RUTH Davidson is leading a Scottish Conservative power surge at Westminster after warning Theresa May's lieutenants that the Prime Minister owes her position in Downing Street to the party's resurgence in Scotland and is urging her to "lead or lose".

In her most direct intervention since the General Election about the future of her party, the Scottish Tory leader is arguing that “capitalism needs a reboot” and that the Conservatives must stop the feuding at Westminster and start winning the battle of ideas.

With a newly enhanced power base at the House of Commons thanks to the election of 13 Scottish Tories, The Herald has been told that Ms Davidson is keen to use her influence to direct Tory policy towards a more socially liberal approach, a softer, "open Brexit" and policies that address directly the concerns of younger voters, who in June voted in large numbers for Labour.

In recent days, party sources have explained how Scottish Conservative MPs have had a series of meetings with UK Government ministers as well as Downing Street insiders.

One well-placed insider said: “We met Gavin Barwell,[the PM’s Chief of Staff in No 10], and made clear to him that if it wasn’t for the Scottish Conservatives, Theresa May wouldn’t have a majority.”

The source said the group of Scottish Conservative MPs, larger than the 10-strong Democratic Unionists, would not seek to bring the Government down and would loyally take the Tory whip because they wanted to see Mrs May continue as PM “at least until the Brexit deal is done”.

But he added: “What we will do is use our influence to make sure at the very least the May Government won’t go down a path that we think would be bad for the UK and for Scotland.”

Ms Davidson, who is expected to be in London more often, attending, among other things, the Conservative Government’s political Cabinet, is set to lay out her vision for the Tories’ future direction in a keynote speech at the party’s autumn conference in Manchester.

In a hard-hitting article published yesterday for the new website, unherd.com, as part of its Reforming Capitalism theme, the Scottish party leader directly challenged the UK Government, saying it "has to actually lead" if it wanted to survive.

Another Scottish Conservative source said: "Ruth is appalled at the defensive crouch that the Government in London has got into.

“Losing a majority doesn't mean that you don't make the case; it means you make it twice as hard. Stop fighting among yourselves, get your finger out and start banging the drum for Conservatism because if we don't, we lose.”

The source added: "Ruth is frustrated that it might seem as if Tory ministers are more concerned with briefing against each other than tackling the briefs they have been given."

Ms Davidson’s intervention might be regarded by some as a pitch for the UK party’s leadership as talk will be dominated in the run-up to and at the Tory conference about who will succeed Mrs May when the time comes. Some inside the party believe they should skip a generation.

However, it was also stressed that the 38-year-old Tory leader has her eyes firmly fixed on Holyrood and wanting to replace Nicola Sturgeon as First Minister at the 2021 Scottish elections.

“It would send a bad signal if Ruth abandoned Scotland and headed south. Apart from anything else, there is no one to replace her at the moment,” noted one source.

Nonetheless, there are those senior Conservatives who believe the Edinburgh MSP is just what the UK party needs to boost its chances of victory at the 2022 General Election.

Anna Soubry, the former Business minister, described Ms Davidson as a “remarkable woman and I hope very much one day will be a remarkable Tory leader”.

Asked if she would want to see the Scot as the leader of the UK Conservatives, the Nottinghamshire MP replied: “One day; undoubtedly. She is an outstanding woman.”

In her article, Ms Davidson questioned how capitalism was working for aspirational young people, who felt trapped by the “impossible choice” of either moving from home to become lumbered with student debt and a low-paid job where there was “zero chance” of owning their own home or staying put in a community that felt hollowed out from the inside.

No one, she argued, should be surprised in such circumstances of the rise of the populist right and left, of “Donald Trump and Jeremy Corbyn, with their simple, stick-it-to-the-broken-system narrative. This is what market failure piled upon social failure piled upon political failure looks like”.

Turning to a direct challenge to the May Government, she stressed how it was “not enough for Government to facilitate a discussion about where next for Britain, it has to actually lead”.

The party leader went on: “The short-term, election cycle nimbyism of prohibitive planning laws needs to cease and there is no room for one-of-the-in-crowd Davos sycophancy either. At home and abroad, we need to press the case for fairer markets.

“Capitalism has lifted billions out of poverty and made the world a better, safer, healthier, more comfortable place. It’s not working for everyone, however, and some people are enriching themselves through the kind of restrictive practices that Adam Smith warned us about two centuries ago. Nationally and internationally, capitalism needs a reboot.”