This is a dispatch from David Cameron's Britain, the country that could be waiting for us at the other end of the polling booths and the soundbites and the spin. I didn't have to take a time machine to get there; I just had to take the District Line. In 2006, a group of rebranded "compassionate Conservatives" beat Labour for control of Hammersmith and Fulham Council, a long stretch of west London. George Osborne says the work they have done since then will be a "model" for a new Conservative government, while Cameron has singled them out as a council he is especially "proud" of. So squeezed between the brownish dapple of the Thames and the smoggy chug of the Westway, you can find the Ghost of Cameron Future. What is it whispering to us?

Hammersmith and Fulham is a sprawling concrete sandwich of London's rich and London's poor. It starts at the million-pound apartments on the marina at Chelsea Harbour – white and glistening and perfect – and runs past giant brownish housing estates and Victorian mansions, until it staggers to a stop on Shepherd's Bush Green, where homeless people sit on the yellow-green grass drinking and watching the SUVs hurtle past. Here, high incomes squat next to high-rises in one big urban screech of noise. In such a mixed area, the Conservatives had to run for power as a reconstructed party "at home with modern Britain". They promised to move beyond Thatcherism and make the poor better off. They were the first to hum the tune that David Cameron has been singing a capella in this election.

People who took this at face value were startled by the first act of the Conservatives on assuming power – a crackdown on the homeless. They immediately sold off 12 homeless shelters, handing them to large property developers. The horrified charity Crisis was offered premises by the BBC to house the abandoned in a shelter over the Christmas period at least. The council refused permission. They said the homeless were a "law and order issue", and a shelter would attract undesirables to the area. With this in mind, they changed the rules so that the homeless had to "prove" to a sceptical bureaucracy that they had nowhere else to go – and if they failed, they were turned away.

We know where this ended. A young woman – let's called her Jane Phillips, because she wants to remain anonymous – turned up at the council's emergency housing office one night, sobbing and shaking. She was eight months pregnant. She explained she was being beaten up by her boyfriend and had finally fled because she was frightened for her unborn child. The council said they would "investigate" her situation to find "proof of homelessness" – but she told them she had nowhere to go while they carried it out. By law, they were required to provide her with emergency shelter. They refused. They suggested she try to find a flat on the private market.

For four nights, she slept in the local park, on the floor. She is still traumatised by the memories of lying, pregnant and abandoned, in one of the wealthiest parts of Europe. The Local Government Ombudsman investigated but the council recording of the case was so poor she said it "hindered" her report. After a long study, she found the council's conduct amounted to "maladministration". Since they came to power, the Conservatives are housing half as many homeless people as Labour – even though the recession has caused a surge in homelessness. That's a huge number of Janes lying in parks, or on rotting mattresses by Hammersmith Bridge.

Why would they do this? The Conservative administration was determined to shrink the size of the state and cut taxes as an end in itself. Rather than pay for it by taking more from the people in the borough with the most money, they slashed services for the broke and the broken first. After the homeless, they turned to help for the disabled. In their 2006 manifesto, the local Conservatives had given a cast-iron guarantee: "A Conservative council will not reintroduce home-care charging". It was a totemic symbol of leaving behind Thatcherism: they wouldn't charge the disabled, the mentally ill or the elderly for the care they needed just to survive.

Within three months, the promise was broken. Debbie Domb, 51, is a teacher who was diagnosed with multiple sclerosis in 1994. She had to give up work, and now she needs 24/7 care. After being lifted up by a large metal harness and placed in her wheelchair so she can talk to me, she explains: "This was always such a great place to live if you were disabled. You were really treated well. Then this new council was elected and it's been so frightening... The first thing that happened when they came in was that they announced any disabled person they assessed as having 'lower moderate' needs was totally cut off. So people who needed help having a shower, or getting dressed, had that lifeline taken away completely. Then they started sending the rest of us bills."

