Leading Conservative commentator Tim Montgomerie gives his tips to the Labour leadership on how it might win the 2015 general election.

The Conservative party after 1997 had no choice but to change or die. In parliament, the party had just 164 MPs. It was wiped out in Scotland and Wales. The Labour government enjoyed double-digit leads in opinion surveys. Although some right-wing MPs and newspapers remained in denial for a very long time, the most thoughtful Conservatives knew that the party had to change. The Policy Exchange and Centre for Social Justice thinktanks grew up as the leading vehicles for delivering this change.

The danger for Labour is that the need for modernisation is less obvious. 257 MPs sit behind Ed Miliband. Although Gordon Brown won just 29 per cent of the vote at the general election, large numbers of left-leaning Liberal Democrat voters defected en masse to Labour's colours as soon as the Coalition was formed. Some will defect back, but most will not vote again for Britain's third party if there is any chance of it propping up another Conservative administration. Labour therefore has a new base vote of about 34 per cent. That's only three or four percentage points shy of the level of support necessary to become Britain's largest party.

The temptation for Ed Miliband will be to make incremental rather than potentially unsettling changes. The temptation will be to hope that unhappy students, the pain of cuts, the controversial NHS reforms and Coalition squabbling will be enough to get Labour over the finishing line. That temptation should be resisted. After all, it's not impossible that the Conservatives under Cameron will find ways of reaching the voters that eluded them in 2010. Labour needs to be ready to defeat the Conservative party of 2015 and not the Conservative party of today. It also, of course, needs an agenda that will be appropriate for the challenges the next government will inherit.

So, for what it's worth, here's a Conservative party member's advice to the Labour party. I've grouped my advice under four headings: leadership, strategy, tactics, and organisation.

Let me get the leadership thing out of the way first, because I have to say it and Labour people have to deny it. Ed Miliband is not prime ministerial. As long as he remains leader it's going to be an uphill struggle for Labour to win an overall parliamentary majority. The problem isn't Red Ed - to use tabloid parlance - but Odd Ed. Voters close their eyes and can't imagine Mr Miliband as the nation's leader, representing Britain on the world stage. What he has achieved, however, is to have induced complacency in Team Cameron. Faced with a more formidable leader, Cameron would have had to raise his game. Faced with Ed Miliband, he's defaulted to his natural coasting mode.

If Labour won't change its leader they should look for a deputy leader that addresses his weaknesses. I'm not sure Harriet Harman balances Ed Miliband's ticket in the way that John Prescott balanced Tony Blair's. At Miliband's side should be a running mate who appeals to Conservative-minded southerners. One day Dan Jarvis might be that man but it's too early for him yet.

But let me move on to my second theme and that's the big strategic issue of the size of government. Fifteen years ago Tony Blair became prime minister. Outside the Festival Hall on the morning of his landslide triumph he said that he had been elected as New Labour and promised to govern as New Labour. The reality, of course, is that Gordon Brown, first as chancellor and then as PM, governed as Old Labour. Taxes, spending, borrowing and dependency all took off. Borrowing during tough times is what many governments do, but Labour borrowed during the good times. People can afford bigger government when their own income is growing. When times are tough they are no longer tolerant of IT projects that go wildly over budget or welfare spending that appears to subsidise indolence. This basic fact explains the ascendancy of lower spending, right-of-centre parties across the globe at the moment.

Labour must re-establish a reputation for being careful with voters' money. Margaret Hodge is an important ally in this task. Labour frontbenchers should be furious at every wasteful project that her public accounts committee uncovers. Evidences of incompetence rather than extreme ideology are the inexperienced Coalition's chief weakness. Labour MPs must be eagerly supplying the torch when the media seeks to shine a light on the inevitable occasions when incompetence produces waste and ineffective use of scarce taxpayers' money. In opposition, you can't do much to establish your own competence but you can be outraged at the government's failings.

Labour also needs to find one or two big items that illustrate it's ready to take the tough decisions on spending. Scrapping Trident may be an easy call for the Labour movement, but limiting the winter fuel allowance would be a flagship sign that Miliband really understands that the money has run out. The decision has to hurt Labour to show that the party has finally got it.

As well as finding money to pay off the debts, Labour should look at ways of spending scarce money more sensibly. Lord Adonis wouldn't be happy but Millennium Dome-sized infrastructure projects like HS2 nearly always go over budget. By scrapping them, the shadow chancellor can pocket tidy sums to reallocate to more people-sized and politically potent causes.

My third piece of advice concerns tactics. Win over centre-right voters by loudly opposing cuts to police numbers and the armed forces - Yvette Cooper and Jim Murphy are already doing this successfully. Campaign hard on issues like bankers' bonuses: 'fat cat pay' is a deeply uncomfortable topic for Cameron and connects Labour to the populist instincts of the Mail and Sun. Focus on issues like CCTV, where Tory civil libertarianism clashes with the voters' everyday desire for order and security. This gap between Tory elites and ordinary voters could become a very rich seam for Labour if it gets on the populist side of, for example, the renewable energy issue.

The other area of tactical opportunity comes in mass mischief-making. Labour must seek to separate the Tory right from Cameron and, of course, the Liberal Democrats from the Conservatives. Votes on Europe provide obvious opportunities for the former. Votes on Lords reform provide the best opportunities for the latter.

Ultimately, however, Labour's tactical interest in undermining the Coalition must not compromise the greater strategic objective of pulling the Liberal Democrats' left wing away from Cameron and, to some extent, from Nick Clegg. Miliband must seek every opportunity to back Lib Dem policy ideas. This has begun with Ed Balls' embrace of Vince Cable's mansions tax. The business secretary's idea to turn RBS into an investment bank should also be a natural policy fit for Labour as it, too, constructs its own industrial strategy. The message that Labour is on the same side of the debate as the likes of Cable, Ming Campbell and Tim Farron needs to be seeded now, and might pay handsome dividends in the event of another hung parliament.

My fourth and final area of advice is organisation - and it is on this subject that I'm most hesitant to offer any at all. All of my experience in politics has been to teach me that the left is better at grassroots campaigning. That was also the conclusion of Conservatives who worked alongside Labour activists on the 'No2AV' campaign and watched in admiration at their energy and ingeniousness. Perhaps it's because of a relative lack of money? Necessity being the mother of invention, the Labour rank-and-file have had to become better at fighting the ground war because they can't afford domination of the air war.

What I will say, however, is that the internet represents the coming together of the ground and air wars. Via online tools political parties can both target households very directly - seeing email and Facebook addresses as the equivalent of letter boxes - but can also spread messages to millions very quickly, by utilising Twitter and YouTube as superior online alternatives to roadside billboards.

With initiatives like 38 Degrees, the broad left is already showing more inventive use of the internet than the right ever displayed when we were in opposition and could feed off anti-government sentiment. The Labour party itself has been slower to understand and harness the internet. It could do worse than headhunt the people behind 38 Degrees and, of course, the team behind will be looking for new work by the end of this year.

Finally, back to my point about strategy. If Labour wants a big idea, I suggest a simple and homely one: 'better spending'. At the next election there will still be no money. The choices will be about allocation of scarce resources and competing growth strategies. Miliband should spend a lot of time with Labour local councils. Their innovations in this era of enhanced localism could provide many models of how to deliver social justice on tight budgets. In an age of voter cynicism, they can also provide proof that there are Labour politicians in existence who can spend taxpayers' money wisely.