Culture secretary wrote memo to David Cameron supporting family's £8bn bid, despite being warned he should not intervene

Jeremy Hunt's grip on ministerial office looked increasingly precarious after the Leveson inquiry heard that he had written an outspoken memo for David Cameron, staunchly supporting the Murdoch family's £8bn bid for BSkyB, a month before he was handed the task of adjudicating on whether to approve the media merger in an apolitical, "quasi-judicial" manner.

The culture secretary also demanded that the prime minister intervene to rein in Vince Cable, who was at the time responsible for the BSkyB bid – a request that explicitly contradicts a statement Hunt gave to parliament last month, in which he told MPs that he made "absolutely no interventions" to put pressure on the business secretary to wave the controversial takeover through.

It also raised fresh questions about the judgment of the prime minister and in particular his then cabinet secretary, Lord O'Donnell, who had ruled that Hunt would not prejudge the £8bn takeover even though he had publicly supported the bid. Cameron did not tell O'Donnell of the memo, but No 10 insisted the memo was "entirely consistent" with Hunt's previous public statements that the Murdoch's bid for BSkyB raised no media plurality issues.

The inquiry heard that the culture secretary drafted the email on his private Gmail account on 19 November 2010 despite being warned by his officials that he should not intervene because the decision was being taken exclusively by Cable. In the memo he voiced concern that Cable, the business secretary, had referred the takeover to media regulator Ofcom, warning him that James Murdoch was "pretty furious" and that the government "could end up in the wrong place in terms of media policy as a result".

Hunt wrote enthusiastically about the bid, saying Murdoch wanted to combine Sky television with the Sun and the Times to create a company spanning "from paper to web to TV to iPhone to iPad" and would revolutionise the media in the same way that James's father Rupert transformed newspapers by crushing the print unions at Wapping – although there was widespread opposition to a takeover that would have brought the largest broadcaster and the largest newspaper group together.

The News Corp bid was opposed by the rest of Fleet Street, including the owners of the Daily Mail and the Daily Telegraph as well as the publishers of the Guardian and the Daily Mirror, and briefly by the BBC – but in his memo Hunt chose to characterise the deal's opponents in nakedly political terms, saying: "I think it would be totally wrong to cave into the Mark Thompson/Channel 4/Guardian line."

At the time, formal responsibility for adjudicating on the bid rested with Cable, who was stripped of the role by Cameron in December 2010 after it emerged that he had been secretly recorded by two reporters working for the Daily Telegraph saying that he had declared "war on Murdoch". Cable was deemed unable to rule fairly on the bid in the light of his remarks.

In the memo Hunt also requested that Cameron organise a meeting with himself, Nick Clegg and Cable, who was refusing to meet Murdoch, "to discuss the policy issues that are thrown up as a result" – although the sole legal responsibility for determining whether the bid should be approved rested with Cable. No such meeting took place.

Last month, however, Hunt denied to MPs that he sought to lobby against Cable. Speaking in the Commons Hunt said: "I made absolutely no interventions seeking to influence a quasi-judicial decision that was at that time the responsibility of the secretary of state for business. However, it is my responsibility to understand what is going on in the media industry and the impact of this very important sector, which employs thousands of people. That is why I was interested to find out what was going on."

It is a breach of the ministerial code to fail to tell the truth to parliament and the shadow culture secretary, Harriet Harman, said it was clear from evidence that Cameron gave responsibility to Hunt for ruling on the BSkyB bid when he knew only too well that the culture secretary was actively supporting it. "The prime minister should never have given him the job. It is clear Jeremy Hunt was not the impartial arbiter he was required to be, and he should already have resigned."

No 10 hit back, claiming: "Hunt's note is entirely consistent with his public statements on the BSkyB bid prior to taking on the quasi-judicial role. It also makes clear that 'it would be totally wrong for the government to get involved in a competition issue which has to be decided at arms length'. The PM has made clear throughout that he recused himself from decisions relating to BSkyB and did not seek to influence the process in any way."

Hunt was not himself at Leveson, which heard evidence from his former special adviser Adam Smith, who resigned last month after it emerged he had been in repeated contact with James Murdoch's chief lobbyist, Frédéric Michel, during the year-long bid approval process. The inquiry heard that Smith had been in contact with Michel more than 1,000 times by text, phone or email in the year after the Sky bid was launched in June 2010, with the two men sometimes speaking as often as four times a day. On one occasion Michel texted Hunt: "You were great at the Commons today" and Hunt replied: "Merci. Large drink tonight!"

Michel was repeatedly asked whether he thought that Smith was speaking for the minister. The inquiry counsel Robert Jay QC asked Michel: "You don't appear very willing to tell us, Mr Michel, whether Mr Hunt was supportive [of the Sky bid] or not ... or are you frankly not assisting us? Can we be clear?" Michel replied: "My view is that Jeremy Hunt was probably supportive of some of the arguments."

The Hunt memo was drafted by him and Smith to be sent to Cameron as part of a process of providing him with fortnightly political updates. Downing Street confirmed that Cameron received the memo dated four days after Hunt had a phone conversation with James Murdoch – a telephone call that was necessary because the minister had been banned from meeting the media mogul by his permanent secretary Jonathan Stephens.

Downing Street was further embarrassed yesterday when it emerged that Cameron's press secretary Craig Oliver met Michel for a "discreet" dinner in July 2011 two days after the Guardian broke the story about the hacking of Milly Dowler's phone.

Draft of Jeremy Hunt's letter to David Cameron, November 2010

James Murdoch is pretty furious at Vince [Cable]'s referral to Ofcom [of News Corp's bid to take full control of BSkyB]. He doesn't think he will get a fair hearing from Ofcom. I am privately concerned about this because News Corp are very litigious and we could end up in the wrong place in terms of media policy. Essentially what James Murdoch wants to do is to repeat what his father did with the move to Wapping and create the world's first multi-platform media operator available from paper to web to TV to iPhone to iPad. Isn't this what all media companies have to do ultimately? ... we must be very careful that any attempt to block it is done on plurality grounds ...

The UK has the chance to lead the way on this as we did in the 80s with the Wapping move but if we block it our media sector will suffer for years ... I think it would be totally wrong to cave into the Mark Thompson/Channel 4/Guardian line that this represents a substantial change of control given that we all know Sky is controlled by News Corp now anyway... It would be totally wrong for the government to get involved in a competition issue which has to be decided at arm's length. However I do think you, I, Vince and [Nick Clegg] should meet to discuss the policy issues that are thrown up as a result.

Jeremy Hunt to MPs, 25 April 2012

I made absolutely no interventions seeking to influence a quasi-judicial decision that was at that time [Cable's] responsibility ... However, it is my responsibility to understand what is going on in the media industry and the impact of this very important sector, which employs thousands of people. That is why I was interested to find out what was going on.

David Cameron to allow free vote on same-sex marriage plans after backbenchers warn issue could split Tory party

David Cameron is to give MPs a free vote on gay marriage following warnings from Conservative backbenchers that any move to use the whip against MPs could cause "serious divisions" within the party.

The climbdown will be seen as an attempt to avoid splitting the Tory party amid strong opposition in some quarters, despite the prime minister's strong backing for the proposals.

Downing Street suggested on Wednesday that cabinet collective responsibility would apply when same-sex marriage plans are debated in the Commons. "It's a government commitment," said the prime minister's official spokesman.

The BBC reported overnight that "senior party sources" indicated the matter would be put to a free vote, which will allow MPs, including ministers, to vote according to their conscience rather than being directed by party whips.

The decision will remove the pressure on ministers opposed to the same-sex marriage plans. Sources told the BBC they were still confident of getting the measure through.

A formal consultation on how civil marriage will be reformed in England and Wales began earlier this year, but the proposals have proved controversial for some within Cameron's government, including the Northern Ireland secretary, Owen Paterson.

In a letter to a constituent published on the PoliticsHome, Paterson said: "Having considered this matter carefully, I am afraid that I have come to the decision not to support gay marriage."

The children's minister, Tim Loughton, last week made the case for the issue of gay marriage to be a matter of personal conscience "rather than of party political line or institutionalised agenda".

He wrote on his website: "The prime minister has clearly set out his reasons for being in favour of gay marriage and I respect his right to do so. But, I particularly respect his acknowledgement that this should be a matter of personal beliefs and that Conservative MPs at least will be free to make up their own minds.

"As such, I have to say that my instinct is not to support these proposals and, as it stands, I intend to vote against measures to legalise gay marriage".

The defence secretary, Philip Hammond, has said gay marriage was not a priority and the government had to focus "on the things that matter to the people in this country".

Tory MP Stewart Jackson, who resigned as Paterson's former parliamentary private secretary over last winter's vote on whether to hold a referendum on Britain's membership of the European Union, told PoliticsHome on Wednesday that any move to whip MPs would cause "serious divisions".

"Number 10 would be foolish in the extreme to disregard this as a conscience issue," he said.

Gerald Howarth, a defence minister, who was among those to flag up their concerns in recent weeks, told the Daily Telegraph he had been assured that MPs would be allowed a free vote. He said it was "absolutely right and proper" for MPs to be given a free vote.

"These issues are traditionally conscience issues," he said. "There is a long-established principle. I am sure that that will be understood."

David Cameron has personally backed the proposal to allow same-sex couples to marry, arguing at last year's Conservative party conference that "society is stronger when we make vows to each other and support each other". He added: "So I don't support gay marriage despite being a Conservative, I support gay marriage because I'm a Conservative."

Deputy PM makes speech in Berlin, where he is seeking to persuade German ministers to adopt new approach

Nick Clegg has condemned the EU response to the euro crisis as woefully fragmented and damaging to public confidence as he started a round of vital meetings with German ministers designed to persuade Berlin to adopt a less cautious approach.

The EU's approach has been piecemeal, always behind events and threatens to create a surge in populist extremism, he said.

Clegg and the business secretary, Vince Cable, were meeting the most senior foreign and economic ministers in Angela Merkel's government.

In a landmark speech in Berlin designed to set out the Liberal Democrat – as opposed to Conservative – approach to the crisis, he said: "We have tried to give Europe's problems different labels, tried to keep them separate. But the world just doesn't work that way. Management of financial risk, fiscal discipline, labour market reform; these are not just different chapters in an economics textbook. They are closely connected problems with consequences for us all.

"We have created different classes of country: strong and weak, spenders and savers, eurozone and non-eurozone. But these divisions are false. Europe's economies cannot be prised apart and filed neatly in different boxes; they are too interdependent.

"And the way we take decisions is undermining public confidence. Every few weeks European leaders sit down to yet another crisis summit, where another temporary solution is agreed. The tree is falling, and we are pruning one leaf at a time. It is piecemeal politics; endless tactics with no strategy."

Rejecting the view that Europe is incapable of solving its problems, he argued: "We have got to hit back against this fatalism which says that Europe can't fix this."

His speech also challenged "the fashionable assumption being whispered behind cupped hands – that for some countries, leaving the euro wouldn't be that bad; that actually, a Greek exit now would be in everyone's best interests.

"My own view is that that wildly underestimates the unpredictable, irrevocable damage that could be done to a monetary union when it is shown not to be permanent.

"No rational person interested in the wealth and wellbeing of Europe's citizens could advocate taking such a risk: not with Greece's future, or our own."

David Cameron has not in public expressed the view that Greece should leave the EU, but he has argued Greece has reached a final point of decision, and if the country votes for parties opposed to the EU imposed austerity package for a second time next month, then Greece must leave.

Clegg set out a four-point plan for handling the crisis, much of which is not acceptable to his German hosts.

He said: "Europe must either share common debt, or change the way money is transferred. You cannot have a monetary union in which one country saves, exports and invests and another spends, borrows and consumes without some mechanism to make it all add up. So we need new fiscal instruments in the eurozone, through either eurobonds or greater transfers between eurozone members."

Second, "the European Central Bank has to act as a real monetary backstop, a lender of last resort. This is critical. Fiscal action across the EU must be supported by responsive monetary policy – with central banks prepared to intervene aggressively to support demand.

"Third, we must build a firewall big enough and strong enough to stop the flames from spreading. At the moment, countries are stuck in vicious, periodic uncertainty. Tottering banks are propped up by governments."

Last, he said the EU needed to get serious about structural reform.

He underlined the stakes involved by warning "the combination of economic uncertainty and political disillusionment is a perfect recipe for an increase in xenophobia, populism, and extremism".

Poll commissioned by anti-independence campaign finds only a third of Scots want to leave UK

Alistair Darling has claimed that Alex Salmond's campaign for Scottish independence has stalled at the starting line after a poll found that only a third of Scots want to leave the UK.

The poll findings were released by the former chancellor a few hours before Salmond launched his party's long-awaited "Yes Scotland" campaign for the referendum on independence in 2014, centred on a new public declaration supporting separation under the slogan "Scotland's Future in Scotland's Hands".

The event at a multiscreen cinema in Edinburgh, billed as the largest community-based political movement in the country's history, will feature pro-independence celebrities and public figures including former Labour politicians such as the former Falkirk MP Dennis Canavan.

SNP activists around Scotland are being trained to act as campaigners for independence, and urged to attempt to convert and persuade as many work colleagues, friends and family members in their areas as possible, and to lobby opinion formers in their community.

In a deliberate attempt to undermine Friday's launch, Darling said that even though Salmond had held power for five years, the YouGov poll – paid for by the soon-to-be-launched anti-independence campaign – had confirmed that leaving the UK still appealed to a minority of voters.

The YouGov poll of 1,004 people found that only 33% of Scots would opt for independence, while 57% would reject it, findings which are close to several recent surveys but show lower support for independence than others.

In another damaging finding for the pro-independence movement, the poll also suggested that only 58% of people who voted for the SNP in last May's landslide victory for Salmond would back independence in a snap referendum, while 28% of SNP voters opposed it.

"Even after winning two Scottish general election victories, raising a war-chest of millions and deploying the full resources of the Scottish government, Alex Salmond has failed to convince Scots that they should leave the United Kingdom," Darling said.

"The nationalists will go to great lengths to try to prove there is a groundswell towards leaving the UK but the truth is that their campaign is stalled. Independence is as unpopular as it has ever been."

The polling results will not greatly surprise the "yes" campaign but Darling's intervention marks the first head-on challenge for Salmond by the anti-independence coalition formed by the three main pro-UK parties of Labour, the Tories and the Liberal Democrats, which is expected to launch formally in June.

Darling, who has confirmed he is setting up the pro-UK campaign, convened a private meeting of senior figures in all three parties at his home in Edinburgh earlier this month – an event lampooned by the first minister as a council of war with "tea and sandwiches".

Sources close to this group said a series of initiatives was being put in place to counter Yes Scotland. Officials within Yes Scotland said their 30-month long campaign, which is being funded largely by two gifts worth nearly £2m, was designed to slowly overcome the gap in support.

A spokesman for Yes Scotland said: "The independence referendum isn't being held tomorrow. The campaign launches tomorrow, and it will be the biggest community-based campaign that Scotland has ever seen."

The direct challenge to Salmond could bolster the first minister's efforts to win support from outside the SNP by polarising the parties and the debate, helping the first minister overcome significant reservations already being voiced by potential supporters about the SNP's policies and tactics.

Yes Scotland officials believe that Canavan's appearance alongside Salmond at the campaign launch will, as a popular former Labour MP, signal to many undecided Labour voters and trade unionists that independence is winning support on the mainstream left.

"Dennis has travelled the journey that we need lots of people in Scotland to travel: from a Labour MP to an independent in the Scottish parliament to standing on a yes platform in which he will make a substantial contribution," said the campaign's spokesman, Stephen Noon.

"He illustrates the sort of person who will be on display on that stage. People who have made journeys, from all sorts of different backgrounds."

Patrick Harvie, the Scottish Green party leader, confirmed he would be attending the launch and signing the declaration, but again warned Salmond that so far the yes campaign was too dominated by the SNP and its centrist policies, including floating support for Nato and continued exploitation of North Sea oil and gas.

However, an influential non-party alliance of civic and voluntary groups called Future of Scotland, chaired by a former moderator of the Church of Scotland, Alison Elliot, urged both camps to wait for the voters to decide what sort of constitutional reform they wanted before launching their campaign.

Elliot, the convenor of the Scottish Council for Voluntary Organisations, warned that running a campaign at this early stage risked boring and alienating voters. "Politicians are jumping the gun," she said. "They should be speaking to people and helping them understand what any change might mean for them. Only then should the campaigning start. If the parties retreat to their corners at this stage we could be subjected to more than two years of political squabbling and tribalism.

"Ideally, the referendum process should reflect what people want to see - a popular rather than political mandate. If people feel disengaged and ill-informed, we risk a repeat of the low voter turnout in the recent local elections and other Scottish elections. This would be a disaster for a referendum on Scotland's constitutional future."

Angus Robertson, the SNP's campaign director, did not directly challenge the YouGov poll's findings but said it was essentially irrelevant, since the referendum was not being staged until the autumn of 2014.

"The referendum isn't happening tomorrow, as the poll tries to pretend. Today is the start of the biggest community-based campaign in Scotland's history, offering a positive, inclusive vision of Scotland's future as an independent nation – and we are extremely confident of winning the trust of the people and achieving a yes vote in autumn 2014.

"And Alistair Darling isn't even confident enough to ask the clear, straightforward question in the referendum consultation document. An independent Scotland will have the political and fiscal independence that we need to build a fair society and successful economy, while sharing a close social union with our friends and neighbours in England, including the Queen as our joint head of state."

Public accounts committee says cutting staff and hiring expensive outside consultants could be bad value for taxpayer

The growing practice of officials leaving the Ministry of Defence only to be re-employed as outside consultants could end up being "dreadful value for the taxpayer", a leading parliamentary watchdog has warned.

