Mr Willetts warns the Tory party in a pamphlet that it will have to reassert its belief in citizenship to stop Labour under Mr Blair gaining support with his call for a more cohesive society.
'We need to show Labour that big centralised government is more of a threat to communities than the free market. 'Community' is an attractive word but it doesn't mean much unless you support the Conservative initiatives such as NHS hospital trusts and grant-maintained schools. If Tony Blair is serious about community, he will have to say he supports them,' Mr Willetts said.
His pamphlet underlines the anxiety among Tories at the threat posed by Mr Blair, who may capture the mood of the public as it swings against the nostrums of Thatcherism. 'The real problem is that Conservatives have become wary of relying as heavily on the free market as we appeared to do in the 1980s . . .'
Mr Willetts urges Tories to 'tackle head-on this crucial challenge that markets undermine values, that commerce destroys culture'. He sets out a 'civic Conservative agenda', including bringing offenders to court more quickly; relating welfare more closely to individuals; local pay bargaining for public sector workers; freedom for public institutions to sell services locally; and overriding Treasury to let schools expand in line with demand.
Civic Conservatism, by David Willetts MP; Social Market Foundation, 20 Queen Anne's Gate, London SW1H 9AA; pounds 10.