May was unhappy about payments, says sacked aide

Theresa May, the Tory chairman, was yesterday dragged further into the dispute over the running of Iain Duncan Smith's private office.

Mark MacGregor, sacked this year as the party's chief executive, spent several hours giving evidence to the parliamentary investigation into the payment of a £15,000 salary to Betsy Duncan Smith from public funds. He is understood to have told Sir Philip Mawer's inquiry that Mrs May was unhappy about the handling of Mrs Duncan Smith's allowances claims.

He refused to comment, either as he arrived to see Sir Philip, or after his interview. But one friend confirmed last night that his evidence had been "at loggerheads" with the Tory leader's version of events.

Mr MacGregor also gave detailed accounts of meetings within Central Office where officials discussed the potential problems over the payments to the Tory leader's wife with Mrs May. Mr MacGregor, now working on the London Mayoral campaign of Steve Norris, was among recipients of the e-mail from the then head of Mr Duncan Smith's private office, Vanessa Gearson, which first sparked the row. In it, Dr Gearson raised concerns over whether Mrs Duncan Smith did enough work as a diary and secretarial aide to her husband to justify her salary, and voiced fears of a "Crick-style" expose of her position.

Mrs May looks increasingly likely to be asked to give evidence to the inquiry. Sir Philip is also expected to call Owen Patterson, the Tory leader's private parliamentary secretary.

Mrs May encouraged both Dr Gearson and Stephen Gilbert, the Tory campaigns director, to get legal advice over the dispute. She is said to have advised them not to sign statements corroborating Mr Duncan Smith's account.

The revelations have irritated the Tory leader's aides and could make her position at Conservative Central Office more precarious. She recently hinted in an interview with The Independent that she could be switched to another frontbench post before the next election.

Mrs May caused surprise at the weekend when she did not appear on a BBC1 interview where she would have faced questions about the "Betsygate" controversy. Tory officials said she had never accepted the invitation and had not been gagged, but the furore fuelled suspicions among some party MPs that she is under pressure from the leadership to lie low.

Television reporter Michael Crick paid a surprise return visit to Sir Philip's office yesterday. It suggested he had been called back to clarify some of the evidence he presented last week.

Mr Duncan Smith has not commented since a flurry of television interviews last week - and a magazine article in which he came close to blaming the controversy on supporters of Michael Portillo. Aides said the Tory leader was continuing, however, to submit evidence to Sir Philip that substantiated his claims. They have dismissed calls from three backbenchers for Mr Duncan Smith to submit himself to a confidence vote in his leadership among MPs.

'Brilliant' organiser who fell victim to party in-fighting

When Iain Duncan Smith appointed Mark MacGregor chief executive of the Conservative Party, the Tory leader praised his recruit's "brilliant mind".

He soon lost his admiration for Mr MacGregor, though, and after little more than a year sacked him, on Valentine's Day this year.

The falling-out came as IDS loyalists suspected that Mr MacGregor, an admirer of Michael Portillo, was attempting to undermine their man.

For the former public relations consultant to be attacking the Tory leadership from the centre-ground amounted to a remarkable personal epiphany. In his youth, he was chairman of the Federation of Conservative Students, which was closed down by the then party chairman, Norman Tebbit, for its embarrassingly extreme right-wing views. These included support for leaving the United Nations and privatising the BBC, and opposition to Nelson Mandela's release.

He went on to run Pulse, an organisation arguing for privatisation in the health service and local government, and then Market Force. Its clients included Dame Shirley Porter, the disgraced former leader of Westminster Council, and Mr MacGregor became a leading light in a group of young right-wingers operating in the borough.

At the last election he fought the Thanet South seat, by which time he had gained a reputation as a leading "moderniser". Although he campaigned for Mr Portillo for leader, he was brought into Central Office two months later.

Old enmities resurfaced in August 2002 when Lord Tebbit demanded his sacking, and in October last year when he took much of the blame for the Tory chairman Theresa May's infamous "nasty party" speech.

Not even his fiercest critics have disputed Mr MacGregor's intellect or his organisational skills. But, they say, his confrontational style is a serious weakness.

He is now working on the London mayoral campaign of another Portillo supporter, Steve Norris.