The conventional wisdom is that the Conservative Party stands for more personal freedom in a smaller State. With Gordon Brown quite possibly facing his comeuppance, there is indeed an enormous opportunity for the party. This does not just mean cutting tax or red tape, desirable though these are. It means an ambitious programme of supply-side reform to raise the performance of the British economy.

Many people think that this is all that Conservatism stands for — personal choice in a market economy. But free-market economics cannot be the whole story. We should stay true to the free-market economics that originally got so many of us involved in Conservatism, while grappling with the big social issues that go beyond economics. That is why many “modernisers” want us to match economic liberalism with social liberalism.

This recognises that our culture is far more tolerant than many Conservatives appear to believe. It recognises that there is a very big problem of just what Conservatives and Conservatism are thought to be like. As Bridget Jones puts it in her diary:

“The point is you are supposed to vote for the principle of the thing, not the itsy-bitsy detail about this per cent and that per cent. And it is perfectly obvious that Labour stands for the principle of sharing, kindness, gays, single mothers and Nelson Mandela, as opposed to braying, bossy men having affairs with everyone, shag shag shag left right and centre, and going to The Ritz in Paris and telling all the presenters off on the Today programme.”

Social liberals recognise that we just have to be much more comfortable with our own country as it is today. Some of these modernisers suggest that — especially in today’s culture, where appearances matter so much — what better way is there of signalling you are in touch than how you dress? Marx might have got his economics deeply wrong but surely he understood his contemporary culture when he observed that a “black broadcloth suit becomes a social hieroglyphic ”. Now we might translate that as: “When the Conservative Party has mastered smart casual it will once more be ready for office.”

It is no accident that this strategy has become associated with the triviality of how we look. Deep down it is all about me, the individual. It is about expanding the sphere in which individuals can express themselves freely. But the Conservative Party’s problem is not about getting more of the individual, “me”, into its philosophy. The challenge is to explain where other people fit in. It is other people who change an individual life into a meaningful part of a family, a neighbourhood or a nation.

We Conservatives have got very good at explaining and expanding what individuals can do for themselves. What we are much less good at is what we can do for other people. Economic and social liberalism in its simplest form conspicuously fails to tackle this. We still have to show that we engage with the problems of people who may not have had the same advantages and opportunities as us.

We talk as if the problem is just the supply of government. But, increasingly, I believe that the real problem has been the demand for government that grows as a consequence of a fractured and fragmented society. There are different ways in which this demand for government expresses itself. If people are living on their own, we know that they are more likely to use the NHS. If you feel rotten in the middle of the night and there is nobody beside you to mop your fevered brow and tell you not to worry, you go to A & E instead. This is just one example of a wider point: atomised individuals need more external support. Social liberalism doesn’t come cheap.

Why has Britain become a more unequal society with such pressure on the tax and benefits system to redistribute from rich to poor? The clue is in the family. We focus very much on the diversity of individual incomes. Of course, in a modern market economy there will be great gaps in individual income. But the big difference between more equal and less equal societies is that more equal societies have bigger households. You see things very differently if you measure incomes not by individuals but by whole households. A society in which well-paid individuals are sharing their income with other members of the family can end up quite equal. In Britain, by contrast, because we have unusually small households, that task of redistributing income falls much more heavily on the State since we do much less of it informally within the extended family.

That is why we need a Conservatism that proposes social reform to create a stronger society.

So we must stand both for a stronger economy and a better society. It would be very wrong for us to feel that we could embrace only one of those principles by excluding the other. Of course, it was precisely the achievement of Tony Blair's Third Way that he appeared to offer some combination of economic efficiency and social justice. For too long the Conservative Party has stood transfixed in the headlights of this vehicle and decided that it either has to veer off as purely the party of neoliberalism and personal freedom, or we become a party of cultural Conservatism trying to protect traditional ways of doing things.

Neither of these approaches will work. We have to move forward confidently and challenge Tony Blair for the centre ground of British politics by trumping him. We should say that we can offer a stronger economy and a better society as well.

David Willetts MP is a member of the Shadow Cabinet.

Times Recommends

• We have kit and leadership. Let’s go
• Behind the scenes at the biggest deal
• Conferences — what a waste of money