So, Brian Nelson, secret agent and loyalist assassin, is dead. More than anyone else he symbolised the symbiotic relationship between the British security state and loyalist death squads - the radioactive core of the report Sir John Stevens will present to Northern Ireland's chief constable Hugh Orde this week.

As the "intelligence officer" for the paramilitary Ulster Defence Association, Nelson was not so much a source for the security state as its servant: he delivered its intelligence - profiles of republican targets - to the loyalist killers who did the dirty deeds. Most notorious was the execution of Northern Ireland's forensic lawyer Pat Finucane in his kitchen, in front of his family, in 1989. No one has been prosecuted for Finucane's killing. Now, Nelson, a key culprit, never will be.

In 1995 Stevens told the US-based Lawyers Committee for Human Rights that he knew "absolutely" who had killed Finucane. His team also reckoned there was little chance that anyone would ever be brought to court.

Finucane's family and friends have long been pessimistic about prosecutions, and a criminal case would not touch the political system that sanctioned his assassination. With no prosecution likely, the government last year conceded a preliminary inquiry by a judge of international standing. That judge, John Cory, began his work last summer and he, too, is expected to recommend a public inquiry.

The story of Stevens' inquiries helps explain why. He has been ambushed and sabotaged by both the army and special branch. His current investigation was prompted by new evidence in a dossier compiled by British Irish Rights Watch in 1999, the 10th anniversary of Finucane's death. Although Stevens has been quarrying for evidence since 1990, it took the Canadian Judge Cory to guide him to "intelligence" files he had discovered after only three months. If it has taken Stevens so long to get to military intelligence, how long would it take him to get to the politicians, the patrons of the army's activities?

There is talk of Stevens recommending charges against 20 members of the security services. But he won't. He will send reports to the director of public prosecutions, and the DPP has been notorious for not pursuing cases against the security forces.

The only people the British government has taken to court in the Finucane case are potential witnesses for the prosecution. Nicholas Davies - whose book Ten-Thirty-Three exposed the collusion between the army's secret force research unit (which harvested data on republican targets for the UDA), MI5, the RUC and loyalists - was allowed no defence, no appeal and warned never to tell what had happened to him. Irish journalist Ed Moloney was taken to court for refusing to hand over his interviews with William Stobie, a UDA informer close to the killing. Stobie was the subject of a failed prosecution and then received loyalist death threats when he supported the campaign for a public inquiry. This government decided not to protect him. He was murdered by loyalists in 2001.

Stevens never seems to be doing what we think he's doing. We believe he is investigating the Finucane murder. But his report to Orde is thought to focus on ethics, practices and procedures. This will strengthen Orde in sorting out special branch, but it is not the Finucane story. The timing is also suggestive. Stevens' report will be presented on Thursday, the day before the start of the Easter holidays.

So we may get a virtual prosecution, some naming and shaming, and Stevens will retract his earlier conclusion that collusion was neither widespread nor institutionalised. He will criticise "rogue elements" at senior levels. But we should not be deluded - the evidence accumulated by journalists, by the Finucane family and by investigative human rights organisations in Belfast, London and New York all points to institutional collusion and worse. As the Lawyers Committee for Human Rights said last year, behind Finucane's murder was "a system controlled by the UK government". The evidence prompts a fundamental question about the UDA's raison d'etre: what was it if not an armed auxiliary of the state, "an extension of the UK government"?

There is little stamina in the political establishment for what are increasingly dubbed "these old cases". Blair, whose greatest achievement may be peace in Northern Ireland, will dissemble the inevitable case for a public inquiry. His crusade against state-sponsored terrorism does not, it seems, extend to our own islands. If he refuses to be bold, he will staunch our society's opportunity to know itself and change itself.

· Beatrix Campbell is writing a book about the Good Friday agreement.