Peregrine Worsthorne: If you will mix with the wrong types ...

George Osborne has endangered something historically vital to Tory success

When millions of working men, on the edge of poverty, were first enfranchised in 1880, nobody except Lord Randolph Churchill thought the Tory party – then a party of patrician landowners and rich bankers – would have a chance of winning. It was simply assumed that the more democratic Britain became, the less chance there would be of the Tory party ever again coming out on top. To everybody's surprise, the opposite proved to be the case.

The Tory party, in spite of being the upper-class party of bankers and landowners, swept the country, and has gone on doing so, more often than not, ever since; with a good chance of doing so once again next time, under the restored leadership of a scion of that self-same "God-given" ruling class, David Cameron.

It is that chance which George Osborne has sensationally shattered by his demeaning behaviour off the shores of Corfu. For Peter Mandelson to keep such unimpressive company is par for the course, but for a senior shadow minster of the Tory party – whose only chance of recovering power is to reclaim convincingly its historic paternalist and noblesse oblige mystique – is altogether another matter.

I realise, of course, that this is not a general view, the general view being that the more the Tory party sloughs off its old upper-class patrician image the better, but that general view, I believe, is quite wrong. The Tory party can never prosper by espousing egalitarianism, a role alien to its history and genius, indeed to its very raison d'être. It can win only by being paternalist, a roll that worked miracles in 1880 – against all the conventional wisdom of that time – and could work again today, again against all the conventional wisdom of today.

It is not so much shadow ministers who inadvertently make racist-sounding remarks that David Cameron should summarily dismiss as shadow ministers who by habit and inclination mix in muddy waters. For while the Tory party can survive and even benefit from political incorrectness, it can only suffer fatal damage by being prominently associated with conduct unbecoming ... and there could be conduct no more unbecoming than leaking malicious gossip to a Murdoch journalist or keeping company with the wrong people.

The magic phrase which has worked miracles in the past and could work miracles again is Tory democracy. This was Lord Randolph Churchill's way of rallying the masses to the Tory cause. Tory democracy consisted of encouraging the people to choose, rather than having the fate thrust upon them from above, to be governed by patricians and bankers; choosing that fate for the very good reason that it was those people that had enabled Britain to create and run the justest and greatest empire the world has ever seen, and also to create and run the free. They also created the greatest democracy the world has ever seen, except possibly the United States, the loss of which was blamed on King George III.

Therein lay the Tories' most persuasive argument which justified social and economic equality in Britain, on the grounds that for even the poorest peasant being the subject of the queen of England was a privilege worth more than all the riches of Arabia.

Very little of this is applicable to the Britain today. But something of it is, and it is that precious nugget which is being endangered by the demeaning conduct of George Osborne. The context is important here. In the course of the past 30 years, ever since the Big Bang in the City, Britain has evolved a new governing class of grossly successful hedge funders whose genius for making paper money arouses much envy but no admiration. Unlike the great industrial robber barons of old, who built railways, mined for coal and gold, and dug for oil, the new top dogs simply borrow and lend money, very often at indecent rates of interest, an activity which was forbidden, in the old days, by the church and has never in this country – unlike the United States – been given public approval. Quite the opposite, in fact.

Until recently it attracted very public disapproval, to the point where bankers went to great lengths, as soon as they could, to disguise themselves as country squires. That was the point of those long City lunches: to avoid seeming too eager to rush back to the counting houses. Something of the same was also true of Mrs Thatcher. For although she was responsible for setting the greedy entrepreneurs to make money, that was not what her popularity with the people rested upon. What made her popular with the people at large was the Tory courage which enabled her to order the mounted police to charge Arthur Scargill's mine-workers' pickets and the Tory courage which enabled her to liberate the Falkland Islands.

In contemporary terms, the hedge funders are the threat that needs to be confronted, just as the trade union barons as generation ago, and the appeasers were the threat before the war; and just as Mrs Thatcher was the Tory leader who took the lead in confronting those earlier threats, so should David Cameron be seen to be for filling the same duties today. It takes a Tory prime minister to put the mistakes right of another. No New Labour prime minster can be relied upon to have the guts to clean today's Augean stables.

Niceness/weakness is in New Labour's genes just as courage/strength is in the Tory genes. This is very largely history's doing, and in times of trouble it is history that counts. In the present circumstance, Nat Rothschild is the very last person for a shadow Chancellor to be seen in cahoots with. Forget about the Russian oligarch. Compared to a Rothschild who has made many millions out of the disgusting boom, the nationality of his host at sea becomes merely a distraction. The public will see them both as part of the same racket.

The writer is a former editor of 'The Sunday Telegraph'