She "panicked" when a bill came through saying she had to pay £12.50 for every hour of care she needed. "I thought, 'Oh my God, how am I going to do this?' The more care you need, the higher your bill, so the most disabled people got the highest charges. Everyone was distraught. I had friends who had to choose between having the heating on in winter and paying for their care ... I know a 90-year-old woman with macular degeneration who can't see, and she had to stop her services. There are lots of people who have been left to rot, with nobody checking any more that they're OK, and I'm sure some of them have ended up in hospital or have died." One of the council's senior social services managers seems to have confirmed this, warning in a leaked memo that the charges could place the vulnerable "at risk".

Debbie co-founded an organisation to fight back – the Hammersmith and Fulham Coalition Against Community Care Cuts – and, after appealing, she finally had her charges cancelled. "But there are a lot of people who can't appeal," she says. "You're talking about very vulnerable people – the very old, the mentally ill, the blind. A lot don't know how, or would be ruled to have to pay anyway, because the rules are so arbitrary. Now they're being taken to debt-collection agencies for non-payment. I know an 82-year-old woman who's never been in debt in her life who is being taken to a debt-collection agency for care she needs just to keep going... They want volunteers to do it instead. But you don't want to have to ask your friends or a volunteer to pull up your knickers for you."

Each year since the Conservative council was elected, the pressure on the housebound has increased. Meals on Wheels brings one good, hot meal a day to people who can't get out. The council jacked up the charges for it by £527 a year – so half of the recipients had to cancel it. A local Labour councillor documented that the council rang up a 79-year-old woman with dementia, and when she seemed to say she didn't need any food, they cut off her meals.

The cost of almost all council services has sky-rocketed, to fund tax cuts that disproportionately benefit the wealthy. David Cameron says he wants to make Britain "the most family-friendly country in the world" with "childcare as a top priority", but his showcase council has increased charges for childcare by a reported 121 per cent – a fact that makes the warnings about Michael Gove's planned "top-up fees" for nursery places seem even more ominous.

As I spend days walking across the borough, I find the detritus of the old thriving public sector now shut and shuttered. Next to a big council estate I stumble across the large red-brick Castle Youth Club. It was built in Dickens' time and bequeathed to the local council "to benefit the children of this area for perpetuity". The Conservatives shut it down two years ago to sell it off. The deal fell through, so now it sits empty while the local kids hang around on the streets outside.

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Ricky Scott, 18, tells me what it used to be like: "It was a really good place. When I left school they found me a part-time job at Sainsbury's – they taught me how to write a CV – and they persuaded me to go to college. They gave you a place to go to stay out of trouble, they got you into the gym, they helped us learn loads of stuff ... They did a lot to teach us about knife crime and how to stop it. When my friend was stabbed they helped us organise a big campaign about knives." After the youth club was closed, there was a surge in anti-social behaviour orders in the area. Ricky isn't surprised. "People don't want us on the streets, but then they take away the only place for us to go, so what do they expect? It feels like we used to have some good things but now they've all been taken away. It always gets taken away."

And in this boarded-up youth club, in Debbie's panic, in the image of Jane and her bump on the floor of the park, I realise I am peering into the reality of David Cameron's "Big Society". The council here told people that if they took away services like this, there would be volunteers; if the state withered away, people would start to provide the services for each other. But nobody opened their home to Jane, or volunteered to feed Debbie, or started a new youth club on their own time and with their own money. The state retreated and the service collapsed. It's a rebranding trick. The Conservatives know that shutting down public services sounds cruel, while calling for volunteerism sounds kind – but the effect is exactly the same. It's as if Marie Antoinette called in Max Clifford, and he told her to stop saying "Let them eat cake" and start saying: "Let them form a workers' co-operative to distribute cake on a voluntary basis."

But it turns out that it's not just the services on the council estates here that are threatened by the council – it's the estates themselves. Recently the leader of the Conservative council, Stephen Greenhalgh, co-wrote a pamphlet called Principles for Social Housing Reform, recommending that Cameron adopt a radical new approach to council housing. He said it provides "barracks for the poor" and helps create "a culture of entitlement", while "deliver[ing] a risible return on assets". He asked: why do we continue to "warehouse poverty in the core of our great cities", on land that is worth good money? Instead of following "the same narrow agenda of 'building more homes'", he said councils should "exploit [the] huge reserve of capital value" in the houses and the land by selling it off and charging "market terms", with some mild subsidy for the very poorest.

