Media: He lives to fight VAT another day: Budget battles do not come any tougher. Michael Leapman meets the mastermind of the publishers' campaign

Towards the end of last week's Budget speech Kenneth Clarke, Chancellor of the Exchequer, spoke of the powerful case that could be made for imposing value-added tax on newspapers - as well as several other commodities - and commented: 'No amount of lobbying should put us off.'

Watching on television at the central London headquarters of the Newspaper Society, the trade body for the regional press, its director and chief lobbyist Dugal Nisbet- Smith was seized with despair. 'This is it,' he told colleagues. 'We've had it now.'

He was certain that his fourth campaign in eight years against the VAT threat had ended in defeat. In minutes, he would have to put into effect his contingency plan A - a series of stiff letters to MPs and ministers - in the forlorn hope of getting the decision changed before the Budget became law.

On the screen, the Chancellor teasingly digressed for a bit. Then, just before sitting down, he said there would be no need this year to expand the VAT base after all. The lobbyists had triumphed again.

Mr Nisbet-Smith was jubilant. Plan A was shelved in favour of plan B - taking the champagne out of the fridge and sending down to the kitchen for glasses.

'I was as surprised as I was delighted,' he said when the euphoria had died down last week. 'It was the most emotional night of all four campaigns. It was the toughest of them and we had convinced ourselves we were going to lose.'

Only a few weeks earlier, in his monthly newsletter to members, he had written of 'a sinking feeling throughout the industry that we are heading for the fourth and last VAT round-up'.

Lord Lawson, the target of the first campaign, disclosed in his memoirs that he was dissuaded from imposing the tax in 1985 only by the intervention of Baroness Thatcher, who did not want to share the hostile headlines. On that occasion - and whenever newspapers have headed off legislative threats to their bank balances or their freedom to publish - credit was given to the proprietors and editors of the national press. They were assumed have used their muscle on ministers at top-secret dinners, making dire threats over the port and cigars to withdraw political support.

Some of that certainly goes on, but the role of the regional press, though largely unsung, is just as significant. Mr Nisbet-Smith, a former journalist and press executive, has been running the Newspaper Society for 10 years. He explained: 'There are 650 MPs out there who have constituencies and each one has a local or regional paper. There isn't an MP who doesn't rely on that paper as a conduit to get his message across. An MP who supports a tax that could damage that newspaper substantially has an antagonistic paper to deal with.'

At the beginning of the year, before Norman Lamont's final Budget, Mr Nisbet-Smith and his deputy David Newell identified 25 Conservative MPs inclined to vote against VAT on newspapers should it be proposed. 'Our strategy was to make sure the opposition of those core MPs was made known to the whips and filtered through to cabinet ministers,' Mr Newell said.

The danger passed in March, but at the start of the latest campaign there were worrying signs that some of these MPs were vacillating.

'The number who would go to the stake was getting smaller,' said Mr Newell. 'With the high public- sector borrowing requirement, they told us we couldn't assume they would support us in November. We had to construct a campaign that tried to turn those MPs back into supporters, and that was where the local press came in.'

'Nobody escaped,' Mr Nisbet- Smith continued. 'John Major and Mr Clarke were accosted many times on regional visits by local editors, working on briefing papers that we supplied. It was an enormous exercise, co-ordinated from here. There was a do for regional editors at No 10 in October. The editor of one of the Birmingham papers went in with his press card round his neck and a 'VAT-Free' logo stuck on it.'

The papers kept the issue on the boil by running advertisements and articles supplied by the Newspaper Society. And while stressing the local approach, Mr Nisbet-Smith did not neglect the traditional lobbying technique of feeding the already well-fed.

Every month he hosts a lunch for about 20 influential people, including ministers. While Mr Clarke has so far refused invitations to this event, one recent guest was the Lord Chancellor, Lord Mackay.

'He seemed to know a surprising amount about VAT on newspapers,' Mr Nisbet-Smith recalled. 'That worried us quite a bit.'

The national papers, members of the Newspaper Publishers' Association, conducted their collective campaign through Westminster Strategy, a firm of full-time lobbyists whose clients include the Police Federation, the Bar Council and the Automobile Association. MPs were invited to meals and meetings and bombarded with figures supporting the newspapers' case.

The well-publicised Hands Off Reading Campaign, involving books as well as papers, stressed the need to foster educational standards by keeping the price of printed material down. Having Lord Bullock as chairman and Lord Beloff as his deputy underlined its academic aspirations. The campaign circulated a photomontage combining the heads of William Gladstone - the man who lifted the tax on newspapers in 1861 - and Mr Clarke, the man threatening to reimpose it.

A third parallel campaign was mounted by the Periodical Publishers' Association on behalf of magazines. Advertisements were placed in about 1,000 of the 1,500 titles owned by the PPA's 180 members, highlighting the pledges Mr Major had made to reduce illiteracy.

A survey was commissioned into the effect of VAT on magazines, concluding that 700 titles could close and 4,200 jobs be lost. A similar survey for the Newspaper Society foresaw the possible death of 245 of its 1,300 member papers.

Now all three lobby groups can relax - but not for long. The issue of VAT on newspapers is like a boxer with more resilience than sense: you may floor him repeatedly but he always gets up for more.

'Our next worry is next November,' says Mr Nisbet-Smith. 'In the middle of next year we'll take soundings again. It's always hard to know when there's a real threat and when it's a figment of our imagination. But when we feel in our bones that this thing is back on the agenda we begin to get a little more active in meeting politicians and senior civil servants to try to plumb the depths of the mystery: is it true or are we being paranoid about it?'

Whatever the answer, MPs can brace themselves for another bout of free lunches.

(Photograph omitted)