A public fallout between Rupert Murdoch and the best-known of his past editors dominated the Leveson Inquiry into the ethics, culture and practices of the British media. At the same time, two more journalists from rival newspapers were arrested by police attached to Operation Elveden, investigating inappropriate payments to the police and instigated due to the fallout from the News International phone hacking and bribery scandal.

Andrew Neil, former editor of the Sunday Times, News International’s most prestigious UK newspaper, has questioned the truthfulness of evidence given to the inquiry by his ex-boss, News International/News Corp owner Murdoch. Neil now works for the BBC.

Neil’s statement was published Wednesday on the Leveson Inquiry web site. Referring to Murdoch’s testimony, he asks whether the wealthy oligarch had “forgotten he was testifying under oath when he claimed he had never asked politicians for anything” and revealed “there was a time when Mr. Murdoch’s support for Mrs. Thatcher paid business dividends”.

“In late 1985, he [Murdoch] had gone to Mrs. Thatcher to get her assurance that enough police would be made available to allow him to get his papers out past the mass pickets at Wapping.”

According to Neil, “Murdoch and Blair also had an understanding where News Corp would enjoy light touch regulation if they supported New Labour in 1997 election.”

“New Labour in power did nothing to undermine or threaten Mr Murdoch's British media interests”, he added, citing the rejection of privacy laws and tougher cross-ownership rules, “as well as the News Corp’s bid for control of BSkyB. This was something Mr. Murdoch’s people lobbied hard for and they had unique and extensive access to the levers of power.”

Neil concluded his statement by saying governments were disproportionately reliant on newspapers’ support, remaining in an “analogue time warp” and ignoring the “political weather” of blogs, social media and news channels.

Neil’s statement underscores the evidence recently revealed by the opening of Thatcher’s archives and the secret deal she made with Murdoch in 1983, whereby the oligarch would use his newspapers to back her government, joining together to fight the workers’ movement and receiving favours in relation to lax media controls in return.

It was a result of this that Murdoch was able to call on Thatcher to order an increased police presence at the Wapping print plant in 1985 to break the mass picket lines that had assembled there to help printers fight rationalisation, de-manning and job losses.

Even more importantly, Neil explains that Murdoch’s relationship with Tony Blair and New Labour after 1997 “became closer, more extensive and deeper than anything during the Thatcher years.”

That relationship helped Blair and Labour to win three general elections, lead British imperialism into an illegal war in Iraq and another in Afghanistan and—above all—to continue the privatisation of public institutions, deregulation of the City, corporate tax cuts and the drastic reduction in the living standards of the working class.

As the editor of the Sunday Times between 1983 and 1994 and founding chairman of SKY TV in 1988, the one-time close personal friend of Murdoch would have known exactly what kind of dirty deals were done behind closed doors between News International and Tory and Labour politicians.

Murdoch’s relationship with Neil soured after he wrote “Full Disclosure”, the inside story of his time at the Sunday Times. The oligarch felt he had been betrayed. Neil left the Sunday Times to become editor of the Sunday Mail, a rival.

On Wednesday afternoon, Murdoch used the social network Twitter to repudiate the main points in Neil’s statement. The media mogul wrote, “Anyone taking any notice of Andrew Neil on me is an idiot. Neil treated best of all ex-employees now shows true colours.”

This explosive exchange provoked by Neil’s submission to the Leveson Inquiry takes place just as the hearings enter their fourth and final stage. Over the next few weeks, Lord Justice Leveson will be taking evidence that is expected to determine whether or not he will recommend statutory controls to regulate the press and media.

The inquiry was initially set up to examine this question, over which there were already sharp divisions within the ruling class, between those that wanted to maintain the loose control exercised by the Press Complaints Commission, primarily Tories, and those that wanted some form of legislative underpinning, mainly Labourites and Liberal Democrats.

When the phone hacking scandal broke last year the prime minister, David Cameron, utilised the inquiry in a desperate attempt to buy some time and bury the bad news that was emerging about his own relationship with leading members of Murdoch’s News Corp media empire.

The argument between the two factions is tactical, as both defend the right of giant capitalist monopolies to control and own the media. The only difference separating them is that one side is frightened by the public exposure of some of the criminal and corrupt practices of the press barons discrediting such a vital propaganda tool. They are calling for statutory regulation to ensure organisations like News International are not allowed to run out of control and put the national interests of the capitalist class and British imperialism at risk again.

The Tories opposing statutory reform are those closest to the hugely wealthy press proprietors and whose interests they protect.

Whereas once these issues would be fought out through parliamentary debate, today differences are so sharp, and parliament itself is so politically discredited in the eyes of the vast majority of the population, that they are sent before inquiries like Leveson’s to be adjudicated upon.

Arrests connected to the corrupt practices of the press have now risen to 41, as the scope of police operations continues to widen. They have also gone beyond the Murdoch stable. Sunday Mirror crime reporter Justin Penrose and Tom Savage, deputy news editor of the Daily Star Sunday, were arrested by officers attached to Operation Elveden and questioned on suspicion of conspiracy to corrupt and conspiracy to cause misconduct in a public office. They were bailed to appear in October.

The newspaper owners, Trinity Mirror and the Express Newspapers, said they were a “cooperating with the authorities”. Trinity Mirror said officers searching Penrose’s desk had “taken away ‘various items’, including his computer”.

Penrose is not the only Mirror journalist to be arrested and questioned recently by Operation Elveden police. On July 4, former Daily Mirror journalist Craig Box-Turnbull, 37, was one of three people arrested by officers investigating corrupt payments.