Lord Tebbit: If it was a nasty party that won all those elections, it had better get itself nasty again

'Iain's instincts are those of traditionalists, but he is over-anxious to keep the party together by seeking to find compromises' says former chairman of Conservative Party

When Norman Tebbit campaigned for Iain Duncan Smith after handing over his Chingford seat in 1992, he pointed to his protégé's mouth and said: "These are the teeth of a killer. This man must have meat or die."

So is the Tory leader's mentor disappointed that he has so far failed to sink those teeth into a Government running into problems on several fronts? The man known as the Chingford Skinhead is reluctant to put the boot directly into his successor. But he admits he is troubled by Mr Duncan Smith's stance on a long list of issues – including tax cuts, Europe, Iraq, asylum, Section 28 and positive discrimination for women. He wants Mr Duncan Smith to trust his traditionalist instincts much more.

"I am disappointed that we aren't at 45 per cent in the opinion polls," says Lord Tebbit. But is he disappointed by Mr Duncan Smith's performance? "I won't go down that road," he replies.

After Labour came to power, the Tories "flatlined" in the polls because the Government did not really hurt people, Lord Tebbit explains. Now, even with taxes rising and the value of pensions falling, "the problem is that the Conservative Party is still trying to find its identity."

He blames divisions among Tory MPs between modernisers and traditionalists. "Iain's instincts are generally those of the traditionalists, but he is perhaps over-anxious to keep the party together by seeking to find compromises between the wings of the party," says Lord Tebbit. "That has let outsiders gain the impression that the party is uncertain of itself."

He believes Mr Duncan Smith should and will lead the Tories into the next general election. "I don't think there is any appetite in the party for another leadership election. It is dangerous for the parliamentary party to overturn so soon a decision which was made overwhelmingly by the membership of the party."

Lord Tebbit insists that the most obvious alternative, Kenneth Clarke, cannot win the next general election. "Blair is the most astute political tactician for a long time. He would take advantage of Ken's leadership to launch a referendum on the euro.

"He would have Ken campaigning on his platform against the Conservative Party. He would probably win a referendum under those circumstances, and would then say, 'Thank you Ken, that was very decent of you. I'm going to see the Queen tomorrow to dissolve Parliament [and call a general election]'."

Lord Tebbit would like to see the Tories raise their profile on Europe. "I think Iain was right to put it on one side with the formulation that the policy has been settled. However, I don't think it is wise to entirely lose sight of a policy which has the support of 60 or 65 per cent of the electorate."

He feels the same with tax cuts, on which the Tory leadership has sent conflicting signals. On Iraq, Lord Tebbit says Mr Duncan Smith is right to back Mr Blair but adds an important rider. "I think he might more frequently have made it slightly more conditional upon the Prime Minister making a better case than he has so far made for the action. It would have been good for the Prime Minister too to have that pressure."

Lord Tebbit believes his protégé picked the wrong issue – adoption by gay and unmarried couples – on which to issue his infamous "unite or die" plea. "He was right – although the issue on which the stand was taken was probably not the best one," he says. "The best way to unite a party is to give it a clear direction."

Now the former Tory chairman is preparing to battle with the party leadership over Section 28. It is abandoning support for the law on the basis that it stigmatises homosexuality and has drawn up guidelines under which schools would display all sex education materials for inspection by parents.

But Lord Tebbit insists: "I don't think there's anything wrong with Section 28. I don't think there is any reason to believe it creates difficulties." He says there is a "fair possibility" Tory peers will refuse to swallow the shadow cabinet compromise, adding with a smile: "We are a funny lot."

He is scathing about the Tory modernisers, repeatedly directing his fire at Theresa May, the party chairman, who told last October's party conference that the Tories were still seen as the "nasty party".

He says: "If it was a nasty party and that was how it won the general elections of 1979, 1983, 1987 and even 1992, then it had better get itself nasty again if we want to win elections. I don't think it ever was the nasty party. It was the party that took some very hard decisions."

He is unimpressed with Mrs May's plans to ensure more women parliamentary candidates, which he describes as "rigging the selection process to exclude able, white males".

The 71-year-old peer has an unmistakable spring in his step. The reason is that asylum and immigration can be mentioned in political circles without attracting opprobrium. He is relishing the debate.

Lord Tebbit warns there is a danger that the asylum problem will polarise the country. "The capacity of society to absorb incomers is limited. If that limit is breached – and no one can define where it is – then hostility will grow on both sides," he says. He is convinced that many immigrants legally settled here share his concerns.

It would be "highly desirable" to detain all asylum-seekers while applications were heard and to speed up hearings, he says. "The real problem is, once on British soil the chances of being deported are pitifully low. It is not so much that a rush of people is trying to get in; we are virtually sucking them in because it is so easy to disappear. They don't have to disappear for very long to have children here; they are then entitled to have British passports."

He admits that he plays "spot the Brit" on escalators on the London Underground. But it would be very wrong to see the man who once proposed a "cricket test" for immigrants as today's Enoch Powell figure. His distaste for "multiculturalism" should not be mistaken as a cover for racism. He recently was the star guest at a dinner to raise funds for medical services in Bangladesh, and repeatedly praises many aspects of Muslim life.

"If we had more people in our inner cities who benefited from extended families and from sharing places of worship, we would probably have a better society," he says.

Lord Tebbit professes "a great deal of sympathy" for David Blunkett as the Home Secretary wrestles with asylum, saying he "is one of the ministers who still has a sure touch in understanding the feelings of the average man and woman in the street". But he says he sometimes gets the mechanics wrong, because of the influence of Home Office officials, lawyers and judges (all hate figures in Lord Tebbit's eyes).

He welcomes the Tories' decision to break their silence on asylum. "I think we should as a party have reached our conclusions and raised the alarm earlier and set out our reasons. It would have got some flak but we would have had the satisfaction that Oliver Letwin [the shadow Home Secretary] could have welcomed in recent weeks both the Home Secretary and the Archbishop of Canterbury to some of our policies."

The Tebbit spark is un-dimmed. He smiles. "I have been here [in Parliament] for 32 years. I still love politics. It's fascinating, isn't it?"