A light shines on a murky nexus

Thursday 26 April 2012

The UK's return to recession, the first double dip since the mid 1970s, adds the charge of economic failure to those of presentational incompetence and uncaring arrogance that the Government has failed to shake off since its post-Budget woes began.

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As the mantra of the advantage to be gained from preserving low interest rates sounds increasingly hollow, the Government, and the Tory Party in particular, finds itself in the dock over its dealings with News Corp as a result of the latest revelations from the Leveson Inquiry.

The apparent existence of a "back channel" of constant communication between News Corp and the Culture Secretary Jeremy Hunt, who had responsibility for ruling on the company's controversial £8 billion bid to take over the broadcaster BSkyB, resulted in the resignation of Mr Hunt's special adviser Adam Smith yesterday. That does not let Mr Hunt off the hook. He insisted in the House of Commons that the objectivity required in his quasi-judicial role was preserved because he consulted the regulator Ofcom and the Office of Fair Trading at every stage of the process. In addition, the Permanent Secretary at the culture department had agreed that the special adviser should act as a conduit with News Corp.Nevertheless, the large body of emails reveals a degree of contact through Mr Smith that is difficult to square with the Culture Secretary's role. His statement failed to remove the suspicion, particularly as to why News Corp sometimes received information before it was given to Parliament. Judgment on whether Mr Hunt breached the ministerial code must be suspended until he has given his account to the inquiry but the backing he was given by the Prime Minister yesterday will do nothing to assuage public fears, given Mr Cameron's own close relationship with the Murdochs and the folly of hiring the former editor of the News of the World, Andy Coulson, as director of communications in Downing Street. Some may see the focus on the Leveson inquiry into press standards as a distraction from the economic crisis. Yet the two are integrally linked in feeding into a public perception that our political masters have become cosy to the point of collusion with the Murdoch empire. Evidence from James and Rupert Murdoch over the last two days has provided confirmation of the extent to which successive prime ministers sought to establish a relationship with News Corp that will deepen suspicion about how much influence the Murdoch family wielded.First Minister Alex Salmond has also been implicated, with allegations from opposition parties that he offered to support the Murdoch bid for BSkyB in return for the Sun's backing in last year's Holyrood poll. Yet both Mr Cameron and Mr Salmond seek to dismiss the charges by claiming they had no scope to influence the BSkyB bid ruling. That might be so but, without convincing rebuttal, mud will continue to stick.As the vast majority of people find that, like the economy, their income has stalled while essential costs, such as energy and fuel, continue to rise, the widening income gap between them and the very rich becomes a source of friction. It is against that background, with years of the Government's austerity programme still ahead, that the unexpected 0.2% retraction in the economy will have a baleful political impact. Output in the first three months of this year was slightly lower than in the autumn of 2010, calling into question the basis for George Osborne's conviction that growth in the private sector would compensate for public sector cuts. The return to recession is largely due to a 7% contraction in construction, where figures are notoriously open to revision. But business confidence will inevitably be dented. This in turn will act as a brake on growth, exactly the opposite of what is required at a time when the economy is so fragile that forecasters are warning the extra day's holiday for the Queen's Diamond Jubilee is expected to reduce output in the next quarter.In such an economic climate, it is reasonable that business leaders with the ability to create jobs are courted by politicians. Yesterday another powerful tycoon, Donald Trump, suggested Mr Salmond led him to believe during a dinner hosted by Scottish Development International in New York that there would be no offshore wind turbines near his golf course. Mr Salmond robustly denies these claims. Yet he now finds himself simultaneously denounced by Mr Trump and cited as an ally by Mr Murdoch. There is succour for the First Minister in neither contribution. The lesson in the dangers of a perception of seeking to cut deals with business are there for all politicians to absorb. Strict adherence to protocol and complete transparency are vital to safeguard both the public interest and the integrity and judgment of politicians when prey to pressure from powerful interests. Senior politicians are expected to establish working relationships with newspaper proprietors and editors. But those relationships must never become so close as to make it difficult to resist influence. Mr Hunt, Mr Cameron and Mr Salmond all have questions to answer about their relationships with News Corp, given the perception of a something-for-something relationship between politicians and the press.The Leveson Inquiry has taken on an air of soap opera when either James or Rupert Murdoch has given evidence. The extent of the political consequences of their commercial ambitions, however, was plain to see yesterday. As Mr Murdoch senior recounted the history of his dealings with prime ministers and potential prime ministers from Margaret Thatcher and John Major to Tony Blair and Gordon Brown, the sequel to James Murdoch's evidence was being played out in the House of Commons when Jeremy Hunt had to defend accusations of backing News Corp's takeover of BSkyB. That in itself was a demonstration of the significance of this public inquiry with its ability to hold to account the commercially and politically powerful. As the inquiry continues, there is likely to be more discomfiture. However unedifying, a light has at last been shone on a murky nexus. We should be grateful for that.

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A light shines on a murky nexus

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