MODERATE Tories are becoming increasingly alarmed as party chairman Mr

Michael Forsyth completes his right-wing revolution at Scottish

Conservative Party headquarters in Edinburgh.

Mr Forsyth's grip on the party is now virtually total with the

appointment to senior Central Office posts of a string of young men with

a background on the ultra-right, libertarian wing of the party.

The party chief executive Mr John MacKay is on holiday but he will not

be returning to his desk at Chester Street. Although he is to retain the

nominal title of chief executive, he has been marginalised as a force

and the real administrative power within the Scottish Tory Party now

lies with Mr Russell Walters, the man appointed by Mr Forsyth to be his

chief of staff.

Mr MacKay's departure places Mr D. Russell Walters firmly in the

political spotlight. A Chester Street insider said: ''Make no mistake,

Russell is in charge. He now runs the show.''

Mr Walters was the first appointment made by Mr Forsyth who was

himself the personal choice of the Prime Minister. She perceived him as

the man with the qualifications to run the new-model Tory Party in


Mr Walters, a Welshman, was hired as part of Mr Forsyth's campaign to

cleanse the party of those not in tune with his philosophy that

''politics is a battleground'' and that many Scottish Tories had

forgotten how to fight.

Two senior Chester Street men, organisational director Mr Bob Balfour

and director of campaigns Mr Peter Smith, were soon seeking terms which

would allow them to leave. Meanwhile, right-wingers Mr Simon Turner and

Mr Douglas Young, in the Walters-Forsyth mould with a political past on

the libertarian right, are also to be part of Mr Forsyth's team.

The chairman has surrounded himself with zealous young men whose

background is in the controversial world of the disbanded Federation of

Conservative Students and similarly rightist groupings. The FCS was

subject to an internal inquiry after a rowdy conference at Loughborough

in 1985.

Scottish Secretary Mr Malcolm Rifkind, in an interview with the

Scotsman today, reaffirmed his authority within the Scottish Tory Party

and denied reports of a rift between him and Mr Forsyth.

''When we are in government the Secretary of State is at the top.

Michael is a friend and a colleague and a very loyal junior Minister in

my ministerial team,'' he said.

''We work extremely well as a team. Power in Scotland rests with the

Scottish Office and I am in charge of the Scottish Office.''

Mr Rifkind said Mr Forysth's chairmanship did not signal any policy

change and he described Mr Forsyth's changes at headquarters as a long

overdue conversion of the organisation into a ''modern professional

fighting organ''.

''Inevitably that can involve some elements of controversy, but I have

no doubt that the thinking behind it is absolutely right and

justified,'' Mr Rifkind said.

Over the years the libertarian wing of the party, which has had a

solid base in Scotland -- Mr Forsyth was FCS chairman in the

mid-seventies -- has gloried in its image as the Blue Trots with more

radical elements advocating legalisation of incest, hard drugs, and much

else besides.

Conservative Central Office has been unusually reticent about

discussing Mr Walters's background, even to the extent of declining a

request for a photograph.

Details of his employment history have trickled into the public

domain. Initially it was revealed that he had come from the Adam Smith

Institute. Then came the news that he had once been a researcher with

the more right-wing Economic League.

The London-based league is an organisation funded by business

subscribers which compiles lists of so-called political agitators and

trade union activists. Subscribing companies use such information when


Mr Walters was one of the senior operatives in the league's

intelligence gathering department.

Mr Michael Noar, the man who ran the league until this June, was

unwilling to be interviewed. However, he conceded that so far as he was

aware Mr Walters had been with the organisation until mid-July.

''He was a much valued member of the research department,'' said Mr

Noar before concluding the conversation.

In April, 1988, Mr Walters was involved in a House of Commons row when

it emerged that a list he was said to have compiled contained details of

the alleged activities and affiliations of Labour MPs, including a

number on the moderate wing of the party.

The Economic League was formed in 1919 to defend ''free enterprise,

individual liberty, and parliamentary democracy.'' In addition to

compiling lists of ''subversives'', it was also active in the propaganda

war waged at the gates of strike-hit factories and saw it as its

function to counter trade union and left wing literature with pamphlets

of its own.

It achieved an unwelcome high-profile as a result of an investigative

series by the World in Action TV programme. Mr Walters also figured in

this as the Granada team sought to highlight the link between the league

and its activities and the Conservative party.

In 1987 Mr Walters was an unsuccessful candidate for vice-chairmanship

of the Young Conservative wing of the party and he has also been an

office bearer with Greater London Young Conservatives.

In his 1987 campaign material Mr Walters described himself as having

served as an officer with the Association for a Free Russia and the

International Society for Human Rights.

He stated: ''You may have been misled by one of the scandalous lies

put into circulation about the Thatcherite team: that we support

apartheid and legalisation of hard drugs. Discount such propaganda . . .

we are not nutters or extremists.''

Mrs Maria Fyfe, Labour MP for Glasgow Maryhill, is concerned about Mr

Walters's involvement in the Economic League. She has been a leading

campaigner against the league and last year unsuccessfully proposed a

Commons Bill which was intended to make its activities illegal.

She is astounded that Mr Forsyth should appoint one of the league's

principal research-intelligence officers to high office in the Scottish

Tory Party.

She said: ''Basically, we wanted to amend the Data Protection Act so

that the Economic League could not keep card index files on individuals

without their knowledge. They have blacklisted thousands of people who

know nothing whatever of it and they very often get things wrong.

''There are now 70 MPs who are members of our campaign. We have

respresentatives from all parties except the Tories.

''I suppose I shouldn't be surprised that Michael Forsyth appoints

someone like Russell Walters. They both belong to the hard right after

all. This will not go down well with the people of Scotland, though.

Appointments such as these will backfire on the Tories because these

people hold attitudes which are alien to most Scots.''

One Scot who has figured in the Economic League's blacklists is

Dalkeith High School history teacher Mr Derek Philips. He is an SNP

activist and organiser of the party branch in Penicuik. He appeared on

the blacklist, wrongly, as a member of the anti-apartheid movement. He

found out about it through the World in Action programme.

Mr Philips said: ''As it happened, I wasn't a member although I did

once carry a Free Nelson Mandela banner during a miners' strike march in

Edinburgh. I also wrote a letter about Nelson Mandela to the Scotsman. I

leave people to make up their own minds about how I then appear on an

Economic League blacklist, not as an SNP activist, but as a supporter of

the anti-apartheid movement. It is sinister.

''I wish Russell Walters all the bad luck in the world as he begins

his new job.''

The closed world which exists on the far right flank of the

Conservative Party is a tangle of inter-connected organisations and


While Mr Walters was on the executive of the Greater London Young

Conservatives a colleague and friend was one Mr Andrew Rossindell. Mr

Rossindell, 23, is a publisher who runs Britannia Press Features Ltd in

Romford, Essex. He has recently been admitted to the Scottish list of

Conservative prospective parliamentary candidates.

Many of the pressure groups of the right, such as the Committee for a

Free Britain, have links with individuals who were once active in the

Federation of Conservative Students.

An indication of how inter-linked, casual or otherwise, this

brotherhood of libertarians is can be gauged from the response to a

telephone inquiry to the CFB office in London.

Asked if Mr Russell Walters was around, the man in the committee's

office first asked who was calling and then said: ''You won't find Mr

Walters here.