LOOKING AFTER NUMBER ONE

Once loathed by Tory and Labour alike, Derek Hatton has mutated from Militant to capitalist with chameleon grace. But then he always did have an eye for the main chance much of the past decade fending off police investigations. But he still has no convi...

DRIVE AROUND Liverpool with Derek Hatton, and it's rather like being with a home-grown television soap star, or one of the more popular members of the Royal Family. People do double-takes; reverse their cars to get a better look; shout "Hello, mate!" out of windows; stick their thumbs up; and say, "All right, Del!" At first, it seems like I'm being set up: surely these must be Hatton's friends lurking on strategic street corners, planted there to give the impression that he's still a local hero 10 years after his heyday as the hard Left deputy leader of Liverpool City Council? But the friendly recognition happens so often that I begin to think that it must be for real. Five teenagers in a clapped-out Ford Cortina make cheering noises; security officers lounging in the sun at the local docks get up and wave; a man walking down an otherwise deserted road steps off the pavement in order to stop Hatton's sleek black car, and says, "Hiya, Del. What are you doing these days?"

"Oh, you know me," says Hatton, with his trademark wink. "A bit of this, a bit of that." And he winks again, as if to prove a point.

You could accuse Derek Hatton of many things, but never of being idle. In 1986 he was thrown out of the Labour Party for his membership of the secretive Trotskyist organisation, Militant, and banned by the District Auditor the following year from holding office as a local councillor. Since then, he has survived extensive police investigations, and been acquitted in two court cases. (The first, in 1993, related to an alleged conspiracy to defraud Liverpool City Council in corrupt land deals; the second, earlier this year, cleared him of attempting to swindle an insurance company out of pounds 45,000 over the loss of his horse-box.) He has become a regular attender of horse shows and gymkhanas (his three daughters are keen showjumpers, which goes some way towards explaining why a Marxist should own a horse-box in the first place). He has also rebuilt a thriving local government consultancy business (his first one collapsed, after his arrest on fraud charges in 1990); and added to his income by making lucrative after-dinner speeches. He has starred in a watch advertisement, which featured him drinking champagne in the back of his Jaguar with its famous DEG5Y numberplate; played King Rat in a Christmas panto; appeared as a celebrity reporter in a television series (he'll be back on the screen this autumn); and made the front page of the Sun for his alleged romance with a female member of the ruling classes (`DI' S COUSIN DATES DEGSY!').

Now that he's on the up again, making money like there's no tomorrow, you'd think he'd be met in his home town with bricks, not smiles. (Liverpool has the highest council tax in the country - a direct legacy of Hatton's era of overspending, according to his critics.) But no: superficially, at least, Hatton seems like the city's favourite scally. He knows everyone, and they know him. And, despite his removal from civic power, he still has friends in the right places. Less than five minutes after I ring the Town Hall, asking to be put through to the Lord Mayor (who was one of the other 46 Labour councillors barred from office for five years at the same time as Hatton), I get a phone-call: not from the Lord Mayor, but from Hatton.

"I hear you want to talk to the Mayor," he says.

"How do you know?" I ask.

He laughs, with his peculiarly manic half-giggle, half-snigger. "I already told you, kid," he says. "Liverpool is a village."

IF LIVERPOOL is a village, then it appears to be a bit of a rough one at the moment, at least in some parts. Ever since the murder of David Ungi, a 35-year-old man shot dead while driving through Toxteth on 1 May, there has been talk of gang warfare. These rumours have been further inflamed by a dozen other shootings, and the seizure by the police of two Uzi submachine- guns last mouth. The Ungi killing, it is said, is part of a dispute over territory, and as much a demonstration of the prevailing culture of machismo as a gun battle over the control of drugs and protection rackets.

Since Hatton seems to have his finger on the pulse of the city, I ask him about the Ungi murder and the rival gangs. "I could tell you," he says, with a dramatic pause. "But it would have to be off the record. It's a story that you could really only write the day before you die."

As it turns out, he doesn't reveal any more detail than you could already have read in the Liverpool Echo. But the story - and his telling of it - is relevant in other ways. There are many myths about Liverpool and its inhabitants, a few based on truth, most probably not. Over the past 15 years we have heard about wild mobs in the Toxteth riots; Mafia-like drug networks selling heroin to the masses; the sinister rise of hard- Left political Godfathers, with thugs at their disposal; and now gun-toting gangsters. The stories are doubtless embroidered, but they all serve to reinforce Liverpool's vivid place in contemporary folklore. It is a city that allegedly revolves around Boss politics, both legal and illegal; or, as one local journalist told me, "the culture of the entourage. A man has to be seen against a backdrop of muscle. It's almost Italian in its posturing."

