John Rentoul: A plot twist in the No 10 soap opera

The characters in Downing Street may be falling out over health reforms, but Cameron is watching the ratings

It seems to be getting a bit Peyton Effing Place in Downing Street. That was Alastair Campbell's description of the melodrama that went on in No 10 when the Blair government was young.

Peyton Place, a Sixties American soap opera, opened with Mia Farrow falling in love with a man of whom her mother disapproved. There was a lot of shouting, crying and sulking. The third volume of Campbell's unexpurgated diaries, covering 1999-2001, is published next month, and will no doubt portray, in similar garish colours, the maturing phase into which the present government is heading.

Last week The Times reported that Steve Hilton, the Prime Minister's strategy adviser, was close to walking out. It was suggested that there were differences between him and David Cameron's other strategy adviser, George Osborne. The previous week, right-wing Tory MPs were reported to be critical of a third strategy adviser, Andrew Cooper, the opinion researcher who is blamed by some of them for the retreat from the NHS reforms.

What is going on? Certainly, there is a running debate in No 10 about the pace of change, and not just in the NHS. Hilton is an extrovert who becomes animated, and who sees his job as being to get things done. This means pushing against the inertia of the bureaucracy, the Treasury and the counsels of caution. It is no surprise, therefore, that some of his frustrations filter into the press. But I am told that there is no question of his leaving Downing Street.

His threatened departure did not seem plausible. My first memory of Hilton was when he worked on the 1992 Conservative campaign – "Labour's tax bombshell" – with a young Central Office staffer called David Cameron. Hilton was 22; Cameron was 25. It was through Hilton that I first heard of Cameron: it may have been Hilton who told me to look out for him because he was going to be prime minister one day. The bond between them goes that far back, and is stronger than most people realise.

That does not mean, though, that the tensions are invented by the press – they rarely are, even if the language in which they are expressed tends to Peyton Place. There really was a big bust-up about the NHS reforms. In the end, Hilton seems to have been on his own in arguing for the plan devised by Andrew Lansley, the Secretary of State for Health. Even Lansley accepted the need to retreat before Hilton did. Hilton was left arguing against Osborne, Cooper and the Liberal Democrats. The Chancellor took a pragmatic view that the Lansley plan was not worth the opposition it had generated in the health service. It has been reliably reported that in a morning meeting in Downing Street in February he lean-ed back in his chair and said: "Does anyone else think this is a bad idea?"

Cooper, meanwhile, who was brought into No 10 around that time to advise on opinion polling and focus groups, pointed out that public opinion was deeply suspicious of the changes. There were two possible responses to being told that the public hated the health reforms. One was to try to persuade people that they were necessary; the other was to say, "Oh, well, we won't do them, then." Hilton was in the first group until the end. Most vociferous at the other end were the Liberal Democrats, once Nick Clegg realised that this was a chance to define himself.

It was significant that Alan Milburn, the former health secretary, waited until last week to come out in support of the original Lansley plan, after the modifications that the Secretary of State explains here. Milburn predicts that the reforms will slow down and the NHS will have to be bailed out with more money. But we are interested in the Peyton Place of it here, for what the argument tells us about the way that No 10 works and, therefore, about David Cameron's leadership.

Hilton is the advocate of always going further and faster, which was also the mantra of the Blairites in the later New Labour years. His attitude to public opinion is that it is there to be led. This is not entirely reckless, although on the NHS it was hard to see how public opinion could have been turned round (at least, not without a new health secretary).

Hilton is also the advocate of the Big Society – indeed, he was the author of the phrase when Cameron first used it in his Hugo Young lecture in November 2009 – which the opinion polls say is a hopeless cause. Polls for this newspaper repeatedly show that most people who have heard of it think that it is a "cover for cuts". When the phrase came up in one of our focus groups recently, the response of one member was to pretend to be sick.

Cooper will be reporting similar findings to No 10, but Hilton is unmoved. The reason Cameron persists with the idea is because he and Hilton see it as part of a bigger argument. It goes back to one of the founding slogans of Cameron's leadership: "There is such a thing as society, it is just not the same as the state." The Big Society is a counter to Big Government: it serves a purpose in showing that Cameron is not a hard-hearted Thatcherite, cutting the public sector and letting people sink or swim. It does not matter what people think of it, it proves that Cameron's heart is in the right place.

The same goes for international aid. The Tory promise to raise aid spending is hopelessly unpopular. All the opinion polls show it, and all Tory MPs know it. But Cameron will not be shifted, possibly because he believes in it (never a motive to be discounted entirely), but also because it says that he cares. It was being seen as uncaring that did for the Tories the last time they were in government.

What is harder to detect is how much the inevitable Peyton Placeism of politics reflects serious ideological division, as the Blair-Brown civil war did, or how much it is merely the argument that always dominates the centre of politics about how much leaders can and should push against the constraints – of public opinion, money and votes in parliament.

independent.co.uk/jrentoul