It has always surprised me that this incident, which took place in the mid-1980s when Mr Blair was a junior Treasury spokesman, is not better known. More than anything else it was Tony Blair’s dawning understanding of the Conservative revolution, of which microeconomic reform was a key part, that marked him out as a future leader. And more than anything else, it was his acceptance that the Thatcher years had changed politics irrevocably that allowed him to seize power and hold on to it.

Most Conservatives are willing to give the Prime Minister credit for his insight. This does not, however, imply that Tories take him seriously. Extraordinarily, this powerful politician, now entering his seventh year in Downing Street and his tenth year ahead in the polls, is seen by his main opponents as having little original or interesting to say. Conservatives persist in believing that all he has done is copy Mrs Thatcher rather badly and reorganise the No 10 press office rather well.

Tories respect the Prime Minister for his electoral success,but are surprisingly incurious about the way it has been achieved.

This attitude is responsible for a rich irony. Tony Blair saved Labour from its failure to comprehend Thatcherism. Now the Tory party is held back by its failure to comprehend Tony Blair.

I remember as Conservative research director sitting in the meetings that led to the “New Labour, New Danger” campaign of 1997. I thought that the Conservative Party would not win another election until it understood that Labour was really changing and changing politics in the process. Sadly, the acceptance of the existence of new Labour never went beyond the slogan.

The strategy agreed at the Conservative MPs’ awayday last weekend will not work unless it includes an understanding of four ways in which politics has changed during the Blair years. It doesn’t matter if Conservatives do not like the way politics is changing, they still have to respond to it.

The first is the separation of means from ends. The abolition of Clause Four was a far more significant moment in politics than the disappearance of some anachronistic words from Labour membership cards. It represented a decision by one of the major political parties to be defined by its values rather than its programme. It allows that party to be flexible about the methods it uses to achieve its goals.

Such flexibility is more important to the Left than to the Right. The Labour Party’s programme had failed so badly that it simply had to be changed. Yet despite the greater success of Conservative means, it is still a mistake to be a slave to them. Tories may wish to cut taxes or privatise government bodies, but this should be done only when it is the best way to extend freedom and protect the essential values of the country, not just because privatisation is “what Conservatives do”. This must include an honest assessment of its electoral appeal.

A totally ideological party cannot defeat a totally pragmatic one.

The second way in which the rules have changed during the Blair years is the replacement of “either/or” politics with “and/but” politics. Tories are inclined to see Mr Blair’s constant pairing of apparently opposite ideas as his way of avoiding making a decision. It is certainly true that the Prime Minister, so often accused of believing in nothing, is more usually guilty of believing in everything, proposing policies that cancel each other out. Yet there is more to it than that.

Tony Blair realised early in his leadership that voters have complex, sometimes contradictory views. He attempts to represent them by bringing together ideas which, at least in political rhetoric, have usually been kept apart — tough crime policies and an antipoverty strategy, for example. It is a political position that is hard to combat, designed as it is to trap opponents into unpopular positions. Yet what is available to the Left is available to the Right. Tories, for instance, could back road-pricing combined with a tax cut, leaving the Government to chose between raising taxes and doing nothing about congestion.

When Iain Duncan Smith spoke yesterday to a youth summit he will have reflected on another way in which Britain has changed since 1997. The country has largely come to terms with the 1960s, rejecting its wilder ideas while lauding its greater tolerance and the freedoms it brought.

The recent photograph of Tony Blair playing his guitar, surrounded by children’s toys, will have been dismissed by most Tories as a dreadful, contrived photo-opportunity. Yet the PM’s image as simultaneously a family man and quite at home with pop culture is powerfully attractive.

The Conservative Party has been encouraged to become the party of the hedonist libertarian and this is quite wrong. The Tory party can never be, and should not try to be, the trendy party. Yet a moderate, reasonable understanding of modern Britain and its attitudes is vital. Without it the Right can never beat the Left.

This is particularly important because of the way class politics has changed. By fighting for middle-class support, Tony Blair has created competition for backing that Tories used to rely on. The old pattern of class voting is unlikely to return and Tories will have to get used to the competition. Rejecting the way middle Britain lives and the opinions it holds is not an option.

The Tory party does not need to love Blair, it does not need to become Blair, but understanding is imperative. There is no point MPs bonding with each other, if they don’t bond with the voters.

Michael Gove is away

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