The tales that are told about Derek Hatton fit perfectly into this cartoon landscape: the Armani-clad sharp operator, the streetwise wheeler-dealer who might or might not be backed up with a posse of heavies. He plays the role with aplomb, and though it probably has nothing to do with reality, it explains why he retains his iconic place in this most iconic of cities (while Militant - the organisation that swept him to power in the first place - has faded). For Derek Hatton's greatest belief is in himself, rather than in his original politics: the ultimate qualification, perhaps, for any great survivor

A FEW days after seeing Hatton in action, I meet the Labour MP for Liverpool Walton, Peter Kilfoyle, formerly known as "the Chief Witch-Hunter" by his enemies in Militant. I've already been told about Kilfoyle by another local journalist, who covered the epic events of the mid-Eighties, when Hatton and his colleagues took a defiant stand against both the Conservative government, over local authority budgets, and the Labour leadership, over the power of Militant. "Peter Kilfoyle was sent into the city by Kinnock to clean it up," says the journalist, admiringly. "He really squared up to it. He's a real hero - a real bloke."

Peter Kilfoyle is a burly man, wearing a grey suit as smart as any of Derek Hatton's. We meet in the House of Commons Lobby, and he breaks off occasionally to discuss rugby with passing MPs of both political persuasions.

I ask him about the menace that is said to have been directed against him by those people who saw him as insufficiently left-wing when he stood as an MP in the 1991 Walton by-election. "There was some physical intimidation," he says, in an off-hand sort of way. "A couple of trivial attempts."

"Like what?" I ask.

"Death threats," he says, with a manly shrug. "I was told I would get my legs broken. It's hard to understand, unless you understand the culture of the city."

I ask him about the city's political history, and he says, "It's very complicated. There's Catholics, Protestants, and the Masons." Then he rattles through some details: the Labour Party was essentially Catholic until 1974; while working-class Toxteth had a Tory MP until 1964, "on the back of the Orange Lodge vote". And there were Boss politics on both sides, he says. "The Tories were a law unto themselves, as were the Labour Party."

But Militant, which emerged as a serious political force in Liverpool in the late Seventies, stepping into the vacuum left by a right-wing, essentially moribund Labour Party, was "a different kind of gang - based on political sectarianism." Nevertheless, for all their apparent radicalism, he says, the Militant supporters had something in common with their more stolid predecessors: the heavy-handed bullying towards anyone perceived as an outsider. "Everyone is related to everyone else," he says. "They drink in the same places, and so on. It can be very intimidating for someone who is out of step with the current orthodoxy."

ONE OF the many perplexing things about Derek Hatton is trying to pin him down on his political orthodoxy, past or present. He is held, in the popular imagination, to have been a dangerous revolutionary - Public Enemy Number One, along with Arthur Scargill - who became a fat-cat champagne- swilling capitalist. And yet with the benefit of hindsight, he did what everyone else did in the Eighties: spend loads of money, on credit. The only difference is that Hatton, along with the rest of his colleagues in Militant, was acting on behalf of Liverpool City Council, using money from Swiss banks to fund local government services. Margaret Thatcher, of course, did not approve: this could by no stretch of the imagination be termed "good housekeeping". But when you listen to Hatton talk about what he regards as his lasting achievements from the Eighties, it seems as though he might have had something in common with Mrs Thatcher (he now describes his former nemesis as "absolutely brilliant"). He speaks as proudly of his houses - 5,000 of them built in his time, he says - as the Thatcherites once did of their home ownership crusade. He takes me to a neat little estate on the edge of town. "This is what we did," he says. "They're nice houses, all with their own drives, gardens in the back and the front." He sounds more like an estate agent than a politician. And he looks like - well, what does he look like in his lime-green blazer and flashy diamond pinkie ring and dark hair blow-dried into fluffy perfection? He looks like a 1980s wide-boy, just as he's always done.

We stop in front of one of the houses, and he knocks on the door. Annette Dooley, a former cleaner for Liverpool City Council, comes out smiling. He encourages her to tell me about the joys of living in her own house, on this pleasant estate, and she is happy to do so. "There's no graffiti, and we keep the pavements clean," she says. "We have street parties, and everyone has got green fingers now. People give each other plant cuttings."

"We always said that if you give people the houses that they want, they'll look after them," says Hatton, with satisfaction. And it doesn't bother him that these council-owned dream homes are being sold off. "To be honest, you couldn't blame anyone for buying a house like this. If it was me, I'd buy it. It's smashing."

