Witness statements by Alan Rusbridger and Chris Elliott have now been published on the Leveson inquiry website.

Rusbridger has completed giving his evidence.

Rusbridger says of the Milly Dowler deletions: "I think there are people who are trying to elevate this into a primary issue now who didn't think it was at the time, and I don't think anybody thinks that – well, I think when you track back the reasons that were given for the closure of News of the World at the time, they certainly weren't that."

Leveson says: "I understand the point. I think that as we're set up, I have to address it, as I am trying to, but it's not a primary focus."

Leveson says the inquiry will have to come back to the issue of the Milly Dowler voicemail deletions.

Rusbridger says "the fact that it's taken some time to resolve indicates that it's not a simple question".

He adds that the parties should be able to interrogate each other and adds: "I'm not sure that we have yet seen all the evidence or had all the answers to what is self-evidently a complex question."

Rusbridger says the debate about statute is a central one. "We utterly reject anything that looks like state licensing," he adds. "But one of the things the inquiry has done is open this up as a more nuanced question and different types of what we mean by statute."

"The blunt point about our industry is we've been under-regulated and over-legislated," Rusbridger says.

Leveson says that the inquiry has "travelled a fair distance" since Rusbridger appeared at its seminar in October last year.

Rusbridger says: "There isn't a journalist in Britain who hasn't found some of the evidence heard in the last few months sobering."

He says a "harsh and uncomfortable light" has been thrown by the inquiry onto bad practice and it has opened up newspapers to "the transparency we expect of others".

Rusbridger adds that Paul Dacre has made "incredibly constructive" moves since the beginning of the inquiry, including the Daily Mail's new corrections column and talk of an ombudsman.

Rusbridger says his main priority is to take opportunities presented by a "ferocious digital revolution". "To what extent that is in print or in digital is a secondary matter," he adds.

The public interest is at the heart of everything we believe in, Rusbridger tells the inquiry.

"The PCC code is good, or adequate," he adds. "The more outsiders, and academics, are drawn into this [the inquiry] the more we become aware of ways it could be improved."

He says many tabloid newspapers do not attempt to justify their stories in the public interest when attempting to overturn privacy injunctions, usually brought by celebrities.

Rusbridger says he "wouldn't be against the use of statute" if a regulator could enforce its powers to deal with early-stage libel complaints.

He adds that the industry ought to welcome a law change by statute to underpin a new adjudication system, because that would make it easier and cheaper to settle privacy and libel complaints.

Rusbridger suggests that the new regulator could be given "absolute privilege" to regulate refuseniks who decline to be part of the new body.

Financial Times media correspondent Ben Fenton has just tweeted:

[Some believe #Rusbridger is getting an easy ride.Will wait to decide if he is asked about Gdn getting Milly deletions wrong.]

Rusbridger is asked about the way forward for press regulation.

Rusbridger backs the idea of sending an ombudsman into newspaper newsrooms to investigate claims of wrongdoing, citing the Independent Television Commission.

Rusbridger is asked about his resignation from the PCC editors' code committee; his letter said "I am out of sympathy with the PCC".

He stresses that his issue was not with the code committee, which he says performed a "valuable function".

"When the PCC's report into phone hacking came out I thought it was crudely a whitewash – in fact it was worse than a whitewash because it was factually wrong about matters that were in the public," he says.

The report "so undermined the principle of self-regulation" that he could no longer stand by it.

"Even when they were lied to by the most powerful media player … there was nothing they could even do about that. Its inadequacies were fatally exposed by that," Rusbridger adds.

Rusbridger says he has met with all the heads of the Met police, except the present one, over lunch.

They will explain difficulties and issues on their patch.

Two senior Met officers came to see him "to talk me out of a story" on the phone-hacking scandal, Rusbridger says. He says former Met police commissioner Sir Paul Stephenson was later gracious enough to say he was glad Rusbridger ignored their advice.

"Lloyd George used to run his cabinet changes past [Guardian editor] CP Scott before he did them," says Rusbridger, noting that the issue of politicians' meetings with editors is not a new one.

It would be a shame if a cabinet member or minister could not talk to a journalist or editor without it becoming a public event, Rusbridger says.

He adds that it was a surprise to find out in the summer how often David Cameron had met with News International executives.

The Guardian has an open morning conference on Wednesdays where a guest – often a politician - will discuss issues of the day with journalists.

Rusbridger says that all cabinet members now feel obliged to declare meetings with newspaper editors.

"I'm not convinced that's a great step forward," he says, giving the example of Vince Cable coming to lunch at Guardian. Cable said to Rusbridger: "If you're here, I'm going to have to declare it."

"It would be a strange world where every contact between a journalist and politician is logged," he says.

Rusbridger says he would be interested in carrying corrections on page 2 if it becomes an industry standard.

Asked about smaller or regional papers, Rusbridger says any paper or chain with a staff of more than 100 should be able to afford such a service.

Rusbridger says the idea for a readers' editor came from living in the US in the mid-1980s and a book by David Broder, the former Washington Post political editor.

He describes having a readers' editor as "liberating" and a "very good model".

"You are giving away a significant portion of control … I'm giving away control over part of my newspaper, which is quite a significant thing to grant," he says. "Sometimes I try and change his mind and usually he ignores me."

Rusbridger says that it is mostly preferable to have sources corroborate a story, depending on whether the story comes from the subject themselves.

