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Sleaze? Scandal? What ... in Corby?

"Power tends to corrupt," Lord Acton once famously declared. "Absolute power corrupts absolutely." That is not what has happened in Corby, Northamptonshire, now home to one of the oddest and certainly the most venomous contests in the local election campaign. It is being fought amid a sea of writs and solicitors' letters. Dossiers have been sent to the district auditor and there have been allegations of councillors junketing on the rates. The fight, however, is not between Labour and the Conservatives. It is the Labour Party fighting itself.

The tale of what has become of the local Labour Party after 16 years in power is a sobering one for those who believe that allegations of sleaze are a purely Tory disease. The council's fall from grace holds remarkable parallels with the Government's difficulties after its 16 years in office.

For ministerial stays at the Paris Ritz, read allegations over a stopover at the Park Lane Hilton. For the £500,000 council house that Alan Duncan MP acquired in Westminster's exclusive Gayfere Street after lending his neighbour £140,000 to buy it under the "right-to-buy" policy, read 1 Park Cottages, Corby, now home to the council leader. For jobs-for-the- boys among ex-ministers, read the district auditor's worries about the number and cost of Corby councillors' trips on official business.

Labour's reign in Corby began with high hopes in the local elections of 1979, when it regained control after losing the council in 1976. The one-industry town was staring disaster in the face. Its steel works was once one of the most modern in Europe when the paternalistic steelmasters Stewart and Lloyds built it in the 1930s on top of the seam of iron ore that had made Corby's fortune. The works attracted many Scots, some of whose children speak in a burr mixed from rural Northamptonshire and Scotland. They are known locally as "Corby jocks". By 1979 the steelworks, part of the nationalised British Steel Corporation, was about to close. The following year some 6,500 steel jobs disappeared. The town of fewer than 50,000 lost perhaps 11,000 jobs in all. By 1983 unemployment in Corby topped 30 per cent.

The newly elected council was determined the town would not die. Labour's economic record in Corby is impressive. Kelvin Glendenning, already 15 years a councillor and six years the Labour group leader, was given extraordinary powers by the Labour group to take decisions with senior colleagues first and then report them to council committees, to help attract jobs to the town. Help was pouring in anyway, from Europe, from British Steel and from the Government, which set up an enterprise zone. Glendenning helped to create a favourable climate for investment by using his power to make rapid decisons on the town's behalf.

A still charismatic and craggy 69-year-old, originally from Shotton in North Wales, he spouts the statistics of Corby's success and has jetted round the world telling hard-hit towns how to do it.

The town's transformation has been remarkable. Since the works went, 800 companies have been attracted to Corby, on the council's figures, and some 13,000 jobs have been created. Unemployment, at 7 per cent, compares favourably with the national average of 8.4 per cent. It is an achievement of which any council might feel proud.

Yet for this week's local elections, 12 sitting councillors including the leader - 16 years on, Kelvin Glendenning is still at the helm - the deputy leader and the mayor, were de-selected by their party. The party took action after mounting allegations that the council leadership had abused their power and run the council in their own interests as well as the town's.

Their reaction was to form their own party and fight 23 of the town's 27 seats under the banner of the breakaway Corby First Labour. The national Labour hierarchy has recognised the significance of the Corby fight: a stream of Labour frontbenchers has passed through along with the party's "Rolling Rose" mobile recruiting van.

The two camps glower at each other from either side of Corby's revamped shopping precinct. A notice in the rebel councillors' shop, the former Donut City, denounces the official Labour candidates as a "a threat to Corby's future ...". A giant press release in the former grocer's, annexed by Labour, accuses the rebels of being "rag, tag and bobtail members who have run away from the official party".

The remaining official Labour candidates find themselves accused alternatively of being "marxists" or "fascists", the rebel councillors of running "a mafia". At last month's launch of Corby First Labour, Mick Skelton, a former steelworks convenor who is the rebels' agent, shook with emotion as he declared that he spent his life fighting communists and militants in the steel union and he wasn't stopping now.