After our tour of the estate, we drive to a Chinese restaurant for lunch. On the way, Hatton tells me about his family history, which is not something that he normally talks about. They have all lived in Liverpool for as long as anyone can remember. His Dad was a sergeant in the Coldstream Guards, and then a fireman for 30 years. Derek, who was born in 1948, was an only child, but with lots of local cousins. His first job, which he started at the age of 14, was in a tailor's shop (he's always liked smart clothes); then he followed his Dad into the fire brigade. He met his wife Shirley when he was 17; they have four children (three girls and a boy). His family, he says, means everything to him.

In the restaurant, he puts his mobile phone on the table and orders a Perrier water. After a few moments, it becomes apparent that his frequent winks are not so much chumminess as a facial tic. It is therefore hard to ignore the memory of the constantly winking anti-hero of Alan Bleasdale's drama, GBH, televised in 1991 and widely believed at the time to have been based on political events in Liverpool a few years earlier. The series, which riveted the nation in much the same way as the more recent Brookside courtroom saga, starred Robert Lindsay as Michael Murray, the high-living Lothario leader of an unnamed Labour Council. I ask Hatton if he watched GBH. "Yes," he says, "but after the third episode I couldn't understand what it was all about. The whole thing fell apart. I think Bleasdale now acknowledges that his mistake was trying to link reality with fiction."

Bleasdale's leader was shown deploying brutal pickets and rented thugs to intimidate his opponents. Hatton, however, says, "In all my years in the Labour Party and trade union movement, I've never seen anything like that, let alone in Liverpool."

"And what about your council security force?" I ask. (This was known in the mid-Eighties as Hatton's Army; many of its members were said to have criminal records.) Derek Hatton pauses before answering this question, which is something he very rarely does. "The press had wonderfully inventive minds in those days," he says, with barely disguised irritation. "Every local authority around had a security force. Every local authority around has a security force that looks after buildings and parks. That security force did nothing other than that. The fact that the fella who had headed it up retired, and we then happened to appoint someone who we happened to know, instead of a retired police officer like everyone else does - immediately, it was Hatton's Army."

This speech illustrates two of Hatton's characteristic oratory devices: first, repetition; second, the occasional use of the royal, or Thatcherite, "we". (For added emphasis, he lapses into the third person, as in, "If it was 5 May 1983, I'd do things exactly the same. But if I was elected to run the Council on 5 May 1995, I wouldn't do anything the same - because life is different, politics are different, Liverpool is different, Derek Hatton is different, everything is different.") Such techniques help to make him curiously plausible, once you've got over the initial impact of his implausible tan and lurid clothes and the pungent cloud of aftershave that announces his arrival several yards before him. After a while, he seems like regular Derek instead of hard-line Hatton. He is impressively fluent about the political convictions of the local people who backed Militant policies from 1983 until the councillors' expulsion in 1987. "It wasn't just Derek Hatton. It was the mood of the city and everything else: the feelings, the desires, the aspirations, everything! That was how it was in those days."

Once he's in full flow, you can see why Hatton - who had had thoughts of becoming an actor before his mother dissuaded him - became so useful a member of Militant. He comes across as a performer with the gift of the gab, rather than a skilled strategist; though he insists that his belief in socialism, now lapsed, was once deep-seated. "In the late Sixties," he says, "I went through a bit of a religious thing. I was looking for something - looking for a way of changing things. I thought, is it the Church? No. I played around with some housing campaigns. Is it that? No."

In the early Seventies, he joined the Labour Party and quickly became involved with Militant: drawn, he says, "by its absolute commitment". He left the fire brigade in order to study social work at Goldsmith's College in London, returned to Liverpool to run a youth centre, and later became a community development officer for nearby Knowsley Council. On the same day that Thatcher became Prime Minister in 1979, Hatton was elected to Liverpool Council, rising quickly through the ranks to become its effective leader when Labour took office in 1983 (the notional Labour leader, John Hamilton, was not a member of Militant and was therefore quickly side- lined).

Hatton could talk in soundbites long before the phrase became fashionable, and with his dark good looks and well-cut suits, the cameras loved him. He was, moreover, a local lad: not a middle-class intellectual who had recently arrived in Liverpool, but a Scouser who watched Everton on Saturdays and hung out at the pub with the rest of the boys. Derek and his mates were "Hard Left" as opposed to the "Loony Left" of the London Labour councils: white working-class heroes every one of them, who spent the budget on sensible things like houses and sports centres (and fell out with many in Liverpool's black community, who accused Militant of ignoring their needs).