He seems to be trying to act on this agenda. He has stopped building any affordable houses for rent, and he is searching for council estates to sell off. I walk to the Queen Caroline Estate along the river, and it is one of the most calm and bright council estates I have ever seen – a walkway of houses and flats lined with trees, all washed over by a gentle river breeze. Teenagers are playing on a football pitch; an elderly couple is watching them, eating sandwiches. Everyone I talk to says they like it – "You've got a good mix of people, and it's so friendly," says one woman. On the other side of the Thames, staring down, is the £25,000-a-year St Paul's School, where Greenhalgh was educated alongside George Osborne in the 1980s.

Greenhalgh has declared that this estate is "not decent", and has offered it for sale to property developers. Maxine Bayliss is a 42-year-old mother who lives here with her two children. She says: "It's frightening to discover there are plans to sell off your home so they can give the land to rich developers. At first the council denied it, but when we challenged them they finally said, yes, we do have plans, actually. One Conservative councillor shouted at me that this was a ghetto and I shouldn't want to live here. Does it look like a ghetto to you? This is my home, it's my children's home. If they charged market rents, people like me would be forced out of London totally. This should be a city for normal people too, not just rich people. It's so insulting to say people like me shouldn't be living here."

Together with a coalition of other mums from the estate, Maxine has formed a group to stop the sell-off. When David Cameron came on one of his visits to the area to cheerlead for the council, she asked him about the threat to her home – and he accused her of "black propaganda". When she explained that the council itself had admitted to having plans, Cameron snapped: "If you don't like them, you should stand for election."

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Do we want our cities to look like Paris, where the rich own the centre, and the poor are banished to grey concrete slums on the outskirts where they riot with rage once a decade? If we hive out all our housing to the market, that will be our future. Or do we place a value on our land – and who lives there – that is more than purely financial? Do we think some things are more important than the market price? Later that night, I watch Greenhalgh on YouTube, lecturing these single mothers, and I keep thinking about that phrase he is so fond of: "a culture of entitlement". Who has really grown up in "a culture of entitlement": Maxine, who has so little, or Cameron and Greenhalgh, who have so much?

I walk the borough for days, trying to find what Cameron celebrates about this council – until, at the tip of the borough, I find a large grassy metaphor for Conservative priorities that seems so crude that I wonder whether it could have been secretly designed by the Socialist Workers Party cartoonist and plonked in my path. Hurlingham Park was a big vibrant patch of green where kids from the local estates could play, and run on one of the few professional running tracks in the country, in a setting so classically beautiful it was used in the film Chariots of Fire. But then the Conservatives were elected. They handed the park over to a large international polo consortium that has ripped out the running track and shut the park down for a month every year – so rich people can watch polo for hundreds of pounds a day.

Lying in the sun on the edge of the green, I find Nick Anderton, a 17-year-old from the local estate. He stares at it sadly and says: "The park is meant to be for everyone, isn't it? But we have to stop our football now so they can get it ready so these people can play polo, and we won't be able to use it for most of the summer ... My friend used to run on the track every day, he wants to be an athlete, but they got rid of it so he can't now ... It feels like we don't have the right to be here any more. They've taken our park and given it to these snobbish people who've got nothing to do with this area. Look at us. Does it look like we need a polo pitch round here?" Later, I read that Monty Python came to this park to film one of their sketches: "The Upper Class Twit of the Year."

So what is Cameron so proud of here? There seems to be only one answer: in this area the Tories have managed to cut council tax by 3 per cent. They've given back about £20 a year to somebody on an average income, and about four times more to a rich person. That's why, when Cameron was challenged about what has happened here, he said: "When I look at the record of what the Conservatives have done here in Hammersmith and Fulham, far from being embarrassed as the Conservative leader, I'm proud of what they're doing." As I heard this, I remembered that earlier this year Cameron's close friend and shadow cabinet member Ed Vaizey said Cameron is "much more Conservative than he acts, or than he is forced to be by political exigency". The principles that run through Cameron's politics seem to become visible at last, as clear and as stark as the Westway on the Hammersmith skyline: tax cuts, whatever the social cost.