A Tory MP bobbed up at Prime Minister’s Questions recently to ask David Cameron whether he was ‘aware that 4 per cent of people believe that Elvis is still alive? That is double the number, we hear today, who think that Edward Miliband is a natural leader?’ The Tory benches tittered, Labour MPs slumped into their seats as if this was a depressingly fair point,  and the Labour leader himself tried not to look too hurt.

The exchange reflected a Westminster consensus that the idea of Miliband as prime minister is risible. His aestas horribilis has reinforced the view among many in the political class that he simply doesn’t have what it takes to be leader. Those supporters of his brother David who greeted his victory by bitterly declaring that Labour had just lost the next election have been out in force in recent weeks.

Perhaps the person in SW1 least affected by all this is Miliband himself. He is used to being written off by the pundits. His friends love to point out that these self same soothsayers were convinced that his brother would beat him to the leadership. He says he has learned to take opinion polls ‘with a pinch of sugar’.

One hopes he also applies the same medicine to his morning newspapers — the press are now going after him with the same enthusiasm with which they went for Neil Kinnock. But the most damaging depiction of him is not as a dangerous socialist but as the lead character from Wallace & Gromit. He is mocked rather than feared.

But titter ye not, Miliband remains the bookmakers’ favourite to be prime minister. The shortest odds are on a Labour majority, and those who believe Cameron can win outright can get odds of 4 to 1.

The opinion polls might have narrowed in the last few months, with Labour’s lead dropping as low as three points, and Miliband has certainly had the worst of the summer political Punch and Judy show. But his more sober-minded opponents know that bad headlines can’t remove the three huge structural advantages which explain why those who bet on the outcome of the next election are backing Miliband.

For decades now the Westminster voting system has been unfair to the Tories. Boundary changes lag population movements, corralling Tories into larger constituencies. As a result, Labour can win on a far smaller share of the vote than the Tories. Tony Blair secured a comfortable majority in 2005 with 35 per cent of the vote, while David Cameron fell short of one with 36 per cent in 2010. Cameron tried to address this imbalance by reducing the number of MPs and equalising constituency sizes, but the Liberal Democrats — aware of the electoral harm this would do to them — killed the idea off.

Compounding this Tory problem is the rise of Ukip. In effect British elections are decided not by a mass popular vote, but by a handful of swing voters in swing seats. Lord Ashcroft last weekend released a poll of these marginal constituencies which said that Labour’s lead has widened to an almighty 17 points. This was not because Labour has become more popular, but because so many Tory supporters have defected to Ukip. Miliband is also buoyed by the fact that the British left, which split in the 1980s with the creation of the SDP, has reunited. When Clegg jumped into bed with Cameron, just under half of his erstwhile supporters leapt into Labour’s arms.

The Westminster debate has not caught up with this new psephological reality. You may think (as most Tories do) that Miliband will be crushed in television debates before the election. You may laugh at his ideas of ‘predistribution’ and regard his running tensions with Ed Balls, his power-hungry shadow chancellor, as a source of macabre entertainment. But if the bookies are right, these two are just one more summer away from their first Queen’s Speech and budget.

Miliband himself is moving into election fighting mode. His speech at Labour conference next week will ditch the intellectual complexity of his previous addresses and talk only about ‘the cost of living crisis’. It will, I’m told, contain ‘practical measures’ to help families with their budgets. This may resonate more deeply than you’d expect. Official government forecasts suggest it may be 2018 before the average British worker returns to a pre-crash standard of living. As one senior Treasury figure admits, ‘Some of his stuff about living standards is cutting through.’

But those close to the Labour leader concede that he also has to win the broader economic argument. He has to persuade the public of his belief that the current recovery won’t last because it is too narrowly based. As one Labour strategist says of the coalition’s economic strategy: ‘People know it’s unfair but what we’ve got to do is to persuade people that it won’t work.’ The aim is to show that Miliband’s economics are ‘hard-headed as well as soft-hearted’. It’s a reminder that Miliband’s aim is nothing short of forging an entirely different sort of British economy. As Tristram Hunt puts it, ‘Ed’s project’ is a ‘recalibration of our political economy’.

Miliband’s aim, breathtaking in its ambition, is to transform Britain into a hybrid of a German and Scandinavian economy. Its effect on Britain could be breathtaking too — and not in the way that Miliband likes to envisage. His approach to the economy is based round the two ideas of ‘predistribution’ and redistribution. That is to say: regulating companies so more money goes to the lower-paid, and then using the tax system to make doubly sure that this happens. But in office, Miliband will soon find that tax is the easiest part. Alarmingly, he is already planning both a 50p tax rate and a mansion tax. Miliband’s answer to the question of whether to tax income or wealth is to tax both.

This emphasis on the cost of living is being taken seriously by coalition strategists. Downing Street is preparing a major push on ‘making markets work for consumers’. Utility companies and the rail franchises can all expect to come under coalition scrutiny in the coming months. Inside government, there is talk of an ‘adopt or kill’ approach to Labour’s work on the cost of living: if they like an idea, they’ll take it for themselves; if they don’t, they’ll savage it. Having had this done to them for 13 years in opposition by Gordon Brown, the Tories know just how this game works.

But when it comes to the economy, the most alarming thing about Labour’s approach is not Miliband’s attempt to change the structure of it but Ed Balls’s return to the Treasury. One might have expected Balls to enter into a period of quiet reflection following the return of boom and bust. But that would be fundamentally to misunderstand the shadow chancellor, the most bafflingly self-confident politician in recent British history. Balls believes that the crisis has vindicated his judgment. He is so enchanted with his 2010 Bloomberg speech on the economy, which cautioned against an early attempt to reduce the deficit, that he has been known to put parts of it to music when indulging his love of karaoke.

His sing-a-long economics would be funnier if they were not so likely to be the fiscal thinking of the next Labour government. The Balls who returned to the Treasury would be a man totally convinced that, when it comes to the economy, he is right and his critics are wrong. There would be no containing him. The country’s economic future would be wagered on his bust judgment.

In this image-driven political era, it is easier to mock Miliband’s idiosyncrasies than to study his policy programme. It may not be immediately apparent, but he is a leader with a breathtakingly radical political project who is the odds-on favourite to become the next prime minister. He may yet have the last laugh.