MoD spending on consultants has soared from £6m in 2007 to £270m in the last financial year, according to the latest figures. Yet the MoD is pursuing a programme of cuts unsure about the impact on continuing demand for skilled people, and the problem is exacerbated by poor morale, according to the Commons cross-party public accounts committee (PAC).

The Guardian earlier this year revealed that the money for the soaring cost of hiring specialist consultants had been drawn from the MoD's equipment budget, which is supposed to pay for the weapons, armour and vehicles needed by troops in Afghanistan and for other operations.

A confidential internal audit found the system for awarding contracts was being routinely abused. When the report was leaked to the Guardian, ministers promised to stamp out bad practice.

"The Ministry of Defence has gone ahead with cuts to its military and civilian workforce without a proper understanding of what skills it will need in the future," said Margaret Hodge, the PAC's chair. She said the committee recognised that the MoD had to make tough financial decisions if it was to reduce its spending by 7.5% a year by 2015, and that it had acted decisively.

The MoD plans to cut its civilian personnel by 29,000 and its military personnel by 25,000, in moves estimated to save £4.1bn between 2011 and 2015, the MPs report.

"We are concerned that these cuts have been determined by the need to cut costs in the short term rather than by considering the MoD's strategic objectives in the long term and the skills it will need to deliver them successfully," Hodge added. "If the department loses key skills, it may have to spend even more money on replacing them, perhaps by buying them in from external consultants."

The MPs welcomed the department's candour about staff morale. Given the scale of change in the department it was not surprising morale was low, they added.

"Morale is not in a good place. We recognise that," Ursula Brennan, the MoD's top official, said in evidence to the PAC in March.

She added: "I do recognise that there is a problem of morale in the civil service and the military. People feel battered and bruised and they feel under a lot of pressure to deliver.

"But if you look around the country at the moment, there are a lot of people who feel under pressure. The economy is putting all of us under pressure."

The MoD is engaging in what it calls a "large-scale communications effort" to allow staff to have "a clear understanding of the programme of changes the department is undertaking".

Stop the Games! The security staff can't get through the Olympic traffic jams. But the beach volleyball show will go on

• Don't panic, but the Olympics may have to be cancelled. The Diary has been given a top-level briefing by the head of Olympic security for G4S, which is providing 10,000 guards for the Games, and the news is not good. At its Games security hub at Canary Wharf, which remotely manages logistics and staffing for the Olympic Park, there is a Truman Show-style bank of giant TV screens providing a stream of the latest info. Two of them permanently display the Transport for London web page, which gives tube and bus info. Forget missile strikes by al-Qaida, G4S's No 1 nightmare is the tube breaking down, as it has done repeatedly this week. If that happens, security staff can't get to the site, and, if staffing drops below specified levels, venues can't operate. Boris?

• More Olympics news. Transport for London today launched its planning tool on temporary road changes, which lets drivers check road closures during the Games. And it did it in the most shameless and chauvinistic way possible. TfL got the women's British beach volleyball team to set up their net in Parliament Square, guaranteeing gridlock as white van men overheated. Yes, we realise you were demonstrating Games-related traffic jams, but parading women in bikinis and sports bras is nothing but a cheap PR stunt. The Diary was trapped in the square for four hours and, frankly, it was a disgusting spectacle.

• Talking of Boris, which we vaguely were, two journalists with strong links to the London Evening Standard – former newsdesk hack Sam Lyon and current chief news correspondent Ross Lydall – are in the frame to replace the recently departed mayoral mouthpiece Guto Harri. Anyone would think there was an umbilical link between Boris and the Standard.

• Bob Geldof has given a fascinating interview to ShortList magazine. Q: Are you passionate about recycling? "No, I don't want to think about it at all. It's just a fucking pain in the arse, all these coloured bins and stuff. I don't have a choice, though. Down in London you get fucking hung, drawn and quartered in the fucking public square if you don't." Good points, thoughtfully made.

• Tony Blair may be set to re-enter frontline politics, but what about Gordon Brown? When, if ever, will he re-emerge? The ex-PM is said to be concentrating on being a good local MP in Kirkcaldy and Cowdenbeath. Yet the diligent Fife Free Press has recorded little about Brown since he attended Cowdenbeath FC's vital match against Forfar Athletic, which clinched its elevation to the first division. That was on 21 April. Fife MSP John Park, who is said to be close to Brown, believes he could be part of the "dream team" (along with Alex Ferguson) to beat the SNP in the independence referendum. "He's potentially more popular than Alex Salmond," says Park, who must be extremely close. As the Heathcliff of the heather broods, the silence becomes deafening.

• Was too much champagne taken at the Journalism Foundation gala evening, which we reported on yesterday? There is growing confusion over who got the replica of the ring jeweller Stephen Webster created for Elizabeth Taylor. The hammer went down on Hugh Grant's bid of £10,000, but it has now been claimed by the Hon Geraldine Harmsworth Maxwell, a friend of Independent owner Evgeny Lebedev. The Journalism Foundation is checking its sources, and the Diary hopes to keep this starry ring cycle going for at least a month.

• Back to Bob's aperçus. Q: How many foreign-language films are in your DVD collection? "I don't have a DVD collection. I snap it out of the thing, watch it and give it back to the rental store. But we have a lot of foreign language, because the missus is French. They're always about some 85-year-old shagging an 18-year-old." Holy Motors!

• Hugh Muir is back next week, thank God, and apparently he's planning a hibu-style rebranding of the Diary. There's sure to be controversy, but ignore the whingers, Hugh. Merci, large drink tonight!

Twitter: @StephenMossGdn

His analysis of the role of education in the reproduction of social inequality challenges Nick Clegg's belief that he was 'lucky' in life

Pierre Bourdieu's analysis of the role of education in the reproduction of social inequality challenges Nick Clegg's belief that he was "lucky" in life. Luck, says the French sociologist, has nothing to do with it. Just 10 years after his death, Mr Bourdieu's work is already a classic to rank alongside Foucault or Lacan. The recent publication of his courses at the Collège de France has put his name back into the headlines. In contrast to those who trumpet self-determination, Mr Bourdieu focuses on the forces which shape an individual. If Mr Clegg really wants to "factor social mobility into the education system", he must recognise that the difference between success and failure is not luck but the ways in which social inequalities repeat themselves. The role of government is to break this vicious circle not to reinforce it. The drastic shrinking of the state is hardly the way to remedy what Mr Clegg called an absolute scandal.

If this module of the Leveson inquiry has a smoking gun, it is the memo Jeremy Hunt wrote to the prime minister on 19 November 2010

If this module of the Leveson inquiry has a smoking gun, it is the memo Jeremy Hunt wrote to the prime minister on 19 November 2010. Mr Hunt, as culture secretary, was not in charge of the News Corp BSkyB bid at the time – Vince Cable was – and Hunt's officials were emphatic that he should keep his nose out of it. He was forced to cancel a planned meeting with News Corp – instead arranging a mobile phone conversation with James Murdoch.

Having, quite inappropriately, spoken to Mr Murdoch on a private line, Mr Hunt could not, apparently, help himself. He promptly wrote a memo to Mr Cameron telling him that Mr Murdoch was "pretty furious" at Mr Cable's decision to refer the bid to Ofcom. He warned the prime minister the government "could end up in the wrong place" and demanded that they shouldn't cave in to the "Mark Thompson/Channel 4/Guardian line". He wanted the government to support Murdoch's vision – "to repeat what his father did … with Wapping and create the world's first multimedia operator available from paper to web to TV to iPhone". He requested a meeting with Cameron, Clegg and Cable. A month later, Mr Cable was removed from overseeing the bid on the grounds he was biased against it. Mr Hunt – whose bias in favour of the bid was evident from this memo – was asked by Mr Cameron to take over.

The memo was revealed at the end of a long day in which the inquiry's counsel, Robert Jay, had examined News Corp's lobbyist, Fred Michel, on the avalanche of material revealing the staggering degree of contact between the company and government while the bid was supposedly being dealt with in a quasi-judicial way. The inquiry will, in due course, be publishing more than 1,000 text messages and details of 350 calls and emails between Mr Michel and the DCMS. Mr Hunt's adviser, Adam Smith, admitted he had no contact at all with the coalition of newspapers – including the Guardian – which opposed the bid.

There are three obvious questions that flow from this new evidence. The first – for Mr Hunt – is why he so recklessly defied the advice of his officials to intervene with Downing Street over a matter in which he not only had no role, but had been positively warned to stay clear of. The paperwork turned over to Leveson clearly shows Hunt's bias towards the bid before he assumed responsibility for it. He showed virtually no interest in the counter-arguments once he was running the process and will have to explain the voluminous insider back-channel contacts between his office and News Corp.

News Corp must answer questions about the "son of Wapping" plan that has now been revealed by the memo. Throughout the bid its executives denied any plans to bundle together its newspapers, digital and TV offerings, companies, platforms and content. Sometimes it suited News Corp to claim that Sky was an entirely separate company. At others the argument was reversed (and duly adopted by Mr Hunt): Sky was controlled by News Corp, anyway, so there was no real proposed change of control. But it now seems apparent that there was, indeed, a well-advanced plan to bring the Murdoch platforms and content into one unity. Leveson should ask to see those plans.

Finally, there are ever-more delicate questions for Mr Cameron. Why, knowing that Mr Hunt was privately lobbying on behalf of the bid, did he think it was appropriate to appoint him to run it, given that Mr Cable – with different sympathies – had just been forced to step down over the appearance of partiality? And what is he going to do about Mr Hunt, who is due to give evidence to the inquiry next week? Mr Hunt has been shown to have defied his officials' advice and to have run the bid (under the ministerial code he has to take responsibility for Mr Smith) against a background of clandestine contacts having made his own position clear in advance. Had it not been for the Leveson inquiry we would have been kept in the dark about what went on. We are, daily, getting a fuller picture, and it is not an edifying one.

Jeremy Hunt's career hangs on credibility of middle men whose close relationship left no room for conflicting interests

They are the middle men whose hundreds of texts and emails go to the heart of the government's handling of Rupert Murdoch's aborted £8bn takeover of BSkyB.

News Corporation lobbyist Frédéric Michel and Adam Smith, former special adviser to the culture secretary, Jeremy Hunt, finally emerged from the shadows to take centre stage at the Leveson inquiry.

French-born Michel, stepping down after giving four and a half hours of evidence at the Royal Courts of Justice, flashed a smile towards Smith as he passed him on the way to the witness stand.

The gesture may not have been reciprocated; Smith fell on his sword last month after Michel's boss, James Murdoch, released 164 pages of emails to the inquiry that showed a remarkably close relationship between the two men.

Except that Michel may not have been quite as close to the culture secretary as the emails at first appeared to suggest.

The lobbyist began his evidence on an ignominious note when he admitted that he had written hundreds of emails to James Murdoch claiming to have had briefings, feedback, "strong" and "long conversations" with Hunt throughout the 13-month passage of the bid.

"I provide below a full and detailed explanation of the references to 'Hunt', 'JH', 'He', 'Jeremy' in these emails are in fact summaries of what I was told by Adam Smith," read Michel's opening in his written witness statement.

The admission was overshadowed by the revelation immediately afterwards that the culture secretary's department had exchanged as many as 799 text messages between June 2010, when Murdoch announced his bid, to July 2011, when it was abandoned after the phone-hacking scandal. In addition, there were 191 telephone calls and 158 emails between Michel and Hunt's department – and 90% of these communications were with Smith. There were also phone calls with Hunt and texts from Michel praising the minster's performance in the House of Commons and on BBC1's Andrew Marr Show.

Michel even texted Hunt his support for Rafael Nadal after he spotted the minister at a tennis match on television. Michel admitted he was a compulsive texter but denied the messages amounted to "schmoozing". There were no such daily updates and "jokey texts" with other interested parties, including an alliance of newspapers and broadcasters including the Guardian, the Mail, Telegraph and Channel 4 opposed to the News Corp-BSkyB deal, the inquiry heard.

"If I were to ask you where is evidence of equivalent contact, any equivalent contact with another interested party, namely the anti-bid coalition, is there any or not?" asked Robert Jay QC, counsel to the inquiry, of Smith.

"There wouldn't be, because from my memory, I don't remember them getting in touch with me, no," replied Smith.

The inquiry heard how Smith had responsibility for managing the relationship with interested parties during the bidding process but that as far as he was concerned this meant News Corp only. He was asked whether this did not raise alarm bells in terms of what "arguably is a lack of balance here". Again Smith saw nothing inappropriate in this apparent favouritism shown to one side.

"No, not really," he replied, explaining to a rather sceptical Jay that the contact he had with Michel was because "often things needed to be sorted out, like redactions to documents or process points".

By the time Lord Justice Leveson intervened, saying "you didn't have to be a lawyer" to know "a judge hearing a case can't speak to the parties outside the case", it was clear Smith had not been briefed on whether the contact with Michel was appropriate in the quasi-judicial process.

At the end of the hearing, it appeared that Michel had an open door to the culture department, whether to Hunt or not, and the opposition did not.

Over four and half hours, the News Corp lobbyist was questioned about emails purporting to show he had a daily inside track on how its bid was faring against mounting opposition from the media regulator Ofcom and an anti-bid coalition of media organisations.

Jay tried to establish whether the welter of emails sent by Michel to James Murdoch claiming they were "in a good place" or that "there shouldn't be a media plurality issue" and "the UK government would be supportive throughout the process" were based in fact.

"Isn't the truth here, Mr Michel, that this [reference to government support] is an example of exaggeration by you to … whether it's to boost morale or to frankly puff yourself up, it's not what happened?" Michel batted straight back. "No, I don't need to puff myself up."

What Jay was trying to establish was whether the emails from Michel to Murdoch were accurate reflections of conversations he had had with Smith and whether Smith had been sanctioned to have this communication by Hunt. If they were, and Michel proved to be a credible witness, then Hunt would be in trouble when it came to his turn at the inquiry.

While he often appeared to get the better of Michel, Jay had difficulty nailing the lobbyist. "You don't appear very willing to tell us, Mr Michel, whether Mr Hunt was supportive or not … or are you frankly not assisting us? Can we be clear, Mr Michel?"

He replied: "My view is that Jeremy Hunt was probably supportive of some of the arguments."

Hunt's career is hanging on the credibility of these two witnesses. Had he sanctioned Smith to have this back channel of communication with Michel or did the special adviser exceed his brief?

Smith described himself as a "buffer" and a "channel of communications" between Hunt and News Corp. "Mr Hunt never gave me precise instructions as to what he perceived my role as special adviser to be," he said. "It was generally understood between us as a result of the way our working relationship had evolved." There was no doubting the high regard within which he was held in government, however. Hunt described him in an appraisal as "my eyes and ears at meetings … brilliant at handling difficult situations".

Even with the most significant developments in the BSkyB bid, Smith said he would only have meetings with Hunt "if they were leading up to him saying something". But Michel believed that on two or three occasions the "feedback I had had been discussed with the secretary of state before it was given to me".

Smith, who continues his evidence , has yet to be challenged about Michel's claim. But he conceded his view was "very broadly" the same as Hunt. "I didn't particularly mind either way whether it happened or not. In a funny sort of way, I couldn't see why everyone was getting quite so worked up about it." He does now.

Pressue will grow on culture secretary to resign after former aide reveals private email to Leveson inquiry

If Jeremy Hunt hoped the resignation of his close aide Adam Smith would draw the sting of the scandal surrounding his handling of Rupert Murdoch's BSkyB bid, his hopes would have been dashed by Smith's brief appearance before the Leveson inquiry on Thursday .

Though he spent little more than an hour in Court 73 of the Royal Courts of Justice, Smith dropped the bombshell of the day by handing to the inquiry an email from his private account which could yet sever the slim thread connecting Hunt to his cabinet job.

The email contained a draft of a remarkable memo Hunt sent to David Cameron on 19 November, after a little drafting help from Smith. The memo railed against the business secretary, Vince Cable, for moving against the BSkyB takeover bid being promoted by the Murdoch family, father and son. It nailed Hunt's own colours firmly to the mast, as a committed, even passionate supporter of the bid.

Hunt even summoned up the spirit of Margaret Thatcher and her historic Tory struggles against the unions in the 1980s, writing enthusiastically: "Essentially what James Murdoch wants to do is to repeat what his father did with the move to Wapping and create the world's first multiplatform media operator available from paper to web to TV to iPhone to iPad."

This was not quite the way News Corporation had publicly presented its bid at the time, assuring the world it had no intention of "bundling" advertising and subscriptions to create a dominant media behemoth.

More significantly for Hunt's personal political fortunes, the words of the memo are the exact opposite of the picture he has sought to present to the world, that he approached the BSkyB bid – which he became responsible for deciding from late December 2011 – in an impartial spirit.

Furthermore, Hunt had attempted to save himself by forcing the resignation of his own special adviser on the grounds that the "tone and content" of Smith's emails and texts to News Corp had gone too far, because they represented Hunt as supportive of the bid. It now seems, after the publication of the Hunt memo, that his special adviser was reflecting the contents of his master's mind with perfect accuracy. If anything, he was too mild in the way he put it.

Hunt had used strong terms in private: he told the prime minister James Murdoch was "furious" that Cable was interfering with his media plans, and that it would be "totally wrong" to "cave in" to the bid's opponents.

No one will call this language "quasi-judicial" – the term the government repeatedly used to characterise Hunt's handling of the bid after he took over responsibility for it. It is likely to appear to his critics just as biased in the other direction as was Cable when he lost his control of the bid for recklessly saying he had "declared war" on the Murdochs.

