It's certainly a striking testament to the iconic power of Margaret Thatcher that she continues to haunt the modern Tory party 13 years after her enforced departure at the hands – largely – of her Cabinet and a large section of MPs. For that is the real meaning of Iain Duncan Smith's (only just) implicit rubbishing of the Major government in a Sunday newspaper interview; that there was a fine Tory government in recent memory but it wasn't Mr Major's.

On one level it's hardly surprising. First, let us concede, John Major spectacularly lost a general election and Baronness Thatcher, three times a victor, never did. But it's also true that the present leader of the Tory party used much of his talent and energy as one of Mr Major's chief tormentors over Europe, in a long-term rebellion for which history has still not given Baroness Thatcher enough credit for masterminding in person. It would be strange if he did not owe his first allegiance to her. No doubt Mr Duncan Smith felt that, politically irrelevant as they are, the Edwina Currie revelations left him the space to attack John Major in a way that the antics of Lord Archer (as a friend of both, Thatcher-Major neutral) didn't.

But Mr Duncan Smith should resist the temptation, when he speaks on Thursday, to dedicate to the Thatcher memory, as some of his lieutenants have already done, his genuinely bold attempt to show that the Tory party is at last attempting to develop some innovative policies on public services. Only one of them is that it opens up a completely unnecessary second front, as Kenneth Clarke graphically demonstrated in his reasoned, spirited, and partial defence of the Major administration at the Independent fringe meeting yesterday, with some of the still most potent figures in the Tory party who happened to be members of it.

Of course Mrs Thatcher was a gigantic figure, largely as a result both of her economic reforms and her part in at once interpreting and hastening the fall of communism, in a way that John Major wasn't. But you can't understand the history of the modern Tory party without understanding that her replacement by John Major in 1990 answered a popular revolt against her divisiveness as deep as the admiration for her achievements. A prominent member of the Shadow Cabinet told me yesterday that criticism of Thatcher-worship in the modern Tory leadership was a middle-class obsession which resonates not at all among the C2s for which she became such a powerful champion. Well, maybe. I don't remember the liberal middle classes being alone in reviling the poll tax. Not to mention the housing crisis triggered by the Lawson boom.

But the Thatcherite error does not stop there. For the concept of the "unfinished Thatcher revolution" makes a reckless assumption about what she would have done, or more correctly would have been allowed to do, were she a 21st-century Prime Minister. The expansion of foundation hospitals, competing on the same modern ground of decentralisation as the Government and the Liberal Democrats, but in a more far-reaching way, is a genuinely interesting proposal, indeed owing something to the internal market reforms of the third Thatcher term. The latest plans for a massive taxpayer-funded boost for private health care emanating from Liam Fox are quite another. Certainly Mrs Thatcher wanted expansion – though not even she contemplated handouts for private operations. But has everyone forgotten that she was saved from herself and prevented from doing so in the late Eighties, not least by her Chancellor, Nigel Lawson, because of the enormous dead-weight costs and because it would have been, as it still surely will be, electorally disastrous?

The final Thatcher fallacy concerns the task of opposition. Mr Duncan Smith has on occasions compared the criticisms he has suffered to those which afflicted Mrs Thatcher after she became Opposition leader in 1975. But her recovery from those owed much to her experience and even more to the huge travails which afflicted the government of the day. The comparison simply isn't relevant enough not to require a radical rethink of the way in which he opposes the Government, and which led to something of a party crisis after a fraught meeting of the 1922 Committee on the eve of last month's Commons Iraq debate, triggering a new wave of factionalism within the party.

Partly this means a policy of not indiscriminately opposing everything the Government does, as eloquently advocated by the shadow minister John Bercow at yesterday's meeting. But it's more than that. What's important about what Ken Clarke has been saying in recent days is not so much his own leadership possibilities. It is that you get an inspiring glimpse of what a coherent Tory opposition which fitted the times might look like. It would, among other things, pick knowledgeably and remorselessly at the most central disputes within the Government, from foundation hospitals to the use of tax credits. It would dare to challenge head-on the Government's economic policy and assumptions without excessive fear that this could undermine the case against euro entry. And it would seek to deepen the splits between Labour leadership and party by judiciously congratulating ministers for occupying Tory ground – while of course maintaining that the Conservatives would do it better.

Nowhere is the task of opposition more important than on Iraq. Here Mr Duncan Smith, to the dismay of a broad spectrum of opinion in his own party, has wholly toed the George W Bush line. Indeed whereas Tony Blair has unobtrusively sided with Colin Powell in the manifold debates within Washington, Mr Duncan Smith's allegiances appear to be the ultra-hawkish figures he knows best in Washington, namely Donald Rumsfeld and Dick Cheney. The result has been an unquestioning acceptance that British forces should back the US in whatever military adventure, however unilateralist, it engages.

In the crude terms of low politics, this is self-destructive. By adopting a more distanced, while moderate, approach, the Tories would have legitimised the dissidents on the Labour benches and put the the Government under greater pressure. If the Blair strategy succeeds, it won't be the Opposition that gets the credit; if it fails, Her Majesty's Opposition is in the wrong place and the Liberal Democrats in the right one. But in the much, much more important terms of high politics, even if only by questioning government policy at the carefully modulated level of the reviled John Major, it would have been fulfilling the historic role of opposition, not least on behalf of the armed forces: holding the executive to account when it matters most.

Oddly, the one Thatcher trait Mr Duncan Smith appears to find it more difficult to emulate is true balance in his Shadow Cabinet. There's no doubt that a fresh injection of talent from the more mainstream wing of the party, the John Maples, the David Currys, the Andrew Tyries, and the Michael Jacks, would help him to address the difficult but vital task of statesmanlike opposition, in way he needs to do on Thursday. The one thing that won't help him is ancestor worship.

dmacintyre@independent.co.uk