Thirty years on from Margaret Thatcher becoming Prime Minister, it is being suggested that we have come to the end of the Thatcher era. Don't believe it. Iron does not rust that easily.

There have been reversals of the direction that she set, with the partial nationalisation of banks and the increase in the higher rate of tax to 50 per cent. But the former is first aid to a tottering banking system rather than an ideologically motivated return to public ownership. The Government clearly wants out as soon as possible, recognising that it knows even less about banking than bankers, difficult as that is. We will not see Clause 4 exhumed.

The bonus classes largely have themselves to thank for the 50 per cent tax rate. Their excess made them an irresistible target. But the higher rate won't raise significant extra revenue. What it will do is deter effort, so Britain will lose out in tax competition with our market rivals, making it harder to restore the City's leading position in financial markets. The higher rate will have to be rolled back before long by whichever party is in government to avoid jeopardising economic recovery.

I don't see either of these measures - regrettable as they are - as a definitive rejection of Thatcherism. The real story is not that the Thatcher era is over but that it continues unabated. Nineteen years after she left office, no successor government has deliberately undone or reversed any of the main changes she brought about. Nor have they come up with anything better. The “Thatcher settlement” remains largely intact.

The best test of this is to imagine where Britain would be had her successors reverted to the political trajectory charted by both parties until 1979. It would be a case of hello there, Zimbabwe, can we join you? Serious as our present problems are, we would be in a very much worse state were it not for the strong foundations that Margaret Thatcher built.

She was asked some years ago what she had changed in Britain and replied “everything”. That is pretty well true, the exceptions being Parliament - to which she was too indulgent - the Armed Forces and the Post Office. Nationalised industries were privatised, tax rates dramatically lowered to encourage initiative and entrepreneurship, trade unions curbed, council housing sold to its tenants, the size of the Civil Service reduced and several of its functions hived off to executive agencies, the City opened up to competition, the professions compelled to adapt. I could go on and on, to quote a phrase. She also embarked on serious reform of education and the NHS but left them too late to complete in her term.

Her great and unusual strength as leader of the Conservative Party was natural empathy with the basic instincts of the electorate. The instincts may not necessarily be admired by Guardian readers or the politically correct, but they are none the worse for that. She understood that owning your own home, spending more of what you earn rather than have the Government spend it for you, dislike of the nanny state, support for our Armed Forces, independence from bossy Brussels and the aspiration to a middle-class lifestyle were not ambitions to sneer at but to be fulfilled. Platitudes about listening government are beside the point: she simply shared the instincts.

The only moment when this empathy deserted her was over the poll tax. Intellectually the case was strong, and benefited many of “her” people. But it loaded costs on an even greater number of “her” people, which they refused to accept.

She was and remains scornful of conventional wisdom. Just because something has always been so in the past does not mean that it has to be so in the future. It made her healthily sceptical of much of the expert advice with which all prime ministers are flooded in an attempt to drown their political instincts. The best known example was the 364 economists who opposed her early Budget. I suspect that John Maynard Keynes would be getting short shrift if she were Prime Minister today.

The other secrets of her success are clear thinking, careful preparation, extraordinary energy and, above all, willpower. The energy was truly remarkable. She viewed holidays with distaste, as an unwelcome interruption in the tempo of work. She punctuated them with eager telephone calls to No10 seeking an excuse for an early return as soon as the obligatory photograph on a beach with Denis and a borrowed dog had been snapped.

I was asked recently how she would cope with the test of being awakened by a 3am telephone call announcing some disaster - which Hillary Clinton implied President Obama would flunk - and was able to say with certainty that it would not be a problem. The chances are she would be up and about at 3am anyway.

Whether this perpetuum mobile was the best way to run a government is something for historians and psychiatrists to argue over. But it was embedded in her character from early on as illustrated by the passage in her memoirs recording schoolgirl holidays occupied with “PT exercises in the public gardens [of Skegness]... rather than sitting around day-dreaming”.

Her ability to focus remorselessly on the task in hand was another strength. She has never been inclined to see two sides to any question or work for consensus because that would imply doubt and indecision. She believed in backing her judgment and was reinforced in that when the electorate backed her three times. Yes, she knew how to be pragmatic and when to retreat, making smoke. But the ratio of pragmatism to steely resolve was lower than in any government before or since.

Not everything in the garden was lovely. There were victims, though far outnumbered by beneficiaries. And the egregious bonus culture has taken some of the moral shine off Thatcherism. But overall the changes she made to Britain have given us more than two decades of unprecedented prosperity. They saw Britain reinstalled as the world's fourth- largest economy, losing our reputation as the sick man of Europe and taken seriously again as a leading world power.

The new generation of Conservatives who will be called on to cart away the rubble from new Labour's implosion will inherit stronger fundamentals than Margaret Thatcher herself was bequeathed in 1979. They will need years of discipline and thrift in public spending to overcome the consequences of the Government's reckless expansion of borrowing and the untrammelled growth of the public sector.

They must also maintain Britain's defence strength. A defence review is certainly needed, and a radical one at that. But the ability to field forces in distant conflicts and deploy an effective nuclear deterrent is what makes the US take us seriously and leverages our influence globally. That will be more not less important as China and India play a greater world role and as more nuclear weapons states emerge. For conservatives, defence must surely be a sacred trust.

Most of all they will need to acknowledge the continued relevance of Margaret Thatcher's agenda and achievements, and recapture the momentum of change that Thatcherism created.

The legacy of someone who killed off socialism in Britain, changed the face of the country and rescued us from being a nation in retreat is the best inheritance that an incoming Conservative government will have.

Lord Powell of Bayswater was Margaret Thatcher's Private Secretary from 1983-90

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