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Can the UK Prime Minister Survive Murdoch Scandal?

The News of the World phone hacking scandal heaped further pressure on the British Prime Minister, David Cameron, on Monday as more questions were raised about his appointment of the paper's former editor Andy Coulson as his director of communications.

David Cameron
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David Cameron

Opposition politicians questioned Cameron’s judgment after former News International chief executive Rebekah Brooks was arrested and Britain’s top police officer, Metropolitan Police commissioner Sir Paul Stephenson, resigned on Sunday.

Rupert and James Murdoch will face an influential committee of MPs on Tuesday. Their appearance will be shown live here on CNBC.com.

The current session of parliament has been extended to Wednesday because of the scandal.

Parliament had been due to break up for the summer recess on Tuesday but Labour leader Ed Miliband said MPs needed time to debate the issues raised by hearings into the phone hacking scandal being held by the Select Committee for Culture Media and Sport and that the prime minister should also face questions from MPs.

But analysts said that, unless evidence emerged the prime minister had done something illegal, he would survive the current crisis.

“It’s not a good time for the prime minister but if you look at the ratings over the weekend, while Ed Miliband’s ratings have improved, Cameron's have hardly moved and the public still see him as the best leader for the country,” Tim Montgomerie, editor of ConservativeHome.com, the Conservative blog which represents grassroots supporters of the party, told CNBC.com.

“So despite the firestorm, while there are questions about his judgment, unless evidence of wrong doing emerges on the part of the prime minister, and I doubt there is any evidence, then he is safe where he is,” he added.

Miliband said Cameron needed to answer several questions about his own judgment.

Those questions must include why the prime minister had dinner with Brooks and Murdoch less than 48 hours after Business Secretary Vince Cable was removed from making the decision over the future of News Corp’s bid for the remaining 61 percent of BSkyB it didn’t own, and whether the deal was discussed during that meeting, Miliband said.

Miliband added the prime minister had failed to show leadership and accused him of making a catastrophic error of judgment in appointing Coulson. He said that Cameron compounded that error of judgement by failing to apologise for that appointment or take responsibility, comparing his actions to those of the Met Commissioner.

A YouGov poll showed that Cameron personally remained largely unscathed by the crisis, despite both Miliband and Liberal Democrat leader Nick Clegg seeing significant increases in their personal standing among the public.

But last week several bookmakers, among them William Hill, shortened the odds on David Cameron being replaced as leader of the Conservative party - in the case of William Hill from 100 to 1 to 6 to 1 - in response to a flurry of activity among punters. Bookmakers shortened the odds of Boris Johnson becoming Conservative Party leader to 4 to 1 alongside George Osborne.

The change in the betting odds came on the same day that Rebekah Brooks, the chief executive of News International, News Corp's UK newspaper wing, resigned following more than a week of intense pressure from both the media and politicians.

The crisis also led to a fight on the Conservative blogsphere with prominent Conservative campaigner and former Tory candidate Iain Dale openly pondering whether the phone hacking scandal could bring down the prime minister and even the government.

"I can't believe I am even writing this, but it is no longer an impossibility to imagine this scandal bringing down the Prime Minister or even the government," Dale wrote Sunday evening.

“It is difficult to predict what Cameron's next move might be. Having regained the initiative last Wednesday, he is now back in a very bad place,” he added.

Those comments led to Conservativehome.com accusing Dale of disloyalty to the prime minister and working on behalf of Tory backbench MP and former leadership challenger, David Davis.

Meetings With Murdoch

Following Brooks’ resignation, David Cameron published details of 26 meetings with senior News International executives over the 15 months since becoming prime minister, including several meetings with Brooks in June, August and December last year and News International chairman, James Murdoch, in November and December last year.

The prime minister also released further details, which showed he played host to Coulson in March at the prime minister’s residence, Chequers, two months after he resigned as Downing Street communications director.

On Sunday, Brooks was arrested by the Metropolitan Police by appointment on phone hacking charges which saw her held and questioned by police for 12 hours before she was bailed at midnight.

Later the same day, Sir Paul Stephenson resigned over the appointment to the Met police of a former deputy editor of the News of the World as a PR consultant. Neil Wallis, the journalist turned PR man, was arrested over the phone hacking scandal on Thursday.

In his resignation statement Sir Paul said: "Unlike Mr Coulson, Mr Wallis had not resigned from News of the World or, to the best of my knowledge, been in any way associated with the original phone-hacking investigation."

"Once Mr Wallis's name did become associated with Operation Weeting, I did not want to compromise the prime minister in any way by revealing or discussing a potential suspect who clearly had a close relationship with Mr Coulson," he said.

Big Questions to Answer

The prime minister, on a trade mission to South Africa, which he has cut short by two days already in response to the phone hacking scandal, said he thought it was right that parliament sit for an extra day in order to meet those demands. Downing Street confirmed the prime minister would make a statement to MPs on Wednesday and face questions.

However, Cameron also defended his decision to appoint Coulson as his director of communications. He said at a press conference in South Africa: “The situation in the Metropolitan Police Service is really quite different to the situation in the government, not least because the issues that the Metropolitan police are looking at, the issues around them, have had a direct bearing on public confidence into the police inquiry into the News of the World and indeed into the police themselves."

On Monday it also emerged that assistant Met police commissioner John Yates, who last week was called before MPs to face questions over his handling of the review of the original investigations into the phone hacking scandal, was tasked with vetting the appointment of Neil Wallis.

And the Home Affairs select committee announced on Monday that it had invited Yates to attend a hearing on Tuesday, which Sir Paul Stephenson is also due to appear before.

As the day continued political pressure on Yates to resign grew steadily - despite his earlier assetions that he had done nothing wrong - when it emerged on Monday morning that the Metropolitan Police Standards Authority (MPA) would be meeting later in the day to determine whether or not to suspend the assistant commissioner. Before that could happen Yates tendered his resignation.

The Metropolitan Police issued a brief statement in the early aftenoon which said: "Assistant Commissioner John Yates has this afternoon indicated his intention to resign to the Chair of the MPA. This has been accepted. AC Yates will make a statement later this afternoon."