The outcry over Sayeeda Warsi’s speech on Islamophobia last week cannot be understood without a clear grasp of the balance of power within the coalition government. There are two factions, and the strongest can loosely be described as neoconservative. This faction remains an unconditional supporter of the United States of America, continues to defend the Iraq invasion, powerfully admires and in some cases worships Tony Blair, and automatically takes the side of Israel in the middle east.

This section of the coalition also takes a hard line on domestic security arrangements, supporting control orders and the divisive Prevent strategy for confronting its special interpretation of the Islamic terror threat. Its key cabinet supporters include George Osborne, Liam Fox, Oliver Letwin, Michael Gove (whose book Celsius 7/7 sought to define the domestic war on terror with astonishing success) and, crucially, the home secretary, Theresa May. Baroness Neville-Jones, the one-time Whitehall spook who sits on the fancily named Security Council, is another well-placed though bone-headed supporter.

The most prominent member of the rival faction is deputy prime minister Nick Clegg, whose room in the Cabinet Office is just a few feet down the corridor from Baroness Warsi’s. In opposition, Clegg made some thoughtful speeches on anti-Muslim bigotry, although in government he has been more restrained. He has also, once again rather feebly, been privately urging the coalition to break with the United States over its now paralysed and bankrupt middle east policy (incidentally, an approach which was powerfully urged this week by Prince Turki bin Faisal, former head of Saudi intelligence and British ambassador to London, in a masterful speech in central London). There are only a handful of other members of this Clegg/Warsi faction: the attorney general, Dominic Grieve, is partially signed up, along with a phalanx of elderly one-nation Tories, mainly confined to the back benches.

This split between the renascent neo-conservatives and Baroness Warsi’s disorganised collection of one-nation Tories and ineffectual liberal democrats has not yet been exposed in the press. This is partly because the infighting has gone on behind the scenes, partly because the issues seem boring and obscure, and partly because the Warsi point of view has almost no supporters in the mainstream media. The split has, nevertheless, occasionally surfaced into public view. The defining occasion concerns the Global Peace and Unity conference in central London last October, a cheerful event attended by some 50,000 Muslims. Baroness Warsi was invited to speak, accepted, and then withdrew at the last moment, acting under an instruction from Downing Street.

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I am told that the deep reason for Baroness Warsi’s withdrawal was the circulation around the Home Office and other government departments of a memorandum from the Quilliam Foundation, an organisation which has been funded by the government and claims to represent mainstream British Islam. This claim is controversial, but there is no question that, along with the Conservative think-tank Policy Exchange, Quilliam has played a vital role in framing the public debate on Islam and exerted a huge behind-the-scenes influence on policy.

The Quilliam memorandum makes a sweeping division between good and bad Muslims. There are ‘moderate’ Muslims, probably politically inactive, who hold no strong views about foreign policy. And there are Muslims who, in the view of Quilliam, advocate extremist ideologies.

According to Quilliam and its powerful allies, a very large tranche of British Islam falls within this ‘extremist’ category: the Cordoba Foundation, the Muslim Council of Britain, the Islamic Forum of Europe and numerous other individuals and organisations which Quilliam defines as ‘entry-level Islamist groups’. The effect of this analysis is naturally to consign many Muslims, who regard themselves as public-spirited and patriotic, to the outer fringes of British public life. This division between ‘good’ and ‘bad’ Muslims lies at the heart of Sayeeda Warsi’s complaint last week about the official use of the term ‘extremist’. ‘It’s not a big leap of imagination to predict where the talk of “moderate” Muslims leads,’ she remarked. ‘In the factory where they’ve just hired a Muslim worker, the boss says to his employees: “Not to worry, he’s only fairly Muslim.”’

The Quilliam list worries other people besides Baroness Warsi. It is also controversial inside Whitehall, and goes to the heart of the catastrophically muddled British debate over political Islam — or, as it is also called, Islamism. According to the neoconservative analysis, which is open to scrutiny through the writing of Michael Gove, Melanie Phillips, Nick Cohen and many, many others, political Islam is a mortal enemy which the West must confront. Attending an ‘extremist’ event such as the Global Peace and Unity conference can be the first step on a terrifying escalator to hardline views and potentially violent jihad.

Critics of this analysis argue that political Islam, far from being an escalator to terrorist violence, plays an important role in preventing it. The East London mosque, for instance, is accused by its critics of hosting apologists for terror. On the contrary, say its defenders, it is an important community centre, very much part of David Cameron’s Big Society. Certainly unorthodox views are expressed, but this is because it plays an important role in enabling Muslims to vent their anger and frustrations.

Up the road from where I live in Highbury, north London, is the North London Central Park mosque (or Finsbury Park Mosque as it used to be known). For years it was an unpleasant and dangerous place because it had fallen under the control of Abu Hamza and a group of thuggish al-Qa’eda apologists. Then one day we woke up and Abu Hamza was gone. It was not the British state which dislodged him, but his Muslim congregation. I understand that many of them are political Islamists who have sympathies with Hamas — extremists with no place in Britain according to Michael Gove and the Quilliam Foundation. Life is much better now, but the Quilliam memorandum nevertheless damns our local mosque as one of its ‘entry-level Islamist groups’.

According to the jungle drums in Whitehall, the neoconservatives have won and David Cameron will shortly be defining the terms of their victory in a speech, billed to address the twin issues of ‘security and extremism’. Before he speaks, I hope that the prime minister will consider this: Baroness Warsi was not the only one excluded from the Global Peace and Unity Conference last October. Also stranded outside were 30 or so supporters of al-Qa’eda sympathiser Anjem Choudary of the now proscribed al-Muhajiroun. They stood outside in the cold and wet, urging ordinary, law-abiding Muslims not to enter because to engage with British democracy was haram — forbidden.

It is not too late for the prime minister to consider whether he has drawn the dividing line in the wrong place, to reconsider his definition of extremist, and to ask whether some of the most blinkered and dangerous extremists are not to be found within the ranks of his own government.

This article first appeared in the print edition of The Spectator magazine, dated