The history of events at the end of 2010, from the moment on 4 November when Cable called in the regulators, shows how relentlessly James Murdoch and his PR man Frédéric Michel lobbied and berated the politicians who were trying to stand in their way. Only three days later, Murdoch was lunching at Chequers with Cameron. The next day, Michel lunched an aide to George Osborne, the chancellor, who he hoped could be persuaded to intervene.

Cable's own advisers refused to meet any of the Murdoch camp, saying it would be improper. So did Treasury minister Danny Alexander.

Michel and James Murdoch therefore concentrated their fire on Hunt and his team at the Department for Culture, Media and Sport (DCMS), even though they had no official role in the legal process being carried out at Cable's business department. Murdoch phoned Hunt and also arranged to meet him.

Hunt caused growing dismay in his department by his apparent enthusiasm for intervening on behalf of the Murdochs. As Michel's published emails reveal, and as counsel to the Leveson inquiry confirmed on Thursday, the DCMS legal director gave him a stern warning not to meet James Murdoch or interfere in Cable's handling of the bid. While not strictly illegal, he said that it would be "unwise".

Hunt was apparently more concerned to appease Murdoch than bow to all his department's proprieties: he appears to have held a mobile phone conversation with Murdoch, although he cancelled his face-to-face meeting. Hunt was already well-briefed on Murdoch's plans: Michel had previously sent him, via his adviser Smith, a lobbying package, outlining Murdoch's ambitious plans for a multimedia breakthrough comparable in scale to his father's move to Wapping in the 1980s.

Within weeks of Hunt launching his anti-Cable campaign in Downing Street, the business secretary would fall victim to a newspaper sting in which he confided that he had "declared war" on Murdoch, and responsibility for the bid was turned over to Hunt.

Hunt's critics will now read the text of his memo to Cameron as the final nail in the coffin of his claims to have switched mentally to a "quasi-judicial" role. This will certainly increase the pressure on him to step down. But it will also raise the question of why Cameron, knowing what a committed supporter of the bid Hunt was, thought it appropriate to give him the job of deciding on it.

What is now known, thanks to the Leveson process, is that James Murdoch was considerably mollified at the time. In the runup to that Christmas, he and Cameron shared a now notorious Christmas lunch at the Oxfordshire home of News International chief executive Rebekah Brooks, in a less "furious" and presumably more festive spirit.

Giving only prisoners released on temporary licence the vote may placate MPs and avert a costly clash with Europe

The latest round of the row on votes for prisoners is much ado about nothing for the inmates of Britain's jails. The vast majority of prisoners do not even want to vote. But on Tuesday the European court of human rights upheld its original ruling that the blanket ban was illegal and gave the UK a six-month ultimatum to act. So this will soon become a great to-do for the inmates of HMP Westminster.

The parliamentary mood and arithmetic has been clear ever since the Commons debate in February 2011. By an all-party majority of 212 it was resolved that the issue of votes for prisoners should be decided by our domestic legislators and not by the European court of human rights. That sound and popular decision would, at an informed guess, be supported by at least 75% of Her Majesty's past and present guests, including this one. That's because life on the wing is realistic not idealistic. In con circles as well as Conservative circles, it is accepted that a jail sentence loses you all sorts of rights, starting with the right to freedom. If any of them could be restored, voting would be way down the list. The right to send emails would be one far higher priority.

At present, the government appears to be set on having a head-on collision with the European court – great fun for Eurosceptics and great fees for human rights lawyers and lobbyists. But let's look at one alternative solution which would still leave our parliament firmly in control. I call it the encouragement of rehabilitation option.

In our jail population of 89,000 there are about 1,800 prisoners who each day are released on temporary licence (ROTL) for employment in the community. They have earned their status by good behaviour and achieving such low-risk assessments that they are considered safe and responsible enough to be sent out to work in local jobs as preparation for their re-entry into society. It would be a small and quite sensible step in their journey of rehabilitation for these inmates to be allowed the vote during this final period, usually about two years, before release.

Although this will not please those who want to stick to the established UK practice that all prisoners lose their voting rights as long as they are behind bars, there is a case for differentiating ROTL inmates, as they are already being treated differently by the prison service for rehabilitation reasons. Adding the right to vote to the right to day release seems a small and temporary concession that would also be in tune with the government's general strategy of encouraging rehabilitation.

The signs from Strasbourg are that the European court will accept that parliament can decide how much or how little voting rights can be restored to prisoners provided there is some movement from the present impasse. If so, a parliamentary bill to allow ROTL prisoners the vote seems preferable to the disproportionate financial bill of a prolonged battle with the European court.

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I agree with Simon Jenkins that "British energy policy is a dark underworld of fanatics" (Comment, 23 May) and I can't understand why the government is pushing for more investment in nuclear power when Fukushima is so recent. I've also heard Ed Davey "squirming" on the BBC and saying we need investment to "keep the lights on". Keep the lights on? Maybe 50 years ago this was the primary use of electricity but now most goes on powering masses of superfluous appliances and gadgets. So we should ask ourselves how we might distinguish between essential (keeping the lights on) and luxury (frothing coffee) electricity? One way would be to install a supplementary DC circuit in every home. Here batteries would be charged at cheap night-time rates or from solar panels, with them supplying a limited amount of essential electricity. The cost for daytime AC power could then be increased significantly so we all start to feel a real level of "financial pain" when we run the tumble-drier, switch on air-conditioning or leave the TV running when we are not really watching it.
Alan Mitcham
Cologne, Germany

• It ill behoves those of us who have lived long lives of profligate energy consumption to wring our hands as if nothing can be done to rationalise UK energy policy. 0ur best efforts make little impression on the global problem and may not impress India or China, but to do nothing sends a message about the greed of arrogant developed nations which they and others will seize with both hands. And we don't need to wait for Jenkins's wise mathematician to deliver answers. We should begin now by taking aggressive measures to cut energy use; not a glamorous step but effective, and cost-effective too.
Phil Booth
Bristol

• Simon Jenkins is right that energy policy can be confusing. Technologies hailed as the sustainable solutions to all of our energy problems often prove nothing of the sort. But his view of biomass as either a new dawn for energy or a technology that threatens half the world's forests is no longer true. The biomass power plant we have developed at Aston University overcomes many hurdles that have held back this technology. By using residues and waste instead of energy crops, the plant does not require the destruction of rainforests or agricultural land for palm oil production.

In fact, its by-product – biochar – can be used to increase crop yields. And by using heat instead of incineration, it produces no emissions. In short, there are no downsides. The first industrial-scale plant is working. If the government wants a clear conclusion for its energy policy, it need look no further.
Tim Miller
Project manager, European Bioenergy Research Institute, Aston University

• No public subsidy for nuclear power, says the energy secretary. Subsidies to the nuclear industry are illegal, according to EU regulations. So the government seeks to create a market structure which ensures the lights stay on. Consumers will have to pay for the infrastructure for new nuclear power stations, meaning prices will rise (Energy market shakeup raises fears of higher bills, 23 May). The insurance industry has become more reluctant to insure nuclear power stations after Fukushima, meaning we, the consumers, would have to pick up any bill in case of an accident.

The issue of storing used nuclear material has also not been settled. Will the nuclear industry pay for a depository deep underground, and for safe transport of the material? The used fuel rods are likely to remain at Sellafield, and will need guarding from terrorists and rising sea levels for centuries to come. Again, the government, ie we, will have to foot the bill. That is not called a subsidy, but it amounts to one by any other name. Legal wrangling will also cause super delays. Why does nobody mention the building of the high-voltage, direct current European supergrid, which will allow import of electricity from the Sahara, hydro-power from Norway, and geothermal from Iceland at times when we cannot generate solar or wind power, and export electricity when we generate more than we need? Several undersea links are there: to France and Ireland. Last year a cable was laid to the Netherlands. The next link to Norway has already been planned. Why does the energy secretary not mention this project, which won't expose us to the risk of a nuclear future?
Aart and Wiebina Heesterman
Birmingham

• Is this a Simon Jenkins first? "Do not read on if you want a conclusion on this subject" says Simon to introduce his second paragraph. As he is never normally under-opinionated, perhaps he is starting to realise, as the government already has, that there is no easy answer to Britain's energy future. Governments for years have read all the reports about the deleterious effects of burning fossil fuels and the future cost of the almost certainly increasing reliance on importing them, and tried to nudge energy policy towards other options, but immediately bang up against voters who are against whatever else is offered – nuclear (safety and cost), and renewables (cost and impacts on what I would call amenity and ambience rather than environment). The only logical response to my mind is to charge the cost to the taxpayer and ignore the amenity, but recent governments, especially this one, won't increase taxes for that, and are also terrified of campaigns against large-scale and/or highly visible options, as they are mostly in or proposed for Conservative areas.

A further consideration that Jenkins does not mention is that renewables would immediately become more attractive if a way could be found to store  the intermittent power generated from solar and wind, to keep the grid going at night and between weather depressions. I've not heard of any work being done in this regard. Anyway, come on Simon, give us a clue, how would you navigate through the "dark underworld" as you put it?
David Mills
York

• Simon Jenkins is looking for mathematical formulae that will help him understand the complexities of climate change, renewables and nuclear. Let me oblige with three suggestions from a recent conference on climate change organised by Help Rescue the Planet.

First RC + MJ = GG where RC stands for Reduced Carbon, MJ for More Jobs and GG for Green Growth. Secondly, EC + R > NO where EC stands for Energy Conservation, R for Renewables and NO for Nuclear Option (In maths > indicates greater than). In other words if the government is planning to spend £100bn to meet our energy requirements, should it spend it on conservation and renewables or on getting Russia or China to build a new generation of nuclear reactors. In political as well as purely economic terms this is a "no brainer".

The third formula was devised by our conference organiser and is the Russell-Jones variant of Einstein's famous 1905 formula MC2 = E where M stands for multitude (as in world population), C = carbon per capita (ie emissions of carbon dioxide and other greenhouse gases per head of population per year) and E stands for extinction of species or, for those politicians who calculate that plants and animals don't vote, it stands for the END of human civilisation as we know it.
Michael Clink
Chairman, Help Rescue the Planet, Cheltenham, Gloucestershire

• If Simon Jenkins is unable to discriminate between James Lovelock and Nigel Lawson on the matter of global climate change, he should cease writing about this topic at all, with immediate effect.
Pam Lunn
Kenilworth, Warwickshire

Our political elites find the issue of social mobility to be both irresistible and intractable (Suzanne Moore, G2, 24 May). Irresistible because even rightwing politicians cannot ignore the fact that our unfair education system, through which parental wealth has a far more significant impact on life chances than ability, is neither fair nor meritocratic, and ensures that structures of power remain ossified throughout society. And intractable because in order to significantly increase social mobility, educational opportunities for less well-off children must be significantly boosted, which will necessarily lead to a diminution of the access presently enjoyed by privately educated children to the best universities and careers.

Michael Gove's speech on the "morally indefensible" dominance by privately educated people in British society, and Nick Clegg's 17 annual "trackers", are nothing more than fig leaves to cover the government's growing embarrassment at the huge chasm between the status quo of private school dominance and the equality of opportunity which any intelligent person must conclude is essential for a country like ours to be able to describe itself as "great".

I doubt this government of privately educated millionaires is up to the task.
John Slinger
Chair, Pragmatic Radicalism

• I applaud Nick Clegg's commitment to the cause of social mobility. I suspect, however, that a much braver and more radical approach will be required. For example, private schools should only be allowed to keep their charitable status if they agree to take into their schools a significant proportion of appropriately assessed children from the state sector who are entitled to free school meals. It would not be perfect but it would be consistent in that, to an extent, selection would still be based on parental income. If they refuse they should lose their charitable status and submit to the market forces so beloved of recent governments.
Gordon Morris
Sherborne, Dorset

• No major political parties are sincere about promoting social mobility because they will not tackle the privileges and powers of Oxbridge and private schools (Social mobility still leaves some living in the gutter, 24 May). But we can do something as individuals. Do not send our children to private schools or the elitist state ones. We can decline to be students at Oxbridge. We can refuse the high salaries and the connections which make us a part of the establishment and instead identify with and agitate with those who are victims of an unequal Britain.
Bob Holman
Glasgow

• Your thesis about "the slow return of rage" (Leader, 22 May) is surprising, as a lead of 5% is a disastrous showing for an opposition party in mid-term. In fact, the low turnout for the local elections shows that the public mood is one of indifference. Part of the reason may be found in a photo you recently ran in which the three leaders plus George Osborne stood side by side. They appeared virtual clones, all being about the same age and wearing the same uniform (dark suit, monochrome tie, middle-of-the road haircut) and the same sleek metropolitan look. It is not surprising that their policies are hard to distinguish, especially as Miliband refuses to tell us what his policy is.
Christopher Wrigley
Chorleywood, Hertfordshire

No 10's director of communications dined with News Corp lobbyist at height of hacking scandal, submissions show

Craig Oliver, No 10's director of communications, had a "discreet" dinner with News Corp lobbyist Frédéric Michel at the height of the phone-hacking scandal.

It took place on 6 July 2011, two days after the Guardian had published the story about the hacking of Milly Dowler's phone that unleashed a wave of national revulsion and led to the closure of the News of the World.

Oliver was named as one of eight Downing Street advisers with whom Michel had contact, and it appears from submissions to the Leveson inquiry that Oliver specifically asked that they find a discreet location.

Although the special adviser's code requires that hospitality received by special advisers is disclosed on government registers, the meal was not declared by Oliver. Downing Street explained on Thursday night that Oliver and Michel shared the cost of the bill, and so no hospitality was extended and nothing need be declared. It is only ministers, rather than special advisers, who are required to declare meetings with senior newspaper executives, Downing Street said. Michel is likely to have been regarded as a senior newspaper executive by the Cabinet Office.

Oliver has taken the role of No 10 communications director in succession to the former News of the World editor Andy Coulson, and would have been seen as an important target to cultivate by News International.

The original purpose of the meeting was for Oliver to be introduced to Will Lewis, the former Daily Telegraph editor appointed by News International to oversee its handling of the hacking scandal. Michel said the meeting was originally going to include wives, but this did not occur and the eventual location of the meeting "was not discrete discreet at all".

The lobbyist said the meeting was social and the pair had not discussed business issues.

The Leveson inquiry also heard that Michel wrote to Oliver's deputy, Gabby Bertin, on 6 July 2011 thanking her for sending messages to Rebekah Brooks. Michel said he was not aware what was in the messages.

It was apparent Michel had one further weapon in his arsenal: be French. He had been 'melodramatising'

Until 24 April, when as a result of James Murdoch's evidence to the Leveson inquiry he was frogmarched towards the nearest cliff face and invited to fling himself forth, Adam Smith was extremely close to his boss, Jeremy Hunt. He was "under the wing" of the culture secretary, he said on Thursday, his "eyes and ears", his "early warning system", his "buffer". They would speak two, three, four times a day, fostering an intimacy so great that even when the minister wasn't present, in Hunt's own assessment, "[Smith] knows exactly what I would want to happen".

Which is just another reason – along with all the other ones – to wonder just what and how much Hunt knew about Smith's bit on the side. For however much attentive buffering the Spad performed to and for the minister, his attentions between the summer of 2010 and the following year were being claimed by another, a seduction to which the young special adviser was more than willing to submit.

How else were we to interpret the evidence that emerged when the two former intimates – the ministerial adviser tasked with handling the "interested parties" in News Corp's bid to take full control of BSkyB, and Frédéric Michel, the company's chief lobbyist – were reunited once more?

In the 13 months from June 2010, it emerged, when News Corp announced its intention to buy the remainder of the company, Michel made 191 phone calls, wrote 158 emails and sent 799 texts to Hunt's office, the overwhelming majority of them to Smith. He, in turn, texted Michel 257 times between November of the same year and July 2011.

On one night alone, on the eve of Hunt's announcement that he intended to accept News Corp's undertakings in lieu for the bid, the two men were still exchanging texts and calls at 1.09am, 2.59am, 3.05am. "This is in the middle of the night!" noted Lord Leveson, not incorrectly. There are lovers who have less contact.

Such a shame these things don't last. When Murdoch decided to release to the inquiry 163 pages of emails detailing News Corp's contact with Jeremy Hunt's office, their proxies found themselves forced to turn on each other. Although he resigned, Smith insisted he didn't recognise much of Michel's account of their contact.

The reputation of each now depends to an extent on how persuasively they can portray the other to the inquiry as a liar.

Though Michel was first to take the stand, Smith was in court 73, accompanied by his lawyer and a formidable stash of folders, almost from the moment the hearing opened. They sat at the back, side by side, on each of their laps a small yellow Post-It pad, ready to scribble discreet notes throughout the Frenchman's testimony.

Smith, who is 30 but blessed with such a youthful complexion that Leveson couldn't resist asking his age when he later took the stand himself, was impassive as the Frenchman gave evidence, only his eyes flicking between witness and interrogator.

Would Michel deliver the fatal blow to Hunt? Offer corroboration of some of the more apparently damning claims in his emails? Damn his former friend to shore up his own job at News Corp, which he still holds, apparently with the Murdochs' full confidence?

What he offered instead, as Robert Jay QC led him through selected highlights from his cache of emails, was a masterclass in the arts of advocacy.

There are, it transpires, a number of key attributes to being a successful director of public affairs for a major media behemoth. Chutzpah, for instance, is handy. The court had access not only to the original cache of his emails but to texts from Smith and Hunt among other records.

More than once, as Jay pointed out, his exuberant accounts to his News Corp team demonstrably bore little resemblance to the correspondence on which they were based. Was he exaggerating? "No." Perhaps to "puff himself up" in the eyes of his colleagues? "No, I don't think I need to puff myself up." (A healthy vanity also helps.)

