THE Conservative leader Iain Duncan Smith was this weekend at the centre of a controversy as former colleagues turned on him on the eve of his party’s conference in Blackpool.

Sworn statements, unattributable interviews and documentation have been gathered by the BBC concerning Duncan Smith’s employment of his wife Betsy as a secretary. Her salary of £18,000 was paid by the House of Commons out of taxpayers’ funds.

Much of the same information — which questions Duncan Smith’s use of allowances he receives as an MP — has also been shown to The Sunday Times. The allegations were understood to have been due for broadcast late last week on Newsnight, the BBC2 current affairs programme. They were to have been presented by Michael Crick, the investigative journalist best known in political circles for his biography of the disgraced Tory peer Jeffrey Archer.

Crick has been working on the programme for more than three months and has told friends that he regards the story as one of the best of his career. But the report was apparently pulled on Thursday after lawyers acting for Duncan Smith stated their intention to sue if the allegations were broadcast.

Duncan Smith also threatened to sue The Sunday Times this weekend should it make public the allegations. He refused to answer detailed questions about what role his wife played.

The allegations, described as slurs by friends of Duncan Smith, come on the eve of the Tory party conference and only two weeks after the Conservatives were pushed into a humiliating third place at the Brent East by-election. They will be seen as a concerted attempt by former senior colleagues and serving members of staff at Conservative Central Office to unseat the Tory leader and spark a leadership challenge.

Duncan Smith’s camp say that the allegations are politically inspired and have no merit. However, if they were true — and they cannot be detailed for legal reasons — they would likely result in his censure by parliament and calls for his resignation as leader of the party. Duncan Smith has strenuously denied all the allegations through his lawyers.

The Sunday Times has interviewed those behind the claims. It has also been passed a copy of an e-mail sent by a senior member of Duncan Smith’s staff, Vanessa Gearson, to party bosses in January 2003. The e-mail, sent to Theresa May, the party chairman, and later passed to Duncan Smith himself, raises concerns about the management of his office.

It notes that Duncan Smith’s wife Betsy had just stopped claiming £18,000 of his parliamentary office costs allowance. It had been paid for out of the public purse at a time when he was in a position to call on the services of party staff.

According to senior party sources, Duncan Smith was “furious” when he became aware of the e-mail’s contents.

The Tory party has long been divided between traditionalists led by Duncan Smith and the more modernist wing, represented by Michael Portillo, which would like the party to become much softer on social issues such as homosexuality, race and marriage.

It is from this more liberal wing of the party — and others disillusioned with his personal performance as leader — that the latest allegations are believed to have emerged.

Friends of Crick say the journalist is angry that the BBC has not run his story. They believe the corporation has suffered a loss of nerve in the wake of the Hutton inquiry into the death of the former weapons inspector Dr David Kelly. "I may not work for them again," Crick is reported to have told one friend.

A second BBC source who is close to the programme makers said: "We have had this story since May this year and we have collected a great deal of information, but it has been an upward struggle from the beginning.

"First it was all the fuss around (Andrew) Gilligan and later the Hutton inquiry. We have been in dialogue with Duncan Smith's lawyers for a long time and they have constantly threatened us with a lawsuit."

The source added that the decision to hold the report was due to be reviewed on Monday when Greg Dyke, the director-general, returned from holiday.

"It looks like no one has the guts to make a decision when he (Dyke) is not around. Michael (Crick) feels he's been let down."

The allegations are likely to influence the first few days of the Tory conference which starts tomorrow. Duncan Smith's political enemies are certain to try to ensure that the information is given a wider airing with a view to forcing him to explain the details of his use of parliamentary funds.

They say further documentation and personal statements from former and existing colleagues are almost certain to surface.

Although the allegations are potentially serious, there is no doubt that they are being disseminated, in part at least, by people with a desire for change at the top. Commentators were last night describing the machinations behind the scenes as an attempted coup.

Others point out that Duncan Smith has few loyal friends within the party to fall back on. While many of his colleagues on the liberal wing were never going to support him, even those close to him politically are now manoeuvring in the background in preparation for a leadership challenge.

"Even if you like the guy's politics, any reasonable person can see he does not have the charisma or talent to run the country. He has made matters much worse for himself by behaving towards some of his senior staff in an arrogant and stubborn manner," said a senior source last night.

Although the Tories avoided serious bloodletting in the wake of their poor showing in the Brent East by-election, the latest controversy could act as a catalyst for dissidents to renew their attacks on Duncan Smith.

There is increasing frustration within the party at the failure to make inroads against Labour at a time when the government has been damaged by the fallout from the Iraq war.

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