"We never had any lesbian wrestling clubs," says Hatton, by which he seems to be referring to the gay rights movement that was on the agenda of some London Labour authorites in the Eighties. As for the fringe left- wing groups from outside Liverpool that were attracted to the city at that time, "we were ruthless to them - we completely excluded them, just kicked them out".

And despite the ferocious attacks directed against him by the government, the press and the Labour leadership, in Liverpool at least Hatton appeared irresistible. So what if he was a bit of a Jack-the-lad? That made him all the more likeably colourful. The city - racked by unemployment and with housing that was among the worst in Europe - desperately needed a popular champion, and Derek Hatton was only too ready to oblige.

Still, he wasn't a hero to everyone. "What about those poor old gardeners?" I ask him, referring to a group of council gardeners - known as the Harthill Six - who refused to take part in a Day of Action, and were subsequently demoted from their skilled jobs, in the orchid greenhouses, to cutting the grass in one of the parks. Their orchid collection, meanwhile, was destroyed.

"I don't remember any `poor old gardeners', to be honest, Justine," says Hatton, with some disdain, concentrating on his chicken chow mein instead. "I do remember a dispute that we had that involved the trade union. At the end of the day the trade union decided who was and who wasn't part of their union. If we gave them closed shop - as we did - then we had to say, OK, that's what they want to do. And we get the blame for it."

IN THE village that Liverpool is said to be, you keep bumping into the same people. So it should come as no suprise that the junior solicitor who represented the Harthill Six when they went to court some years ago in an attempt to get their jobs back, turns out to be none other than Peter Quinn, Derek Hatton's current lawyer and the man who has helped him defeat various fraud charges over the years.

"I've seen the good side and the bad side of Derek," says Quinn, sanguinely. "I've never met a man with so much self-confidence. But he's also a fantastic family man. And he's got an incredible instinct for self-preservation. If he fell down the deepest holes in the world, he'd come up smelling of roses."

Quinn still disapproves of the way the Harthill Six were treated, but he has no time for the police suspicions that Hatton used land deals to fund Militant. "I'm not sure that Derek ever was politically committed," he says. "I think he just found himself in that position."

I am to hear that view again, from Rex Makin for one, a prominent Liverpool solicitor and Quinn's employer at the time of the Harthill Six court case. "Hatton was a careerist adventurer dressed up in Militant clothing," says Makin dismissively.

Others are less open, but the implication is nevertheless peeking through their guarded testimonials. Terry Fields, the Militant MP who won Liverpool Broadgreen for Labour in 1983, says, "Hatton, of necessity, was like a moth to the flame with television cameras. Propaganda was an important weapon in the war we were fighting. It was like a pop group - you need someone upfront, as a figurehead for the movement - but you need people behind him." Now, says Fields, "Derek is doing what he does best - self-promotion and talking. I don't begrudge him that. "

Terry Fields himself has fared less well. Expelled from the Labour Party in 1991, he lost his seat the following year, and today, at the age of 58, is unemployed and in ill health. "I worked for six mouths in a pub," he says, "and ground myself into the ground." He is no longer involved in politics, though he does not disavow his previous convictions. "The ideas are still there," he says. "The reality is, unfortunately, that I've done enough."

There are others, too, who have fallen on hard times since the glory days of Militant in Liverpool. Tony Mulhearn, one of Militant's founders in the city, and a key figure on the Council at the time of Hatton's leadership, is now a taxi-driver (which is ironic, given the Council's notorious delivery by taxi of redundancy notices to its 31,000 employees when the money ran out in the autumn of 1985).

Shortly after being expelled from the Labour Party in 1986 and subsequently barred from local government office for five years, Mulhearn was made redundant from his job as a printer at the local News International plant. Undaunted, he is now studying part-time for a degree in politics at Liverpool University.

Mulhearn, a dignified man with cropped grey hair, takes me on a tour of the city in his taxi, a spluttering Peugeot with a leak in the engine and a copy of A World In Crisis: A Marxist Analysis for the 1990s on the back seat. We drive past Scotland Road, the Catholic area in which he was born just before the Second World War, and then on to the Albert Docks. (His grandfather was a merchant seaman, says Mulhearn, and his brother served in the Royal Navy; while he went to sea for a short time in the early Sixties.) He is saddened by the fact that the Docks are no longer a thriving part of the shipping industry, but a tourist attraction full of wine bars and gift shops. Then he takes me past the old Art School, where he was at the same time as John Lennon.

On our way to Toxteth, he talks disapprovingly about the slave and cotton trade that was the basis for the Victorian wealth of the city. "I'm still very much a radical socialist in the Marxist wing of the Labour movement," he says. "Everything that has gone on under Thatcher and Major has only served to confirm my feelings about the greed of the capitalist society."