Flattery is useful. "You were very impressive yesterday," he had texted Hunt after a meeting at the department in January 2011. "You were great at the Commons today," read another on 3 March; "Very good on Marr" on 13 March. "Is this an example of, to use the vernacular, of schmoozing, Mr Michel?" asked Jay. Michel gave a smile and a sad little shake of his head. "No. It's a friendly text." "Humph," grunted Jay.

If all else failed, it was apparent, Michel had one further weapon in his arsenal: be French. Yes, perhaps his account on that occasion had been overblown – he had obviously been "melodramatising". He was French, you see.

OK, so maybe the last sentence of that email was overblown – "you could probably put that on my sort of … way of writing English".

And his description to his bosses of a "one hour" conversation with Smith that the phone records showed had in fact been 34 minutes? "French time." Oh, and while we're at it, je ne regrette rien.

His evidence done, he stepped down from the stand to give way to Smith, a manoeuvre that forced them to shuffle around each other.

As they passed, the two former intimates exchanged the briefest ghost of a smile.

David Cameron's idea for lifting Britain harks back to 1930s Bank of England dogma. What we need is a cash injection

David Cameron is right. The government must tackle the deficit while securing growth. The G8 in Washington agrees with him, so do Europe's finance ministers, so does the IMF's Christine Lagarde, so intermittently does the Labour party. If so many people agree, what is the problem?

In reality Britain, and much of Europe, is chasing deficit reduction so hard that growth eludes it. Europe is in the grip of a demand famine that is the economic equivalent of the Black Death. A plague is feeding on itself. Today Britain was confirmed to be in persisting recession, precisely what the prime minister and his chancellor, George Osborne, said would not happen. Two years ago they derided those pleading for plan B as cynics and pessimists. I hear no apology.

In the Commons on Wednesday, Cameron described his attempt at a shotgun marriage of austerity and growth. He listed four components, combining "deficit reduction … an active monetary policy, structural reform to make us competitive, and innovative ways of using our hard-won credibility". He did not elaborate on modalities. Yet when rhetoric and reality appear in such glaring conflict as now, even a man as self-confident as the PM must sense he is up a stormy creek without a paddle.

Britain's deficit reduction has not been very austere, not like Greece or Spain. It is aimed at reverting public spending to its level of roughly five years ago, hardly straitened times. It has been effective in sustaining Britain's foreign credit. But it cannot be denied that it has stifled growth. Chided on Wednesday to reconcile his conflicting ambitions by the MP Dennis Skinner, Cameron said lamely that the purpose of his austerity was "to deliver low interest rates which are essential for growth".

As this seems to be the intellectual prop of the policy, it merits analysis. Low interest rates are not "essential" to growth, as Cameron says. They may help, but what is essential is higher demand, rising sales and profits. These are vital not just to growth but to government revenues and deficit reduction.

Cameron has pursued the lowest interest rates in modern British history, yet the economy has not grown but lurched into prolonged recession. How can he link the two? His cart is before his horse.

Throughout these troubles Britain has suffered from the worst economic bugbear: ingénue politicians in thrall to the Bank of England. The Bank's amiable governor, Sir Mervyn King, mesmerises Cameron and Osborne as he did Gordon Brown and Alistair Darling. The Bank's conduct of monetary policy for the past three years has been as disastrous as was its conduct of financial regulation in the preceding two. But no heads have rolled.

Cameron's second growth prescription is of an "active" monetarism. This has consisted of King filling bank vaults with £325bn of credit notes. It has helped banks back to profitability but there is no sign that the policy has had any impact on credit to businesses, let alone on domestic money supply. It must be the costliest fiasco in regulatory history. Yet all King could say to a supine Commons committee in March was: "If there is one word I think we need to hang on to … it is patience. We've done the things that are necessary." Cameron's own banker admits that his monetary policy is not active but inert.

The message that Keynes drew from the inter-war depression was that there was no get-out-of-jail card. A choice had to be made between deflation and recession on the one hand, and recovery with possible inflation on the other. In essence governments should postpone deficit reduction in hard times, and build surpluses in good ones. Even if surpluses were not built, as in the last boom, deflating economies in a recession merely prolongs that recession.

Cameron's belief that austerity holds the key to growth through low interest rates and bank bailouts is Bank of England dogma of the 1930s. He may as well don a black jacket and striped trousers and declare unemployment the medicine for human sin. Economics students used to be reassured that such ideas would never again be heard because governments were no longer that stupid. Really?

Across Europe democracy is telling politicians this game is up. People want recovery stimulated, as much as governments want a return to buoyant revenue. The age of the bankers is ending. But what form should stimulus take? Cameron's two remaining prescriptions are opaque. Structural reform "to raise competitiveness" is noble in theory, but does nothing for growth in the short term. Deregulation has yet to reveal itself in practice and will hardly send consumers rushing out to buy.

As for "innovative ways of using our hard-won credibility", this was left unspecified, but does at least offer a glimmer of hope. Current Whitehall talk is of public spending "off balance sheet" – in theory hidden from the bond markets – which usually means privatised building projects such as Michael Gove's revived schools programme. They are seldom "shovel-ready" and yield little or nothing in the short term. N,or are they really off balance sheet, though they obsess prestige-hungry ministers. They are more likely to fuel the next boom and the next deficit crisis.

More intriguing is if Cameron is at last ready to draw on the coalition's much-vaunted credit balance and throw a little caution to the wind. Retailers, small businesses, large corporations, city councils and the exchequer are all skint. They desperately need goods moving from shelves, shops restocking, banks lending against renewed cash flow, employment growing and taxes being paid.

There is no shortage of ideas for this, long rehearsed in this column. They range from boosting social benefits for a year to temporary tax reliefs, scrappage schemes and time-limited spending vouchers. Given present unemployment and spare capacity it is inconceivable that such an injection would be inflationary. The Bank of England could print £500 per head in notes and dump them in every private bank account in the land for less than it has given its banking friends. It would be the quickest way of injecting cash into the veins of the economy "off balance sheet".

Such short-term boosts to demand would hardly endanger Cameron's "hard-won credibility". As a Tory he should know that the fastest growth in jobs comes from private spending; from money circulating in cash machines and purses through shops and services. The economy has been sated with state growth. To borrow a phrase from Cameron's favourite politician, Tony Blair, it needs people's growth.

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Culture secretary told parliament he had no unofficial contact with News Corp lobbyist while considering the BSkyB bid

Jeremy Hunt exchanged texts with Frédéric Michel at least four times despite telling parliament he had no unofficial contact with the News Corp lobbyist while he was considering the company's bid for BSkyB.

The culture secretary told MPs on 25 April that all of his contact with Michel while he had quasi-judicial oversight of the bid was minuted and in the company of government officials.

"Throughout the bid process, when I got responsibility for it, the contact that I had with Fred Michel was only at official meetings that were minuted with other people present," he told the Commons on the day after emails released by the Leveson inquiry appeared to reveal inappropriate communication between his department and News Corp.

However, text messages shown to the inquiry suggest Hunt had undisclosed conversations with Michel as recently as July last year. Michel told the inquiry that he exchanged "one text every three months" with Hunt over the period.

The texts

Michel to Hunt:

20 January 2011, 20.54

Great to see you today. We should get little [children's names redacted] together in the future to socialise. Nearly born the same day at the same place! Warm regards, Fred

Hunt to Michel:

20 January 2011, 23.45

Good to see you too. hope u understand why we have to have the long process. Let's meet up when things are resolved. J.

Michel to Hunt:

3 March 2011

You were great at the Commons today. Hope all well. Warm regards, Fred.

Hunt to Michel:

3 March 2011

Merci. Large drink tonight.

Michel to Hunt:

13 March 2011 Very good on Marr as always.

Hunt to Michel:

13 March 2011 Merci. Hopefully when consultation over we can have a coffee like the old days.

The pair also exchanged text messages in July 2011 after Michel spotted Hunt on TV at a Wimbledon tennis match between Rafael Nadal and Andy Murray, the inquiry heard.

Home secretary becomes most senior politician to take part in Out4Marriage campaign

Leveson inquiry hears culture secretary had urged PM to support BSkyB takeover before he was appointed to oversee bid

Downing Street has been drawn further into the argument over News Corporation's bid to take over BSkyB after it emerged that David Cameron appointed the culture secretary, Jeremy Hunt, to oversee the bid even though Hunt had directly lobbied him to resist the Murdoch company's rivals, including the BBC and the Guardian.

Hunt undertook his lobbying in November 2010, two months before Cameron appointed him to succeed the business secretary, Vince Cable, who had been revealed to have "declared war" on the Murdoch empire. Hunt claimed broadcasting would suffer for years if the bid did not go ahead.

Labour was pointing out on Thursday night that in late December 2010 it had written to the cabinet secretary, Lord O'Donnell, asking him not to appoint Hunt to oversee the bid, owing to his perceived bias.

O'Donnell replied to the then shadow business secretary, John Denham: "The prime minister specifically asked me whether there was any legal impediment to moving it to Mr Hunt. I took advice from lawyers, and in providing advice that there was no such impediment I was of course aware of the former statements from Mr Hunt which you cite. I am satisfied that those statements do not amount to a pre-judgment of the case in question."

He added in evidence to the Leveson inquiry: "I think the legal question as it was put to me was: do those ministers' comments amount to a pre-judgment of the issue? And that's where the lawyers were clear that it didn't."

It is now likely that Cameron, when he gives evidence to the inquiry next month, will be asked why he did not disclose the Hunt memo to O'Donnell, and whether he thinks he should have.

No 10 will argue that he "did not sit on the memo with knowledge", and that O'Donnell was only looking at Hunt's public statements. It was also being suggested that O'Donnell was anyway not making his ruling primarily on the basis of Hunt's previous statements, but how he would behave in the future, and whether he had the capacity to be neutral.

But it is also likely that O'Donnell will himself be asked by Leveson whether, in coming to a judgment on Hunt's suitability to judge the bid, he should have been informed of Hunt's lobbying of No 10, and whether it would have changed his view.

O'Donnell has already given wide ranging evidence to the Leveson inquiry once, but was only superficially pressed on this issue.

Hunt's officials argued on Thursday that the memo does not show a bias or a prejudgment, as Hunt explicitly says the bid should only go ahead subject to competition considerations, and this was a legitimate position to adopt.

Hunt's allies added that, in a prior Financial Times interview on 16 June, Hunt had been much more explicit in his view that plurality issues did not arise because News Corp already owned 39.1% of BSkyB. He told the FT: "It does seem to me that News Corp do control Sky already so it is not clear to me that in terms of media plurality there is a substantive change, but I do not want to second guess what regulators might decide."

Downing Street sources claim the memo released at Leveson was far more caveated than these previous public media remarks. It was also suggested that the cabinet secretary, Sir Jeremy Heywood, also takes this view. Downing Street said the memo makes clear that "it would be totally wrong for the government to get involved in a competition issue which has to be decided at arm's length".

Labour pointed out that Hunt had told parliament he had "made absolutely no interventions seeking to influence a quasi-judicial decision that was at the time the responsibility of the secretary of state for business".

Hunt and his permanent secretary, Jonathan Stephens, are facing questions over the extent to which they briefed Adam Smith, Hunt's special adviser, on how to handle contacts with News Corp when handling a decision of a quasi-judicial nature.

O'Donnell told the inquiry this month that the minister or the permanent secretary should specify this was a different quality of decision and in particular "you should make sure that the same information is passed on all parties in a case. This is not least to protect against a future judicial review". Smith admitted he spoke far more regularly to News Corp, and there is no parallel traffic with those opposed to the bid.

The News Corp lobbyist Frédéric Michel washed his hands of Hunt's behaviour, saying of his contacts: "If anyone from Hunt's office thought this inappropriate they would have told me. It's not for me to say how Hunt's office should work."

Culture department sources claimed the contacts were tilted in one direction as News Corp was the organisation fighting to keep the bid on track, and trying to persuade the government that its assurances of editorial independence for BSkyB were genuine. There was no need to talk as much to those opposed to the bid.

If Stephens declares it was the responsibility of Hunt to control the contacts of his special adviser, and that he did not, then Hunt may prima facie be in breach of the ministerial code. Cameron has been resisting referring any such breaches of the code to the independent adviser on the code, Sir Alex Allan, at least until this wave of hearings has ended.

Many building projects were cancelled and the education secretary made to apologise after communication errors

Culture secretary tried to persuade David Cameron to lean on Vince Cable over News Corp's BSkyB bid

Jeremy Hunt's memo for David Cameron appears to reveal what many suspected all along. The culture secretary's words show he was desperate to please a "pretty furious" James Murdoch – so desperate in fact that he tried to persuade the prime minister in the middle of November 2010 to lean on Vince Cable, the minister with sole legal responsibility for taking the decision over News Corp's desire to take over the whole of BSkyB.

Hunt's memo to the prime minister also betrays more inside information about the frustrated mogul's thinking. Hunt says James Murdoch wants to "create the world's first multi-platform media operator available from paper to web to TV to iPhone to iPad". Or, to put it another way, Murdoch wanted to bundle together Sky with the Sun and the Times – from Sky football matches to Sun match reports, or rolling TV news integrated with Times journalism – all wrapped together for a single price.

It was precisely this scenario that terrified everybody else in Fleet Street, from the Telegraph to the Guardian, from the Mail to the Mirror, because it would have fused together the nation's biggest broadcaster with the country's largest newspaper group, boasting content that rival titles could not match.

Hunt was so taken with the prospect he describes it as akin to a second Wapping revolution. But this was precisely the scenario that News Corp refused to discuss in public; the company consistently said it saw the purchase of BSkyB as essentially financial. For example, in a phone interview with the Guardian earlier that month, James Murdoch explicitly played down the possibilities of bundling Sky with his company's newspapers. He almost laughed when the question was put, knowing it was the basis of the objections of his Fleet Street rivals to the £8bn bid for BSkyB.

It isn't clear where Hunt's information came from. There is no documentary evidence to explain it – at least not yet. But the memo to Cameron was dated 19 November 2010. Four days earlier, Hunt was due to meet James Murdoch, but he was told he could not by his permanent secretary. It was too sensitive. Instead, the pair spoke on the phone – and whatever was said was probably fresh in the minister's mind.

Cable was prevented from adjudicating on the Sky bid because of unguarded comments given to Daily Telegraph reporters – his declaration of "war on Murdoch" – who covertly recorded him.

Hunt, meanwhile, seems to have been James Murdoch's biggest advocate. He may have been handed a quasi-judicial responsibility but, it seems, he had already made up his mind.

John Harris says children with special educational needs will lose out in a rush to reform. Far from it – they'll get a better deal

John Harris writes of the fight he had to simply get the basic support for his autistic child (Special needs kids deserve better than a rush to reform, 21 May). His experience is a story I have heard over and over again. It is precisely this problem that the coalition government is trying to fix.

John says: "It quickly became clear that NHS speech therapy was effectively nonexistent, no one mentioned my son's obvious problems with motor skills, and too often we were effectively told to go away, depend on threadbare arrangements and wait till he was eligible for school." I have heard from thousands of parents like John, who have battled to get their children's needs recognised. Parents go through repeated assessments; and all too often, even when their child's need is accepted, there are more delays as different parts of the system squabble about who should be paying for what. And when a child gets to 16 it can feel like standing on the edge of a cliff, as all the legal rights and support disappear.

I also know the system doesn't work well enough for children with less severe needs either, such as those with unrecognised language difficulties whose frustration in trying to communicate shows up as angry, even criminal, behaviour. For each child with an issue not picked up, there is one mislabelled as "special educational needs" (SEN) who is actually falling behind for another reason, perhaps because they're caring for a relative or being bullied at school.

But John's claim that the purpose of our reforms was to deliver some arbitrary reduction in the numbers on the SEN register is just scaremongering. These reforms are about making sure every child, whatever their needs, gets the right type of help early.

Neither is it true that the government's approach is "frantic" or that we are rushing into reform. We set out our plans in a green paper in March last year. Since then we have consulted carefully with parents. John says he's spoken to charities and pressure groups who reported "mounting concerns", but the detailed consultation on our plans has shown broad backing from across the SEN sector. We are now testing our plans in 20 areas, before parliament debates the legislation next year. These are the biggest reforms to SEN for 30 years and we are taking the time to get them right and to listen carefully to parents.

At the heart of our reforms is the proposal to make the current statementing process simpler and stronger – so families like John's get a much better deal from the system. John says "there are clear signs that [the new plans] will not be as dependable as what they will replace". Far from it, the new education, health and care plans will keep all the existing legal protections, but will bring health and social care needs into a single assessment process. This will be backed by a new legal requirement for councils and health services to plan services together. And that cliff edge will disappear as we extend rights for young people in education or training up to 25.

As for personal budgets, there are many parents who do want to have greater choice and control over their child's specialist support package, but no parent will be forced down this route.

Finally, I share John's frustration about the lack of early intervention. That's why we'll be drawing up a clearer definition of SEN, so schools ask why children are falling behind, and put in place the right support. Children and young people with special educational needs or disabilities deserve a much better deal. We owe it to families to get it right.

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We need a fundamental re-casting of the economy so that Britain can once again pay its way in the world

Two years have passed since George Osborne was preparing his first budget, and much has changed since the heady first days of the coalition.

In June 2010, the chancellor was expecting growth of 2.3% in 2011. In the event, it was 0.7%. Activity was supposed to accelerate to 2.8% in 2012, but the current consensus is for growth of 0.5%. This is a woeful performance, and it is the real message from the revised GDP figures.