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

#leveson simon kelner has just arrived to observe

Rusbridger says that approval from the head of department is needed for the use of subterfuge.

"Generally, you should do most of your journalism by saying who you are and by being open and transparent about it," he tells the inquiry.

He says an example in the past two years of subterfuge justified in the public interest includes a Guardian reporter who went undercover in the English Defence League.

On prior notification, Rusbridger says that in general it is the Guardian's policy to tell people about stories about them in advance. He does not think it should be mandatory.

Rusbridger says it is best practice to note the reasons for not pre-notifying people in case it becomes a legal issue at a later date.

Rusbridger says that the Guardian will cover high-profile stories that involves someone's private life if the story has reached worldwide exposure, giving the example of Tiger Woods.

Rusbridger is asked about privacy and the public interest.

"It's for every editor to set the dial on where the privacy settings should be - we set ours pretty high," he says.

Reporters are given general guidelines because editors can't be there 16 hours a day. "Most journalists know generally where we stand and that informs what we think," he says.

Rusbridger is asked about private investigators. He says the editor has to authorise their use personally.

The Guardian's editorial code of conduct is a set of guidelines as to how employees should behave, Rusbridger says; it incorporates elements of the PCC code.

Only the Scott Trust can fire the Guardian editor, Rusbridger confirms.

He says that the trust advises new editors to carry on editing the paper as "heretofore" and that it is a "liberal" paper with a small (and non-political) "l".

Rusbridger describes his former Guardian diary column as a "showbiz-free area".

Chris Elliott has now finished giving evidence and Guardian News & Media editor-in-chief Alan Rusbridger has taken the stand.

Elliott estimates he receives one "significant" complaint a day.

The external ombudsman may be involved in two substantial concerns a year which take up a lot of time, he says.

The Guardian had 31 complaints made to the PCC last year, Elliott says.

Elliott says the Guardian no longer has a "high to low" relationship with readers, but is more closely engaged with them, which builds up trust.

Elliott says he would still like to "get to things faster" but is prohibited by the volume of complaints.

The internet has increased a pressure to resolve complaints quickly online, Elliott says, adding that most are resolved within three to four days.

That resolution ususlly takes longer if the complainant goes through the PCC, he adds.

The readers' editor's Open Door column at the foot of the letters page allows Elliott to expand on how mistakes were made and how they were resolved.

Elliott says that mostly lawyers will ask for the correction or clarification to have the same prominence as the original article.

"Mostly, people are content" with the corrections and clarifications column on the Guardian's letters page, he says.

He adds that if an industry standard emerges from the Leveson inquiry the Guardian would be interested in taking part.

Elliott says that once or twice in 18 months he has had to go to a journalist's line manager if they are reluctant to assist with his investigation. Both times the journalist eventually co-operated, he says.

A growing issue is the number of people wanting to change stories that exist online. "That's really quite a big issue for us and takes up quite a lot of our time," Elliott says.

The readers' editor's office received 26,700 emails last year, he adds, but not all could be classed as complaints.

Guardian readers feel very close to the newspaper and want to have a conversation about coverage and changes, Elliott says.

The readers' editor can also deal with lawyers' letters, but mainly in conjunction with the Guardian's own legal department.

Elliott says complaints will range from "basic" issues – grammar and spelling, for example – to more complex areas, including stereotyping and taste and decency.

He mentions one investigation conducted by his predecessor that involved 40 separate aspects to the complaint.

If a complainant remains unhappy after the readers' editor has carried out his investigation, they can request that the complaint is referred to the external ombudsman.

The ombudsman will assess whether the readers' editor has carried out the investigation competently and fairly.

Elliott says that occasionally there will be differences of opinion on whether an issue warrants a correction or clarification. He will consult the editor and the journalist involved, but the ultimate decision rests with the readers' editor.

Elliott says he was interviewed for the readers' editor job by a panel of three trustees from the Scott Trust, which funds the Guardian.

Chris Elliott, readers' editor of the Guardian, takes the stand.

Carine Patry-Hoskins, junior counsel to the inqiry, is asking the questions.

The inquiry is now taking a short break.

Witherow has completed his evidence.

Witherow is asked about his vision for the Sunday Times.

Newspapers are caught up in an absolute revolution. We've never had a challenge like this in 300 years … The challenge is how do you continue to publish in print and digitally and continue to publish good journalism? It is one of the biggest challenges facing publishing since we first started.

Witherow agrees with Harding that there should be a public interest defence for hacking and bribery cases.

Witherow suggests there should be a financial penalty for not being involved in a new system of regulation.

Leveson repeats his point that most of Witherow's suggestions require a basis in law for a judge to be tougher on parties that opt out of a new regulatory body.

John Witherow's witness statement has now been published on the Leveson inquiry website.

Witherow has "serious doubts" about a statutory regulatory body set up by parliament and agrees with James Harding's argument that it would open the door to political interference.

He points out that 21 out of the 25 most free media markets, according to Reporters Without Borders, have a system of self-regulation.

Leveson says: "I just wonder whether there has to be something that prevents the need for this sort of inquiry, again and again and again."

Witherow says it is possible to produce a "tougher self-regulatory system" that deals with many of the issues brought to the surface by the Leveson inquiry.

Witherow is asked about the future of press regulation.

"We have learnt a lot from this inquiry already," he says. He adds that the Sunday Times has already put in place new mechanisms, including a "paper trail" and a record of decisions taken about public interest and use of subterfuge.

