David Cameron is smiling now. But Nick Clegg could have last laugh

Inside Westminster: Labour says the ‘Red Ed’ soubriquet jars with the Tory decision to attack Miliband as weak

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This is very left-wing,” Conservative ministers texted each other as they watched Ed Miliband’s Labour conference speech on TV. “It’s back to Red Ed,” one Tory official texted to a colleague.

The Tories could hardly disguise their excitement that the son of the Marxist academic seemed to be following in his father’s footsteps. Tory-supporting newspapers needed no encouragement to rush out their favourite headline about the Labour leader – “Red Ed” – even though most have highlighted soaring energy prices, the issue he addressed with his promise of a 20-month price freeze if Labour wins the 2015 election.

In Conservative eyes, Mr Miliband was returning to the state interventionism of the 1970s. Just, coincidentally, as the Tories were preparing to honour “the lady” who brought it to an end, by marking the death of Margaret Thatcher at the start of their own conference in Manchester tomorrow.

Unlike New Labour, Mr Miliband seeks a new post-Thatcher economic settlement to ensure the benefits are shared by the many, not the few at the top. He insists reform of the privatised utilities or the banks is not “anti-market” but about making markets work better.

As the week passed, wiser Tory heads realised why Mr Miliband was happy for the Government to be seen “on the side” of the unpopular energy companies. Labour strategists are delighted the price freeze story has run since Tuesday, convinced it is the greatest policy hit of Mr Miliband’s leadership and, unlike his other announcements, will really be noticed by voters. Labour officials also claim that “Red Ed” jars with the Tories’ decision to attack Mr Miliband as “weak”, because he is being strong in standing up to the energy giants. The Tories, however, point out that Mr Miliband’s approach reinforces their other line of attack, that his party is the “same old Labour”. Ministers insist they are not fazed by the price-freeze pledge. Well before Mr Miliband’s speech, the Tories had planned to unveil some measures to alleviate the “cost of living” crisis at their conference. They are looking closely at increasing the national minimum wage, which has fallen behind inflation in recent years.

Yet Tory modernisers are worried that Labour’s perceived “lurch to the left” may tempt their own party to shift to the right at their conference on issues such as immigration and welfare. Why? Because of the elephant in the Manchester conference centre – Ukip – which won’t be mentioned much but will weigh heavily on Tory minds. Despite its shambolic conference a week ago, Nigel Farage’s party is seen as the biggest barrier to a Tory victory in 2015 – not because it is going to land lots of seats, but because it could win enough votes to spoil the Tories’ chances in many key marginals.

Talk of a Tory pact with Ukip is back. Some 27 per cent of Conservative members want a deal in which the two parties would give each other a free run in some seats, according to a YouGov survey of 850 activists for Queen Mary University, London, and Sussex University. Some 70 per cent think the Tories should fight every constituency. The poll found that 61 per cent of Tory members are aged 60 and over, while only 6 per cent are between 18 and 24. On a scale running from zero (very left-wing) to 10 (very right-wing), the average Tory member puts himself at 8.4, to the right of David Cameron (whom they place at 7) and closer to Ukip, which Tory members put at 9.1. A pact with Ukip almost certainly won’t happen, but the chatter reflects Tory jitters. Things can only get worse after the European parliament elections next May, when Ukip is set to come top.

The Tory modernisers hope Mr Cameron will resist the temptation and the pressure to tack right. The real enemy is Labour, they say: with Mr Miliband claiming the One Nation mantle, the Tories need to restore it to its rightful owner.

Of course, both the Tories and Labour will claim they are in the centre ground. They always do. But if the voters perceive them lurching to the right and left respectively, there will only be one winner – the Liberal Democrats.

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