The 2017 general election was a disaster for Theresa May. She lost the Conservative party’s overall majority, lost what leverage she had in the Brexit negotiations, and lost the argument to a Labour party campaigning with a simple message: for the many, not the few.

But the dark cloud of Tory gloom had a silver lining: the party gained half a dozen seats in areas that had hitherto been seen as Labour fiefdoms. Stoke-on-Trent, Mansfield, Derbyshire North East and Walsall North were never supposed to go Conservative, but in 2017 they did.

Building on those modest successes is now central to Boris Johnson’s election strategy, and anybody who thinks the prime minister will go to the country on a platform of deregulation and devil-take-the-hindmost free-market capitalism really hasn’t been paying attention for the past three months.

To be sure, there are Tories who would like nothing better than to take an axe to the state and make London the wild west for footloose global capital. But while it is quite possible that they will eventually take control of the Conservative party, they are not running it at the moment.

Dominic Cummings is no free-market zealot, and he is targeting Blue Labour voters: economic interventionists but social conservatives – people who loathe City bankers and want more money spent on the NHS, but are hardliners on law and order, believe in the nation state and are strongly attached to their own communities.

David Cameron appealed to socially progressive neoliberals; Johnson, as was obvious to anyone watching last week’s Conservative conference in Manchester, has turned this strategy on its head. On the Monday afternoon the chancellor, Sajid Javid, announced plans for a higher minimum wage. The next morning, the home secretary, Priti Patel, was telling criminals she was coming to get them.

Speaking at a fringe meeting, the former Tory minister David Willetts said: “The strategy is to shift the party’s electoral base away from remain-voting areas – such as Winchester and Guildford – to Brexit-voting Labour areas in the Midlands and the north. What these potential Tory voters want is the welfare state, higher public spending and the unfreezing of working-age benefits.”

And that is what Johnson and Cummings are offering them. The biggest annual increase in public spending for more than 15 years involves more money for the NHS, schools and the police. Tax cuts are being planned, even though this will mean breaking the government’s own budget-deficit rules.

This has caused some confusion among the government’s political opponents. For years the left has said austerity wouldn’t work, and that a more activist fiscal policy would lead to stronger growth and – eventually – a lower deficit. It is something of a back-handed compliment to Jeremy Corbyn and John McDonnell that the Conservatives are now copying their ideas. There is, though, little point in branding Johnson’s economic policy rightwing when it clearly isn’t.

Needless to say, Johnson’s approach has plenty of flaws. The ditching of austerity comes after nine years of cuts. Much damage has been caused, especially in those parts of “forgotten Britain” where low-income jobs are rife.

With cynicism about politics running high, voters may join the experts at the Institute for Fiscal Studies in wondering how long the spending splurge will last. History suggests it will be until the first budget after the general election, because governments like to get the tough measures out of the way early in a parliament’s life.

The Tories also poll badly with younger voters, in large part because they have feather-bedded owner-occupiers and pensioners at the expense of renters and people of working age. Javid’s pledge to lower the age for the adult minimum wage from 25 to 21 is an acknowledgement of this weakness.

But Labour needs to take the threat posed by Johnson seriously. For a start, the Conservatives are focusing on voters in the seats where the election will be won and lost. Of Labour’s 45 target seats in England and Wales, all but 10 voted leave in the 2016 referendum. Similarly, 16 of the 25 most vulnerable seats Labour is defending voted leave, with four in England and five in Scotland voting remain.

An often heard argument is that loathing of the Conservatives will mean the Labour heartlands stay loyal. But many of the seats up for grabs have wafer-thin majorities. For Johnson to win, he doesn’t need Labour voters to defect en masse; he simply needs a thousand or so in each constituency to stay at home.

Corbyn did much better than expected in 2017, in part because his anti-austerity message resonated and in part because he managed to get the debate off Brexit. By doing so, he was able to disguise the fragility of the coalition between Labour’s blue- and white-collar constituencies.

That’s not going to be so easy to pull off this time. The coming election will be dominated by Brexit, and Labour – despite Corbyn’s efforts – will fight it as a more overtly remain party. Labour is now two parties: a middle-class party dominated by people who see politics through the prism of identity and a working-class party dominated by people who see politics through the prism of class.

Johnson thinks he can exploit the fact that Labour’s two wings no longer speak the same language by promising to deliver Brexit, bang up more criminals, build more hospitals and abolish poverty pay. Will it work? The idea of the Conservatives – bankrolled by hedge funds, and viscerally anti-union – as the party of the working class should be beyond parody. It has to be said, though, that many Labour MPs – especially those in the north – don’t exactly seem to be relishing the prospect of an election.

• Larry Elliott is the Guardian’s economics editor