He says if it uses private investigators in future, the paper will need a formal agreement with them and this is "just good practice".

Witherow talks about the internet and the threat of "unregulated media who can base themselves offshore".

He says it is a "great dilemma" how to ensure a fairly regulated press when there are rogue elements on the internet.

"Any regulation that comes out of this has to take the internet into account," he says.

The worry is that serious investigative journalists could choose to set up an online operation that is free from the regulations applied to newspapers including the Sunday Times.

"The more responsible ones might want to be part of self-regulation," he says, adding that it might even be held as a virtue not to be a part of press regulation.

Witherow is asked about the Sunday Times Insight investigative team. He says the Insight team was never closed, but it was brought into the main newsroom.

He denies that money was a factor in this.

Dan Sabbagh has just tweeted:

Sunday Times hired John Ford, a former actor, to work as a blagger. He was used by Insight "on various investigations" eg Fifa.

Witherow is asked about a recent article by John Simpson, the well-known BBC broadcaster.

In the article, Simpson talks about six photographers besieging his former wife. They taped down her doorbell to keep it ringing all night.

Witherow says he thinks it is unacceptable. "I've no idea how much of this goes on," he says, adding that it is not Sunday Times policy.

Witherow says "a very small number" of PCC complaints have been upheld against the Sunday Times in the past five years.

Witherow is asked about AA Gill's controversial column about Clare Balding, which the presenter complained to the PCC was homophobic.

He defends Gill's use of the word "dyke", saying: "She was openly gay … we regarded it as a matter of freedom of speech … we didn't regard it as pejorative."

He says there are websites that use this term: "These are gay websites that use that term in a positive way."

Witherow is asked about investigative journalist Mazher Mahmood, AKA the "fake sheikh", who previously worked for the News of the World and now works for the Sunday Times.

Witherow is asked why he employed Mahmood.

I think Mr Mahmood is an exceptional journalist. He's proved himself over many years … the stories he's done for us have been excellent.

Witherow says he made independent inquiries from News Corp's management and standards committee and other sources that Mahmood was not involved in phone hacking.

Leveson asks whether Witherow was concerned with the circumstances surrounding Mahmood previous exit from the Sunday Times in the 1980s. (Roy Greenslade has written about the episode on his blog.)

"Reading the detail now it seems incredibly trivial," he says, noting that Mahmood was a young journalist. "I wouldn't let it influence me now because he has such a good record since then."

Witherow is asked what influence Rupert Murdoch has over the Sunday Times.

"He doesn't have any," Witherow says. "He will talk to me periodically. I think you'll discover that the Sunday Times has a robustly independent line on political allegiance."

He adds that the conversations with Murdoch will often be "very general" and sometimes they will not speak for weeks.

Witherow is asked whether a reporter attempted to blag information about Gordon Brown's finances from a bank call centre in Bradford.

"Yes," says Witherow. "We're pretty certain, yes."

He confirms that the blagger is not Barry Beardall.

Robert Jay QC, counsel to the inquiry, refers to a Sunday Times story in 1994 decribing Michael Foot as a KGB agent.

Witherow says it was based on false information in a book by Russian defector Oleg Gordievsky and admits: "I overcooked it and cocked it up."

Foot sued over the story and Witherow dryly tells the inquiry that the politician "built another wing to his house with the proceeds".

Jay says that the information commissioner wrote to Witherow on 11 December 2002 to ask him to attend an interview under caution to discuss a story about the tax affairs of Lord Levy.

Witherow explains that he rejected the interview because it was not justified, and that there was a public interest defence in running the story. He says they used a judgment handed down by Lord Justice Toulson to inform his rejection.

The information commissioner did not have the power to compel Witherow to attend.

Witherow says that meeting politicians in private does not give much extra information than from their public speeches.

Witherow says four or five senior editors at the Sunday Times met before the election to choose which political party the paper will back.

He adds that the paper is generally quite impartial but that its columnists have opinions. The paper will lay out its support in a leader column in advance of an election, he says.

Witherow is asked about his relationship with high-level politicians.

He says he will see the prime minister, chancellor and senior cabinet members "from time to time" and that he will go with colleagues.

His purpose in attending is to establish "what is on the minds of the politicians". You rarely get information you would put in the newspaper but it is useful background information, he adds.

Politicians want to maintain contact and persuade newspapers that they are doing the right thing, says Witherow.

Witherow says the Sunday Times is not interested in private lives unless it has a "bearing on their public duty".

He adds that the Sunday Times has been given private information on the financial affairs of ministers but it does not have a bearing on their public role so it has not been published.

When newspapers pay for information there is always a suspicion that the payment will colour the story, Witherow says, so the Sunday Times will attempt to always pay money to charity.

He says payments are "very small", mentioning £1,000 to £2,000.

Witherow says that the Sunday Times has looked at the information commissioner's 2006 reports on private trade of information.

He says that the journalist named as using a PI in the What Price Privacy Now? report was attempting to trace the phone number of a former Home Office official to ask them to respond to a story.

Witherow is asked about private investigators.

He says the paper has only used two private investigators who are well known to the journalists in the past, and the information they obtained was already in the public domain.

"The point is our journalists make sure they behave in a proper way," he says.

The Sunday Times has used blagging and impersonation in the past, Witherow says, but never phone hacking.

Asked why the Sunday Times has drawn the line at phone hacking, Witherow says: "I didn't know about it, for a start, but it's illegal and it seems quite unethical."

