If the Tories didn't exist, would we really need to invent them?

Mr Hague is preaching about `kitchen-table Conservatism': what it means I cannot tell you

IF IT isn't too rude to ask, what is the Tory party for? It is doing its best to confuse us about the answer. As the 20th anniversary of Margaret Thatcher's first victory looms, William Hague is preaching something called kitchen-table Conservatism: what it means I cannot tell you. But let us not worry too much - there is sure to be another relaunch along soon.

Now Peter Lilley has decided that the proper response to the continuing doldrums is to howl remorse for the ideology of the past. It is not a pretty sight. On the same day, the Centre for Policy Studies publishes a guide to the future by the Conservatives' former advertising guru Maurice Saatchi and the economist Peter Warburton. They predict that voters will become disillusioned with Labour because: "Taxes are always going up but the Government never seems to have enough to spend on the good things like health and education."

The pair then call for greater independence from government and better incentives for individuals and groups to take initiatives. It is a recognisably clear, dry Conservative position. The only trouble is that is almost diametrically opposed to Mr Lilley's call for Tories to stop fighting for free market causes. Conservatives are starting to occasion an unfamiliar emotion in me: pity. One friend, a lifelong activist who has spent years canvassing Labour voters with large dogs in unwinnable seats, and eaten more rubber chicken than the human digestive system can be expected to take, called after the reports of Mr Lilley's mea culpa and said simply, "I really don't know what it is that I belong to any more."

Mr Lilley is deputy leader of the party and responsible for reviewing policy, so his comments cannot be dismissed as just another existential wobble by a depressed member of the back benches. He rose and thrived as a Thatcherite of the purest water. On the scale of great recantations, his call for the Tories to move away from market principles in health and education is a bit like Galileo announcing that the sun did go round the earth after all. But then, Galileo had the Inquisition to worry about; Mr Lilley, the last I heard, was not similarly threatened.

The source of his intimidation lay elsewhere - in the focus groups which report that the public does not trust the Tories on the NHS and on the welfare state. But then, the public never did, all through the years of Conservative electoral dominance. Voters simply believed that the Tory party was cruel but efficient. Now they believe it is cruel but inefficient. Conservatism has what its social worker would call low self-esteem. Hence the desperate slash and burn operation on its old beliefs. At this rate, the faithful will be reduced to watching bootleg videos of Thatcher's speeches in bunkers.

Officials point out that expenditure on health and education actually rose faster under the Tories than under Labour. This admission used to pain Mr Lilley greatly: I remember that he took pride in responding that the rate at which spending rose was slowing down. Now the party has taken to presenting what it once considered its failure to curb state spending as a virtue, which is a bit like telling suspicious dinner guests that the souffle is really meant to be that flat.

All defeated parties have to come to terms with the shift in political realities. This is what Mr Lilley is attempting to do in returning to the explicit acceptance that state education, the publicly funded NHS and a comprehensive social security system are untouchables. This is the ground the Tories occupied between the times of Rab Butler and Edward Heath. Thatcherism was as much a response to the dead-handed corporate statism of Heath as it was a revolt against the left. The Mr Lilley of 1999 has taken up cudgels against his 20 years younger self. Why?

Here is a forensic and intelligent politician who understood the full impact of New Labour rather earlier than his more bumptious front-line colleagues. He has always admired Peter Mandelson's role in modernising the Labour Party, so much so that he once pointed out Mr Mandelson to me at a very loud party with the words, "That man used to be my pin-up." At least I thought that's what he said. When I passed on the compliment to Mr Mandelson, the then minister rolled his eyes and said, "What he really said was that I used to be his pair." It was a grave disappointment to discover that the two had merely been twinned in the Commons system that allows MPs a night off voting now and then.

Today, however, New Labour really is Mr Lilley's pin-up. There is only one example of a party recanting so much of its past and becoming more attractive to the voters and that, of course, is the Labour Party of Tony Blair. But the position of Mr Hague's party after the 1997 defeat is only superficially analogous with that of the Labour Party after 1979. The Tory Party changed the terms of the argument in Britain about economics, trade-union legislation and the role of the state. It moved the consensus in a direction of privatisation and lowering labour costs which many other countries have chosen to follow and adapt. Mr Blair was in the fortunate position of being able to take on great swaths of the Thatcherite settlement and add some popular alleviations such as the minimum wage, limited rights to trade-union representation and a slightly more redistributive emphasis in taxation.

Mr Lilley, on the other hand, is calling on Conservatives to accept old pieties about the role of the state which lag behind events, rather than point the way ahead. His call for a return to acceptance of the post-war welfare state and a publicly funded NHS is out of date, even in New Labour thinking. If throwing money at education worked, we would have the best schools in Europe. We do not. If the NHS could keep up with rising demand simply by expanding the amount decanted from GDP into it year on year, then that is what the Government would do.

But Mr Blair knows that these are not adequate responses to the problems of our public services. There is nothing sacrosanct about the state. It is a delivery system for services. When it fails to deliver, as too many schools and too many sectors of the NHS do, we should look at alternatives. The Government accepts this in opening the way to privatising failing schools. It is already preparing to remove service provision from local authorities that under-perform. I have not yet noticed a popular backlash under the banner "Spare our council the indignity of scrutiny".

It is still unpopular to say so, but I believe that the Government will, in time, impose some NHS charges in order to free funds to maintain the quality of essential services. These are the debates that will really shape the future of our public services. Late converts to the comforting certainties of the welfare state from a Tory Party down on its luck do it no service. These are different times. They're so Old Labour, these old Thatcherites.