In a single day, the Labour party has lost Luciana Berger and “gained” Derek Hatton. As swaps go, this isn’t dissimilar to giving someone an orgasm and them giving you gonorrhoea: the loss of a hard-working, campaigning constituency MP (Berger was among seven MPs to resign from Labour) and the official welcoming back, by a three-person panel, of a man so odious that he infamously delivered redundancy notices by taxi to his own council staff.

To sum up Hatton in a brief vignette: at the 2016 Labour party conference in Liverpool, I was in a coffee shop searching for wifi, and hit on a hotspot someone had called “Derek Twatton”.

Liverpudlians don’t even need to have been born during Hatton’s 80s tenure as deputy leader of Liverpool city council to know the havoc he wreaked on the city. As with stories of Beatlemania, Hillsborough, The Sun, and later Anthony Walker, Scousers pass their history on. But for those who don’t know who Hatton is: he was a member of the Trotskyist faction Militant Tendency, and became deputy council leader just five weeks before Margaret Thatcher’s 1983 landslide win (and Michael Foot’s disaster). The Labour council was the first majority one in a decade for the city.

Hatton, who eclipsed the mild-mannered leader, John Hamilton, was right to be furious with central government grant cuts and underfunding of Liverpool during Geoffrey Howe’s mooted “managed decline” policy for the city after the riots of 1981, and when changes in shipping practices – the rise in the use of containers in particular – were having a devastating impact on a proud port. Deprivation and unemployment were widespread. But Hatton’s response was to set an illegal budget – expenditure exceeding income – and to gamble that the government would make up the £30m overspend. Other councils also affected by central government grant cuts managed to set legal budgets.

The debt Hatton plunged Liverpool into was finally cleared 15 years later, in 2001. The interest rate paid over this time amounted to 57%. The Militant loans? They came from Swiss, Japanese and French banks. But Hatton’s nadir came when he hired taxis to deliver redundancy notices to the council’s 31,000 staff, on the basis that the council couldn’t afford to pay them, as a “tactic” to extend negotiations of the Whitehall stalemate.

Facebook Twitter Pinterest An anti-Militant protest in Liverpool Photograph: Manchester Daily Express/SSPL via Getty Images

Away from finances, Hatton appointed an unknown Londoner, Sam Bond, to the Liverpool Race Relations Liaison Committee over objections from the Black Caucus, at a time when racial tensions were especially high. Bond did not support affirmative action policies, and similarly, Militant did nothing for LGBT groups, given its opposition to policies that focused on particular oppressed groups. The neutral office of lord mayor, meanwhile, was abolished, to strengthen Militant’s power.

It is true that the council’s Urban Regeneration Strategy managed a programme of house-building and delivered seven new sports centres. But the city facing bankruptcy meant schools were underfunded to the extent that they couldn’t afford teachers, stationery or basic equipment or, in some cases, electricity and heating.

Opposite my former school, there used to be Harthill Gardens, known as the “Kew Gardens of the north”. When the gardeners were called out on strike, they rebelled, fearing the impact on the flora. In an act of political revenge, and a mark of his character, Hatton sacked the gardeners and bulldozed the gardens. A famous banner held aloft in protests against the council at the time read: “Hitler only destroyed half of our city. Hatton tried for the lot.”

Militant’s grip on Liverpool came to an end with Neil Kinnock’s famous speech at Labour’s Bournemouth conference in 1985. Then party leader, Kinnock blasted Hatton’s running of the council as “grotesque chaos”. The NEC eventually voted 12 to six to expel Militant members. Hatton was put on trial on corruption charges, in response to Merseyside police’s brilliantly named Operation Cheetah, though he was eventually acquitted. Liverpool’s economy did not recover until the late 1990s.

Get ready for this bit, if you don’t know the story. In the time it takes for a costume change in a Beyoncé show – ie about five seconds – the ostensibly socialist Hatton moved to tax-haven Cyprus to establish a property empire. (He already owned two buy-to-let flats in Liverpool). Even when deputy leader, Hatton was notorious for rolling around in a Jaguar and wearing obnoxious metallic suits.

In a 2008 Telegraph interview he boasted about his £60,000 Range Rover and “six-figure bracket” salary. Cyprus, he said, was great, because it (then) had a 10% tax rate (now 12.5%). As if this wholesale hypocrisy wasn’t enough to turn the stomach, Hatton starred in a Sekonda “solid gold” watch advert. “My attitude has always been that you don’t know how long you’ve got in this world, so spend what you have while it’s there,” Hatton said. No shit.

This is the man Labour has just readmitted to the party. A man who was literally cast as King Rat in a pantomime. In recent years, Hatton has even turned his hand to espousing ignorant ideas around rape cases, because he is committed to always becoming that bit worse.

But it is perhaps most egregious that Berger’s heartfelt statement on antisemitism has been met with Hatton’s readmittance. Just a few years ago, Hatton tweeted about “Jews with any sense of humanity”. The intellectual vacuity of antisemites, unable to distinguish between Netanyahu’s government and past Israeli administrations and an entire group of historically oppressed people, or their right to a homeland, continues to take the breath away. It is a truly depressing thought, a morally vacant one.

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Stella Creasy has told Sky News that Hatton’s return “absolutely beggars belief. I’m not going to pretend otherwise”. Lucy Powell has said the “timing could not be worse”, while the former Welsh minister Alun Davies called the decision “appalling. I do not want to be in the same party as this man”. Neither do I.

Whatever one thinks of the newly formed Independent Group – and it has always been my view that those who resign the whip, or cross the floor, should stand in byelections – Labour’s reaction is dreadful. Referring to himself in the third person Hatton told Radio 4 this morning: “I can assure you, Derek Hatton will not be the candidate for Wavertree,” referring to Berger’s constituency seat. But “Degsy”, the nickname he gave himself and had made into a numberplate (DEG5Y) is back espousing socialist values he disavowed. He’s sucking up to Jeremy Corbyn, though two years ago he wrote that he had “serious doubts about him”.

In response to a query about how his new capitalist lifestyle aligned with his apparent socialist beliefs – Hatton once said: “My days in politics were a very long time ago and I lost interest in it after I was expelled from the city council.” The man doesn’t have an honest bone in his body. I hope someone writes him a note telling him where to stick it, and delivers it in a taxi. Derek Twatton, indeed.

• Hannah Jane Parkinson is a Guardian columnist

• This article was amended on 20 February 2019 to correct the personalised numberplate; it was not DE5SY but was DEG5Y.