If Mr Portillo wants to be leader of his party, he'll have to seduce Mrs Whetstone of Wealden

Tory leadership: the activists

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Tory leadership: the rivals

Steve Richards: The Tories may be in agony now. But Portillo is their only option

Linda Whetstone is tall, slim and ferociously energetic, a no-nonsense, 58-year-old intellectual; the sort of woman who in her youth would have been described as a bluestocking. She is also past chairman and president of the Conservative Association in Wealden, the third safest Conservative seat in the country, and one of the most beautiful corners of England ­ rolling Sussex downland, lovingly tended by the affluent.

The past week may have left many Tory footsoldiers confused and troubled after their party's second historic defeat at the polls and the sudden resignation of their party's leader. But Mrs Whetstone, though chastened, is not bewildered by the trouncing of the Conservatives. She speaks with utter conviction. "We deserved everything we got at the election. We hadn't got any policies. Now we need a leader who appreciates that we wasted the last four years; who is capable of systematically thinking through a philosophy and then developing policies out of it."

This philosophy, she is convinced, must be rooted in the free market. "We could have won the argument on the NHS if only we'd been a bit braver. We have a health service that delivers worse results than almost any other system ­ a 65 per cent survival rate after five years for breast cancer in this country, compared to 86 per cent in most other countries. We wouldn't buy shoes, or holidays, from the Government, so why do we persist in buying from them the two things closest to our hearts ­ health and education?

"In other areas, we've accepted that private enterprise delivers. Even Sweden, a far more socialist country than ours, uses private money to better effect. Only Canada has a similar system to ours, and that's crap too. We do have to find a way to give choices to the least well-off, to enable them to join in. But there are lots of good ideas for that."

Mrs Whetstone accepts that these views would put her on the right of the party, "although I'm not a hanger and flogger". If Ann Widdecombe were to become leader, she says, "I would be off like a shot."

She also diverges from the bulk of Conservatives on the countryside and planning. "Most of them have ideas that are frankly bananas ­ that nimbyish 'not one more brick!' I say to them, 'but nurses can't live in your village. The only people who can are the rich who work in London'."

She despises the Countryside Alliance, and, if she had her way, all farming subsidies would end. "I don't know why the countryside is so resentful of the town, because the town subsidises the countryside more than any sector subsidises any other sector ­ an average of £20 per week for a family of four. What are they paying for? Farming is in its worst state since the 1930s, and it's more heavily subsidised than ever."

If Wealden is one of the most beautiful parts of England, then Mrs Whetstone's house must be one of the loveliest parts of Wealden ­ a red-brick 17th century manor house, half covered by a creeper, with leaded windows, its own oasthouse and views over sweeping lawns to the downs.

An agricultural economist, Mrs Whetstone is a trustee of the Institute of Economic Affairs, the free market think-tank which was founded by her father. She gathered half a dozen fellow Tory activists at her house one evening last week to talk about defeat, policies ­ and Michael Portillo.

Many party members realise that the Conservatives need to think again about what they stand for, how they present themselves to the public, and what sort of leader the party should have. "We assumed we were the natural party of government and that we could just pursue what was right for the country," one middle-aged man told me miserably last week. "Now we've got to do something different." He was evidently at a complete loss to know what it might be.

"All the Conservatives I know are compassionate and thinking people," another told me in bafflement. "But our image as a party just doesn't measure up."

The Wealden activists gathered in Mrs Whetstone's drawing room, with its huge fireplace and windows on three sides over open countryside, had, on average, been involved with the Tory party for 40 years ­ which gives some sense not only of their commitment but also their age. The most immediately striking thing about them was how unperturbed they appeared to be about the European single currency. Even Brian Mayhew, the constituency president, who thought the policies for the election "were right, but we just put them across badly", felt that "William Hague spent far too much time on the euro."

Theo Packman, who has recently retired as constituency treasurer, noted that "the statisticians say the euro was only the ninth most important issue on the doorsteps, which was how it felt. Informal ballots in a couple of constituencies around here show that members would like Kenneth Clarke to be the next leader, even though in meetings they all talk about Euroscepticism."

No one in this meeting actually wanted Britain to adopt the euro, but no one seemed very excited about the issue, either. They all, in fact, talked about health and education ­ although, apart from Mrs Whetstone and her husband, Francis, a councillor, who are powered by their clear free market ideology ­ there was not much sense of what to do about them. Len Schwaiger, a branch secretary, thought that the problem was chiefly one of presentation. "We need to knock the rough edges off and carry on as before."

Derek Reeves, a branch treasurer, talked about inclusiveness, but then rather paradoxically worried that health and education might "just be a bandwagon, and they're not the issues for Conservatives to follow". Brian thought the whole thing could be sorted out with a few efficiency savings. "There's a lot of wasted money in the NHS. I suppose the same is true of schools."

Surprisingly too, no one mentioned law and order ­ although, when I brought it up, there was a vague feeling among some that "punishments aren't severe enough". Brian expressed the view that "there is no blue water in crime" ­ which is some indication of how far New Labour has come. There was the odd knee-jerk bit of Conservatism. Someone expressed the view that "the teacher training curriculum is very left wing"; someone else mourned the loss of defence as a surefire vote-winner, and added the rather ill-judged comment ­ which I don't believe was intended to be ironic ­ that "what we need is another Falklands".

But on the whole, these activists seemed rather stunned. They were disappointed by the loss of interest in politics, and ­ because they were all volunteers for charities and community activities of other kinds ­ by what they saw as a loss of civic engagement. On the doorstep, Sue Renshaw had found that people with young families "didn't think we had anything to say to them".

Most of all, though, they were disappointed by the loss of what I think they secretly regarded as their right to be running things; the assumption that the Conservatives were the natural party of government. Many of them did not have much in the way of politics, because they had never needed them. They could always rely on their instinct, as Theo said, that they were "pursuing what was right for the country".

All were agreed on wanting a "firm leader, someone with charisma", but enthusiasm for any individual was distinctly muted. They seemed uncertain what to make of Michael Portillo. One or two persisted in believing that the perfect candidate had not yet been thought of, and might mysteriously appear in the next couple of weeks. The only thing they were unequivocally agreed upon was that they did not want Ann Widdecombe.

Mrs Whetstone thought Michael Portillo was "totally sound on the euro. He can speak about it in a very quiet and informed way, without being emotional, or completely anti-Europe, which is a different thing." I raised the question of his youthful homosexual experiences, and several people earnestly hoped that there was not anything more to come out ­ to which Linda tartly replied that he could hardly have been expected to have given us start and finish dates.

"I dare say a lot of people are homophobic and sexist and all the other 'ists'," Len said, "but they won't want to admit it." Theo thought "people in the party will accept it, but other people, in the country, might not". To which Mrs Whetstone replied that it was almost certainly the other way round. "I think there will be people who will mind. But if we only do what the tight centre wants, it's going to be hopeless. We've got to be prepared to ruffle a few feathers in the party. If we can't live with Portillo's past, we're doomed."