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Tory modernisers' best hope is an Ed Miliband victory

Being beaten after just one term by a man deemed unelectable would open up space for those who understand the need to reinvent the party.

Defeat would open up space for reinvention.
Ed Miliband speaks to supporters on January 17, 2014 in London. Photograph: Getty Images.

The British Conservative Party needs shock therapy. It may still scrape back into government in next year's general election but if it does, barring a miracle, it will be on a smaller share of the national vote than in 2010. This has been the case every time its been victorious since 1950. As a growing number within the party recognise, it's reaching a point where things have become unsustainable. Forty per cent of voters now say they wouldn’t even consider voting Conservative, while the party has little base among ethnic minority and working class voters, especially in the north. Once-proud Tory heartlands like Sheffield and Manchester now have not even a single Conservative councillor. As the impressive David Skelton of Renewal has argued, voting Conservative in these parts has become counter-cultural.

In the 1980s and 1990s, the left was forced into a reckoning. It had suffered successive electoral defeats but it had also been intellectually defeated, with the end of the Cold War and shifts in the country's social fabric. The Conservatives have never really undergone such a reckoning, largely because Thatcher was never defeated at the ballot box, mostly thanks to a divided opposition. And so a mythology has grown up and still has hold over the party: that her brand of free market triumphalism won over the whole country, benefited the whole country, and can do so again.

This was always dubious – but has sustained itself even as the impact of her legacy on country and party sews division and resentment, especially in the deindustrialised north, and the "party of the rich" image has been baked in. As a creed, Thatcherism has come to rest on public deference to business elites, a faith that whatever their excesses, their inherent superiority will benefit us all in the end, which has been severely undermined by the financial crisis and flatlining wages.

Moreover, Britain may be a conservative country, with many attracted to Thatcher's ethics of self-reliance and discipline. But few outside the south-east ever shared the values of break-neck economic liberalism to which those ethics gave rise. A lot of people don't like to be made to feel powerless to forces shaping their lives, or like losers for not wanting to be self-made billionaires.

And yet Thatcherism remains the default instinct for much of the party – any departure is usually tactical or skin deep (with the notable exception of gay rights). Contrary to what many on the left think, the Conservative tradition is rich and long pre-dates the neoliberal era, encompassing communitarian and even social democratic schools of thought. Yet these days, any thinking in its ranks which entails fundamentally challenging the Thatcherite comfort zone is tossed aside. If the party get back in to power in 2015, this sleepwalking will continue, even if in its obliviousness it further erodes the electoral ground on which they can be returned.

Increasingly it seems that the only thing that can reverse the trend is Ed Miliband, smiling from the steps of 10 Downing Street. If this sounds like preposterous accelerationist tosh, think about it. Being beaten after just one term by a man the party's leading lights have long deemed unelectable would provoke huge internal recriminations. In this post-mortem there will open up space for those who understand the need to reinvent the party, from top to bottom both ideologically and organisationally; a project that Cameron initially grasped and then retreated from.Even if the initial leadership contest doesn't produce such a candidate, Labour may still rescue the Conservatives with their spell in government – though only if Miliband is as successful as he intends to be.

Unlike his predecessors, the Labour leader has made clear his desire to rework the political economy that Thatcher brought into place and New Labour left largely in tact. If (and it's still a huge if) he is successful, it would re-wire the rules of British politics: towards intervention in markets to make them work for consumers; towards active industrial policy and economic populism. Living standards and wages – reform of the economy to make it deliver for ordinary people - would become the central issues of British politics.

Such ground is the only place from which Conservative renewal can be fought, given the kind of votes they need to win. Were they to move onto it, combined with already potent messages on welfare and crime, they would be a formidable threat. Yet they seem incapable of doing so of their own accord. It's almost certainly too late in this Parliament, having already surrendered so much ground Labour in favour of a much narrower agenda. Increasingly, it seems, they will have to be forced there.

This may still be a little sunny, admittedly. Defeat for the Conservatives could well just result in a prolonged turn to the right and doubling-down, as it did last time. But unlike before, there's a range of intelligent and interesting people in Conservative ranks who understand what the party needs to do to broaden its appeal, and have placed reforming capitalism at the heart of their pitch. Jesse Norman, Skelton at Renewal, and Rob Halfon are just a few. Though currently fighting an uphill battle, they have already laid down a marker for any future battle to come. And who knows, their ascent may yet end up being Miliband's biggest threat, and greatest achievement.