To read their press, Conservatives should be cock-a-hoop at Labour's policy splurge. Red Ed's retro-trip back to the 70s will put out the lights, it's Kinnock all over again with a Mugabe land-grab. This week's figures show the economy motoring while Labour lurches left. What's not to celebrate for the Tories in Manchester this weekend?

But beneath the bluster they're rattled, scuttling to find policies that prove they're not as "out of touch" and "for the few" as pollsters find. Expect the long-promised marriage tax bonus, a rumpled old rabbit to pull out of the Tory top hat, the idea that a small sum will send cohabiters dashing down the aisle. Rumours suggest David Cameron may be spooked into raising the minimum wage by the 5% it has fallen since 2010; bring it on, says Labour, we'll raise the stakes. Could the Tories raise income tax personal allowances again? They have already spent £11.5bn pretending it helps the low-paid, though the Institute For Fiscal Studies said that three-quarters went to earners in the top half.

A sign of panic: when Labour announced its childcare offer – breakfast-to-tea care in every primary school and 25 hours' free nursery – Liz Truss, children's minister, pulled out of a long-arranged event at the Resolution Foundation, pleading an "unavoidable diary clash". Her childcare pledge goes mostly to higher earners, while she's had to abandon her scary plan to warehouse babies, six to a childminder.

Conservative unease sees Labour paying for childcare with a levy on banks, in contrast to George Osborne, who on Thursday took legal action to stop the EU's cap on bank bonuses. A further embarrassment: Labour demands the Tories pay back £5m in donations from Michael Spencer, their former treasurer and founder of Icap, which has just been fined £55m for a Libor-fixing scandal that Cameron refused to investigate. The question Cameron needs to escape is: whose side are you on?

A torrent of red scaremongering may not work. As Professor Tim Bale – and the pollsters – point out, fewer people identify left or right, barely understanding the terms: few remember the 70s anyway. But people do know their energy bills rise by 9% for years in a row, while energy companies make £4bn a year in profits, by both generating electricity and selling it to themselves at opaque prices. Bills rise when wholesale rates rise, but fail to fall when they drop. The Mail that now rants against Red Ed has been campaigning on it too. A temporary price freeze while the market is broken up to force more competition is no statist takeover.

This is the clearest symbol for Miliband's "responsible capitalism", breaking the grip of cartels and rip-offs. Gregg McClymont, the shadow pensions minister, is gunning for the extortionate hidden fees of the pensions industry, where City salaries are paid out of skimming other people's savings. Osborne has let the banks slide out of firm-enough regulation. Hedge funds and developers hoard building land they should use or sell. Rogue letting agents and landlords in the wild-west rental market should be reined in. Small businesses – by far the main employers – need a boost at the expense of tax cuts for corporations. None of this costs money outside Osborne's spending limits.

Calling all that dangerous socialism may not resonate with most voters, so how, beyond puerile abuse, do the Tories oppose it without looking like defenders of vested interests? After the top tax cut, they don't like the corner they've been painted into. Nastiness is their fallback, scoring best on immigration, scroungers and crime – and that keeps Ukip at bay, their true enemy.

Ministers will rise to report their successes. But serial policy errors loom larger as the election approaches – above all the NHS, with emergency care buckling already. The lack of primary school places and portable buildings for many remind how Michael Gove's haphazard free schools have eaten up the building budget. Universal credit is falling under the wheels of its impossible task while the Work Programme finds real jobs for only one in five. The brutality of the bedroom tax risks turning opinion against further benefit brutality.

However the great bulwark of Cameron's confidence remains the economy, the one strong reason why he might not lose – and that's still Labour's mountain to climb. Voters may like Miliband's "responsible capitalism" cure for a rip-off corporate culture – but only if they see him as a responsible pair of hands. Without that trust, popular policies gain no traction. That makes Miliband character assassination the Tories' best ploy: weak Ed, red Ed, odd Ed – but Bullingdon bullying risks backfiring in Manchester. After Miliband put a brake on the rush to bomb Syria, after he has staked out strong plans for the future, "weak" may miss its mark. The Tory scramble for a riposte shows how jumpy they are – and with good reason. Ashcroft polls find Labour 14% ahead in the marginals, 13% ahead with women voters. Wiser Tories know the risk of crowing too loud about growth while most people feel none.

This week Labour took on the deadliest foe of all – the stay-at-home party. All who say on the doorstep "you're all the same", "why bother?" have not been far wrong until now. Trimming, triangulating, sneaking small policy advantages and wallowing in the narcissism of small differences, the parties seemed locked in a distant and disreputable Westminster charade. But that spell is broken with hard policies – not bribes but beacons of Labour's intent: building homes, jobs for the young, childcare for working mothers, all life's essentials.

Leftish refuseniks for whom Labour is never good enough, or sod-them-all young voters, or the alienated who stopped listening long ago have no excuse now to sit on their hands. The difference between a Labour and a Tory win will be monumental. There is no vacancy in the fabled centre ground: Labour occupies it, while Cameron has marched rightwards with the most ideological Tory party since the war, recklessly pursuing neoliberal anti-statism.

It's "Red Ed" who is the pragmatist, no longer willing to be dragged along in the neoliberal slipstream, but holding the line against privatisation of everything and the surge of wealth away from the low paid to the boardroom. Some might fear Miliband will wreck the economy, others that Cameron will asset-strip it. Either way, neutrality or indifference is no longer an option. Cameron's fear this week should be that Labour gets out the absentee vote.

• This article was amended on 27 September. The former Conservative treasurer and founder of Icap is Michael Spencer, not Michael Spicer, as originally stated. In addition the original article used the work break instead of brake. This has now been corrected