Jay asks whether subterfuge is ever used "on a hunch".

Witherow says: "We don't do fishing [expeditions]."

He says an undercover investigation was proposed to him recently "that appeared to me to be a fishing expedition" and he rejected it.

Witherow is asked about use of subterfuge.

He says that the principle for use of subterfuge is whether it is it in the public interest. That will be debated and decided upon in advance.

"Generally, it's fairly clear cut," he tells Leveson, citing examples of criminality and wrongdoing by MPs.

John Witherow's witness statement has now been published on the Leveson inquiry website.

Witherow says it is good journalistic practice to obtain more than one source for a story, but adds that once the paper withheld a story that had five sources because they were in a "contentious" area.

Journalists have been given written warnings "fewer than 10 times" since Witherow became editor of the Sunday Times, he says.

Witherow is asked about the Sunday Times ombudsman.

The ombudsman is effectively number three on the newspaper, Witherow says, and he takes as "robust, independent" role in mediating complaints and discussions within the newspaper.

Harding has completed his evidence and John Witherow, editor of the Sunday Times, has taken the stand.

Harding is asked about his meetings with David Cameron.

He says often the Times's political editor will also be in attendance.

The inquiry has now resumed.

Lord Justice Leveson says that during lunch break he's been thinking about Harding's concerns about statutory regulation and political interference in the press.

He refers to the Constitutional Reform Act, which governs the relationship between the parliament and the judiciary. He reads out the relevant clause from act.

Leveson says he would welcome any suggestions on this issue.

Susan Panuccio's witness statement has now also been published on the Leveson inquiry website.

James Harding's witness statement has now been published on the Leveson inquiry website.

Harding is likely to be asked about the following paragraph:

The Times has never used or commissioned anyone who used computer hacking to source stories. There was an incident where the newsroom was concerned that a reporter had gained unauthorised access to an email account. When it was brought to my attention, the joumalist faced disciplinary action. The reporter believed he was seeking to gain information in the public interest but we took the view he had fallen short of what was expected of a Times journalist. He was issued with a formal written warning for professional misconduct.

This relates to a paragraph in News International director of legal Simon Toms's witness statement; it was also covered in Tom Mockridge's written evidence.

Here is a lunchtime summary of today's key evidence so far:

• The Times editor, James Harding, says the paper should have covered the phone-hacking scandal "harder, earlier".

• He warns that statutory regulation of the press would open door to political interference in newspapers.

• Harding confirms the Times rejected MPs' expenses data in 2009.

• The News International finance director says cash payments from journalists to sources have "gone down considerably" in the past year.

• The News International chief executive, Tom Mockridge, says strict new compliance policies have been introduced and are "rigorously applied".

• Private Eye editor Ian Hislop claims the Press Complaints Commission would not give the magazine a fair hearing.

• Hislop calls for the Leveson inquiry to examine the relationships between News International and David Cameron, Gordon Brown and Tony Blair.

The inquiry has broken for lunch. Harding will continue his evidence at 2pm.

Janine Gibson, the Guardian's US editor, has just tweeted:

James Harding very carefully expressing fear that @caitlinmoran @indiaknight @gilescoren will leave him for their twitter followers.

Harding is asked about prior notification and suggests that it might not always be practically possible to contact the subject of the story before publication; the paper should be allowed to publish if an attempt has been made.

Harding is asked about the internet.

He says that some individuals online have a bigger readership than national newspapers and they could be regulated in some way.

Harding says, again, that his concern is political power over newspapers.

"I do not want journalists from the Times, years from now, walking into the offices of politicians and behaving in a certain way [because they feel they have to kowtow to politicians because of statutory regulation]," he tells Leveson.

Leveson asks Harding about the proposal that newspapers' continuing exemption from VAT could be conditional on them signing up to a post-PCC regulator.

Harding says that making that work is an "unenviable" task and that they have received "contradictory" feedback from experts.

"Before the war the Times endorsed appeasement," Harding says. "There was a real concern that a leading newspaper had got too close to government."

Harding suggests that a "Leveson act" could open the door down the line to politicians interfering with press regulation, possibly by inserting something in relation to standards.

Harding says the body has to be "sufficiently robust" but he is concerned that politicians will be able to amend the "Leveson act" to clamp down on the press in the future.

Leveson replies:

This model we're talking about isn't intended to identify standards, isn't intended to identify who should decide where there's been a breach of standards. It is merely to give some authority to independent regulation.

Leveson says that the Times leader has "moved the debate on".

"This is a problem for the press," he adds. "They have to solve it in a way that it works for them. But it's got to work for the public as well."

Leveson and Harding are discussing how an independent regulator will ensure that all newspapers are covered.

Leveson asks: "How do you solve the problem of a substantial publisher of newspapers saying I'm not prepared to participate in your independent regulator?"

Harding asks Leveson if he is proposing a compulsory system "because that would mean the licensing of newspapers".

Leveson reiterates – "watch my lips" – that he hasn't made his mind up about anything yet.

Roy Greenslade has just tweeted:

#Leveson Agree with Dan Sabbagh - Lord J Leveson is giving big hint that he will require 'statutory unerpinning' for a new regulatory system

Harding says the leader is "largely my own work" but that he consulted with colleagues on it.

"It's been significantly influenced by what's been happening in this room," he adds.