To be sure, the data looks curious. The idea that the economy contracted by 0.3% in the first three months of the year hardly squares with business surveys or the unemployment figures. The report from the ONS shows that government spending added to growth, which fits oddly with the toughest austerity programme since Jim Callaghan called in the IMF in 1976.

But there's a danger here of failing to see the wood for the trees. Whether the UK grew a bit or contracted a bit in early 2012, the big picture is of an economy that has moved sideways (at best) for 18 months when it should have been eating up the ground lost during 2008 and 2009.

Three questions arise from this under-performance: what caused it, what happens next, and what can be done about it? The answer to the first is that the UK is a deeply dysfunctional economy that has allowed its productive base to shrivel, is deficient in skills and infrastructure, and has papered over the cracks for decades by squandering North Sea revenues and borrowing excessively.

The immediate future looks grim. Europe's death spiral, the squeeze on real incomes, the unwillingness of companies to invest and the likelihood that spending cuts will soon start to show up in the GDP figures means that there may be a further two quarters of negative growth this year punctuated by a transitory period of rapid expansion during the Olympics.

As to what can be done, in the short term policy is likely to be eased by the Bank of England. In the medium term there may be higher (and much needed) infrastructure spending. In the long term, though, there is no escaping the need for a fundamental re-casting of the economy so that Britain can once again pay its way in the world.

David Cameron announces detectives will fly to Libya in pursuit of information about the policewoman's 1984 killing

British detectives will travel to Libya to renew their investigation into the shooting of the police officer Yvonne Fletcher, David Cameron has announced.

Fletcher was shot from the Libyan embassy as she oversaw an anti-Muammar Gaddafi protest in St James's Square, London, in 1984. The embassy was besieged by British police but the culprits were not surrendered.

Cameron announced the renewal of the investigation after meeting Abdurrahim el-Keib, Libya's interim prime minister, in London. Cameron said the visit by detectives to Tripoli would be a "really positive step forward".

Investigations into, and speculation about, the killing of Fletcher have continued since 1984. In 1999, Libya accepted responsibility and paid compensation to her family which preceded the resumption of diplomatic relations between Tripoli and London.

Detectives visited Libya and interviewed suspects on several occasions after 1999. It is understood that they have focused on two men who became senior figures in Gaddafi's regime but it is not clear if they survived the war that led to his overthrow.

Commander Richard Walton, head of the Metropolitan police's counter-terrorism command, said the news was significant. "We have never lost our resolve to solve this murder and achieve justice for Yvonne's family," he said.

Keib was appointed interim prime minister before elections later this year, but Libya remains divided with a weak central government.

The international criminal court ruled last month that Libya could not try Saif al-Islam Gaddafi, the son of the former leader, fairly and ordered that he be sent to The Hague.

Gaddafi is in the custody of a regional militia which has refused to release him to the Keib government.

Keib spent much of his life working abroad as an academic and businessman in the United States and UAE, and played no part in Gaddafi's administration.

He told Cameron: "The Fletcher case is a case that is close to my heart personally. I had friends who were demonstrating that day next to the embassy. It is a sad story. It is very unfortunate that it has anything to do with the Libyan people."

The Libyan prime minister's visit to Downing Street comes days after the death of Abdelbaset al-Megrahi, the only person convicted over the Lockerbie bombing in 1988. Police in the US and Britain remain keen to continue their investigation into the attack on Pan Am Flight 103, which exploded above the Scottish town.

Downing Street later revealed that Keib met Lord Advocate Frank Mulholland, the Scottish government's senior legal officer, during his visit to discuss the investigation into the bombing of the Pan Am flight. Cameron also raised the issue of Gadaffi's support for the IRA during his talks with the Libyan prime minister.

Introduction of a 50p minimum price for alcohol could happen by April 2013 after Scottish National party wins Holyrood vote

Cut-price wine, beer and vodka will be outlawed in Scotland from as early as April next year after the Scottish parliament on Thursday overwhelmingly passed a bill to introduce a 50p minimum price for alcohol.

The new measures setting the first legally-binding minimum price within the European Union are expected to get royal assent later next month after the Tories, Scottish Greens and Liberal Democrats voted alongside the Scottish National party at Holyrood.

The legislation– which could be followed by similar price controls for England and Wales – will mean that whisky will cost a minimum of £14 a bottle, average strength wine will cost £4.69, four cans of own brand supermarket lager £3.52 and standard strength vodka £13.13 a bottle.

It will also finally stop supermarkets, shops and pubs, which are already legally prevented in Scotland from selling alcohol at bulk discounts or two for one offers, from offering single bottle cut-price promotions which push the cost of the drink under the 50p a unit level.

Labour, which had earlier signalled it could finally support the bill, became the only party to abstain after failing to win the Scottish government's support for new measures to claw back extra profits the supermarkets will now earn from higher prices.

Nicola Sturgeon, the Scottish health secretary, is now braced for possible legal challenges from the drinks industry or overseas producers which could prevent the law coming into force from 1 April next year as planned.

The Scottish government must notify the European commission about the new legislation and the legal basis for the policy within weeks. The commission will begin a three-month consultation on the measures which is expected to quickly trigger legal action by its opponents.

Sturgeon's advisers believe the commissioners will accept the price control is legal under EU law because it is a proportionate measure which will have a significant positive impact on Scotland's health and crime levels.

She said the new measures would help Scotland achieve a "cultural shift" in its unhealthy attitudes to alcohol.

"This policy will save lives – it's as simple as that. It is time to turn the tide of alcohol misuse that for too long has been crippling our country," she said. "Minimum pricing will kickstart a change by addressing a fundamental part of our alcohol culture – the availability of high-strength, low-cost alcohol."

However, individual drinks companies or overseas suppliers whose sales are based on cheap prices are now expected to challenge the measures in the Scottish courts and the UK supreme court, potentially delaying the new measures until 2014 or later.

Critics insist the legislation has an unjustified impact on responsible and less well-off drinkers, is illegal under EU and global competition laws and would also ruin the Scottish whisky industry's efforts to counter price controls and high tariffs in overseas markets. The drinks industry in the rest of the UK is threatening similar action if David Cameron presses ahead with similar measures for England and Wales.

Whisky is Scotland's single largest and most valuable export, worth £4.2bn last year, and the Scotch Whisky Association has insisted that minimum pricing is likely to be illegal, breaching European and global rules on free trade and competition.

Gavin Hewitt, chief executive of the Scotch Whisky Association, said minimum unit pricing (MUP) "has consistently been found to be illegal in Europe. It was first ruled to be a barrier to trade by the European court of justice more than 30 years ago. No doubt those opposed to MUP across Europe will draw on this case law in the coming months.

"We expect legal challenges to emerge once the Scottish government notifies its proposals to the European commission. We hope the UK government will take due note and drop its own proposals for minimum pricing of alcohol."

With alcohol abuse and alcohol related crime estimated to cost several thousand early deaths a year in Scotland, a study by health experts at Sheffield university estimated that a 50p minimum price would save about 60 lives in the first year and 300 within a decade. The cumulative social and economic benefits would see a "harm reduction" worth £942m within 10 years.

Under persistent questioning, Adam Smith reiterated that the culture secretary had always said there wasn't a problem with the Murdoch bid

Vince Cable lawyers call on high court to ban former Farepak bosses from being company directors for up to 15 years

The bosses of Farepak, the Christmas hamper business that went bust leaving 116,400 people out of pocket, were accused on Thursday of being unfit to run a company.

Lawyers acting for the business secretary, Vince Cable, called on the high court to ban the former Farepak bosses from being company directors for up to 15 years.

Malcolm Davis-White QC, for the Insolvency Service, part of the business department, said Farepak's former bosses, including Sir Clive Thompson, a former president of the CBI and chief executive of Rentokil, had taken "unreasonable risk" with prudent savers' money.

Davis-White said Farepak was still accepting "about £1m a week" from customers on low incomes right up until its collapse in October 2006 even though the company had "identified a risk" that it might not have enough cash to pay its suppliers as far back as November 2005.

"With alarming cashflow projections available from early April 2006 warning of a lack of sufficient cash in the group from October 2006 onwards, various unsuccessful attempts were made by the group to find a solution to the funding crisis," Davis-White said.

"Throughout this period, savers' weekly payments (amounting by October to £2m per week) continued to be collected by Farepak and swept up daily into the group account, unprotected by any trust account or similar arrangement."

Davis-White said Farepak's customers continued to scrape together their monthly payments to the scheme with no inkling of any serious risk to their savings, while the company's bosses were well aware of the risk of failure.

"The collapse did not come out of the blue," Davis-White told the high court on Thursday.

"Directors tried one possible means of raising finance after another. But nothing came of any of these.

"The collapse of the group left tens of thousands of Farepak savers, whose socio-economic profile meant they were drawn from some of the most financially vulnerable members of society, out of pocket for Christmas 2006 and with no prospect of obtaining either vouchers for Christmas 2006 or any immediate distribution in relation to their claims as unsecured creditors."

Davis-White indicated that Farepak might not have collapsed if its funds had not been "swept up every night to EHR [Farepak's parent company, European Home Retail]". At the time of the collapse, Farepak was owed £35m by EHR, which was chaired by Thompson. EHR also collapsed.

The judge, Mr Justice Peter Smith, described Farepak's business model as a "helpful arrangement where they get the money 12 months in advance".

Neil Gillis, a former chief executive of Blacks Leisure, and five other directors, are also facing the threat of being banned from standing as company directors for between two and 15 years. Two others have already agreed not to act as directors.

Suzy Hall, a former Farepak saver who set up a campaign group, Unfairpak, said she was "delighted" that the legal proceedings had finally begun five and a half years after the collapse.

"We hope justice will finally be served in respect of 116,400 prudent Christmas savers who had £30m taken from them and their Christmases ruined," she said.

Contraction of 0.3%, coupled with more bad news from the eurozone, increases pressure on government to intervene to boost economic growth

The prospect of fresh action to boost the flagging British economy loomed larger on Thursday after official figures showed a steeper fall in activity than previously thought and the crisis-hit eurozone drifted towards a deeper slump.

Labour seized on data from the Office for National Statistics (ONS) showing that gross domestic product declined by 0.3% in the first three months of 2012 as evidence that Britain is ill-prepared to withstand a deterioration in the rest of Europe over the coming months.

The ONS had originally pencilled in a 0.2% drop in output for the first quarter but said that the downturn in the UK's construction sector was even more pronounced than it had previously projected. Britain's economy was 0.1% smaller at the end of the three months to March than it was a year earlier, the ONS added.

A survey of business activity in the eurozone showed that the worsening of the debt crisis looks likely to have a marked impact on business activity. The purchasing managers' index – a forward-looking guide to sentiment in the manufacturing and service sectors – slid to a 35-month low of 45.9 in May, from 46.7 in April and 49.1 in March. Manufacturing was particularly weak, with activity contracting at the fastest rate for nearly three years while services activity shrank at the fastest rate for seven months.

Meanwhile, a key measure of German business confidence – the Ifo index – revealed that fears about the break-up of the single currency are starting to cast a shadow over Europe's biggest economy. Business confidence fell from 109.9 to 106.9, reversing all its gains of the past five months.

The shadow chancellor, Ed Balls, said: "It's now clear that this is a recession made in Downing Street by this government's failed policies. Despite all the problems in the euro area, France, Germany and the eurozone as a whole have so far avoided recession and only exports to other countries stopped us going into recession a year ago. The result is that Britain is now in a weaker position if things get worse in the eurozone in the coming months."

According to the ONS, the downturn in the first quarter was of the same magnitude as the contraction in the final quarter of 2011, undermining hopes that the economy was moving towards recovery.

Deputy prime minister Nick Clegg suggested earlier this week that the coalition plans to expand its policy of credit easing, using government guarantees to kickstart spending on infrastructure and housing to boost the economy. According to the ONS, construction output declined by 4.8% in the first three months of the year, after a 0.2% decline in the fourth quarter of 2011, helping to explain the government's change of heart about pumping fresh cash into building projects.

"Over the past 18 months, the economy has experienced a mild contraction in output. This reflects global economic headwinds as well as domestic economic conditions such as the impact of continuing high rates of inflation in the UK," the ONS said.

With the extra bank holiday for the Queen's diamond jubilee expected to depress economic output in the second quarter of the year, as workers down tools and fire up their barbecues, analysts believe it will be autumn at the earliest before the UK emerges from recession.

However, as Sir Mervyn King, the governor of the Bank of England, has stressed, events in the eurozone, where leaders are battling to contain the impact of the political paralysis in Greece, present a major risk to the outlook in the weeks ahead.

David Miles, the one member of the Bank's monetary policy committee (MPC) to vote for further quantitative easing this month, said: "No one on the MPC feels comfortable with the prolonged and substantial overshoot of inflation above its target level. But that does not mean bringing inflation back to target very rapidly is the best thing to do.

"In a situation where weak demand is likely to be having a negative impact upon productive capacity, the cost of having a tighter monetary policy to bring inflation back to target fast will be some long-lasting damage to incomes."

Howard Archer, of consultancy IHS Global Insight, described the growth figures as "very disappointing".

US economist says work used to back deputy prime minister's speech was 'misquoted and misrepresented'

The economist whose work the government used to back up its claim that a child's chances in life were not affected by the levels of inequality in the society they were born into, told the Guardian he has been "misquoted and misrepresented".

In a speech this week, Nick Clegg said: "Myth (number) one is that social mobility is simply a sub-set of income inequality. According to this myth, mobility will follow automatically in the wake of greater equality".

Research shows that Britain is a highly unequal society, with income inequality rising faster any other rich nation since the mid-1970s. Researchers also widely claim that opportunities for the poor in Britain to better themselves are harder to come by than almost any other developed nation.

But the government pointed to a 2002 paper by Gary Solon, a professor at Michigan State University, which it claimed had raised doubts over whether there was a link between high levels of income inequality and low levels of social mobility.

Solon was a surprise choice – he was the first academic to question whether the US, a highly unequal society, was really a land of opportunity 20 years ago. He estimated that in America if a father's income doubled then 40% of this advantage would be passed on to his child.

The government has "misrepresented" his work, he said. "My 2002 paper did not criticise the hypothesis that inequality and intergenerational immobility are related, but rather supported it," Solon added. "The government have misquoted me".

He said Clegg's speech was odd given that Barack Obama's council of economic advisers, chaired by Princeton economist Alan Krueger, published a report in February showing that in unequal societies background determines success to a far greater degree than in societies which were more equal. The study showed children from richer families more likely to be rich as adults, while their poorer counterparts were more likely to stay poor.

"We are not sure of the extent of how causal this relationship is, but I think it is a causal relationship. Sounds like if I could have voted in the UK, I would not be voting for (Nick Clegg)," Solon said.

Other experts have also questioned Clegg's broad assertions. Miles Corak, a professor at economics at Ottawa University, was at the speech and tweeting in agreement until the deputy prime minister claimed it "was a myth to suggest that reducing inequality will promote social mobility".

"It's an inappropriate representation of the role of inequality in determining opportunity. The relationship is there and we can see it in the data. We know that families and employment and the state all play a role but you cannot deny inequality is a factor," he said..

Corak added that the deputy prime minister was wrong when he asked: "Why do Australia and Canada have UK levels of inequality, but almost Scandinavian levels of mobility?"

The Canadian academic, who presented a paper before Clegg spoke, said Australia and Canada "do not have UK levels of inequality. They are more equal societies. But they are not as socially mobile as Finland and Norway. They don't have Scandinavian levels of mobility. If Clegg is saying this for ideological, political reasons then there's not much I can say."

Campaigners warned that "UK income inequality has already reached levels that has adverse impacts on our economy and society". Duncan Exley of One Society, a charity which promotes equality, said "It is now increasingly difficult to avoid the conclusion that excessive inequality is a huge barrier to social mobility."

A spokesman for Clegg said there was a "complex" relationship between inequality and social mobility. "In particular, we note that data for income equality has its limitations and that some countries with similar levels of income inequality achieve higher levels of social mobility than the UK.

"The deputy prime minister argued, therefore, that income redistribution is not a panacea and that we take a wider approach to improving social mobility, as well as questioning why those cross country differences arise."

• Hunt drafted memo to Cameron backing News Corp's Sky bid
• Smith admits no contact with anti-bid coalition
• Michel: Smith gave updates on timings and process of bid
• DCMS 'encouraged News Corp to stay in the game on Sky bid'
• Michel denies he exaggerated DCMS position to Murdoch
• Hunt adviser sent 257 texts to News Corp lobbyist
• Over 1,000 texts between News Corp and DCMS over Sky bid
• Michel: 'I apologise if my texts are too jokey sometimes'

6.16pm: The Guardian's Josh Halliday has just tweeted:

Hunt to MPs 25/04: No unminuted/unofficial contact with Michel (http://www.publications.parliament.uk/pa/cm201212/cm …); Michel to #Leveson 24/05: "one text every 3 months"

— Josh Halliday (@JoshHalliday) May 24, 2012

6.13pm: The Guardian's Patrick Wintour has just tweeted:

Downing Street claims Hunt memo is the same as his remarks in newspaper interviews and did not show he had prejudged the issue.

— Patrick Wintour (@patrickwintour) May 24, 2012

5.13pm: Lisa O'Carroll adds this:

Following the meeting to hand over responsibility for the BSkyB from Vince Cable's office to Jeremy Hunt's office, an email was circulated to summarise the key points.

The confidential memo which was shown to the inquiry in court 73 but has not yet been published raised concerns about several issues including a rumoured plan by Rupert Murdoch to "bundle" content from his newspapers with content from BSkyB enabling readers and viewers to subscribe to packages of coverage of, for instance, sport from the Sun and the Times along with Sky Sport.

