Archie Norman: 'I have failed in both my political objectives: to make the Tories electable again and to serve in government'

The Conservative politician and businessman's mantra is not "unite or die" but "change or die"

It is pretty rare to find an MP prepared to describe himself as a failure in politics and to admit his party is failing. But Archie Norman, who successfully turned round the Asda supermarket chain, candidly admits he has failed to revive the other ailing patient on his list - the Conservative Party.

Mr Norman became an MP in 1997 with two goals, to make the Tories electable again and to serve in government. "A lot of my friends would say I have not succeeded in either mission. I think they are substantially right," he admits.

A leading moderniser, Mr Norman campaigned for Michael Portillo in last year's Tory leadership election. When Iain Duncan Smith won, he decided to leave the Shadow Cabinet. Instead, along with his fellow "Portillista" Francis Maude, he set up C-Change, a think-tank designed to act as an "ice-breaker" for modernisation, and Policy Exchange, an independent research body.

Since July, Mr Norman has been working six days a week at Energis, where he is chairman, as he tries to turn round the troubled telecoms company. One survey showed he had voted in only 55 per cent of Commons divisions, putting him 550th out of 659 MPs. He describes his voting record as "average" for a Tory MP, denies that he has "opted out", and insists he plans to stay on as MP for Tunbridge Wells after the next general election. All the same, he adds: "I am not so smitten with political ambition that there is nothing else I can contemplate doing."

There are already enough professional politicians, he says. "I am of more value to the party if I am something of an outsider. I can bring experience of another world." He is not a "political fanatic". Most MPs, he says, enjoy the process, the status and measure their success in the strength of their argument and language. "If you spend most of your career trying to achieve things and you ask at the end of the day why the world is different in a small way, then politics is exasperating," he sighs.

After a bizarre week in Tory politics, capped by Iain Duncan Smith's dramatic "unite or die" challenge to his party, Mr Norman is less critical of the Conservative leader than one might expect.

No, he should not have made that much-derided personal statement. Instead of "unite or die", Mr Norman's mantra is "change or die". But he is, surprisingly, convinced that "IDS" is committed to modernisation. "He is everything he said he would be, but more progressive and more courageous," he says.

He likens the squalls to a "family row" and says Tory MPs should now "chill out". He adds: "This is a difficult journey. Along the way, there will be hiccoughs and mistakes. What matters is how fast you get moving again afterwards."

According to Mr Norman, the task now is to return to the new agenda unveiled at the Tory conference in Bournemouth last month, which he believed would prove a "watershed after which the party would never be the same again". He was wrong. "It is as if it never happened," he says. "We lost that momentum. When we came back to Westminster, it was as though the party was a different party to the one that met in Bournemouth. It was back to business as usual – the same old cabbage-throwing across the floor of the Commons."

He is convinced that Mr Duncan Smith will lead the Tories into the next general election and denies the leadership's claims that Mr Portillo is plotting to take over. "I don't know what Michael has to do to convince people that he is now someone who has left the leadership contest behind him. He is utterly sincere," he says.

What would Mr Norman say if he had to write a one-page memo for Mr Duncan Smith on how to rebrand the Conservative Party? "Be true to yourself" is his first point. Mr Norman believes that, while political magnetism helps, straight politicians without oodles of charisma can still flourish, citing John Howard, the Australian Prime Minister.

Secondly, "change must be relentless and must not be allowed to slip back. We must transform the whole party so it is unrecognisable." He adds: "We must not be complacent about the party. We should be angry about it."

Thirdly, Mr Norman would tell IDS that the party is longing to be led, and will rally behind a leader who delivers a little success. "People will do extraordinary things for him but we need to be brave and tell the army which way to march."

Fourthly, the rest of the Tory party must adopt the tolerant tone of Oliver Letwin, the shadow Home Secretary. The public, and young people in particular, have turned away from political parties because their partisan approach suggests that they are doing things only for their own benefit, Mr Norman says. The Tories, for example, oppose measures in Parliament they would implement in power, such as the closure of inner-city post offices.

"There is no future for the party unless we start attracting today's generation," he says. He rattles off some depressing figures: the Tories are in third place behind the Liberal Democrats among women under 35 and among all under-25s. "That is a very serious problem. It is why some of these nettles must be grasped."

In Mr Norman's eyes, the irony is that "Britain is a more conservative country than it has ever been" but the Conservative Party is out of step with it. "We can no longer be a party which supports economic liberalism but social authoritarianism. Young people will just not buy it," he says.

In other words, the Tories cannot be in favour of enterprise, deregulation and opportunity and preach to people "how to live their lives". Mr Norman abstained in the vote on gay adoption a week ago which sent the Tories into convulsions. Now, he says, the lessons must be learnt before the Commons votes on Section 28, and Tory MPs must be given a free vote. The Tories must accept that people are not less worthy because they pursue a particular lifestyle. "Some of the things we hold dear and we feel strongly about, we are going to have to relinquish," he says.

He goes on: "We are competing on a new political landscape. Much as we would like the clarity of the old ideological divide, it has probably gone forever. There are big differences [between the parties] but competence and delivery is more important to the guy in the street than the process and approach. People are more interested in whether you deliver better health care than how you deliver it."

If his words have a touch of "mea culpa" in them, Mr Norman sees good reason for that. After entering Parliament in 1997, he was given the senior role of chief executive of the Conservative Party by William Hague, who had previously worked under him at the management consultants McKinsey.

His brief at Tory headquarters was to bring in sweeping reforms. Although changes were made, mistakes were too, Mr Norman admits. He encountered "endless brickbats" and claims that he might know about retailing but knew nothing about politics.

What is the essential difference between business and politics? "In political parties, there is an aversion to management. In business, management is not about command and control. It means outstanding communications, building a team, mutual support, giving people some ownership of the project – highly relevant to what happened last week."

Mr Norman regrets not moving "further and faster" in ensuring more women were chosen as parliamentary candidates. "Time is very pressing," he says. If local Tory associations are upset, so be it. "Having a wider team is more important than whether you break a few eggshells on the way. We have got to be brave about it. It will be tough on some very able white male investment bankers, and management consultants, but it is for the greater good."

Mr Norman admits he should have stayed on at Conservative Central Office to pursue the reforms instead of advancing his own career by joining the Tory frontbench in 1999. "The whole reform programme lost momentum. That is a sadness. I was glad to move on but it was the wrong thing," he says.

As the list of regrets continues, Mr Norman acknowledges that he failed to persuade Mr Hague to campaign on public services at last year's general election, when the party leader preached to the Tory converted on Europe, asylum and crime. "We sailed the ship into an iceberg. It was a tragedy that should never have happened," he says. When he was shadow Environment Secretary, Mr Norman became concerned that the Tories were dangerously out of touch with "the everyday experience" of people in Britain's towns and cities. They no longer know conservatism and conservatism does not know them, he says. "Our problem is that we represent the affluent suburbs but our mission is in the centres of towns in the Midlands and North."

Again, he returns to his theme that the Tories face a long journey. Mr Duncan Smith says they have already reached base camp, but Mr Norman is not so sure. "It is no use pretending this is a molehill. It is Everest. But we can climb it."