Some of the more technical questions about the future of regulation "have loomed much larger," he says.

Harding says he has drawn the line between independent regulation and statutory regulation. "We don't want the prime minister deciding what can go in or out of newspapers," he adds.

He was coming around to the idea that Leveson would recommend a regulatory "backstop" but is now opposed to that.

"I think that the creation of a Leveson act would give politicians ability to loom over press coverage," he adds.

Harding is asked about the Times's leader article today on freedom of the press.

Harding makes what he describes as a defence of agenda-driven journalism, pointing out that newspapers should be free to pursue their own lines of inquiry and focus of specific issues. He gives as an example the paper's ongoing coverage of adoption issues.

"If you try to constrain journalists, you'll often find you don't get the best people working for you and don't get the best stories," he says. "I don't feel that's the nature of the Times."

Politicians will seek to use the pages of the press to make their case and secure re-election, Harding says, but the job of journalists is to "sift the reality from it".

Harding is asked whether the Times is under pressure to come up scoops to differentiate itself from TV news, and therefore is susceptible to politicians offering exclusives. He says the paper does not "choreograph" its coverage around the 6pm or 10pm TV news.

Leveson says the real question is whether it is possible for newspapers to overly influence government policy.

Harding says: "That's never been the subject of the conversations I've had with politicians."

He adds that when journalists meet with politicians they should be a representative of the reader, not pursuing their employer's interests.

Harding says he feels strongly about state regulation of the press because "the one set of people you want to trust to walk into the offices of state … is journalists".

Harding is asked about his meetings with politicians.

"I try to meet with them pretty regularly," he says. "By which I mean once every few months, once every six months … I'd like to make the point that for journalists, access is very important."

He says he expects his journalists to meet with politicians regularly to pursue journalistic lines of inquiry.

Harding says he has met David Cameron "about half a dozen times, maybe more" since 2010 but does not have a precise figure.

Harding says his dealings with Rupert Murdoch "vary a great deal". Sometimes he won't hear from him for weeks, but sometimes "you'll get a couple of calls in week".

He says Murdoch made a number of undertakings when he bought the Times in 1981 about not interfering editorially and, in his experience as editor, he's kept to those.

Harding says in the runup to Christmas Murdoch phoned more frequently about the Eurozone crisis and other issues.

Harding is aked if the Times was slow to cover the phone-hacking scandal, possibly because of external pressures.

Harding says: "If you look back at the coverage of phone hacking, it's clearly the case that the Guardian broke the story in the summer of 2009 … we followed that story immediately … and in the months that followed we covered it too and occasionally on the front page."

Harding says that changed when it emerged that Milly Dowler's phone had been hacked. Then, he says, the paper featured the story on the front page for about three weeks. It criticised the News of the World for the original activity and News International and the Murdochs for their response.

He adds that proprietors of the Times "never raised a finger to stop us doing so".

Harding says: "Looking back I certainly wish we'd got on the story harder, earlier. The reality is that both the police and News International poured cold water on the story."

He adds: "We went to the sources we had to try chase it up and ran off those … It has proved a very important and significant story."

Leveson asks Harding whether newspapers should have an audit trial to demonstrate the thinking behind public interest decisions.

"There is a real value in having an audit trail for the very simple reason that it shows there is a process," he says. However, don't want newrsoom to spend all their time accounting for what they're doing. The Times will only carry out an audit trial when there is "an issue of concern", not for every judgment.

Harding suggests the idea of logging meetings where public interest judgments are made.

Harding confirms that the Times was offered the MPs' expenses data.

"We were one of a number of papers approached about that story," he says.

Asked why the Times did not pay for the data, Harding says:

We generally don't pay for stories. On that occasion we took the view that we shouldn't be in the business of paying for stolen goods … There was a fee for looking at a selection of the disks before you acquired them. There may have been a public interest defence – there was undoubtedly a public interest in the publishign of that story - this is the lesson that I drew: you have to have a set of standards in the newsroom … but you have to be willing to break them if you are presented with a story in the public interest.

Harding is asked about the balance between free speech and privacy.

"There is clearly no absolute right of privacy and no absolute right of freedom of expression," he says. "What you are always doing is considering a sliding scale."

He adds that if the editor is considering breach of privacy, they have to decide on the seriousness of the story.

Harding says the letters page is the most important page in the newspaper because it is where readers can give feedback.

"I do feel as though we are keenly aware of what is being said about the paper, good and bad," he adds, mentioning blogs and Twitter.

Harding is asked about sourcing. He says that stories will be published with only one source but "very very rarely" and only when the source is "pivotal to the story" and when it has been properly interrogated.

The biggest change in Harding's time as editor has been "how to take a paper printed on paper for 225 years and produce it on a screen to the same standards," he tells Leveson.

Harding says that he will set the culture of the paper at the news conference in a morning where the staff will discuss which stories will be covered and which will not.

Harding says the Times has a "feedback editor" of the paper who acts much like a readers' editor.

Harding has been editor of the Times since December 2007; he was previously at the Financial Times for 11 years.

Panuccio has now finished giving evidence and James Harding, editor of the Times, has taken the stand.

Panuccio says there has been a reduction in cash payments since summer 2011.

"The usage of cash payments has gone down considerably," she tells the inquiry, adding that in the six months to December cash payments reached £50,000 "which was significantly less than they have been in the past".

"Journalists were very nervous in relation to cash payments … there's a lot more awareness about cash payments," she adds.

