Iain Dale: The little shop of political horrors

It's the place where Ann Widdecombe left her knickers. Its regulars are novelists, political editors, heads of state and spies. When New Zealand's Prime Minister Helen Clark was in town for half a day, she knew exactly where to head to first. It's Annie's Bar for Blair's Britain and the centre of Westminster life. And as Politico's bookshop approaches its fifth anniversary next month, it is, increasingly, the place for politicos and wannabes to go.

Nestled discreetly between an Army & Navy store and an old-fashioned pub in Victoria, Politico's was opened in 1997 by John Simmons, a refugee from the motor trade, and Iain Dale, a former parliamentary researcher and journalist. "Everybody thought we'd fail," says Dale. A year later Politico's publishing was launched. Then in 1999 their new website, www.politicos.co.uk, paid for itself within two weeks. Politico's website design team, launched last July, had 20 clients within a month (it now numbers 60, including several Labour MPs and half the shadow cabinet). Michael Portillo was one of the first to sign up during the Tory leadership election, and Iain Duncan Smith's campaign website was also designed by the team. "First and foremost we're political people," says Justin Jackson, who joined up following a six-year stretch in the Conservatives' war room. "We just know how important the internet is."

Politicians, too, recognise the importance of Politico's. Neil Hamilton, a regular customer, calls it "a unique institution". "Dale and Simmons," he says, "are extremely enterprising." So much so that when the Hamiltons appeared on Who Wants to be a Millionaire, Dale was on their phone-a-friend list as political expert.

Hamilton is not alone in suggesting that much of Politico's success lies with Dale, the ebullient front man. "He's got the sort of personality that enables him to persuade people to do things," he says. But if you ask Dale what makes people confide in him, he shows a politician's knack for dissembling. Oh, he's not so clued-up, he says, he just knows a few people. What he will admit is that "there's always an agenda. People tell me things because they hope I'll pass them on. But these people are my friends. If I hear something in confidence, that's the way it stays." You get the impression that he could tell you stories to make your eyes water, if only he weren't so gallingly discreet.

He was the first to suggest that Shaun Woodward was about to be parachuted into a safe Labour seat before the election. "Whispers" told him, apparently. He "stumbled upon" a clue to the retirement date of Madam Speaker, when a "friend" received a cheque from her House of Commons department. In the space where the bank usually prints one's name were the words: "Speaker of the House of Commons for the Time Being." David Shayler is a customer. Apparently his e-mail address begins "mi5spook@".

Much of the networking that goes on at Politico's happens at the book launches held there. For example, next Wednesday Paul Routledge launches his biography of the Tory politician and spy Airey Neave. "A Politico's launch is always a hive of high-grade gossip," says The Independent's Don Macintyre. "It's where to find the political craic, I suppose. It's also a very good bookshop."

It's certainly a very unusual bookshop. Alongside the biographies, manifestos and obscure psephological reports is what Dale calls "the kitsch". Erskine May Parliamentary Practice 22nd edition shares shelf-space with gargoyles of Brown and Blair (both regular customers). When John Prescott stops by to peruse the Transport Act 2000 he has to pick his way through a huddle of garden gnomes modelled in his likeness, complete with boxing gloves. A typical customer arrives at the counter with an armful of educational literature concealing a pair of underpants (unisex, apparently) sporting the slogan "Up for Portillo". They're always "for a friend".

There have been calls for Politico's to expand. "We're very big in New Zealand," says Dale, "for reasons completely beyond me." And Washington has always appealed. "But I have no delusions of grandeur, and if I had a huge business I wouldn't be able to do the things I enjoy. I love serving behind the counter." And where else, after all, could a proud Essex boy be at the hub of political gossip? How many shopkeepers have the ear of prime ministers? Who else in politics gets to have coffee with Christine Hamilton, tea with Peter Hennessy and a scone with Michael White?

Politico's anniversary dinner on 8 April will be a minor coup for Dale. Margaret Thatcher, whom Dale considers something of an icon, has agreed to be the guest of honour, and to combine the event with the launch of her book, Statecraft. Dale is the proud owner of an authoritative Thatcher website, www.margaret thatcher.com, but stresses it is a personal venture: Politico's remains strictly politically neutral. To date, though, he has never achieved his ambition of persuading the great Lady across the shop's threshold.

He is responsible for some notable firsts, though. Not long ago, Dale was able to present Ann Widdecombe with a pair of the shop's best-selling item: the "I * Widdecombe" pants. "To her credit she roared with laughter," he recalls. "But as she was leaving the shop I noticed the knickers still on the counter. 'Ann,' I shouted. 'You've forgotten your knickers!' And there can't be many men in the world who have had the chance to say that."