From what I know (and admittedly it's fairly limited), selection of candidates is the responsibility of local Conservative parties. There is some evidence of entryism in the local parties from right-wingers. Nevertheless, the local parties know what's going on and the Conservatives are in danger of losing traditional voters.
Before the last election, Conservative Central Office gave the local party in my constituency a list of shortlisted candidates and told them to choose. One of them was the obvious preferred choice. There was a great deal of resentment in the local party and they chose a candidate who wasn't the preferred one, almost as a matter of principle.
The feeling seems to be that the central party might be able to impose its own candidates but it's going to lose grassroots support, which could be critical in marginal seats. The Labour Party and LDs already have better "armies" on the ground than the Conservatives do, so grassroots support is important.