Osborne: BSkyB bid 'inconvenience'

The Murdoch bid for full control of BSkyB was a "political inconvenience" that would "cause us trouble one way or the other", the Chancellor has told the Leveson Inquiry.

George Osborne insisted he did not have a "strong view about its merits" either way and suggested the decision to give responsibility for the deal to Culture Secretary Jeremy Hunt was made on the recommendation of Downing Street's then-permanent secretary Jeremy Heywood.

Mr Osborne also defended the decision to recruit Andy Coulson as Conservative director of communications, insisting the former editor of the News of the World's contacts with News International, which published the now defunct Sunday tabloid, were "not relevant" in his appointment.

He admitted he had not interrogated Mr Coulson about the possibility of hacking at the paper being widespread following the conviction of its royal editor Clive Goodman but had made a "reasonable assumption" the police had uncovered all the relevant evidence.

Mr Osborne said he remained friends with Mr Coulson but had been unable to speak to him for a year.

He said: "I was very impressed by him and I think it confirmed my instinct that he would be a very good candidate for the job.

"I thought it was worth hiring someone with real talent and ability and weathering the adverse publicity that appointing someone who had resigned from the News of the World would bring."

Earlier, former Prime Minister Gordon Brown used the Inquiry to repeat previous denials about claims he had "declared war" on Rupert Murdoch in a telephone call to the media mogul and behaved aggressively to former News International chief executive Rebekah Brooks.

He said the conversation where he was "alleged to have acted in an unbalanced way" as well as threatening Mr Murdoch "never took place".

"I'm shocked and surprised that it should be suggested even when there is no evidence of such a conversation," he said.

He also criticised the way The Sun published a story about his son Fraser's cystic fibrosis, which he had complained about in July 2011.

The ex-Labour leader called for measures to stop the "conflation of fact and opinion" in the press.

Mr Osborne struck a different tone, warning Lord Justice Leveson it would be a "slippery slope" to impose restrictions on the media based on judgments about what was in the public interest.

Pressed about his role in the saga of News Corp's bid for BSkyB, Mr Osborne suggested the decision was either going to offend one media camp or another.

"I regarded the whole thing as a political inconvenience and something we just had to deal with, and the best way to deal with it was to stick to the process," he said.

He cast himself as "merely an external observer of the process" and said he had had no "specific conversations" about it with either Business Secretary Vince Cable, who was initially responsible for it, or Mr Hunt, who later took over.

The quasi-judicial role was transferred to Mr Hunt after Mr Cable's opposition to the bid was exposed in the media when reporters secretly recorded him declaring war on Mr Murdoch.

Mr Osborne said he had not even been aware of the Prime Minister's view of the bid and confirmed he had only had one conversation with News Corp's James Murdoch about it.

He said claims of a "conspiracy" around Mr Hunt's appointment did not "stack up".

Lord Justice Leveson was told of a text exchange between Mr Osborne's special adviser, Rupert Harrison, and News Corporation lobbyist Frederic Michel in November 2010.

Mr Michel had texted asking if Mr Osborne might write to Mr Cable regarding the "Sky merger".

Mr Harrison had replied: "We will have to discuss it with g when he is back from China."

Lord Justice Leveson suggested that Mr Harrison might have replied by saying: "This is a judicial process. We are not interfering. Be off with you."

Mr Osborne told the judge: "He was being diplomatic."

He added: "There were lots of people at the time saying 'the bid should go ahead' or 'the bid should not go ahead' and people were saying things at drinks parties and events of various kinds.

"When you are doing a job like mine or working as a special adviser for someone like myself you get asked about a whole range of things the whole time.

"In this case I think what Mr Harrison was doing is absorbing Mr Michel's texts."

Mr Osborne denied suggestions he met the Murdochs in a chalet during the 2010 World Economic Forum in the Swiss resort of Davos but said a meeting had taken place the previous year at the conference.

"I remember David Cameron and I seeking to try to bring the conversation gently to domestic politics and what the Conservative Party was doing to put itself in a position to win a general election.

"But Rupert Murdoch was more keen to talk about the international economic situation.

"I don't think this was a crucial encounter."

Mr Osborne told the inquiry one of James Murdoch's "bugbears" was the licence-fee funded BBC and he raised it repeatedly.