Cameron's sights on centre ground

Prime Minister David Cameron will seize on Labour leader Ed Miliband's "Red Ed" image this week as the central feature in a Tory plan to dominate the centre ground of British politics.

The Conservative leader will use the "red peril" warning as a main weapon in his efforts to counteract the appeal of the new Labour leader, when he gives his first public response to Miliband's victory at his party conference in Birmingham.

Cameron sees Miliband's leftist background - including his close association with former Prime Minister Gordon Brown and the country's biggest unions - as a significant obstacle to his attempts to persuade Britain's middle classes to return to Labour.

Some senior Tories are calling for a long-term alliance with the Liberal Democrats beyond the next election regardless of the result.

It follows a claim by the Chancellor of the Exchequer, George Osborne, yesterday that Labour had made a "historic mistake" in electing Miliband.

He added: "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."

Cameron will use his first conference speech as Prime Minister to warn that 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 Miliband ahead of a union march against spending cuts later this month, which the new leader has promised to attend.

The warning will help mollify Conservative right-wingers, who have expressed growing concerns that the Liberal Democrats have been given too much influence over the coalition Government.

However, 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 Lib Dems in government.

Conservative Cabinet ministers have gone out of their way to praise their relations with Lib Dem counterparts in recent days, with Kenneth Clarke admitting he finds them "jolly".

One of Cameron's closest Cabinet allies claimed the Tories should continue the coalition arrangement after the next election - 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 Conservatives win a majority at the next election I would want to work with them."

But the move to lay claim to the centre ground comes against a backdrop of policy battles between Downing St and two leading figures on the Tory right.

A stark warning by Dr Liam Fox, the Secretary of Defence, to Cameron, in a leaked letter, that "draconian" cuts demanded by the Treasury will have "grave consequences" suggested relations between the two former leadership rivals had hit rock bottom.

Amid suspicions that the leak was part of a co-ordinated campaign, Lord Michael Heseltine, a former Tory Defence Secretary, said it looked like the culprit was the Ministry of Defence.

A senior MoD insider said Fox was 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 being successful."

The Treasury has demanded a 10 per cent cut in the defence budget, but the MoD says Labour's uncosted over-commitment to projects means a budget freeze would still leave a 9 per cent shortfall and Osborne's target would equate to a 19 per cent cut.

Fox's team believe they can still secure a deal which is close to their standstill option.

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 after the final decision to proceed on replacing Trident was pushed beyond the 2015 election.

Lord Norman 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." He said some party members will be concerned about the threat to the armed forces posed by defence cuts at a time when the international development budget has been protected:

"There will be quite a lot of people who would think defence has priority over overseas aid."

Fox is not the only right-wing Tory to have had his Comprehensive Spending Review negotiations spill in to the public arena.

Osborne admitted to a "bust up" with the Work and Pensions Secretary, Iain Duncan Smith, about how to tackle the ballooning welfare bill.

Duncan Smith will signal a victory in the stand-off with the Treasury today as he unveils plans to scrap a string of benefits to be replaced with a universal credit system, which will be phased in over two parliaments.

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.

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