Panuccio says that the £150,000 payment to a source in the News of the World's Pakistani cricket corruption story was approved by herself and the then chief executive, Rebekah Brooks.

She describes the size of that payment as an exception, but adds that there has been "a couple in the £30,000 to £40,000 range" since.

Panuccio is asked about the approval system for payments.

On most NI papers – except at the News of the World – managing editors must approve payments. "The only exception was the News of the World, where certain desk heads could approve payments of up to £2,000 without going to the managing editor," she says.

On cash payments, Panuccio says that journalists and the editor now have to sign for the payment, and that it now includes elements of the bribery act.

The Times has not made any confidential cash payments and the Sunday Times has made less than 10 since she has been chief financial officer.

Panuccio's testimony is expected to be quite short as both James Harding, editor of the Times, and John Witherow, editor of the Sunday Times, are listed to give evidence before 1pm.

Susan Panuccio, finance director of News International, has taken the stand.

Tom Mockridge referred briefly in his evidence to an instance involving a Times journalist and computer hacking from 2009. He said that the journalist allegedly hacked a "third-party computer".

Mockridge's written statement adds that this journalist was later dismissed for "an unrelated matter".

He says:

At the date of my first witness statement, it was my understanding that the reporter in question had denied gaining such access. Following further inquiries, I now understand that the reporter in fact admitted the conduct during disciplinary proceedings, although he claimed that he was acting in the public interest. The journalist was disciplined as result, He was later dismissed from the business for an unrelated matter.

The Guardian's Roy Greenslade has written a blogpost on the Times editorial titled "The Times thunders about press regulation failures - but its remedy is weak". You can read it on his Greenslade blog here.

Pennant-Rea has completed his evidence and the inquiry is having a short break.

Pennant-Rea says trustees – as at the Economist and the Guardian – "could well be a model" for newspapers.

The board will ask the editors from time to time if they feel "subjected to [proprietorial] pressure'. Pennant-Rea says they do not.

Pennant-Rea is asked about the independent directors' input to the Times and Sunday Times.

He says the board must approve the appointment or dismissal of editors. They interviewed Times editor James Harding before his appointment.

Pennant-Rea says the board's duty is to ensure that editors have the freedom and money to pursue the coverage they want.

He describes the Times newspapers' coverage of phone hacking as "comprehensive, objective and fearless".

Rupert Pennant-Rea, chairman of Times Newspapers Limited, has taken the stand.

Mockridge praises the current state of the UK press:

There are many people outside the United Kingdom who look at the British press with jealously – due to the extent of competition and choice and ability of the press in general terms to examine issues and report with a freedom and holding to account that is not available in other markets. Everything might not be perfect, but if we look at the great array of the newspaper stories published in this country in last decade there's only a minute fraction that are of interest to this inquiry.

Leveson questions the phrase "everything might not be perfect" and that a "minute fraction" of stories are of interest to the inquiry.

Mockridge says he is talking about the situation today, and that the British press "enjoys something precious" in its relative freedom.

Mockridge has completed now his evidence.

Mockridge tells Leveson that in the UK there is a "great responsibility" on the state to ensure it does not interfere with the press, given the absence of a US-style First Amendment set of rights.

Lord Justice Leveson asks Mockridge if he can share with the inquiry his view on the future of the British press.

Mockridge says self-regulatory mechanisms in Australia and New Zealand "appear to be working effectively".

He says he shares the view of other witnesses that "I share the view of many of your other witnesses that in this society, where there is not a constitutional [right] to a free press, it would be dangerous for the government to make laws which intervene in the press would undermine the basic principle of a free press."

Mockridge mentions regulatory models in Hong Kong and Italy, saying that there is not much to learn from them.

"The general lesson is that state intervention in the press diminishes the free press," he says.

Mockridge says that the culture of News International is slowly changing.

"It might be overambitious to say the culture entirely has changed in six months, but there has been a change of policy … and individuals are rigorously applying policy,' he says.

News International applies News Corporation's risk management policy, Mockridge says.

Jay has now completed his questions.

Mockridge is asked about a paragraph in News International director of legal Simon Toms's witness statement.

I am not aware that any NI title has ever used or commissioned anyone who used computer hacking in order to source stories. I have been made aware of one instance on the Times in 2009 which I understand a journalist attempting to access information in this way. However, I also understand that this was an act of the journalist and was not authorised by TNL. As such, I understand it resulted in the journalist concerned being disciplined.

Mockridge says the incident involved a third-party computer, not an employee's computer.

Mockridge is asked if News International's use of search agents has ceased, and says he is "completely confident" that it has.

He seeks to distinguish between private investigators and search agencies.

"I have required of the editors and managing editors that we don't employ PIs and search agencies are subject from the general governance of the company – they can't operate in a way different to employees of the company would."

He says that there is a "particular sensitivity" around use of private investigators and that editors have been instructed not to use them.

He adds: "I am confident there is no leakage in the policy. It will require ongoing attention to ensure that [remains]."

The inquiry is interrupted by an evacuation announcement about the Thomas Moore building at Royal Courts of Justice.

This has happened before. Lord Justice Leveson is quick to say: "It's not us. Sit back, have a drink."

Mockridge says that NI board members "have a general responsibility" on the ethics of newspapers.

He describes ethics as a "subjective rather than an objective" term.

"If the board shows an interest to set clear and well communicated policies that itself is a message to the employees of the company to the manner they're expected to behave," he says.