The memo reads: "Is bundling a competition issue and something that we need to think about?"

The memo goes on to also raise concerns over an imminent Ofcom report into plurality issues arising from the takeover bid.

"Are we permitted to share the Ofcom report with News Corp but not with other interested parties? " the memo asks.

Finally it says Jeremy Hunt would like some reading material for his Christmas break to familiarise himself with interventions made to Vince Cable.

"The secretary of state said that he would be grateful for some reading material that he could peruse over the Xmas break – we should keep this concise. He would particularly like to see a summary of the representations that were made prior to Vince Cable's intervention notice to Ofcom (eg Enders Analysis) as well as the EC Rreport. You also explained that the EC report is not in the public domain."

5.12pm: The Guardian's John Plunkett adds:

The special adviser at the centre of the controversy over Jeremy Hunt's handling of News Corp's aborted BSkyB takeover said he "couldn't see why everyone was getting quite so worked up" about the £8bn merger.

Adam Smith said his position on the merger was "very broadly" the same as Hunt.

"I didn't to be honest particularly mind either way whether it happened or not," said Smith.

"In a funny sort of way I couldn't quite see why everyone was getting quite so worked up about it."

Jay told the inquiry: "This is the sort of issue which for whatever reason has the tendency to divide opinion, where people hold strong points of view on either side. You're aware of that?"

In his evidence, Smith said he remembered Hunt saying he wanted to be fair to everybody, including News Corporation.

"Was there a sense that the previous incumbent [Vince Cable] had not been fair to News Corp?"

Smith said: "I think that was the view, yes. I think it more meant that he would consider the bid on the grounds of media plurality rather than anything else."

5.06pm: The Guardian's Lisa O'Carroll has this on Smith's evidence:

Jeremy Hunt's special adviser Adam Smith admitted he had no contact with the coalition of newspapers and broadcasters that was officially opposing News Corp's £8bn BSkyB bid.

He told the Leveson inquiry that that might "possibly" have been an "interested party" but he didn't have any contact with them because "I don't remember them getting in touch with me."

Robert Jay, counsel to the inquiry, repeatedly pressed him on the point that this might have amounted to bias in what was a quasi-judicial role. Smith made it clear that he did not understand the quasi-judicial process to mean he had to have equal contact with all interested parties.

"Did that even intuitively raise alarm bells with you? Mr Smith," Jay asked.

"No not really," said Smith explaining much of his contact with Michel was "redactions to documents or process points and obviously you don't necessarily meed to talk to other interested parties."

"My understanding of 'quasi-judicial' was that Mr Hunt had to decide on media plurality issues," he added.

The media alliance that opposed the BSkyB have accused the government of showing bias towards Rupert Murdoch in the bid and said they had only one "wooden" meeting with the culture secretary which was as good as a "chocolate teapot".

4.58pm: Here is an evening summary of today's Leveson inquiry evidence:

• Jeremy Hunt drafted a memo to David Cameron saying it would be "totally wrong" to block News Corp's BSkyB bid four weeks before he was put in charge of the controversial takeover.

• Hunt told Cameron that James Murdoch was "pretty furious" at the Ofcom referral by Vince Cable.

• Hunt aide Adam Smith confirmed he was broadly in favour of the BSkyB bid while DCMS had judicial oversight.

• Smith admitted having no contact with anti-bid coalition, despite more than 1,000 text messages between his department and News Corp.

• News Corp lobbyist Frédéric Michel was given Hunt statement on BSkyB bid four hours before culture secretary spoke in Commons.

• Michel denied exaggerating conversations with Smith or that he received a "running commentary" on confidential government process.

• Smith sent 257 text messages to Michel over the course of the BSkyB bid.

4.51pm: The Guardian's Lisa O'Carroll has just tweeted:

Leveson over. Clearly Smith had no concept of quasi judicial process even though this affected stock Market fr news corp and BskyB

— Lisa O'Carroll (�@lisaocarroll) May 24, 2012

4.47pm: The inquiry has finished for the day.

Smith will return to complete his evidence tomorrow morning from 9.30 am.

4.43pm: Here is the full final exchange in which Smith confirms that he broadly agreed that News Corp should be allowed to buy BSkyB.

Jay: "Would you in essence describe your position on the merits of the bid as broadly speaking same as Mr Hunt's position?"

Smith: "Very broady. I didn't, to be honest with you, particularly mind either way where it happened or not. In a funny sort of way I couldn't quite see why everyone was getting quite so worked up about, but broadly speaking yes."

Jay: "Broadly speaking?

Smith: "Yeah, broadly."

4.41pm: Smith says his view on the plurality issues around the bid was drawn from the expert advice, "not much" more than that.

He adds that "broadly speaking" he shared the view of Hunt that the deal should go through.

"I didn't particularly mind either way whether it happened or not. In a funny way I couldn't see what everyone was getting worked up about. Broadly speaking, yes [I was in favour]".

4.39pm: Jay asks if this apparent bias raised any eyebrows.

"Not really," answers Smith. Jay suggests that Smith treated his role in the BSkyB bid as any other media policy decision. Smith says he did.

4.36pm: Smith "can't remember" whether Hunt asked him to the be point of contact for News Corp's Michel over the bid. The permanent secretary did not explain it either.

4.35pm: The Guardian's editor-in-chief, Alan Rusbridger, has just tweeted:

Wapping 2 (multi-platform, from paper to web to tv to digital) is just what News Corp denied was aim w Sky bid ‪#Leveson

— Alan Rusbridger (�@arusbridger) May 24, 2012

and

Memo reveals that Cam knew Hunt was passionate supporter of Sky bid just before he appts him in place of Vince

— Alan Rusbridger (�@arusbridger) May 24, 2012

4.33pm: Smith does not remember having any contact from the coalition of media groups who were opposed to the BSkyB bid.

Smith says: "There wouldn't be any [correspondence] because I don't remember them getting in touch with me".

4.33pm: Was there a view that Cable had not been fair to News Corp, asks Jay? "I think that was the view, yes," Smith replies.

4.31pm: media veteran Andrew Neil has just tweeted:

Cameron knew Hunt was pro BSkyB but still put him in charge of takeover process. Hunt memo to Cameron v revealing ‪#leveson

— Andrew Neil (@afneil) May 24, 2012

4.31pm: In his written statement, Smith says Hunt expressed a desire to "do things differently from Mr Cable" and "be more open" and hold more meetings with interested parties. Smith explains that Hunt was aware Cable had held no meetings with News Corp over the bid, and that he wanted to be seen as open to receiving representations.

4.30pm: Smith says there was "no direct instruction" about what he could and could not do in relation to his correspondence around the BSkyB bid.

4.30pm: The Guardian's Dan Sabbagh has just tweeted:

Hunt's memo to Cameron reveals a piece of News Corp strategy that was NOT in the public domain. News Corp ruled out TV/newspaper bundling

— Dan Sabbagh (@dansabbagh) May 24, 2012

4.27pm: The Guardian's Patrick Wintour has just tweeted:

Pm spokesman says hunt statement to parliament on april 25 was given in context of evidence to leveson day before. Does not say accurate.

— Patrick Wintour (@patrickwintour) May 24, 2012

and

Pm spokesman had 4 chances at briefing to say hunt gave fully accurate account to parliament of his contacts with news international.

— Patrick Wintour (@patrickwintour) May 24, 2012

4.25pm: Leveson intervenes to say that you do not have to be a lawyer to understand that "quasi-judicial" means that whoever has this oversight cannot speak to the parties "in the evening" or in any way other than is "open and transparent to everyone".

4.23pm: Jay turns to a meeting on 22 December 2010 between BIS officials handing over the bid to DCMS officials, including Hunt.

Hunt's "quasi-judicial" role was likely discussed at this meeting, Smith says.

4.21pm: Here is the draft text of the memo from Hunt to Cameron from November 2010:

James Murdoch is pretty furious at Vince's referral to Ofcom. He doesn't think he will get a fair hearing from Ofcom. I am privately concerned about this because News Corp are very litigious and we could end up in the wrong place in terms of media policy. Essentially what James Murdoch wants to do is to repeat what his father did with the move to Wapping and create the world's first multiplatform media operator available from paper to web to TV to iPhone to iPad. Isn't this what all media companies have to do ultimately? And if so we must be very careful that any attempt to block it is done on plurality grounds and not as a result of lobbying by competitors.

The UK has the chance to lead the way on this as we did in the 80s with the Wapping move but if we block it our media sector will suffer for years. In the end I am sure sensible controls can be put into any merger to ensure there is plurality but I think it would be totally wrong to cave into the Mark Thompson/Channel 4/Guardian line that this represents a substantial change of control given that we all know Sky is controlled by News Corp now anyway.

What next? Ofcom will issue their report saying whether it needs to go to the Competition Commission by 31 December. It would be totally wrong for the government to get involved in a competition issue which has to be decided at arm's length. However I do think you, I, Vince and the DPM [deputy prime minister] should meet to discuss the policy issues that are thrown up as a result.

4.19pm: The Guardian's Dan Sabbagh has just tweeted:

Hunt memo to Cameron is extraordinary. Firmly takes side of James Murdoch, dismisses critics as BBC + Guardian.

— Dan Sabbagh (@dansabbagh) May 24, 2012

and

Hunt memo divides media world into Murdoch and publicly owned/trust owned media orgs. No room for Mail or Telegraph or ITV

— Dan Sabbagh (@dansabbagh) May 24, 2012

4.17pm: Hunt received legal advice from officials that "it would be unwise" to intervene on the BSkyB bid because Cable was handling it. Hunt later sent the memo to Cameron.

The culture secretary said in the memo that it would be "totally wrong to cave into the [BBC], Channel 4, Guardian line" of opposition to the bid.

4.16pm: Smith says he spoke to Jonathan Stephens, the DCMS permanent secretary, about comments made publicly by Hunt about the BSkyB bid.

Pressed on whether he asked for private comments as well, Smith says: "I believe it was public comment".

4.16pm: The Guardian editor-in-chief, Alan Rusbridger, has just tweeted:

Hunt memo to Cameron Nov 19 10: "James Murdoch is furious .. he wants to repeat what his father did at Wapping."

— Alan Rusbridger (@�arusbridger) May 24, 2012

4.12pm: Hunt said in his memo to Cameron that News Corp's BSkyB bid raised "no plurality issues as we all know Sky is controlled by News Corp now anyway."

4.12pm: Smith says to the best of his knowledge there was never a meeting between Hunt, Cable and the prime minister over the bid, following Hunt's intervention to David Cameron.

4.07pm: Hunt emailed Smith on 19 November 2010 saying he was "privately concerned about this because News Corp are very litigious" and that James Murdoch was "pretty furious" about Cable referring the bid to Ofcom.

Hunt told Smith that Murdoch wanted to "create the world's first multiplatform operator" and "if we block it our media sector will suffer for years".

He added in the email that sensible controls could be put in place and that they should discuss this with Cable.

Smith says "yes, I suppose" when asked by Jay whether this email shows the culture secretary saw no impediment to the bid.

"His personal view then was yes," adds Smith.

This was a draft version of a fortnightly update that was to be sent to David Cameron.

4.03pm: Leveson asks what this had to do with the DCMS and Smith, given that the BSkyB bid in October 2010 was being handled by Vince Cable's department for business.

Smith says it was a hot media topic at the time and the documents were just for information.

4.02pm: Smith is asked about the briefing documents he was sent by Michel on 7 October 2010 titled "Strictly confidential but very interesting". One related to plurality issues and the other was about competition issues.

Smith forwarded the documents to Hunt and the culture secretary replied that they were "very powerful actually".

Michel interpreted that as Hunt believing the documents were "persuasive".

4.01pm: Smith says he cannot remember having informal comments with Hunt about the bid before it was announced on 15 June 2010.

I think his public comments were well known. He said something along the lines of 'he couldn't see a particular problem with it but didn't want to second-guess the regulators' and that's something he [adhered to] throughout the process.

3.59pm: Jay turns to Hunt's thinking on the BSkyB bid before 21 December 2010. Smith says he did not believe Hunt was close to News Corp.

"He [Hunt] did not have that much of a relationship with either of the Murdochs or the chief executive of News International ... but he was not close to News Corp," Smith says.

Smith denies that Hunt was a "cheerleader" for News Corp's BSkyB bid.

3.58pm: The Guardian's Dan Sabbagh has just tweeted:

Smith's A* appraisal of Dec 10 -"effective operator; bright, articulate, insightful, extremely well briefed".

— Dan Sabbagh (@dansabbagh) May 24, 2012

3.57pm: In his witness statement, Smith describes himself as a "buffer" for outside organisations that wanted to meet Hunt. "It was to help him focus on what he wanted to do," he says. It was at Smith's discretion whether to suggest meetings to Hunt.

3.54pm: During News Corp's BSkyB bid, Smith's contact with Hunt about the takeover was "not as frequent" as you would expect and not daily. It was driven by events.

He spoke to Hunt around News Corp's publication of its undertaking in lieu, he confirms.

Smith would often speak to Hunt if events "were leading up to him announcing something," he adds.

3.54pm: The Guardian's Dan Sabbagh has just tweeted:

Adam's five star appraisal in Dec 10 is flashed up on our screens. "An ideal bridge with the dept and minister" + "consistently adds value"

— Dan Sabbagh (@dansabbagh) May 24, 2012

3.53pm: Smith says he would generally speak to Hunt between two and four times a day. He was based down the corridor from Hunt's office at DCMS headquarters in central London.

3.52pm: Smith says it is fair to say that he was "under the wing" of Hunt as his special adviser.

Hunt gave him specific instructions on some occasions, he says, but generally he acted in accordance with what he believed Hunt expected of him.

3.50pm: Smith says that the permanent secretary had a supervisory role over him and others in the department. Jay asks who Smith's line manager was.

I didn't really have a line manager if you like. I reported in to Mr Hunt and would meet with senior officials.

3.40pm: Leveson thanks Smith for appearing and says it "can't be an easy time" for him. He resigned the day after his correspondence was published by the inquiry at the end of last month.

Leveson asks Smith his age, and he says he is 30 years old.

3.39pm: Adam Smith, Jeremy Hunt's former special adviser, takes the witness stand.

3.38pm: Michel has now completed his evidence.

3.37pm: Michel texted George Osborne's chief of staff asking him to recruit the chancellor to support News Corp's Sky bid:

Michel text to Rupert Harrison Nov 09 2010

Rupert just spoke with James it would be helpful if George were to send a letter to Vince on our Sky merger and its economic importance separate from the Ofcom process. Do you think it is a possibility. I can of course help with the content. Best, fred

3.37pm: Michel says it was never put to him that he would get a substantial pay bonus if News Corp was able to purchase the remaining shares in BSkyB.

3.32pm: Michel later texted Gabby Bertin, the prime minister's spokeswoman, saying "thank you for your messages to Rebekah last night":

Michel text Gabby Bertin - 06 Jul 2011 08.17

And thank for your messages to Rebekah last night xxx

3.31pm: Michel tried to organise a dinner with News Corp's Will Lewis and No 10 press chief Craig Oliver, on 6 July 2011, shortly after the Guardian's Milly Dowler revelations.

Here is Michel's text to Oliver and email to Osborne's special adviser, Rupert Harrison:

Will suggests we meet for dinner with no wives. Is that okay/ what time?

Email to Rupert Harrison
10 July 2012
Hi, Quick question for your advice, you think it would be possible/helpful to get a senior govt person to come out condemning strongly phone hacking, ask for thorough police investigation but insisting on the need or the legal process to be follows ? Incredible that a business decision on a massive taker could be left to Parilament to oppose/influence no? Hope all is week , Fred.

Jay says Michel "wanted to find a discreet location".

Michel says in the end Oliver could not make it.

"It was social. The idea was to introduce Will to Craig," says Michel.

3.30pm: The inquiry has resumed and Jay turns to text messages from Michel to various individuals.

On 13 May 2011, Michel texted Craig Oliver, the No 10 adviser, saying "phone hacking case to be launched against Daily Mail on Monday".

Michel tells the inquiry: "It was a rumour I had been told. It never happened".

3.27pm: Former Guardian media correspondent James Robinson has just tweeted:

Poor Adam Smith has been waiting to come in to bat all day. Those pads must be getting very uncomfortable #leveson

— james robinson (@jamesro47) May 24, 2012

3.26pm: The Guardian's deputy editor, Ian Katz, has just tweeted:

Michel insists key mail to Brooks saying Hunt and No 10 want help shaping response to hacking broadly accurate tho language poss bit strong

— ian katz (@iankatz1000) May 24, 2012

3.20pm: The inquiry is now taking a short break.

3.18pm: Michel says Smith told him on 7 July about possible public inquiries (such as Leveson).

Michel says he offered to brief the DCMS and other government departments on phone-hacking issues after the Guardian broke the Milly Dowler story "and it was something that was welcomed at that time".

Smith says he didn't know about this.

3.17pm: Michel tried to secure a meeting with Hunt's deputy Ed Vaizey around 7 June but was rebuffed by the department and Smith.

3.16pm: The Guardian's Dan Sabbagh reports that Adam Smith's evidence is now likely to run on into tomorrow given the pace of Michel's evidence.

3.12pm: Jay quotes emails from Michel highlighting News Corp's increasing frustration with the bid process, at one point even threatening that it might walk awy from the bid.

Michel says he was "reflecting the internal frustration from high up" when he told Smith that News Corp could withdraw its bid if lengthy regulatory hurdles continued.

