The Westminster Scandal: Disgraceful, wilful, unlawful, unauthorised, improper: The Westminster homes-for-votes scandal: the District Auditor's damning verdict ..

DAME SHIRLEY PORTER, a former leader of Westminster City Council, and Barry Legg, Conservative MP for Milton Keynes South West, were last night among 10 people who may face surcharges to meet the pounds 21m costs of what Labour called 'political corruption on a scale unknown in post-war Britain'.

If upheld, the provisional findings of the District Auditor's four-year inquiry into the council house sales policy of the Tories' flagship council amount to the most comprehensive indictment of gerrymandering by any council in Britain.

The auditor, John Magill, recommends Dame Shirley, Mr Legg and eight other named orginators of the policy should be surcharged for selling homes to maximise Tory votes in marginal wards - an action he described yesterday in a summary of a 700-page report as 'disgraceful and improper' as well as 'unauthorised' and 'unlawful'.

Under the policy many council homes which fall vacant in marginal wards have not been relet - council tenants might be expected to vote Labour - but boarded up and sold to owner-occupiers who are more likely to vote Tory. The consequent costs have included pounds 13.32m on selling properties at a discount on open market value and more than pounds 1m spent on steel doors for empty flats.

Mr Magill said 'the electoral advantage of the majority party was the driving force' behind the policy. 'My provisional view is that the council was engaged in gerrymandering,' he said.

The amount of 'loss or deficiency' suffered by the council amounted to pounds 21.25m and the 10 named people, members and officials, should repay the expenditure, he added. The loss in the council's accounts was caused by 'wilful misconduct' and the council had failed in its duty to homeless people when it designated an additional 500 homes each year for sale.

In addition to Dame Shirley and Mr Legg, those who could face surcharge are David Weeks, her successor as council leader, who recently resigned; Peter Hartley, a former chairman of housing; Dr Michael Dutt, a former chairman of housing; Judith Warner, now chairman of education; Bill Phillips, former council managing director; Graham England, present director of housing; Robert Lewis, a former deputy city solicitor; and Paul Hayler, a senior housing officer.

Dame Shirley said last night that she had received legal advice that the auditor's report was 'neither correct in law, nor in fact'.

The auditor's statement was welcomed by Peter Bradley, deputy leader of Westminster's Labour group: 'It has been a long time coming. But the real victims are those people who have suffered since 1987 from the policies promoted by this council. It seems clear to us that leading members of the authority, and some officers, were acting outside the law.'

However, the city council was unrepentant. Miles Young, its leader, said the auditor's findings would be vigorously contested. 'We have a deserved reputation for excellence in our housing policies and I view this report with extreme surprise.' He said the council had taken counsel's advice at every step, and had been assured its policy was legal.

He added that there was 'a political view that it was very important to boost middle-income home ownership in Westminster. It is a nonsense to claim that the designated sales policy in any way whatsoever was designed to, or was even capable of, influencing an election result.'

He said there were no plans to suspend the policy.

The political embarrassment for a beleaguered Tory party is made all the more acute since its victory in Westminster in the 1990 local elections - after implementation of the policy - was greeted at the time by the Cabinet as evidence that it was a model for how councils should be run.

Local government observers last night pointed to the irony that the overwhelming 1990 victory, riding on the back of a pounds 36 poll tax, had little to do with the housing policy.

John Smith, the Labour leader, spoke in the Commons yesterday of a 'devastating example of financial corruption and the abuse of power by senior members of the Conservative Party'. Labour is certain to exploit the findings to the full in the four-month run-up to the local elections. This year they take place in all the London boroughs - including Westminster.

In heated exchanges, Mr Smith repeatedly urged the Prime Minister to condemn those responsible.

John Major replied that if the allegations were confirmed, 'I condemn it unreservedly'. But he emphasised the legal process had only just begun and people were innocent until proved guilty.

The people named as perpetrators of the homes-for-votes policy have until 29 July to submit written defences to the district auditor and some ministers believe the subsequent High Court proceedings to decide on Mr Magill's findings might drag on for some two years after that.

Jack Straw, Labour's local government spokesman, said Westminster council had mocked the needs of the homeless, adding: 'Surely it is perfectly possible to condemn the crime now without prejudging the issue of who was guilty of committing those crimes.'

Gerry and the placemakers

'GERRYMANDER' is derived from a Governor of Massachusetts, Elbridge Gerry. In 1812, his administration enacted a law redrawing the state's senatorial districts, consolidating the Federalist Party vote in a few and giving disproportionate representation to Democratic-Republicans. Gilbert Stuart, an artist, altered one district's outline into a salamander and showed it to the Boston Sentinel's editor, who said: 'Better say a gerrymander'. The word caught on, meaning 'to rearrange voting districts in the interests of a particular party or candidate' or 'to manipulate so as to reach undue conclusions'.

'The short term objective must be to target the marginal wards and, as a matter of utmost urgency, redress the imbalance by encouraging a pattern of tenure which is more likely to translate into Conservative votes.'

Paper on 'Home Ownership

Proposals' presented to a

group of Westminster Tory

councillors, January 1987

Critics jubilant. . . . .2

Why they did it. . . . . .3

Thatcher flagship. . . .4

Leading article. . . . .15

Diary. . . . . . . . . . . . . . .17

(Photograph omitted)