Mockridge is asked about News International's compliance policies.

"We have sought to update, refresh, the whole range of compliance policies and in particular the communication of the compliance policies," he says.

It's an objective to make sure that compliance policies are "up to date and communicated," he tells the inquiry.

Mockridge says his dealings with News Corporation boss Rupert Murdoch varies from week to week. On some weeks he will speak to Murdoch several times a week.

Murdoch is interested in the news – "what is current in British society" – and in the progress at News International and the Leveson inquiry. "A broad range of issues," Mockridge says.

Jay says the purpose of Mockridge giving evidence is to "draw out a number of discrete points" about what is happening at News International.

Mockridge took over from Rebekah Brooks when she stepped down in July last year.

Hislop has completed his evidence and Tom Mockridge, chief executive of News International, has taken the stand.

Leveson asks Hislop whether he has any thoughts on the inquiry to date.

"After the first two weeks of the inquiry I thought that might be it for the press," Hislop says, referring to powerful evidence given by celebrities in November. " The level of distaste for the press was ratcheting up … I was very worried that for X weeks there would be nothing to say why don't you close down the lot of them, they are utterly revolting."

He adds: "I really hope this inquiry doesn't throw out the baby with the bathwater."

Hislop is asked about why not much of the magazine's content appears on its website. He says "I cannot see why journalism, which at its best is a noble craft, should be given away."

He says the magazine's French equivalent, Le Canard Enchaîné, has website that just says "go and buy the paper". He says he was heartened by this.

The Mail on Sunday's Ian Hyland has just tweeted:

Have I Got News For You should book Leveson as a guest. As long as Rita can spare him from the Kabin for a bit longer.

Hislop is asked about his relationship with politicians.

He says he will "occasionally" meet politicians at social events. "I'm sure there's an agenda on both sides," he adds. "I'm hoping to find out information that would be useful to me, they're trying to do the same. It's a trade."

He advocates an "arm's length" relationship with politicians. "A certain amount of distance is advisable," he adds.

Hislop tells Leveson about another example of when Private Eye was effectively gagged from publishing a story.

Private Eye received a warning letter from lawyers for a director of an NHS IT system who was accused of squandering £12bn in public money after a journalist for the magazine put a series of questions to him.

Hislop says he got around the legal threat by reading out the letter under privilege before a parliamentary committee.

Dan Sabbagh has just tweeted:

Leveson - "I'm not suggesting mandatory prior notification...there could be good reasons not to prior notify". Key statement.

Hislop is asked about prior notification.

He says he was stopped from running a story that was "self-evidently in the public interest" about Law Society president Michael Napier for five months while the application for the injunction went through the courts, at a cost of £350,000 to Private Eye.

Leveson says it is a clear example of a need for a low-cost libel tribunal service.

"The lesson I learnt from that was not to give prior notification," Hislop says.

Hislop is asked about the public interest.

He argues that the definition should not be so narrow that it is impossible to justify issues in a grey area.

Hislop says it all comes down to editors' judgment:

A reasonable editor could not have thought 'I must hack into a murdered girl's phone' [and run the Christopher Jefferies contempt stories]; those things seem to me self evidently unreasonable.

The BBC's Ross Hawkins has just tweeted:

Jay putting what I'm calling the #leveson paradox - how can you have non state regulation AND make sure all papers take part?

Hislop says that the Murdoch family are "deeply embedded in our top class", a situation he says gave the News of the World "unbounded confidence to do as it liked".

If the prime minister appoints the former News of the World editor as his communications director, News International will think 'We are top of the pile, nothing can stop us.'

The Guardian's Dan Sabbagh has just tweeted:

Hislop - blunt, quotable, and entertaining evidence. One of the best witnesses - not surprised he is top trending on Twitter UK.

Hislop says he believes in a free press, "not a regulated press', and the law.

"The bigger groups have tended to operate a code of we don't write about each other," he says, adding praise for the Guardian's coverage of the phone-hacking scandal.

I believe in a free press and I don't think it should be regulated, but it should abide by the law.

He says he hopes the inquiry will ask members of the public why they bought the News of the World – "what they thought they were getting" – and Lord Justice Leveson says he will, "but perhaps not in that way".

Hislop is asked about the PCC.

He says the "Street of Shame" section is two pages criticising newspapers, so he doesn't have much confidence in a body on which a number of newspaper editors sit.

He admits it is "a bit embarrassing" that the only other major publisher who isn't in the PCC is Richard Desmond.

Hislop also has an issue with the balance of editors on the PCC and "News International's influence" on the body.

Hislop says libel arbitration is a waste of time. "I would rather end up in the court because I think that's where you end up anyway," he adds.

Hislop says he often does not agree with the settlement proposed by the claimant, so prefers court.

Hislop is asked about proprietorial influence.

He says newspapers' agenda is pretty clear from reading them, referring to the Daily Mail and other titles: "Mr Desmond is the worst example, obviously … The Murdoch press is pretty clear in a lot of its manifestations of what its agenda is going to be, and the paper follows it."

Look at the coverage of this inquiry … You read it fairly closely and think why have they missed out the bits that were critical of us? Is it because they're in tune with the readers, or the editor is embarassed, or the proprietor doesn't want to read it?

Ben Fenton, the FT's media correspondent, has just tweeted:

Hislop statement says sex can affect how people behave.Finance another.In France both wrongly considered private, Hislop tells #leveson

Hislop is asked why Private Eye is not part of the Press Complaints Commission.

