Deputy PM supports Vince Cable's claim that colleague was told Lib Dems would be 'done over' if they opposed Sky bid

Nick Clegg has supported claims by business secretary Vince Cable that someone linked to News International made "veiled threats" that his party would be "done over" if it didn't back Rupert Murdoch's bid for BSkyB.

The deputy prime minister told the Leveson inquiry on Wednesday that Norman Lamb, the Liberal Democrat MP for north Norfolk and Clegg's former political adviser, had told him that an unnamed executive related to News Corporation said the party would get "favourable" coverage in the company's newpapers in exchange for support for the bid.

"Norman Lamb, a friend and a colleague of mine, a Liberal Democrat MP had been told – he described it at least – told that it would be good for the Liberal Democrats to be open to the bid, otherwise we would expect no favourable treatment from the Murdoch press and Norman was quite agitated about that," Clegg told Lord Justice Leveson.

Clegg, the Lib Dem leader, said he did not take the threat seriously. It is believed that Lamb has now written to Leveson on the matter.

Clegg also told the inquiry that he raised concerns about the appointment of Andy Coulson to a No 10 job by David Cameron. The two politicians had a conversation about the former News of the World editor in May 2010 as the coalition government came together.

The deputy prime minister said that he asked Cameron if the appointment was "the right thing to do" given "the controversy around Andy Coulson".

He added that his concern was hardly surprising given Lib Dem criticism of Coulson being hired as Cameron's director of communications when the Tories were in opposition in May 2007.

Clegg said that Cameron told him that he was "satisfied with the response he'd received from Andy Coulson" to his inquiries on the subject and felt his director of communications deserved "a second chance" after he resigned as editor of the News of the World in January 2007 when the paper's royal editor was jailed for phone hacking-related offences.

The deputy prime minister said neither man were aware of the full extent of the phone-hacking allegations at that time, and that he, in any event, had no power over personal appointments made by Cameron. It was not a conversation based on the premise that "I would say 'you can't do that'," Clegg added.

Clegg also accused the News of the World – closed in the wake of the phone-hacking scandal in July 2011 – of "almost amoral behaviour" with its hacking of the mobile of Milly Dowler.

"The Milly Dowler thing transformed everything because it quite rightly inflamed public anger," said Clegg. He said it was evidence of newsroom practices there were "totally out of control" and people who "clearly felt they could operate by one set of rules while everybody else had to operate by another".

"That cultural impunity, sort of one rule for us and another for everybody else, it's not only abhorrent, it's certainly illegal, it's also an expression of a culture in which perhaps because of the intimacy between the press and politicians ... and the press and the police, they felt it they did operate by another set or rules because they ... had the measure of politicians and police,"

Clegg added: "In other words, the arms of the state that should be exercising authority, enforcing the law and acting transparently, were doing exactly the reverse, so no wonder over time the press felt 'oh great, we can do what we like'."

Clegg also set out proposals for reform of press regulation, arguing that the "current oversight and regulatory framework in which the press operates is discredited" and it would probably be necessary to introduce legislation to back up a reinvented Press Complaints Commission.

Any new body needs to be "robustly independent" of "parliament, politicians, government and crucially the media as well", the deputy prime minister said, adding that he saw two areas in which it would probably be necessary for statute.

Referring to the "Desmond problem" – Richard Desmond's withdrawal of his titles from the PCC – Clegg said that "parliament will have a role in crating incentives" to ensure that all newspapers are part of a revamped system, because "you have to buy-in from everybody".

He added that it could also be necessary to have a "statutory backstop" for an independent regulator, mirroring the system where the self-regulatory Advertising Standards Authority oversees adverts, and behind that body sits Ofcom, theoretically able to step in if the ASA is deemed to have failed in its work.

However, Clegg said that he was "attracted" by the idea of balancing any statutory requirements with a "quasi-constitutional guarantee" to recognise the "freedom of the press", emulating protections for the independence of the judiciary.

Concluding, the deputy prime minister said "I think we have a once in a generation opportunity to clean all this up", arguing that public confidence in newspapers had been shaken by the treatment of ordinary people such as the family of Milly Dowler and Chris Jefferies.

He called on Lord Justice Leveson to come up with recommendations that would leave no room for "politicians to make endless mischief" and hold up reform "by having endless debate".

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