Powered by Guardian.co.ukThis article titled “David Cameron to announce full-scale inquiry into phone hacking” was written by Nicholas Watt, chief political correspondent, for The Guardian on Wednesday 13th July 2011 00.13 Europe/London

David Cameron will announce on Wednesday that a judge will oversee a full-blown inquiry into the background to phone hacking and a panel that will examine media regulation, as Downing Street scrambles to regain the initiative after a series of decisive interventions by Ed Miliband.

In a statement to MPs, shortly before all parties unite behind a Labour motion calling on Rupert Murdoch to abandon his bid to take full control of BSkyB, the prime minister will announce that he reached broad agreement on Tuesdaynight with Miliband and Nick Clegg over the scope of the judge’s work.

The judge, who will be named on Wednesday, will lead the main inquiry into the background to phone hacking, which is expected to be modelled on the Hutton inquiry into the death of Dr David Kelly in 2003. It will be established under the 2005 Inquiries Act, which means that witnesses may be compelled to appear and will give evidence under oath.

This inquiry will not sit in public until the criminal investigation has been completed. It is understood that the inquiry will go further than looking into allegations of phone hacking at the News of the World, as it is also expected to examine relationships between police and press and politicians and press. This raises the prospect that Tony Blair and Gordon Brown could be called to give evidence about their relationship with media barons.

The judge leading the inquiry will also oversee a separate panel, which will examine media ethics and future regulation of the media. This will start its work soon.

Cameron also met Sir Paul Stephenson, the commissioner of the Metropolitan police, last night. It is understood the prime minister expressed deep concerns about the original police investigation into phone hacking.

The cross-party agreement on the inquiry followed Cameron’s decision to take the rare step of backing an opposition motion, marking a high point for Miliband, who has transformed his leadership of Labour after he issued a direct challenge to News Corp last week. Speaking at last Wednesday’s session of prime minister’s questions, two days after the Guardian reported that the News of the World illegally targeted the missing schoolgirl Milly Dowler and her family, the Labour leader called on:

• The government to refer the News Corp BSkyB bid to the Competition Commission.

• The News International chief executive, Rebekah Brooks, to consider her position.

• The prime minister to admit he made a “catastrophic judgment” in appointing the former News of the World editor Andy Coulson as Downing Street director of communications. Coulson, who stepped down in January and who was arrested last Friday, denies any knowledge of wrongdoing at the newspaper.

An angry Cameron rejected the criticisms. When the former Labour culture secretary Ben Bradshaw echoed Miliband’s call for the BSkyB bid to be be referred to the commission, the prime minister said: “You would look pretty for a day, but useless for a week.”

A week after his dismissive response to Bradshaw, the prime minister will now go further than anyone had expected when he will make clear in the Commons that the BSkyB bid should be dropped altogether.

The cross-party unity behind the Commons motion marks a change for all the parties, who have had to respond rapidly to events that have changed by the hour, if not by the minute.

Miliband decided on Saturday afternoon to devote Labour’s allotted opposition debate today to Murdoch. At that stage, he aimed to table a motion calling for the bid for BSkyB to be delayed to allow police to finish their investigation into alleged criminality at News International. The motion would have said the bid should be referred to the Competition Commission, but only after the police had completed their work.

Miliband, who was clear that the motion should be worded in a non-partisan way to try to attract the widest possible support, put out feelers to the Liberal Democrats who can boast the most consistent track record in standing up to the Murdoch empire. It is understood that contacts were made with Simon Hughes, the party’s deputy leader.

The Labour leadership was encouraged when Hughes and the energy secretary, Chris Huhne, made clear in separate TV interviews on Sunday morning that they would look at the motion seriously.

Emboldened by the positive signs from the Lib Dems – and with more damaging details of the phone-hacking scandal emerging by the minute – Miliband struck against Downing Street on Monday by demanding that Cameron answer an urgent question in the Commons. Downing Street tried to trump this by deciding that Jeremy Hunt, the culture secretary, would deliver a statement on the phone-hacking scandal.

One Labour source said: “We knew they were flat-footed and behind the curve when the prime minister refused to answer our urgent question. Rather than turning up in the Commons, the prime minister went ahead with a pre-planned speech at Canary Wharf on public service reform.”

The pressure from Labour sparked what was described as controlled panic in Whitehall as Hunt moved to prepare the ground for his Commons statement. Hunt quickly released letters to the OFT and Ofcom asking whether they wanted to reconsider their advice in light of the latest allegations, though government sources said this was a normal part of the process of consultations.

Murdoch, who knows how to outsmart his enemies, moved to gain control of events by saying he would withdraw his undertaking to spin off Sky News 30 minutes before Hunt spoke. This gave Hunt no choice but to announce that he would refer the bid to the Competition Commission.

The one key figure who had no idea of these changes was Cameron. News of the Murdoch decision – and Hunt’s response – was texted to an aide accompanying him on the Canary Wharf visit. But the aide decided not to interrupt the PM.

This meant that Cameron did not know how the tectonic plates had shifted when he too changed his stance. In questions after the speech, he said that News Corp should sort out its “mess” before pursuing the bid.

Miliband decided he would press ahead with the Commons debate and focus on the need to allow the police to carry out their investigation before Hunt made a decision on any recommendation from the commission. But with mounting shareholder concerns about phone hacking, he decided simply to call on Murdoch to drop the bid.The prime minister’s spokesman quickly said the government would support the motion.

Some Tories were dismayed by Cameron’s handling of the issue. One veteran said: “The prime minister has not been his usual self. He has been behind the curve. He has not had a good week.”

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