3.04pm: The Guardian's Dan Sabbagh has just tweeted:

Michel's "one hour" phone call with Smith on March 10 was actually 34min long. "French time" Michel says.

— Dan Sabbagh (@dansabbagh) May 24, 2012

2.59pm: Michel was told by Smith that Hunt was "minded to accept" and that he would make a statement the following day.

Jay says if the correspondence is correct Smith gave Michel a preview of Hunt's statement at 3.25am – four hours before it was delivered to parliament.

2.57pm: Jay turns to the events of 3 March 2011, when Hunt publicly announced that he was minded to accept News Corp's undertakings in lieu for the BSkyB bid.

There was a spike in correspondence between Smith and Michel, the inquiry hears, at around midnight when News Corp was putting the finishing touches to its press statement about the bid.

2.52pm: On 11 February 2011, Michel emailed Murdoch to say:

JH called:

- he now knows what OFCOM and OFT will send him tonight: both will recommend he refers to CC

Jay suggests that by this time Michel knew that DCMS backed News Corp's BSkyB bid.

Michel says: "They [the DCMS] were encouraging us to stay in the game, but I wouldn't say they were parti pris."

2.51pm: The Guardian's deputy editor, Ian Katz, has just tweeted:

Michel says call in which he tld Hunt (via Smith) to shw "some backbone" was attempt to "reflect frustration + language we wr using in team"

— ian katz (@iankatz1000) May 24, 2012

2.49pm: The next day, Michel emailed Murdoch and others to say: "Just had a strong and long exchange with him
again now."

Jay puts it to him that the call was just over three minutes – hardly "long".

2.48pm: The Guardian's Dan Sabbagh has just tweeted:

Michel told J Murdoch he spoke to "JH" before Swan Lake on Feb 9 when in fact Smith spoke to Hunt at 19.03 and appears to have relayed back

— Dan Sabbagh (@dansabbagh) May 24, 2012

2.46pm: Hunt and Smith exchanged calls and text messages just before the culture secretary apparently went to see Swan Lake on 9 February 2011, says Jay.

Smith and Michel spoke later on the phone for about half an hour, the inquiry hears.

2.46pm: The Labour MP Chris Bryant has just tweeted:

One other point: Hunt told parl 25/04: "I have published all advice.. together with corresp between myself and News Corp". Clearly a lie.

— Chris Bryant (@ChrisBryantMP) May 24, 2012

2.42pm: Michel says there was a "toxic relationship and mistrust of Ofcom" at News Corp and that he was getting on well with Smith even after the bid process.

2.40pm: The Guardian editor-in-chief, Alan Rusbridger, has just tweeted:

Michel claims Hunt's man offered to provide him confidential documentsfrom opponents of Sky bid#Leveson

— alan rusbridger (@arusbridger) May 24, 2012

2.40pm: Jay turns to a 23-minute phone call between Smith and Michel.

In a follow-up text, Michel asks Smith to send him written submissions to the DCMS from a group which opposed the bid.

In the reply, Smith says "don't mention them to anyone like OFT". Michel was not given the documents, Jay says.

2.33pm: Michel is asked about a further text exchange of 25 January 2011:

FM/AS: Today went well. Look at the coalition campaign's statement: so weak!

FM/AS I think we re in a good place tonight no?

AS/FM I agree. Coverage looks ok. Let's look again in the morning though!

Michel later emailed James Murdoch to say:

Just had update on today's events with JH.

Given the opposition has very few arguments on the impact on media plurality...

JH believes we're in a good place tonight. Let's see what the morning's coverage brings.

Michel says he interpreted that as the undertakings in lieu had been represented well.

2.31pm: This is the email in which Smith allegedly told Michel it would be "game over for the opposition" if strong undertakings in lieu in relation to the bid for BSkyB were published.

The inquiry is told by Jay that Smith "hotly contests" the email.

To: Anderson, Matthew
From Michel, Fred
Date: 23/01/2011
Time: 8.59pm

He still wants to stick to the following plan:

- Monday: receive further details on UIL - but to need to meet at this stage

- Tuesday: Publication of Ofcom report; our submission and announcement that he has received UIL proposal and is looking into it

- Ask OFT to work with us on the UIL

- Put the UIL to Ofcom for advice. He said he would be able to send it to them with a specific question to limit their ability to challenge it [ie - 'your report demonstrates that Sky News is the core concern; I would like you to consider the following UIL which addresses all of these issues] He said Ofcom would not be able to create major obstacles in that way

- That in 2 weeks time, he announces he is minded to refer but has received a very substantial UIL and would like to consult publicaly

- He predicts it should all be done by mid-Feb.

His view is that he announces publicly he has a strong UIL, it's almost game over the opposition.

He understands fully our concerns/fears regarding the publication of the report and the consultation of Ofcom in the process, but he wants us to take the hear with him, in the next two weeks.

He very specifically said that he was keen to get to the same outcome and wanted JRM to understand he need to build some political cover on the process.

If he were to follow our Option 1 and not provide any details on the Ofcom report, he would be accused of putting a deal together with us behind closed doors and it would get in much more difficult place. The more this gets out now, the better it will be as the opposition with lose arguments. This week's events do not give him much choice

He said we would get there at the end ad he shared the objectives.

Finally he asked us to stick with him in the coming weeks plan the upcoming Tuesday's publication and the debate which will unfold

Fred

2.27pm: Smith continued:

Other than what jeremy and I have told you! We have no legal wriggle room in a statement to parliament.

2.25pm: On 25 January 2011, Smith texted Michel to say:

There's plenty- potential to mitigate problems! We can't say they are too brilliant otherwise people will call for them to be published. Will check on meetings.

Michel agrees that this refers to News Corp's undertakings in lieu.

2.22pm: Michel admits he was surprised that Smith sent him pre-notification of Hunt's statement on the BSkyB bid before it was made to parliament.

The Guardian's Dan Sabbagh has just tweeted:

Michel was surprised that Smith shared info with him about the content of Hunt's Jan statement on Sky bid as early as 3.21pm the day before

— Dan Sabbagh (@dansabbagh) May 24, 2012

2.22pm: Michel is asked why he told Murdoch he had been given sensitive documents from Smith "although absolutely illegal".

He answers: "It was a very bad joke. In hindsight, I wouldn't have put such words ... It's just an expression of surprise from me."

2.20pm: On 24 January 2011, Michel emailed James Murdoch:

Subject: RE: CONFIDENTIAL - JH STATEMENT

At the end, JH will indicate..

Subject: CONFIDENTIAL-JH STATEMENT

Managed to get some infos on the plans for tomorrow [athough absolutely illegal…>!]

JH will announce that...

2.20pm:

[On UILs - inthe Sky bid, News Corp proposed hiving off Sky News as separate company, diluting concentration of Murdoch-owned news power]

— Ben Fenton (@benfenton) May 24, 2012

2.19pm: The Financial Times's Ben Fenton has just tweeted:

[On UILs - inthe Sky bid, News Corp proposed hiving off Sky News as separate company, diluting concentration of Murdoch-owned news power]

— Ben Fenton (@benfenton) May 24, 2012

2.18pm: The Guardian's Dan Sabbagh has just tweeted:

Michel writes on Jan 23 - days before Hunt goes to the Commons -that Smith "wants us to take the heat with him in the next two weeks".

— Dan Sabbagh (@dansabbagh) May 24, 2012

2.16pm: Michel says he believed that whatever Smith said was also the view of Hunt.

"He's communicating the view of the secretary of state," he explains. "I was representing News Corp; he was representing the secretary of state in the discussion."

Jay asks how Michel interpreted his phrase that Hunt "shared our objectives".

Michel says he "took comfort" that News Corp had a strong chance of securing BSkyB because of its undertakings in lieu, but denies Jay's suggestion that they were given "immense reassurance".

Michel adds: "Yeah, it was encouraging."

2.08pm: Jay refers to an email from Michel to News Corp's Matthew Anderson, Jeff Palker and Andrea Appella of 23 January 2011 stating:

Subject: update - confidential.

He still wants to stick to the following plan …

He predicts it should all be done by mid-Feb …

His view is that once he announce publicly he has a strong UIL [undertaking in lieu], it's almost game over for the opposition.

He very specifically said that he was keen to get to the same outcome and wanted JRM to understand he needs to build some political cover on the process.

Michel agrees that "he" refers to Hunt, through his spokesman Smith.

Smith hotly denies that he told Michel News Corp's undertakings in lieu meant it was "game over" for the opposition.

Michel says he believes that Smith used the phrase "game changer" in reference to News Corp's undertakings in a meeting.

2.03pm: Frédéric Michel, the News Corp lobbyist, is back at the witness stand.

Michel denies he was engaged in a "running commentary" on News Corp's Sky bid, but says there were "back-and-forth discussions" with Jeremy Hunt's adviser, Adam Smith.

2.03pm: The inquiry has resumed.

Lord Justice Leveson opens by saying that the inquiry will begin at 9.30am tomorrow. Jonathan Stephens, the top civil servant to Jeremy Hunt, is listed to appear.

1.47pm: Lisa O'Carroll's story on Michel's evidence so far is now live. Lisa writes:

Jeremy Hunt had indicated to News Corporation by the end of 2010 that he was "probably in favour" of arguments for allowing its £8bn BSkyB takeover, the company's lobbyist responsible for contact with the culture secretary's department has told the Leveson inquiry.

Frédéric Michel told the Leveson inquiry on Thursday that by December 2010, just before Hunt was given quasi-judicial responsibility for the bid, the Conservative cabinet minister and his Department for Culture, Media and Sport (DCMS) were supportive of News Corp's argument that the BSkyB deal would not be detrimental to UK media plurality.

Michel was asked by Robert Jay QC, counsel to the inquiry, whether the DCMS was considered by News Corp to be "on side" in terms of being in favour of the Sky bid by December 2010.

"I think they were probably in favour of, or in agreement with, the arguments we had put forward in terms of plurality, definitely," replied Michel, who at the time was News Corp's European head of public affairs.

You can read the full story here.

1.13pm: The Guardian's Lisa O'Carroll has sent us this transcript of text messages between Michel and Hunt as seen at the Leveson inquiry.

Michel to Hunt:
20 January 2011
20.54
Great to see you today. We should get little [children's names redacted] together in the future to socialise. Nearly born the same day at the same place!
Warm regards
Fred

Hunt to Michel:
20 January 2011
23.45
Good to see you too. hope u understand why we have to have the long process. Let's meet up when things are resolved. J.

Michel to Hunt:
20 January 2011
6.58am
"We do, and we'll do our very best to be constructive and helpful throughout. You were very impressive yesterday. "

Michel to Hunt:
13 March 2011
Very good on Marr as always.

Hunt to Michel:
13 March 2011
Merci. Hopefully when consultation over we can have a coffee like the old days.

1.07pm: Here is a lunchtime summary of the key evidence heard by the Leveson inquiry today:

• Jeremy Hunt's department and News Corporation exchanged more than 1,000 text messages during the controversial BSkyB takeover bid.

• Hunt's adviser, Adam Smith, sent 257 text messages, plus a string of emails from his personal account, to News Corp lobbyist Frédéric Michel.

• Michel believed Hunt was "probably in favour" of News Corp's £8bn BSkyB bid by December 2010.

• Michel denied he was given "running commentary" on the bid by the Department for Culture, Media and Sport.

1.05pm: The Guardian's deputy editor, Ian Katz, has just tweeted:

Michel says Smith may not have "made a plea" that News Corp help identify errors in Ofcom report but he was encouraging him to do so

— ian katz (@iankatz1000) May 24, 2012

and

That was important: the "help find errors" email is key. Michel rowed back tiny bit on it but defended substance. Mail: bit.ly/I97mLM

— ian katz (@iankatz1000) May 24, 2012

1.03pm: The inquiry has broken for lunch and will resume at 2pm.

1.00pm: Michel says in another email to Murdoch that Hunt had met Ed Richards, the Ofcom chief executive, and challenged him over the regulator's issues letter about the bid.

Jay says Michel spoke to Smith three times on the day Hunt had a critical private meeting with the Ofcom boss. The conversation lasted for 27 minutes.

Michel interpreted Smith's view as encouraging News Corp to find legal flaws in Ofcom's report.

"On this particular subject of the Ofcom report you could say he was probably agreeing with me on areas where we could justifiably find some criticism," he says.

12.55pm: Jay asks about an email he sent to James Murdoch on 31 December 2010 stating:

Got a debrief from DCMS on their short meeting with OFT and Ofcom this morning.

The details of the remedy were not discussed. OFT mentioned to JH they were meeting us this aftemoon.

The conversation was solely on how they can set a process and timetable; but also on whether they can both work together [!].

JH asked them to adhere to the timing set out in the terms of reference, Le. 2 weeks.

12.54pm: The Guardian's Dan Sabbagh has just tweeted:

Hunt text to Michel Mar 13 "Merci hopefully when consultation over we can have a coffee like the old days".

— Dan Sabbagh (@dansabbagh) May 24, 2012

12.52pm: Jay asks if the texts were "schmoozing".

"No, it's a friendly text," replies Michel. "I think it's one text every three months."

12.52pm: The Guardian's Dan Sabbagh has just tweeted:

Hunt txt to M jan 20: "Good to see u too. Hope u understand why we have to have the long process. Let's meet up when things are resolved".

— Dan Sabbagh (@dansabbagh) May 24, 2012

12.51pm: Michel sent Hunt a text congratulating the culture secretary on his performance in the House of Commons.

"Merci! Large drink tonight," replied Hunt.

In another message, Michel says "Very good on Marr as always".

"Merci," replies Hunt, again.

12.50pm: Michel says the DCMS had an approach "based on transparency" compared to Cable's department.

News Corp lawyers were aware of Michel's level of correspondence with Smith, he confirms.

12.45pm: Michel denies that Smith have him a running commentary on the bid, but did give him "atmospherics" of the takeover as well as updates on timing.

12.45pm: Michel says he was not surprised at Cable's secretly-recorded remarks about "declaring war on Murdoch" because they were "very much" in line with what he already believed about the business secretary's views.

12.42pm: Jay turns to correspondence between Michel and Rohan Silva, a senior adviser to prime minister David Cameron.

Cameron wanted to see media plurality, Silva told Michel, and in a meeting between the pair Michel mentioned the plurality issues around the BSkyB bid, the inquiry hears.

Michel met Silva and Cameron's adviser, Steve Hilton, in No 10 on 10 December 2010.

12.41pm: The Guardian editor-in-chief, Alan Rusbridger, has just tweeted:

Hunt & Cable advisers saying same thing in mid Nov 10: don't meet with News C "Wrong, inappropriate, don't do it" #leveson

— alan rusbridger (@arusbridger) May 24, 2012

12.37pm: The Guardian's Dan Sabbagh has just tweeted:

Michel: "I apologise if my texts are too jokey".

— Dan Sabbagh (@dansabbagh) May 24, 2012

12.36pm: Jay suggests Michel was frustrated because Cable's department would not allow him to trade text messages with them, which he was "very good" at.

Michel responds: "I am a compulsive texter, I will accept."

12.36pm: Michel says that Hunt's department took a "very different approach" when the culture secretary was given responsibility for the bid.

When the bid switched to DCMS there was "much more openness" about hearing News Corp's arguments, he adds.

12.35pm: The Guardian's Dan Sabbagh has just tweeted:

Nov 15 2011 - Hunt told he could not meet Murdoch. Cable also refuses to meet Murdoch. Michel says Cable wrong but Hunt more open later

— Dan Sabbagh (@dansabbagh) May 24, 2012

12.33pm: Michel tried again to meet Cable's special adviser, says Jay, but was once against rebuffed.

He believed that this deserved to be "tested" and asked News Corp lawyers whether they should be allowed to lobby Cable and his special adviser.

12.29pm: Michel says: "If anyone from Hunt's office thought this inappropriate they would have told me. It's not for me to say how Hunt's office should work."

Jay turns to a meeting between Michel and George Osborne's special adviser, Rupert Harrison. It was rushed but Harrison told Michel there were "coalition tensions" around the bid, the inquiry hears.

12.27pm: Michel says that in Cable's department there was "definitely a view that no representation would be taken" on the BSkyB bid.

Jay suggests that was different with DCMS and that the conversations turned "clandestine". Michel contends that it was "advocacy".

Michel says there are a lot of lessons to learn from this process and that he can understand Jay's argument.

12.24pm: The Guardian's Lisa O'Carroll has sent us emails flashed up on screens at the Leveson inquiry containing the assertion that Hunt found News Corp's arguments for a successful BSkyB were "persuasive".

EMAIL ONE: MICHEL TO SMITH OCT 7, 2010

From: Michel
To: Smith
Date: Thursday 7, Oct 2010
Time: 16.11

Adam,
Hope you're well.
As promised in Birmingham, attached briefing memo for Jeremy on the transaction, including Sky News audience shares.
I hope it's helpful. Let me know if he needs more info
I will keep you aware re timing
Warm regards
Fred

EMAIL TWO - MICHEL TO SMITH

To: Michel
From: Smith
Date: Friday 8, Oct, 2010

Attached briefing on competition issues around the transaction as well

EMAIL THREE: SMITH TO HUNT

From Adam Smith
To: Fred Michel
Re: Confidential - Urgent
Date : Monday 11/10/2010 7.02am

Jeremy's response to this - 'persuasive'

12.24pm: Jay resumes his questioning about Michel's contact with Cable's department.

In one message, Michel was told by one of Cable's advisers that a meeting was completely off-limits because it was highly sensitive.

Jay asks whether he found it strange that DCMS's stance was more open.

"No, I thought DCMS's stance was more normal," Michel says.

