Cameron to use 'Red Ed' as rallying call for centre ground

Leader will use keynote speech to attack 'leftist' Miliband

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David Cameron will seize on Ed Miliband's "Red Ed" image this week as the central feature in a Tory plan to dominate the centre ground of British politics and exclude Labour from power for a generation.

The Prime Minister believes the "Red Peril" warning is his best weapon to counteract the appeal of the new Labour leader. Mr Cameron gave the first indication of his strategy last night, insisting Tories would never "vacate the centre ground" while he was in charge. Some senior Tories are calling for a long-term alliance with the Liberal Democrats beyond the next election, even if the Tories secure a majority.

Mr Cameron attacked Mr Miliband's move to the left of both Tony Blair and Gordon Brown after backing tax rises while delaying action to reduce the deficit. The stance left "a massive gaping hole of credibility in his entire approach", the Prime Minister told the The Sunday Telegraph.

It follows a claim by the Chancellor, George Osborne, that Labour had made a "historic mistake" in electing Mr Miliband: "They have chosen to move off the historic centre ground of British politics. He is a man without a mandate or an answer to the deficit, and that makes him weak."

Mr Cameron will use his first conference speech as Prime Minister to warn that Mr Miliband's election represents a return to old-style class politics, with greater union rights, demands on employers and taxes on the rich. The Tories plan to intensify their attacks on Mr Miliband ahead of a union march against spending cuts later this month, which the new leader has promised to attend.

The strident remarks will help mollify Conservative rightwingers, who have expressed growing concerns that the Liberal Democrats have too much influence over the coalition.

However, Mr Cameron's attack is part of a wider strategy of presenting the Tories as the natural party of the centre in British politics, particularly now they are working with the Liberal Democrats in government. A series of Conservative cabinet ministers have gone out of their way to praise their relations with their Lib Dem counterparts in recent days, with Kenneth Clarke admitting today that he finds them "jolly".

And in a further sign that the leadership is developing a radical strategy to exclude Labour from power, one of Mr Cameron's closest cabinet allies claimed the Tories should continue the coalition arrangement – even if they win enough seats to govern on their own.

"We are pleased to be with the Lib Dems," the minister said. "The voters think it is more civilised. Even if the Tories win a majority at the next election, I would want to work with them."

A YouGov/Sunday Times poll last night put Labour ahead on 41 per cent with the Tories at 39 and the Lib Dems on 11.

Mr Cameron's move to lay claim to the centre ground comes against a backdrop of major policy battles between No 10 and two lead

ing figures on the Tory right. In a leaked letter, the Defence Secretary, Liam Fox, warned Mr Cameron, that "draconian" Treasury cuts will have "grave consequences", suggesting relations between the two former leadership rivals had hit rock bottom.

Amid suspicions that the revelation was part of a co-ordinated campaign, Lord Heseltine, a former Tory defence secretary, said it "looked to me like a letter written to be leaked", although Mr Fox called in military police to investigate how the private correspondence was made public.

Regardless of the source of the leak, a senior MoD insider said the events of last week had put Mr Fox in a stronger position. "There is a game of brinkmanship going on and he has boldly upped the ante. There are quite encouraging signs at the moment that his tactics are succeeding."

The Treasury demanded a 10 per cent cut in the defence budget, on top of a 9 per cent shortfall caused by Labour's uncosted commitments, creating a combined 19 per cent reduction. Mr Fox's team believe they can still secure a deal which is close to their stand-still option.

Mr Cameron condemned the "complete car crash" of a defence budget which is overspent by £38bn, but added: "Yes, there are difficult decisions, but we will have some amazingly capable defence forces with some of the latest equipment in the world, including more Chinook helicopters." Defence remains an important issue for the Tory right, which has become uneasy about the threat of cuts and the Lib Dems' influence, not least over Trident .

Lord Tebbit, a former Tory party chairman, said: "People are a bit uneasy over whether or not the Lib Dem tail is wagging the Tory dog too much." Some Tories were alarmed at the cuts to the armed forces at a time when international development has been protected, he said. "There will be quite a lot of people who would think defence has priority over overseas aid."

However, the former Liberal Democrat leader Sir Menzies Campbell said: "This public squabbling is embarrassing, but more to the point it gets in the way of a coherent outcome to the defence review."

Mr Fox is not the only right-wing Tory to have had his Comprehensive Spending Review negotiations spill into the public arena. Mr Osborne admitted yesterday to a "bust up" with the Work and Pensions Secretary, Iain Duncan Smith, about how to tackle the ballooning welfare bill.

Mr Duncan Smith will signal a victory in the fight with the Treasury today as he unveils plans to scrap a string of benefits to be replaced with a "universal credit" system, to be phased in over two parliaments. The disability living allowance will remain unchanged.

