Andrew Grice: Gould may get his dying wish: the brothers reunited

Inside Westminster

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The last time I saw Philip Gould, the Labour strategist who died this week after a long battle with cancer, was at a recent birthday party.

I looked around the room and counted lots of ex-advisers to Tony Blair. A few had gone on to work for Gordon Brown. But I couldn't see anyone who is close to Ed Miliband.

I left thinking Labour still has two tribes: Tony and Gordon replaced by David and Ed Miliband. I was being too simplistic. The wounds from Ed's act of fratricide against David are still there, but time is a great healer. I'm told their families are seeing more of each other. The full reconciliation Lord Gould, right, wanted to see before he died may be closer than we thought.

The birthday party came back into my mind this week. There is an intense debate in Labour circles about Ed Miliband cosying up to the anti-capitalist protesters outside St Paul's Cathedral and, in this newspaper, branding David Cameron as incapable of representing the 99 per cent since he comes from the top 1 per cent.

Some senior Labour figures are appalled by what they regard as an ideological crusade against the capitalist system. They want a switch to more traditional tunes on health, education and the economic crisis. "Faintly ridiculous and going nowhere," was the verdict of one former Labour cabinet minister. I suspect Ed Miliband will ignore the siren voices. He senses a unique opportunity over the next six months to drive home the message of his controversial Labour conference speech in September, in which he argued the neoliberal consensus since the Thatcher era had failed the majority of people, and said the state should reward "producers" and punish "predators". The anti-capitalist protests globally suggest the Labour leader may be mining a rich seam. He is convinced he can be both radical and credible, that his call for responsible capitalism can be the game-changer he needs because it is also good politics. He constantly calls Mr Cameron "out of touch". Labour and Tory private polling finds the same thing: this is the Tories' Achilles' heel.

The big challenge is to put flesh on the bones. Insiders say there is no shortage of ideas. At the next election, Labour will offer tax incentives to encourage companies to pay a living wage higher than the minimum wage. It will consider a pay ratio under which, for example, the highest paid person in each company could not be more than 20 times that of the lowest paid.

It won't be easy. Ed Miliband has been good at identifying the problems – "the squeezed middle", the end of the tradition that each generation was more prosperous than the last and the need for "responsibility" at the top and bottom. Although this has won him grudging respect at Westminster, the public have barely noticed. He is struggling to get his message heard outside his comfort zone. One Labour MP admitted: "We're doing Downing Street's research for it. We need to start getting some credit from the voters."

The Cameroons may mock Mr Miliband's alliance with the St Paul's protesters as "a bit weird", but they take the issues he identifies seriously. The Prime Minister is drawing up plans to ensure "moral markets" (copyright David Miliband). He may order companies to publish the pay ratio between their highest paid and other employees. Labour would doubtless accuse Mr Cameron of stealing its clothes; welcome to opposition.

Labour may wish to champion the 99 per cent (which party wouldn't?) but cannot claim a monopoly on this agenda. Steve Hilton, Mr Cameron's close adviser, launched a company and wrote a book called Good Business. Two rising stars on the Tory back benches, Matthew Hancock and Nadhim Zahawi, have just written Masters of Nothing, with a list of meaty reforms to improve company behaviour and prevent a repeat of the banking crisis.

Mr Cameron should heed their warning that "nudge is not enough". Five years ago, he tried to nudge WH Smith to display real oranges instead of chocolate ones at its tills to tackle obesity. Today, chocolate oranges are still on sale. The lesson Ed Miliband draws is that it is not enough to urge businesses and people to behave responsibly; the rules for the economy and society must be rewritten. After the 2008 crash, the bank bailouts with taxpayers' money and the continuing scandal of high pay, Ed Miliband may be more in tune with the public mood than Mr Cameron. The PM would look even more "out of touch" if he listens to the 30 City figures who yesterday urged him to scrap the 50p top tax rate. That really would make him look like the champion of the top 1 per cent.

Who said politics is boring because the parties have all converged in the soggy middle ground? We have a new battle, between the son of a Marxist historian and the son of a stockbroker. And a real debate, which is welcome.

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