"We need policies that demonstrate our faith in the idea that improving standards depends above all on allowing parental choice. The most important first step is the recognitio n that the leadership of a headmaster or headmistress shapes the whole character of a school," he told a meeting organised by the think-tank Politeia.
This could mean, according to the Conservatives' education spokesman and policy adviser David Willetts, heads becoming "contract-holders" with greater powers over hiring, firing and rewarding staff.
Mr Hague told The TES his aim was to lay down the policy ground rules, rather than become involved in details, at this stage of the Parliamentary term.
He said he saw educational policy as one of the most fruitful areas for radical Conservative thinking. He described Education and Employment Secretary David Blunkett and his erstwhile colleague, Stephen Byers, as municipal socialists who saw themselves as chief executives running the education service with an iron hand.
"They have taken unprecedented powers to allow them to manage the affairs of individual schools from Whitehall," said Mr Hague.
He paid tribute to his own state education at Wath-upon-Dearne comprehensive and Oxford University. "State education opened the door to a world of possibilities for me and I want to open a similar door to thousands of pupils today who are still denied the good teaching and high standards which ought to be a birthright in a modern society."
By the end of the Conservative Government's period in office, he said, many secondary schools were grant-maintained or city technology colleges, but this had not gone far enough. "Part of the reason we did not get the credit we deserved for this achievement was because basic terms like grant-maintained meant nothing to the public. The original and far better name for GM schools was independent state schools, and that might have struck a chord," he said.
Mr Hague also used the speech to lay the ghosts of his predecessors. He refuted the perception that for Conservatives there is just the individual pursuit of self-interest, restrained only by a powerful state.
Referring to Margaret Thatcher's much quoted - and according to him much mis-quoted - assertion that there is no such thing as society, Mr Hague said: "Yes, I do believe there is such a thing as society."
He called upon David Willetts' notion of a "civic society", and the need for the strengthening of the institutions which stand between the individual and the state. There needs to be, he said, an institutional framework that brings people together.