Interview: BNP ‘smasher’ Margaret Hodge

Margaret Hodge has won plaudits for her work as parliament's penny-counter in chief – but it's her time fighting far-right extremism which underlies her work defending taxpayers' money.

"I'm very privileged!" Margaret Hodge burbles as we sit down. She is cramming me in between commitments, gulping down some sort of tomato-ey soup, and laughs loudly when I suggest she is, in her words, "non-establishment in an establishment room!" Her office, with its oak-panelled walls and Pugin wallpaper and "fantastic" view of the River Thames far below, is as grand as they come in the Palace of Westminster.

Most MPs are obliged to put up with office space outside the main parliamentary building, giving them a tiresome traipse to and from the Commons chamber every time the division bell rings. Not so Hodge. Even in the days before the Portcullis House office block was built and most backbenchers were effectively homeless, the public accounts committee (PAC) chair was always granted a grand space in which to work. The difference is that, for the first time, the inhabitant of this office, doesn't owe his position to the party whips – and is all the more powerful as a result.

Hodge has been feted by this week, having been named on our list of parliament's most liberated MPs. Her work as chair of the PAC won her plaudits from our jury for operating independently of the party system which dominates Westminster. Our aim in creating this list of rebels was to highlight what makes them distinctive: mostly, they work best within the system to get things done.

One jury member described her as "wielding more clout than the average minister", and it's true her influence is felt across government. Recent reports from the PAC on defence spending, tax credit errors and the west coast mainline fiasco have castigated the present government – but were only able to be so effective because of parliamentary reforms that saw her job elected for the first time.

"It's not me, it's a team," she insists. "What works best is when all of us get into the committee room, leave our party political labels at the door and really focus on the work, the job that we've got, which is to follow the taxpayer's pound and defend the taxpayers' interests."

Hodge's office walls are lined with portraits of former PAC chairs, prompting an instant mental parallel with the pictures of ex-PMs lining the staircase in No 10. Few of them have been dealt the hand the present tenant has. The coalition dynamic has helped her cause, she thinks. Her claim that current Conservative MPs are "much less tribal than their predecessors were" is eyebrow-raising. Really? "There's a new breed of MP coming in. Coalition politics has made a difference – when we were in government you had to vote the Labour whip, you didn't dare threaten anything and you were hugely punished if you voted against. This time around, with a coalition, that changes the balance a little bit."

As a former minister, Hodge knows a thing or two about being restricted. "I had a reputation of being a bit too straight-talking, which probably didn't always serve me well," she admits. Relations with her local party have never been completely smooth, either. It may be her latest Westminster job which has drawn me to her grand office, but it's her struggle against the British National party (BNP) in Barking – and her local party's refusal to accept the looming danger – which has seen the biggest fight of her political career.

This was a seat which began 95% white, but has slowly transformed over the two decades Hodge has been its MP. It emerged in its current form as a massive housing estate for the local Ford factory. Ninety-eight per cent of Barking's housing stock was owned by the council before right-to-buy. That opened the way for second- and third-generation immigrants to come in. Properties were being bought up by inner-city councils for their tenants, too, placing increasing pressure on the community. With the Conservative party non-existent, there was no effective opposition to the Labour-dominant council. "All that comes together and you've created a vacuum into which the BNP came," Hodge explains. She got a scare in 2001 and realised her miserable voters were angry, but still engaged in politics. But something stopped her addressing the problem immediately. "I should have responded much more aggressively than I did," she now admits. It took until 2004 for her to start talking much more about the emerging threat. "The local party was much more resistant," she says.

Only in 2006, when the BNP got its 12 councillors, did Hodge and her local party colleagues realise the full extent of the danger. "It took the BNP to jolt everybody into action." She responded by "completely changing" the way she operated as a constituency MP.

Hodge abandoned the idea of being a party mouthpiece completely. Now she never bothers with using briefs from the parliamentary Labour party. "I don't cut ribbons at opening events. I don't go to town hall shindigs. I do find always new ways of reconnecting," she says. "Whether it's through my coffee afternoons, street meetings, campaigns on issues that matter to local people, or traditional door-to-door knocking. I don't set the agenda and say 'rotten Tory government, this is what they've done'. I say – what's bugging you? Listening, and then reflecting that."

The tactic worked, as 2010's results showed. Out of this experience Hodge has emerged half-triumphalist, half-worried. She "smashed" the BNP, she states boldly, and claims to have stunted the momentum of the latest wave of fascist thinking infecting British politics. Griffin might have made a mistake taking her on, not having realised she had already been acting to address the disengagement problem for several years, but the council elections in 2014 might still be a different story. The BNP remain active and the English Defence League, "a thuggish group", is quick to begin agitating whenever new mosques are built and called 'community centres'.

"In 2010 we were able to merge the M. Hodge brand which I'd been working on for four years with the council, and that helped," she says. "In 2014, it's going to be the council on its own. How many will go through to Ukip, which is much more democratic, and how much will go through to the fringe – BNP and EDL? That will be the challenge. That's one reason why I can't take my foot off the accelerator."

Hodge's constituency efforts are taking place out of the glare of publicity; it's her work as PAC chair which put her in the minds of her jury. Still, she insists the two are interlinked. What the PAC has been doing is capturing, "unwittingly but effectively", what has been bugging voters on the street. The lessons learned in Barking are now being applied to national policy. After being hampered for decades by the controlling influence of the whips, Hodge's oak-panelled office now contains a truly anti-establishment spirit.

"We were able to shine a light, change policy which I'm really thrilled about, and also reflect people's real concerns. The more politicians can do that, the more you reconnect with the voters and they stop thinking we're a shower of useless overpaid lazy so and sos and start believing in the worth of politics again."