Phone-hacking trial: Coulson on the budget, the back bench and the back of the book

Coulson's counsel, Timothy Langdale QC, continued his examination in chief by asking his client further questions about his role as deputy editor of the now-defunct tabloid between 2000 and 2003 and his relationship with then editor Rebekah Brooks. Coulson told the court "we were very good friends and became very close", adding that there was an "affair, which was wrong and shouldn't have happened" adding " I take my full share of responsibility for the pain it has caused other people, not least my wife." The defendant agreed that their "closeness" meant he had a different relationship with Brooks than he would have had with another editor but denied this would lead them to breach professional standards.

The defendant told the court that when he and Brooks joined the News of the World, a senior journalist, Greg Miskiw, was appointed as head of the newspaper's "investigation department". This, Coulson said, was not a success and Miskiw was later appointed as head of the news desk. The court was then shown an organisational chart of the paper's senior staff and the witness confirmed the names and roles of the people shown. Coulson confirmed that fellow defendant Stuart Kuttner was the managing editor and described him as an "incredibly experienced journalist and a decent man".

The defence barrister then asked Coulson about his role as editor the News of the World. "The main job as an editor is to produce a succesful paper," Coulson said. "The second thing is to produce a paper within the budget, but there was some unspoken leeway." The defendant told the court that he believed he had been a success "in a shrinking market". There was, the defendant told the court, tension between the advertising department and the news department over who got space in the paper. The period was also, Coulson said,, the start of the "CD and DVD giveaway" era, and these became far more important than stories in increasing sales figures. "Sounds depressing," Judge Saunders commented. "It was profoundly depressing, there was no loyalty attached to it," Coulson replied. He added: "You could do market research the next week and the reader would not even remember where the free film came from."

Coulson was then asked about his contact with Rupert Murdoch. He said Murdoch "would call on a Saturday evening every now and then" and would usually discuss "the big picture in terms of news". He is "very interested in news and politics," the defendant said. Murdoch would also visit the paper two or three times a year. The former editor said he "endured rather than enjoyed" the process of agreeing a budget with News Corporation and would consult with senior staff and the managing editor in putting foward a proposal every year. Coulson said he did not remember if he would go through each item one by one, as he had "bigger issues" to deal with such as the TV listing magazine or the promotional budget. "The weight of paper you use to print your magazine is a key budget item, that could save hundreds of thousands of pounds," the court was told.

The witness was then asked about a 2005 document proposing a "50 per cent cut in the budget of 9 Consultancy". Coulson told the court he "had a memory of them being mentioned on a budget document and knew they had an investigative role". The jury has already heard that 9 Consultancy was the company used by convicted phone hacker Glenn Mulcaire. The former editor asked if he was aware 9 Consultancy was paid over £105,000 a year. "I was told that it was, in effect, a money-saving exercise," he replied, but could not remember the specific conversation. Asked if he ever inquired what the company did, Coulson said: "I assumed it involved finding people. It was not an area of the News of the World I was particularly interested in, I never really got involved with private detectives." Coulson told the court that he believed Mulcaire was involved in tracing people, saying "for me, finding people quickly is an incredibly important part of the process and I viewed that as the function of special inquiries".

The former editor told the court that he would not agree that £100,000 was "a lot of money in the context of his budget"; it paid double that to the astrologer, he added. The jury was then shown further budget documents which showed the paper spent £22,000 per year on flowers alone, which "may have included alcohol as well," the former editor said. There was also an "editorial management budget" of £32,000 and a "contingency fund" of £1.25 million a year on top of the weekly newsdesk spend. "I did my best not to attend most budget meetings," the defendant told the court, saying: "I tried to get other people to go for me. As long as I generally stayed within my budget I was left alone to spend my money as I saw fit."

The court then took a short break.

When the jury returned, Timothy Langdale QC asked his client if he was aware of the contract between Mulcaire and the News of the World that was signed in 2001. "Not that I remember, no," the defendant replied. The former editor was then given a large folder of newspaper "cuttings" including a 1998 two-page feature on the engagement of David Beckham and his wife Victoria he produced while at the Sun. "That was my last story as a journalist," he told the court. He had arranged for the photographs to be syndicated as they were the only pictures of the engagement ring. "A happy event all round," Judge Saunders remarked. Coulson agreed he had a long involvement with the Spice Girls. The court was shown a front page on the Omagh bombing which Coulson said was produced when he was editing the paper in the absence of David Yelland and Rebekah Brooks, who were at a conference.

The defence barrister then turned to the question of journalistic sources. The former editor told the court that there were a varied number of sources including freelance journalists. "It was like factory basically with all sorts of information coming in from various sources, the public, relatives, celebrities and their agents." Coulson said the Spice Girls or the Beckhams "knew how to brand themselves and how to use the media, the business of showbusiness became far bigger while I was editor". When it came to individual sources the defendant said: "It was given you did not throw their names around the office, that's how the media works." The defendant said you would sometimes know a reporter's sources as "it would be obvious" but "that was a pretty low percentage". Some sources, the witness said, would want to stay anonymous as "they might be working for the person or be in a relationship with them". Coulson said that in these cases it was "possible to pay that person in cash with a pseudonym attached, but it was not encouraged". He added that as editor he would not usually be told or involved in cash payments and would not usually ask who a source was other than in "general terms".

The defence barrister asked the witness if he ever pressed a journalist for the identity of a source, Coulson said in general he would not ask for a name from an experienced reporter and would be more interested that the lawyers were happy with the story. Judge Saunders put it to the witness that an anonymous source would not be available to back up a story if it came to a defamation trial. "That is one of the things you take into consideration before publishing," the former editor replied, and if it was an issue they would discuss with the newspaper's lawyers.

The witness then took the court through his weekly schedule in the lead up to publication on Saturday night and told the court that while the "back of the book" – regular features such as motoring, gardening and films – would be finalised early in the week, news stories would be developed through the week at daily conferences. When a story was written, it would be added to an internal system called "Hermes" where it could be edited or changed as the week went on. Story placement would be dealt with by the "back bench" run by Harry Scott, the associate editor. Coulson told the court that if a story was to be moved between editions he may or may not be told about it. "The night editor would be responsible for that," the defendant said.

Court then adjourned for the day

All of the defendants deny all of the charges, the trial continues.