Barry Legg the loyalist must go to avoid another round of leadership stories

Last Saturday, I warned of the time bomb set off by the appointment in February of Barry Legg as chief executive of the Conservative Party and suggested that Iain Duncan Smith "might be wise to reconsider this appointment". As events unfold, it is imperative for Mr Legg to spare his friend by doing the decent thing and stepping down.

Dark rooms, whisky bottles and pearl-handled revolvers used to be the stock-in-trade of the Tory party – I should know, after my own resignation from John Major's government in 1994. If he is a true supporter of the party leader, Mr Legg will not want to place Mr Duncan Smith in the position of having to take the decision. Even worse would be the indignity of a row with the Conservative Board and Tory MPs – possibly resulting in another wretched leadership story.

It is understandable that Mr Duncan Smith wants to surround himself with a kitchen cabinet of soulmates who can be trusted to carry out his instructions. Mr Legg was a close friend and associate during the days of the Maastricht rebellion. The two had entered Parliament together at the 1992 general election. Mr Legg cut his teeth in local politics during the 1980s on Westminster City Council and had a reputation as a successful businessman.

The subsequent furore during the 1990s when Mr Legg was implicated in the inquiry of the district auditor over the "homes-for-votes" scandal led to a difficult time for him but he escaped the serious punishment meted out to Dame Shirley Porter, who was the council leader. Mr Legg continued as an MP for Milton Keynes and served as a diligent chairman of the Treasury Select Committee.

But, as Derek Conway, the Tory MP for Old Bexley and Sidcup, has reminded us, rewarding close friends with positions in politics is fraught with danger. The Tories have made much since 1997 – rightly – of cronyism inside the Labour government and need to be on firm ground themselves should further opportunities arise to make such charges. And they would be wise not to dismiss Mr Conway, who was a government whip for most of the 1992-97 parliament. He knows where too many bodies are buried already. It was ironic that Mr Legg found himself up against Mr Conway, who lost his Shrewsbury seat in 1997, for the selection at Bexley in December 2000. Stories emerged earlier this year, which were denied, that Mr Legg had been considering joining the UK Independence Party. Rumours have also circulated that he had even been removed from the candidates' list by the Hague regime after the 1997 election and was only restored after pressure from Lord Tebbit and Mr Duncan Smith. Mr Conway claims to know full details of these matters.

So Mr Legg is a marked man in the eyes of Mr Conway and it would be very unwise for the leadership to try to blacken the Conway name. His memory for details of past events is elephantine. He learnt his politics as a local councillor in the North-east and the skills he acquired in fighting Labour made him a formidable pairing whip. Mr Duncan Smith may be the quiet man but Mr Conway is the relentless man of politics.

The reports against Mr Legg regarding the dumping of homeless people in blocks of flats with asbestos in Westminster and the role he played at Hillsdown Holdings over the company pension scheme are, to some extent, a rehash of old stories but there may be further revelations. Whatever the truth, they will, at the very least, disable Mr Legg and make it impossible for him to be effective at Central Office.