He says that ethics are "self-evident", adding: "contempt of court is illegal; phone tapping is illegal; police taking money is illegal … the fact these laws were not rigorously enforce is due the ... interaction of the police and News International."

Private Eye will abide by the spirit of the PCC's code, Hislop says.

He adds: "I hope you'll be calling the PM and Tony Blair and Gordon Brown to explain how that comes down from the top."

Leveson points out that not all of the wrongdoing included criminal offences; some of it was "tortious", ie civil offences.

Hislop talks about what he feels are draconian privacy and libel laws in France. "The French situation is terrible," he says. "They are now catching up with about two decades of news about what their politicians got up to."

Hislop tells the inquiry that he was targeted by "Benji the binman", AKA Benjamin Pell. Hislop apparently caught Pell on camera; a "very stiff" note Hislop had written to one of his colleagues, but decided instead to throw away, appeared in Punch magazine, at the time owned by Mohammad Al Fayed.

Asked if he has evidence for this, Hislop says: "Oooh."

Hislop says that Private Eye has done a lot of work on the phone-hacking scandal but that it "cannot claim that the story is ours". "That story was broken by the Guardian," he says.

Private Eye covered the Met police's Operation Motorman inquiry into newspapers' use of private investigators because Hislop was named as someone that PI Steve Whittamore was paid to search for, he says. He does not say which newspaper targeted him.

He says he will not "throw my hands up at blagging", mentioning undercover investigations into whaling and the practice of lobbyists.

Private Eye's Street of Shame section "tends to be full of stories about journalists misbehaving," Hislop says, for example drunkenness and stealing stories from each other.

Hislop is asked about sourcing.

He says that "whistleblowing" stories often have just one source because only one person is "brave enough" to talk to the magazine.

"As editor you trust your journalists," he says. Journalists should be trusted to check out stories and not to run stories that are "pure grudge".

Hislop says that Private Eye's best sources are its readers. Broadly, the sources for its sections come from inside the relevant professions, he says – "a lot of whistleblowers … a lot of people inside who feel they have a story to report".

He adds that nearly all of the stories in the "Street of Shame" section – about newspapers – come from journalists, "it being a loyal profession".

Ian Hislop, editor of Private Eye, has taken the stand.

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

The BBC's Ross Hawkins has just tweeted:

From written #leveson evidence, S Mirror was offered pic of politician's son in "gangster" pose apparently holding gun on Fbook, rejected it

The Times has published an 1,800-word leader article on the future of the press.

In stark contrast to the gloomy warnings issued about press freedom so far, the Times says that Lord Justice Leveson's inquiry could produce "both a better and a freer press".

It can ensure that newspapers treat people better; it should take a firm view on questions such as prior notification, the publication of corrections and the independent oversight of the press. It must also ensure that the pursuit of stories in the public interest is more robustly protected, with a clear defence that applies to all the laws that govern information gathering. People who are misrepresented or mistreated by newspapers deserve quick and easy access to a meaningful form of redress. Corrections should be in a regular, prominent place. Editors should be willing to remedy a substantial mistake on the front page by at least flagging a correction on the front page. And it would be helpful if the regulator posted newspaper corrections on its website and circulated them to all editors and newsdesks.

The leader calls for prior notification as "best practice", but stops short of favouring an obligatory mechanism. It says that the new regulator should be "more than just a clearing house for complaints".

It needs to have investigative and punitive powers too. This means launching inquiries where there is credible third- party evidence of wrongdoing. Where the regulator's findings suggest illegal behaviour, it should refer the news organisation to the police or any other relevant statutory powers. And punitive powers mean the power to fine.

The full leader is not behind the Times paywall and can be read here.

Good morning and welcome to the Leveson inquiry live blog.

Today we will hear from Ian Hislop, the editor of Private Eye, the chief executive of News International, and the editors of the Times and Guardian.

Alan Rusbridger, the editor-in-chief of Guardian News & Media, and Chris Elliott, the readers' editor of the Guardian, will give evidence to the inquiry, as will James Harding and John Witherow, the editors of the Times and Sunday Times respectively.

Tom Mockridge, the News International chief executive parachuted in after the phone-hacking scandal, will appear later in the day. Mockridge is likely to be asked about new corporate governance rules at News International. The News International financial director, Susan Panuccio, will also give evidence.

Follow the inquiry live from 10am.

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

Good morning and welcome to the Leveson inquiry live blog.

Today we will hear from Ian Hislop, the editor of Private Eye, the chief executive of News International, and the editors of the Times and Guardian.

Alan Rusbridger, the editor-in-chief of Guardian News & Media, and Chris Elliott, the readers' editor of the Guardian, will give evidence to the inquiry, as will James Harding and John Witherow, the editors of the Times and Sunday Times respectively.

Tom Mockridge, the News International chief executive parachuted in after the phone-hacking scandal, will appear later in the day. Mockridge is likely to be asked about new corporate governance rules at News International. The News International financial director, Susan Panuccio, will also give evidence.

Follow the inquiry live from 10am.

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

Gilson says he is "not as pessimistic about the future as the others".

The old inky product is not dead … bumping along the bottom was mentioned this week; that is still the case, [but] there is still a demand for a big print product in the hand.

McGeoghan says last year Greater Manchester police tweeted every single crime.