Peter Mandelson: How Cameron became one of the Great Ignored

The Business Secretary argues the Conservative leader struggles because his flagship idea lacks substance

A very strange thing happened during the Manchester TV debate last week. David Cameron suddenly lost his voice.

For sure, he delivered a few pre-scripted answers and told some shaky stories about people he'd apparently met on the campaign trail. But when it came to setting out a credible alternative philosophy with which he hopes to govern, the so-called Big Society, Mr Cameron came to a juddering halt.

Gordon Brown defined a clear mission for his next government: to secure economic recovery, protect frontline services and radically reform our politics. But while Nick Clegg decisively beat Mr Cameron in the charisma stakes – sending Tory spin-doctors into a panic – under sustained questioning, Mr Cameron seemed to be fatally crippled in his attempt to set out a distinctive set of policies.

That's because the Big Society has proved nothing more than a sticking plaster that is failing to cover up the ideological fault line in his own party.

Just two days after Mr Cameron's glitzy manifesto launch at Battersea power station, the Big Society became the Great Ignored in the Granada Studios.

In fact, the Big Society was never such a big idea after all. It was a desperate attempt to mask the deep divide between "one nation" Conservatives, who accept the responsibilities of government to tackle social ills, and the Thatcherite "small state" Tories, who hope David Cameron's conversion to "society" means a decisive turn away from the state.

"Small staters" believe government should not employ targeted measures to tackle poverty, as Labour has done. They believe lower taxes alone will generate wealth and enterprise – a trickle-down-to- the-poorest theory refuted by the US experience.

Those tensions were under the surface through Mr Cameron's performance at Thursday's debate, limiting his ability to mount a big argument.

As someone who lived through the creation of New Labour, I recognise that Mr Cameron wants to model himself on Tony Blair. But his tightly knit group of associates has simply pinched a few ideas from our campaign manual, rather than fundamentally reforming the party to make it fit for office.

Unlike New Labour, the Tories have not hammered out a unifying philosophy that can be turned into a credible strategy for government.

There are irreconcilable tensions that are personified in the top team the Tory leader hopes to take into Downing Street. On the one hand, there is Steve Hilton, the thoughtful strategist behind Mr Cameron's more "touchy-feely" moments and an admirer of New Labour. On the other, there is Andy Coulson, a former News of the World editor, who sees no reason to veer from gut Thatcherite instincts. Strung out between two such strong personalities, Mr Cameron's voice has become muted.

When he has made choices, Mr Cameron has sided with the "small state" right-wing tendencies – witness his manifesto pledges on the marriage bonus and the inheritance giveaway to the richest estates in the UK.

For the rest of the population, it would be fairer to retain family benefits such as the child trust funds and tax credits that would be withdrawn by a Cameron government.

These policies go to the fundamental contradiction at the heart of David Cameron's Big Society. If you are proposing to undo the existing welfare state in order to cut taxes, no amount of voluntary provision by a more active society will fill the gaps.

We have seen this clash between the rhetoric of compassionate conservatism and the reality of an unchanged Conservative philosophy before, and we know the outcome. Remember George W Bush.

Lord Mandelson is First Secretary of State and Business Secretary