Once in Toxteth, we drive along North Hill Street, and he points out the wilting bunches of flowers that mark the spot where David Ungi was murdered last month. He mentions the "sophisticated apparatus of protection" that now operates in the city. But he also plays down the idea that criminal gangs are ruling the streets of Liverpool, and concentrates instead on reminding me of the good things that are still testament to Militant's time in power. "The houses and sports centres we built still survive," he says. "And the political tradition still survives."

Not in Derek Hatton's case, I point out. "Derek is concentrating on his commercial activity," he admits, "But frankly, I don't think he had much option. Conditions determine consciousness, as they say. And Derek is a pragmatic man."

Mulhearn parks the car, and gets a polystyrene cup of tea and a limp cheese roll from a sandwich bar. "As you can see, I live off the fat off the land," he remarks. Then he tends to the water leak in his engine, and resumes the tour, driving past the Town Hall. "We'd stand on a platform outside, and address thousands of people in the streets," he says nostalgically. And then we go past St George's Hall ("We had some great rallies there, too"); past the Victorian statue of a man on a horse ("I don't know who he is supposed to be, but he symbolises British imperialism); and the car threatens to seize up. "I'm having a spot of bother with this vehicle," he says, but we make it to Lime Street Station, where I am meeting Derek Hatton for the second time.

I ask Mulhearn what I owe him for the hour-long taxi ride. "pounds l6," he says, slightly embarrassed at having to discuss money. Hatton, who has been waiting for us, pokes his head through the window and says, "pounds 16? I'm his agent - he's worth at least pounds 100 an hour. Financial arrangements, that's what's important."

No no, says Mulhearn, pounds l6 is more than enough. And they start talking about another ex-Labour councillor, who is now earning pounds 350 a day in local government consultancy fees. Hatton is outraged. "pounds 350?" he says. "He's undercutting me by miles!"

Then Hatton tells Mulhearn about his son, a talented footballer who may get a sports scholarship abroad. Mulhearn looks impressed. "What I'd give to be 19 again," he says.

"But it's different now," replies Hatton. "The opportunities they have these days...We never had anything like it."

DEREK HATTON knows how to make the best of the opportunities that present themselves to him. He has a passion for self-promotion. (This is the man who dealt with a low ebb in his career in the late Eighties by turning to the publicity agent, Max Clifford. Clifford arranged for Hatton to be photographed cavorting with an upper-class blonde in various London nightclubs, much to the delight of the tabloids. "It lightened the image," says Clifford with some satisfaction. "I love to take on these challenges.") Nor does Hatton see anything wrong with his whole-hearted embracing of capitalism. "You only had two choices," he says, referring to himself after his political empire crumbled. "You either lay down and died and knocked on the door of the local security office, or you got yourself sorted and carried on. You borrowed some, and did this and that. But we're still here, still alive, still operating."

There was no alternative, he says. "I went from a position where I could actually affect the way things were going, to one where everything fell apart... I couldn't use the Labour Party any more. I couldn't use the Council any more. I couldn't even use my job any more. No platform left what-so- ever! So I thought, all I can do is make some money to keep my family going."

I'm still not quite clear how his consultancy business works, and so he explains, making it sound terribly reasonable. "Say for instance a company is wanting to do a development in Manchester, and knows it's going to have problems with Planning - I don't mean there's going to be automatic rejection, but what they want and what the Council want seem to be different things. What we're able to do is sit down and talk to people, both within the company and on the Council, to try to get people together and talk in a much more sensible way."

It all appears to be far removed from the bludgeoning tactics said to have been used by Militant in the Eighties. And for a moment I feel completely adrift, lost as to who this strange, slippery man really is. "In what way have you changed?" I ask, desperately searching for a handle.

"Well, the Eighties won't come back, so Derek Hatton won't do the same things again," he says, regally. "What Derek Hatton is doing now is, if you like, entrepreneurial. And the way Tony Blair has moved the Labour Party, I think it's much more American. It's not about policy. It's about, do you like his face, do you like his hairstyle, does he have a nice wife?"

What he seems to be saying, in a slightly tangential way, is that there is no room left in the Labour Party for an honest, heartfelt politician such as himself. This is, when you think about it, rather extraordinary: for apart from the obvious - that Tony Blair would never let him near the new Labour Party - Derek Hatton has always offered style rather than content. It's just a different kind of style to what is generally associated with militant socialism. You can see him, with a few minor readjustments, as a successful Thatcherite acolyte; a junior Minister in the Conservative government; a television game show host; a used car dealer; the star of a Merseyside sitcom; a gangland hero. The face fits, so why not use it? !