12.13pm: The Guardian's Dan Sabbagh has just tweeted:

So News Corp was told that Hunt found their bid arguments "persuasive".Was Hunt minister for Murdoch then?

— Dan Sabbagh (@dansabbagh) May 24, 2012

12.12pm: The inquiry is now taking a short break.

12.10pm: Jay turns to Michel's dealings with Vince Cable's department for Business, Innovation and Skills.

Michel says that in September and October 2010, many Liberal Democrat and Labour politicians were telling him that phone hacking would be a problem.

12.08pm: The Guardian deputy editor, Ian Katz, has just tweeted:

2 interesting things so far: 1. Michel protecting Hunt to point by saying he wasn't supportive 2. Smith will deny lot of what Michel claimed

— ian katz (@iankatz1000) May 24, 2012

and

If you're following Michel at #Leveson you may find this mega-timeline of the BSkyB bid and Micehl's lobbying helpful bit.ly/I97mLM

— ian katz (@iankatz1000) May 24, 2012

12.07pm: Jay turns to correspondence recently passed to the inquiry.

On 7 October 2010, Michel sent a confidential email containing commercially-sensitive information to Smith (Jay says Smith had two email accounts but Michel denies he saw any difference between them). Smith replied saying he had passed the information on to Jeremy.

The following day, Michel sent Smith a briefing note on media plurality issues. Smith replied on 11 October 2010 saying "Jeremy's response to this persuasive".

Jay asks if this was suitable reassurance.?

"There is two items: the plurality side and competition side. On the plurality side it was definitely something the UK was focusing on. The competition side was being focused on in Brussels," Michel says.

Jay asks whether Michel had the same correspondence with other departments.

Michel says he only did it with the DCMS and BIS.

12.03pm: The Guardian's Dan Sabbagh has just tweeted:

Michel won't say it strongly but seems obvious to a dodo that Hunt preferred the Sky bid when compared to the 'biassed' Cable.

— Dan Sabbagh (@dansabbagh) May 24, 2012

and

Michel now agrees that Team Hunt was "probably in favour" of Sky bid by Dec 10

— Dan Sabbagh (@dansabbagh) May 24, 2012

12.03pm: Michel and Smith had a 22-minute phone conversation after Ofcom released its "issues letter" on the bid.

Michel later wrote from this conversation that Hunt was supportive of the bid and suprised at Ofcom's stance.

12.00pm: As Jay leads Michel through the trail of correspondence, the counsel indicates that Smith will later repeatedly deny Michel's interpretation of their conversations.

Jay asks again if Michel believed Hunt was supportive of the bid.

Michel replies:

My view is that Jeremy Hunt was probably supportive of some of the arguments we were putting forward and he has made that public on the plurality [issue].

In another email, Michel says: "Jeremy has also asked me to send him relevant documents privately".

He tells Jay that he meant "directly" rather than "privately".

11.55am: The Guardian's Dan Sabbagh has just tweeted:

Michel tripped up. Writes June 10 mail that UK govt would b "supportive" of bid after spkng to Smith - but says didn't know if Hunt onside

— Dan Sabbagh (@dansabbagh) May 24, 2012

11.55am: Michel denies exaggerating Smith's comments about government support for the BSkyB bid, saying: "I don't need to puff myself up."

As Jay turns to another email to Murdoch, Michel denies again that he exaggerated what he was being told by Smith.

11.54am: The Guardian's Dan Sabbagh has just tweeted:

Michel - "I was never told otherwise" that it would be wrong to work w Smith on bid behind scenes.

— Dan Sabbagh (@dansabbagh) May 24, 2012

11.52am: Michel says his conversations with Smith were to "check on an ongoing basis the temperature in Westminster".

"Precisely," says Jay, before moving on.

11.50am: The Guardian's Dan Sabbagh has just tweeted:

Hunt told Michel in a pre Xmas texts - all contact must be through "official channels" - ie Smith.

— Dan Sabbagh (@dansabbagh) May 24, 2012

and

Hunt told Michel in a pre Xmas texts - all contact must be through "official channels" - ie Smith.

— Dan Sabbagh (@dansabbagh) May 24, 2012

and

Leveson asks why Michel wrote to Murdoch it was "fine to liaise at that political level". Michel-Smith linkin addition to lawyer contact

— Dan Sabbagh (@dansabbagh) May 24, 2012

11.50am: Jay asks whether he exaggerated that text conversation with Hunt in a memo to Murdoch.

Michel denies he exaggerated the conversation, but says he put his own interpretation on it.

11.46am: On 24 December 2010, Michel text Hunt to say James Murdoch asked him to be the point of contact for the culture secretary and Smith. Michel says in the text "glad John Zeff is in charge of dossier".

Hunt replied to say: "All contact with me now needs to be through official channels until decision made."

Michel says he took this to mean Hunt's office was his official channel.

He adds that he stopped having contact with Hunt "except for a few private contacts during the day".

11.44am: Jay says it is clear that Michel was working with Smith to send Hunt "helpful arguments" relating to the BSkyB bid.

Hunt replied: "Pleasure".

Michel says he does not know if these arguments were about the BSkyB bid.

11.40am: Jay raises a memo from 15 November 2010 to Michel which explained that Hunt was unable to meet James Murdoch. The memo says: "Jeremy's very frustrated about it but the permanent secretary has also now been involved."

Michel confirms that this message was from Smith, Hunt's special adviser, who suggested Murdoch and the culture secretary have a private conversation by mobile phone.

11.38am: In October 2010, Michel asked Hunt if he will see News Corp"s arguments for Sky bid. Hunt later texts back to say this is "persuasive".

Jay says these exchanges between Hunt and Michel showed that the culture minister was "reasonably favourably disposed to the bid".

Michel replies he would not have drawn that conclusion.

11.35am: Jay turns to text messages sent by Michel between June 2010 and December 2010.

On 27 August 2010, Michel sent a text message to Hunt about a speech by BBC director general Mark Thompson. Hunt replied: "Thanks. I agree, nothing about BBC role in competitive market". Michel described Thompson's speech as "a whimper" in a follow-up text. Hunt replied: "Because he trained his guns on you he failed to make his case to me".

These text messages were in response to Thompson's MacTaggart lecture in Edinburgh, in which he warned that BSkyB was too powerful and threatened to "dwarf" the BBC and its competitors.

11.34am: The Guardian editor-in-chief, Alan Rusbridger, has just tweeted:

Jay: did you big up your role (by exaggerating in emails)?Michel: No i don't agree with that. I didn't need to#Leveson

— alan rusbridger (@arusbridger) May 24, 2012

11.31am: Jay asks whether Michel exaggerated Smith's position in his emails to James Murdoch.

Michel says his emails were "accurate accounts of the conversations" but adds: "Maybe I was trying to keep the morale up internally" because News Corp was facing closed doors from other government departments.

He does not agree that he spun the emails to put himself in a good light.

"It was a very few, rare occasions where this happens," he says.

11.30am: Michel describes Smith was "very straightforward" and available to him.

Jay asks whether he believed Hunt was in favour of the BSkyB bid.

"It's something I can't say," Michel answers. He believed that Hunt was acting impartially over the takeover.

11.26am: Jay says that there were 191 telephone calls, 158 emails, and 799 text messages between Michel and the DCMS, of which 90% were with Smith. Between 28 November 2011 and 11 July 2011 Smith sent 257 text messages to Michel, Jay adds.

Michel says he did not have any reason to believe Smith was or was not in favour of the BSkyB bid.

11.25am: The Guardian-editor-in-chief, Alan Rusbridger, has just tweeted:

Michel I always assumed Smith, special adviser, represented Hunt's views at all times#Leveson

— alan rusbridger (@arusbridger) May 24, 2012

11.24am: Michel says he believed that special advisers always represented the views of their boss, the secretary of state.

He believed some of the information from Adam Smith came after the special adviser's conversations with Hunt.

"There was two or three events where I had the impression some of the feedback I was given was discussed with the secretary of state before it was given to me."

11.22am: Michel's first witnes statement has now been published on the Leveson inquiry website.

11.21am: Michel is asked why he did not make clear in emails to James Murdoch that "JH" did not mean conversations with Hunt himself.

He explains:

I think it's a shorthand I decided to use, both because I was having a lot of conversations at the beginning of January with the office of the secretary of state and I was trying to be as quick as I could when writing those.

Michel traded "less than five" messages with John Zeff, Hunt's head of media, the inquiry hears.

11.20am: Michel says there were no conversations with Hunt between 24 December 2010 and the end of July 2011, but there were texts with Hunt.

11.19am: Michel is asked why he lobbied other government departments outside Cable's before December 2010.

He says that News Corp was not given much chance to make representations to Cable "even though we tried".

Jay asks whether he hoped another government department might be able to influence Cable.

Michel says other departments were "very interested in hearing our case" because they wanted a debrief on the complex issues and undertakings involved in the takeover.

11.17am: The Guardian's Dan Sabbagh has just tweeted:

Michel says "JH" meant Hunt or his spads or civil servant. Therefore Michel should not made any inappropriate contact w any of them.

— Dan Sabbagh (@dansabbagh) May 24, 2012

11.16am: Michel says he did not believe it was inappropriate to lobby the office of the secretary of state.

"I was never of the view that it was inappropriate to at least try put the view or make representation to his office," he adds.

Jay asks why, then, he used "JH" as referring to Hunt's team in his emails to James Murdoch.

"I don't think anything inappropriate ever took place," he says.

11.15am: The Guardian's Dan Sabbagh has just tweeted:

Michel edgy, cautious. Jay moving slowly, stalking him. Leveson's early tone sceptical.

— Dan Sabbagh (@dansabbagh) May 24, 2012

11.12am: The Guardian's Dan Sabbagh has just tweeted:

Michel says (dubiously) that he didn't have a specific view whether Tories or Labour would be more favorable to a Sky bid.

— Dan Sabbagh (@dansabbagh) May 24, 2012

11.12am: The Guardian's Lisa O'Carroll has just tweeted:

Michel written statement says "reference to hunt, JH, Jeremy in the emails are I'm fact summaries of what I was told by Adam smith #leveson

— lisa o'carroll (@lisaocarroll) May 24, 2012

11.11am: The Guardian deputy editor, Ian Katz, has just tweted:

Here's what Michel reported to his bosses about his June 15 conversation with Cable on bid bit.ly/KcPEWD #Leveson

— ian katz (@iankatz1000) May 24, 2012

11.10am: Michel is pressed on when he first knew about News Corp's £8bn bid for BSkyB.

He says there were internal discussions and reports in the media from when he joined in May 2009, but that he was formally told the day before it was publicly announced.

He adds that he did not have a specific view on which government ministers would and would not be in favour of the bid. He was tasked to discover what government ministers – including business secretary Vince Cable – thought of the bid.

11.07am: Michel says he was only aware News Corp was launching a bid for full control of BSkyB the day before it was publicly announced. He adds that he was not in the "circle of confidence" that knew in advance.

In his witness statement, Michel says his only contact with the Department for Culture, Media and Sport was "solely with Mr Hunt's adviser Adam Smith and the (DCMS) director of media Jon Zeff," according to the Evening Standard reporter Tom Harper at the court:

Frederic Michel w/s: "My contact was solely with Mr Hunt's adviser Adam Smith and the (DCMS) director of media Jon Zeff"

— Tom Harper (@TomJHarper) May 24, 2012

11.04am: Michel joined News Corp as director of public affairs for Europe in May 2009.

He says News Corp's BSkyB bid "became a very full job" from September 2010 and increased "further and further" throughout the process. It took up 80% of his time, he adds.

11.02am: The inquiry has resumed and News Corporation lobbyist Frédéric Michel takes the witness stand.

Robert Jay QC, counsel to the inquiry, is leading the questioning.

11.01am: Sky News reporter Martin Brunt has just tweeted:

#phone Ex-News International CEO Rebekah Brooks bailed for another two months on phone hacking and bungs allegations

— martinbrunt (@skymartinbrunt) May 24, 2012

10.57am: The Guardian's Maya Wolfe-Robinson has just tweeted:

Here's the judgment in the Trimingham v Associated Newspapers Ltd bit.ly/KcNJBa

— Maya Wolfe-Robinson (@mwolferobinson) May 24, 2012

10.56am: Brooke has completed his evidence and the inquiry is taking a short break.

10.55am: Brooke is asked what functions he believes the reconstituted press regulator should have.

He says: "I wouldn't want to do a big bang," and advises that the powers of the new regulator be increased over time instead of all at once.

Leveson asks when there be this appetite for change.

Brooke says a "big bang" change to press regulation "needs a big person to do it".

10.50am: You can watch today's hearing live on the Leveson inquiry website here.

10.48am: Brooke says it is a "great pity" the government and press was not able to reach an agreement and move forward.

The government might have been able to sleep better at night because it had not crossed the Rubicon, but it might have been better if had, says Brooke.

10.47am: The Guardian's Josh Halliday has just tweeted about the Trimingham case:

The Judge Tugendhat ruling on Trimingham-Daily Mail sounds significant. What did Trimingham, a PR, do to limit expectation of privacy?

— Josh Halliday (@JoshHalliday) May 24, 2012

and

Trimingham describes ruling as potential "blueprint for bullies and bigots" – @BBCNews

— Josh Halliday (@JoshHalliday) May 24, 2012

10.42am: Brooke is asked whether he was lobbied by the press in this period.

He says he cannot recall any lobbying over press regulation between 1992 and 1994.

10.42am: Brooke says he was effectively being asked by the then prime minister, John Major, to take the white paper back to the drawing board.

Later, in June 1994, the then home secretary proposed that the white paper could be published without the contested draft clauses.

10.41am: The Guardian's Josh Halliday has just tweeted about the Trimingham case:

Judge on Trimingham: [She] was not the purely private figure she claims to be. Her reasonable expectation of privacy has become limited" -PA

— Josh Halliday (@JoshHalliday) May 24, 2012

10.38am: No 10 wrote to Brooke to recommend continuing pressure to improve self-regulation but asked that a white paper be redrafted featuring arguments against it, the inquiry hears.

10.34am: Lord Wakeham was instrumental in incorporating a privacy tort into the Press Complaints Commission code, says Brooke.

10.29am: Brooke is asked whether the government believed the Press Complaints Commission, when established, would be a regulator.

He replies: "We believed it would be a self-regulator".

Lord Justice Leveson presses Brooke on what he understood by "self-regulator".

Brooke says "he would not go to the stake for the phrase," indicating that the government was not entirely sure of the self-regulatory function.

10.23am: Sky News has just tweeted about the Trimingham case:

Court orders Carina Trimingham to pay £250,000 in costs within 14 days after losing privacy case.

— Sky News Newsdesk (@SkyNewsBreak) May 24, 2012

10.22am: Brooke says it is correct that the government gave the press one more chance to avoid regulation after the 1993 Calcutt report.

He describes further proposals suggested by the MP Clive Soley as "draconian".

10.19am: Calcutt's report on the press was leaked so the government had to bring forward its response, says Brooke.

His 1993 Review of Press Self-Regulation reiterated the potential need for a statutory press tribunal, as well as sterner laws to protect privacy.

Brooke says in his witness statement that the government was "extremely reluctant" to introduce statutory regulation of the press.

He adds:

The press has been not subject to statutory interference since 1695. The first time it happens is going to be a very significant event.

10.17am: Elsewhere at the high court, BBC political correspondent Carole Walker has just tweeted about a privacy case involving Chris Huhne's partner Carina Trimingham:

Carina Trimmingham has lost her case against the Daily Mail

— Carole Walker (@carolewalkercw) May 24, 2012

10.15am: Brooke was the national heritage secretary between 1992 and 1994, replacing David Mellor in the post.

Barr asks whether the press exacted revenge on Mellor because he appointed Sir David Calcutt to review self-regulation of the press.

Brooke cannot remember having any conversations about that at the time.

10.07am: Lord Brooke, the former national heritage secretary, has taken the stand.

David Barr, junior counsel to the inquiry, is questioning Brooke.

10.05am: The Guardian's John Plunkett has sent us breaking goat news from the steps of the high court. No kidding: that is a real goat.

9.58am: The Guardian's Esther Addley has just tweeted from the high court:

Adam Smith is in court, with (i assume) his lawyer. Order of witnesses: Lord (Peter) Brooke, Frederic Michel, Smith #Leveson

— esther addley (@estheraddley) May 24, 2012

9.51am: Good morning and welcome to the Leveson inquiry live blog.

All eyes will be on the culture secretary Jeremy Hunt today as his former special adviser, Adam Smith, and the News Corporation lobbyist, Frédéric Michel, give evidence about their role in News Corp's abandoned £8bn bid for BSkyB.

It will be the first time the pair have spoken publicly since the huge row over Hunt's handling of the bid erupted at the end of April.

Smith resigned on 26 April after he admitted he allowed the impression to be created of too close a relationship between News Corp and Hunt's Department for Culture, Media and Sport.

More than 160 pages of emails published at the Leveson inquiry showed that News Corp's Michel was given inside information on ministerial thinking over the company's bid for BSkyB, including handing over commercially confidential information and repeatedly suggesting that Hunt wanted the bid to succeed.

Smith will be pressed on whether he was a rogue operator acting without the authority of Hunt and other senior colleagues in the department. Jonathan Stephens, the department's top civil servant, will give evidence on Friday and Hunt is expected to be called in the coming weeks.

The pair will appear after evidence from Lord Brooke, the Tory cabinet minister between 1989 and 1994. Brooke was the national heritage secretary from 1992 to 1994 in a department later renamed Department for Culture, Media and Sport; he was the Northern Ireland secretary between 1989 and 1992.

The inquiry begins at 10am.

Please note that comments have been switched off for legal reasons.