Previously it was claimed that the grant, made by the English Tourist Board to Mr Brandreth's failed exhibition company, Unicorn Heritage plc, was written off by the National Heritage department. Labour then called for Mr Brandreth's resignation as PPS, but the Independent can reveal the slate was wiped clean by Treasury officials.
Under Whitehall accounting rules, the English Tourist Board has power to write off debts up to pounds 1,000 only. Officials at National Heritage can go up to pounds 100,000. Above that, the Treasury decides.
Mr Brandreth was managing director of Unicorn immediately prior to its demise in June 1990. When the company - set up to develop a 'Royal Britain' exhibition at the Barbican Centre in London - received the grant in 1988, he was a director and shareholder, along with two of Britain's richest men: Sir Leslie Porter, former head of Tesco, and the Earl of Bradford. The exhibition flopped and the company went bust.
Mr Brandreth joined the Commons in April 1992 and was appointed PPS to Mr Dorrell last February. Three months later, on 12 May, National Heritage officials sent the Unicorn file to the Treasury.
A Treasury spokesman said the loan was investigated by an official in HE7, the division governing Home and Education expenditure, which includes National Heritage. He said it was the Treasury's job 'to make absolutely certain there was no chance of the money being recovered'. On
14 May the debt was scrubbed.
Unicorn's pounds 200,000 was the largest single amount among pounds 1.1m of tourist board grants deemed irrecoverable.
The Treasury official, whom the spokesman refused to name, reported to Andrew Turnbull, Second Permanent Secretary in charge of public spending. 'It was the decision of an official, not a minister,' said the spokesman.
Asked if there were similarities between Mr Brandreth's case and that of Norman Lamont, who had a legal bill paid by the Treasury when Chancellor of the Exchequer, the spokesman said the pounds 200,000 'was treated as a company debt not a personal one'.
Mr Brandreth said last night that he could see no conflict between his position in the Treasury and the department's action. He added that from the company's collapse until the present row broke, he had not discussed the debt with anyone from the tourist board,
National Heritage or the
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