Labour's charge against the rebels is that the leadership used the special powers granted in 1980 and never revoked to quash opposition. On a couple of occasions Labour councillors who challenged council policies found the whip withdrawn. Information they sought was denied. The council fell out with the local newspaper, barring it from meetings for a time. For the 15 months before they resigned from the party, the national Labour leadership had been attempting to get Glendenning, his deputy and the mayor to answer disciplinary charges over their running of the council before the party's national constitutional committee.

To outsiders, some of the disputes will seem arcane. There was a furious row over plans to twin with Shijiazhuang in China not long after the Tiananmen Square massacre. Glendenning found himself under fire when he attended the opening of the local City Technology College, which the council helped facilitate, just before the last election, when Labour policy was to oppose them. There are bitter allegations that the council leadership failed to organise to support the Labour candidate in the 1992 general election, contributing to a defeat by 342 votes in a seat Labour should have won. Peter McGowan, the deputy leader, had unsuccessfully applied to fight the seat.

But this is not what has given the campaign its fire. Rather, it is allegations of the abuse of power of the sort that have dogged the Government over the past three years.

Glendenning moved in 1987 from a council house to one of Corby's more desirable residences, a former woodsman's cottage set in Throughsale Wood, Corby's green and rolling central park, just after up to £10,000 was spent renovating it. He then bought it on a discount under the right to buy. It is no mansion, but is undeniably one of Corby's more attractive locations. Mr Glendenning insists he had simply become top of the council's priority list for a move after his former home was vandalised and broken into five times. He declines to discuss what he paid for it.

Then there are council expenses, an issue that the district auditor has raised with the council in the past. Corby councillors, he pointed out a couple of years ago, spent more on travelling and subsistence than the five other district councils in Northamptonshire combined. He appeared unimpressed by the argument that Corby councillors still needed to travel to attract the investment the town needed to survive. If Corby merely cut its spending of about £53,000 a year in 1992-93 to that of the next highest spending district, the auditor pointed out, an 85 per cent saving would result.

Then there was the Hilton Hotel in February this year, when Mr Glendenning and a council official travelled to London for a television interview at the Hungarian embassy, the town being twinned with Miskolc. A council booking in a more modest hotel was cancelled and a stay for two complete with dinner at the Park Lane Hilton resulted. Mr Glendenning paid his own hotel bill, insisting, "We went there on our own account". But the atmosphere in Corby is so poisonous that someone referred the trip to the district auditor.

Mr Glendenning dismisses the charges against him as "malicious gossip", accusing those opposing him of envy and of seeking revenge for Corby's success. He says: "They don't like the fact that we went for an enterprise zone when that was against Labour Party policy, that we got a CTC when that was against Labour policy, that we didn't carry out their wishes that we should have a ghost town in Corby in 1980, and that we worked with a Conservative government." He brands those who have opposed him in the Labour Party "militants, dissidents and ex-communists", a charge that sits oddly with the Corby party's 225-24 vote for the new Clause IV in the recent ballot.

"We claim no divine right to be councillors," the rebels' campaign literature says. But their logo adapts the town crest, their title uses the council's slogan of "Corby First". A sense that somehow Corby owes them for all that they have undoubtedly done pervades their campaign.

The battle to oust the Glendenning regime has created new alliances. Two of the 11 Tory candidates for Thursday's elections - they hold just one seat at present - slid into the Labour office last week to confide that if they can't persuade electors to vote Conservative, they're advising them to vote Labour. "I'd do anything to get rid of them," one of the two says of the rebel councillors, "and if that means helping Labour, I'll help Labour. This isn't about politics, it's about getting the town run right."

Jack Adamson, the soft-spoken 71-year-old whom Labour hopes will lead the council from next Friday, insists this is not just a clash of large personalities in a small place. "It's much more basic than that. These people have been in power so long that they consider they have a God-given right to be in control of Corby's affairs," he says. A bit like the Conservative government? "Aye," he adds.

Giles Smith is away. His interview will return next week.