Sue, grab it and run the country: The Major libel case was a farce with a darker side, says Steve Platt, editor of the New Statesman

THE FIGURES speak for themselves: an almost-derisory pounds 1,001 taken out of court by the Prime Minister in settlement of his libel action against the New Statesman, but a pounds 250,000 bill for the magazine in other costs.

It is all a long way from February, when John Major angrily rejected the New Statesman's overtures towards a settlement. Then he demanded 'payment of a substantial sum by way of compensation', an admission that the article complained about was defamatory, a full apology and an undertaking not to comment on the case in future. He has obtained none of this. Indeed, in an action that need never - should never - have been commenced, he has ended it on terms that could have been obtained at its outset.

Once again, a question mark hangs over the Prime Minister's judgement.

As Private Eye lampooned his decision to embark on this action at the time, it must be the first occasion in history that someone has sued a magazine for saying that he was not having an affair.

Some of the conduct of this case has been risible. From the early efforts of the tabloids to find out what the New Statesman story was about ('Have you got photographs? Are they full frontal?' as one newsdesk frantically requested), to Mr Justice Drake's expression of disappointment in a preliminary court hearing that the plaintiff was not represented in person, it has resembled nothing so such as high farce.

But the farce has a darker side to it. In suing the New Statesman's printers, distributors and wholesalers, the Prime Minister has employed a tactic that was previously restricted to the likes of Robert Maxwell.

Under England's uniquely draconian libel laws, everyone in the publishing chain - right down to the corner shop that sells a publication and the paper boy or girl who delivers it through your letterbox - is potentially liable. In this case, John Major stopped at the wholesalers, W H Smith and John Menzies.

Under the normal terms of business, they are indemnified against the costs of any libel actions by the publications they handle. The consequence of this for the New Statesman was that they were under no incentive to fight the Prime Minister's actions against them. On the contrary, they reached out-of-court settlements - and then passed the bills, totalling pounds 150,000, on to the magazine. Even had the New Statesman gone to court and won, those costs would not have been recoverable. Legal it may be, just it isn't.

So why did Mr Major react to this article as he did? In part, the explanation lies in a contingency plan, drawn up in the hothouse atmosphere of the last election. Rumours swirled around Westminster's political and media circles about a whole host of alleged affairs and assorted sex scandals.

Some, such as the Paddy Ashdown story, came out at the time. Others, such as the David Mellor affair, emerged later. Many more - the vast majority of them, such as the one involving the Prime Minister, without a shred of evidence to back them up - sat in the pending trays of tabloid newspaper editors. They were used, it was suggested at the time, as part of a stand-off, in which Tory-supporting papers agreed not to use the stories they were sitting on if Labour-supporting papers did likewise, and vice versa.

The contingency plan agreed by Downing Street was to issue blanket denials and hurl writs in all directions if so much as a whisper of the false rumour concerning Mr Major and Clare Latimer threatened to appear in the press. Nine months later, with Mr Major and his senior press officer on a visit to India, the same strategy was triggered under entirely different circumstances.

The New Statesman fell prey to a course of action intended for a very different article in a very different publication. Once he had embarked on this path, Mr Major lacked the sense of judgement and self-confident leadership to extricate himself from what, it quickly became apparent, was a wholly inappropriate and disproportionate response.

His over-reaction confirms the importance of the article that the New Statesman was attempting - one that brought the cold light of disclosure to play on the Westminster gossip- and rumour-mongering machine.

This was no ordinary tittle-tattle. The rumours concerning the Prime Minister had been around since the beginning of his premiership. They had been referred to in national newspapers and on television. Their persistence was like a poison in the body politic. They needed to be exposed - and the nature of their origins needed to be discussed.

The New Statesman article included speculation from senior politicians and journalists that an organised smear campaign was under way. At the very least, disaffected Thatcherite backbenchers and commentators were playing a part in spreading the rumours.

And they still are. I have lost count of the number of right-wing commentators, MPs and personalities who have informed me - privately, of course, and with that peculiarly prurient British love of the sex-scandal story - that the irony of all this, old chap, is that the rumours (or variations on them) are true.

It's absolute nonsense, of course. But Mr Major should watch his back, and concentrate on running his party - and the country. Taking the money and staying out of the witness box may be the best judgement he has made in a long time.

(Photograph omitted)