Conservatives from addressing the key element which they should be tackling as we head into recession: the extent of public spending.

Cutting back the state has been entirely absent from the remedies Cameron and his increasingly clumsy Shadow Chancellor George Osborne have proposed for dealing with the recession. But the Conservatives, as a party of "personal responsibility", surely cannot let this territory go unchecked for much longer.

If households, small businesses and large companies are all now having to tighten their belts, why shouldn't large chunks of the public sector not undergo a similar – and arguably greater – retraction? Is it right in a climate where Gross Domestic Product is expected to fall by 2% next year, for the state to grow by that same margin? What will that do to growth and the long-term in the long term?

When pushed on this issue, Cameron's stated policy is to declare that "over the economic cycle", the state will grow "more slowly" than the general economy because "the proceeds of growth" will eventually be shared with tax cuts. To call this cautious wouldn't do it justice – and it simply doesn't cut the mustard for a centre-right party facing the biggest economic test since the war.

A targeted attack on the wasteful, non-productive parts of the public sector is now an unarguable necessity for the Conservatives if they are to offer a credible alternative to Labour. The burgeoning cost of the quango state, the £20bn cost of identity cards or the low productivity of the NHS – these all might be initial and very legitimate targets for the Tories.

No longer should Cameron's party agonise about the reaction to "public service cuts". They should instead focus on persuading voters that there are parts of the public sector which have burgeoned under Labour over the last ten years which maybe – just maybe – we can do without. If the Conservatives find the right language, they may find people – and not just those in the private sector – more receptive than they think.

Such an attack will, of course, require tact and guile. And, speaking of which, the former Scottish Secretary, Lord Forsyth, is making a start. In a lecture this week, Forsyth will quote no less than President-elect Barack Obama as he makes the case for public sector cuts.

In one of his presidential debates earlier this year, Obama declared: "I want to go line by line through every item in the Federal budget and eliminate programmes that don't work and make sure that those that do work, work better."

It couldn't be clearer. And if Obama can do it, so should Cameron.