Sipping on an orange juice, fitting us in before a phone call from President Abbas and a visit to Brussels for an EU council meeting, David Miliband looked relaxed in his grand room overlooking Horse Guards Parade. You wouldn’t know that a few weeks earlier his decision to stay in cabinet and not follow his old friend James Purnell to the backbenches had been the lynchpin in the prime minister’s survival. So what about those members who might have wanted him to be a future leader of the Labour party? ‘They should want me to be a really good foreign secretary,’ he warns, and then uses the obligatory phrase of the moment – the party needs to be ‘united’. It needs to put on a ‘strong face’ because ‘the perils of not making the most of it are that you end up with a Tory government which costs our constituents very, very dear’.

He’s not going to fall for the question of whether he’d make a better prime minister than David Cameron, though: ‘I think Gordon Brown makes a better prime minister than David Cameron,’ Miliband retorts, and quickly moves on to the safer ground of talking about the opposition. ‘Every time the Tories try and say something they flake away’. ‘They have opposed every single thing we did on the economy and they have been proved to be wrong’. ‘Their policy on Europe is completely bonkers.’

But what about those in our own party who believe the real enemy is New Labour itself? ‘New Labour is needed more, not less, now’, says the foreign secretary. While he doesn’t believe in ‘bowing down in front of a Buddha of 1997 and saying everything that was said then is correct now’, Miliband is clear that those who still define themselves as New Labour would be making a ‘massive mistake if we allow a caricature of what we’ve been’, either from the right who ‘fear’ the fact that the government has been ‘progressive, reforming, social democratic’, or from the left who really should be ‘applauding’ a government which he contends has been ‘the most reforming – socially, economically and politically – in Britain since 1945.’

And what about the accusation that proponents of New Labour are obsessed with market fundamentalism? ‘I don’t recognise the allegations … it’s an easy hit,’ he responds. ‘The founding insight of New Labour politics is that markets need to serve the public interest, not that markets need to be abolished. That’s why I believe in the social market economy.’ Miliband should know a fair bit about the founding tenets of the New Labour project. He was Tony Blair’s head of policy in 1994 and helped to write large chunks of the 1997 manifesto. It’s not to be taken lightly, therefore, when he says, ‘New Labour’s success was that it wasn’t a faction in the party’. It drew its strength from both the left – ‘public investment’, ‘passionate about individual rights’ – and the right – ‘pro-European’, ‘multilateralist on defence’ and clear about the importance of tackling ‘crime and antisocial behaviour’. In that sense, he argues, New Labour was a ‘third way within the Labour movement, not just a third way between the old left and the new right in the political spectrum’.

How, then, can the government rediscover its guiding narrative? The government needs to reset its ‘political compass’ Miliband replies, quipping, ‘I hope I’m allowed to mention the word “compass” in Progress magazine!’ His prescription for achieving this relies on ‘linking your policies to your values’. On the economy, therefore, ‘Labour stands for the creation of wealth as well as its fair distribution’. ‘When you’re talking about the welfare state you say rights and responsibilities. When you’re talking about social policy you say you judge the condition of the country by the position of the weak, not just the strong.’ The foreign secretary is also aware that party activists are struggling to know what Labour stands for anymore. He agrees that the government needs to give people ‘a hymn to sing, because people come into the Labour movement because they want to metaphorically march to a tune.’

Might Labour activists be happier marching to a tune which put spending to end child poverty before spending on Trident? Miliband is dismissive. ‘We’re spending much more on tackling child poverty than we are on Trident and ID cards, much, much more.’ For him, the key to Trident ‘is the progress of multilateral disarmament talks’. ‘You’ve now got an American administration that’s meeting the Russians next month, you’ve got a new start to the START talks.’ He’s agitated that no one seems to know that by signing up to the non-proliferation treaty, countries are taking on three commitments: ‘One is to prevent nuclear proliferation, two is to promote the right to civilian nuclear power but the third is to multilaterally disarm to zero.’ He is convinced, he says, that President Obama and the prime minister are serious about going to zero.

Is Britain serious enough about supporting the protesting Iranian democrats or are we sitting on the fence? Miliband’s clear that ‘the worst thing for democrats would be to play into the argument that somehow we are backing one side or the other,’ because Britain has a ‘history of trying to decide who governs Iran, and the demonology of 1953 is a central feature of the demonisation of the west by the regime, so anyone who thinks that it’s a smart idea to repeat that frankly needs their head examining’.

One area on which Labour activists might argue the government needs their heads examining was on the decision not to hold the Iraq inquiry in public – a point which obviously wasn’t lost on the powers that be who changed the goalposts since the interview with the foreign secretary. In a supplementary question, Progress asked whether the government’s U-turn made it look like policymaking was in disarray? We received the following response: ‘We were adamant that we wanted a comprehensive independent inquiry that answers the need to learn lessons for the future on the basis of a clear look at the past. That requires candour and a spirit of inquiry, not prosecution. It is for the inquiry to decide how to run its proceedings, including public ones. But for some people and some issues, private hearings are the only way forward.’

Miliband is clearer about the need for citizen involvement in the debate around constitutional reform. ‘I don’t believe that constitutional reform is a middle-class issue. That is a sort of falsehood that’s put about by anti-reformers to say “look how people care about health and jobs and crime, stop mucking around with all this frippery”’. He suggests this is a real difference between New Labour and the old right: ‘Unless you get your political system breathing, living in a modern way, you’ll never sort out your education, your crime, your social policy.’

But despite Miliband’s general ardour for political reform, it doesn’t look like he will be embracing proportional representation along with cabinet colleagues such as Alan Johnson: ‘I think the constituency link is a good thing, not a bad thing.’ Instead he reinforces his support for AV: ‘I think the argument about the electoral system is about how you reconnect people with politics, and I think everyone who comes into the House of Commons should be able to say 50% of people in my constituency who voted, voted for me.’ Miliband’s also clear that the purpose of electoral reform should not be to ‘weaken the executive, it should be to strengthen the legislature’.

The foreign secretary ends with an appeal to the ‘next generation of the party’, saying: ‘I’m very excited about the people who are coming through the party … we’ve really got to make sure that you’re well served.’ Maybe he’s still got one eye on the leadership after all.