Theresa May’s speech in defence of capitalism proves that she fears Jeremy Corbyn’s ideas are popular

The Prime Minister’s speech to the Bank of England today is an admission that Labour is setting the agenda

The Prime Minister is paying Jeremy Corbyn the compliment of taking him seriously. She recognises that his party conference speech was dangerous enough to require an immediate response. She cannot allow his siren phrases about the “new common sense” and “the mainstream” to echo unanswered through a whole news cycle.

So she is making a speech today to insist that the centre ground of British politics is free market economics. She realises that many floating voters will have nodded along to Corbyn as he promised to take back the utilities into public ownership, introduce rent controls and pay public sector workers more. He did a good job this week of presenting himself as merely articulating the common sense of the people: “Our manifesto and our policies are popular because that is what most people in our country actually want.”

Theresa May, aware that this is the sort of conventional wisdom that can take hold if not challenged, is going for a bit of what used to be known in the Labour Party as “rapid rebuttal”. She knows that most of these voters also suspect that the promised land to which Corbyn’s supporters expect him to lead them might not be quite as easy to get to as all that, and that we may suffer milk and honey shortages if we ever get there.

So she has to disrupt the plausible idea that the British people are emerging from the false consciousness of reading the Daily Mail, that they now demand a return to the pre-Thatcher consensus: a more equal society, with more state ownership and state control.

“A free market economy, operating under the right rules and regulations, is the greatest agent of collective human progress ever created,” she will say, in a section of her speech issued in advance. Because that is the rival “common sense” of the British political economy: many of the same people who nodded along with Corbyn’s speech also think Uber and Airbnb make their lives easier, and realise that innovation and the profit motive are what made us and keep us a rich country.

The reaction to Transport for London’s refusal to renew Uber’s licence sums up the political battle. People like capitalism when it delivers a good, cheap service, but they agree with May’s caveat – they want it to operate “under the right rules and regulations”. Most people don’t want to nationalise Uber, but they do want it regulated so it is forced to take passenger safety seriously.

May has a hard task ahead. She has to re-fight the arguments against state ownership and state control that the Conservatives – and most of the Labour Party – thought were settled in the 1980s and 1990s. One of the reasons rent controls were abolished in 1989, for example, was that the private rented sector had almost ceased to exist in London – but that is largely forgotten now.

Corbyn can offer greener grass on his side of the fence, whereas she has to persuade voters to stick with the discontents of today in the hope that things will get better gradually.

Margaret Thatcher, against whose “broken model” Corbyn railed yesterday, had a big and tangible benefit to offer large numbers of voters: the prospect of home ownership. It is hard to see how the Conservatives can counter Corbyn’s promise of a “world transformed”, in his supporters’ catchphrase, unless May can not only promise but start to deliver something similar.

James Forsyth in The Spectator argues that the Tories are doomed unless they urgently begin a huge programme of housebuilding and housing reform. He is right that, unless young people think (by the next election) they have better prospects of a place of their own, the free-market argument is one Theresa May is in danger of losing.