Hailing the "dawn of a 21st-century welfare system", Mr Duncan Smith will be allowed to keep a substantial slice of expected savings to ensure people are not worse off when they move off benefits. "We will break the cycle of dependency and poverty that has become entrenched in our poorest communities."

This announcement may reassure a number of right-wing critics at the start of conference week, but many still remain deeply concerned over the direction that the Government is taking.

One of the most senior Tory back-benchers brought the reservations dramatically into the open when he complained that his party had been "held to ransom" by the Lib Dems.

Christopher Chope, the secretary of the influential backbench 1922 Committee, accused the Prime Minister of handing down policies "like tablets of stone" without consultation with MPs. "It seems as if the coalition is proceeding on a basis of continuous appeasement without consulting the back benches," Mr Chope said.

Michael Fallon, the Tories' new deputy chairman, has stressed there will be no electoral pact with the Lib Dems. "We will be fighting every seat as the Conservative Party and we aim to win," he said.

The simmering resentment is in sharp contrast with the theme of the Tory conference – "Together in the National Interest". The cordial relations have even survived an edict from Mr Osborne that spending on Christmas trees in Whitehall must be slashed.

A succession of Tory ministers will use their platform speeches to underline their claim that they are enjoying working with the Lib Dems.

Oliver Letwin, the Tory policy chief, has often spoken of his affection for the "friendship" of a coalition instead of an overall majority for the Conservative party with its "spectrum of opinion", which he likened to a formal "marriage".

At a recent event organised by the Policy Exchange think-tank, Mr Letwin said: "In a marriage you are committed, so some of the inhibitions are removed and there is a terrible tendency therefore for some frictions to exhibit themselves.

"Whereas in a friendship, you are more concerned constantly to ensure you behave properly to avoid not seeing one another, which would be sad."

What a difference a year makes: Policy initiatives at 2009 gathering – and how they have changed in coalition

Defence

"A future Conservative government will never leave this country open to nuclear blackmail and we will guarantee a round-the-clock, submarine-based nuclear deterrent for as long as it is needed." Shadow Defence Secretary Liam Fox, 8 October 2009

The Lib Dems had freedom to "make the case for alternatives" to replacing Trident. Political pressure means the final decision is put off until after the 2015 election. General Sir Richard Dannatt, unveiled as a Tory defence adviser, was later dropped. Negotiations over defence cuts have played out on the front pages.

Inheritance tax

"Encouraging savings is why I made my promise that only millionaires would pay inheritance tax ... in the lifetime of a Parliament we will honour that pledge." Shadow Chancellor George Osborne, 6 October 2009

The plan was dropped in the coalition negotiations to help fund the Lib Dem policy of raising income tax threshold.

Immigration

"A Conservative government will be robust in the way it controls immigration... We will set an annual cap on the number of people who can come and live and work here." Shadow Home Secretary Chris Grayling, October 7 2009

After taking office, it was announced the number of non-EU workers allowed into the UK would be limited to 24,100, a 5 per cent cut, until April next year. But Lib Dem Business Secretary Vince Cable claimed it was causing "huge damage" to British business and called for flexibility in the cap.

Marriage tax allowance

"By recognising marriage and civil partnerships in the tax system and abolishing the couple penalty in the benefits system, we'll help make [family life] that little bit easier." Tory leader David Cameron, 8 October 2009

After being played out endlessly as a tax-cutting policy during the election campaign, it was quietly dropped and not mentioned in the Budget.

Prisons

"A Conservative government will build the prison places to address overcrowding," Shadow Justice Secretary Dominic Grieve, 7 October 2009

Justice Secretary Kenneth Clarke angered the Tory right by saying the Government had to be "sensible on sentencing" and aimed to have "fewer people in prison". He also claimed he had achieved more in cutting crime as Chancellor, by creating wealth, than as Home Secretary.

Matt Chorley

In quotes: What ministers said en route to Birmingham

"Let's put these cuts into perspective. Many businesses have had to make far greater reductions in one year."

David Cameron, News of the World

"I've seen more pictures of Neil Kinnock on TV in the past week than in 20 years. That's old politics."

George Osborne, Daily Telegraph

"I would be very distressed if it was thought I was getting any sort of pleasure from this."

Eric Pickles, Yorkshire Post

"We are working together in the national interest. That's what people most want from politicians."

Baroness Warsi, The Independent

"I do not rule out the risk of a double-dip recession caused by some fresh wave of global fear and crisis."

Kenneth Clarke, The Observer

"I have wanted a smaller state all my political life."

Francis Maude, The Times