News Corp offered Gove £2m to build 'free school'

Rupert Murdoch's News International offered £2m to sponsor an academy in east London close to the company's headquarters at Wapping, it emerged yesterday at the Leveson Inquiry.

But the project foundered because the Department for Education was unable to afford the cost of building the new school specialising in media and technology near the Olympic site in Newham. Within weeks the company had changed tack, expressing an interest in establishing one of a new generation of "free schools".

Mr Murdoch, chairman of News International's parent company News Corp, met the Education Secretary, Michael Gove, a former executive at The Times, several times after the general election to discuss plans for wide-ranging reform of the schools system.

Yesterday, Mr Murdoch told the inquiry that the state of British schools was a "disgrace", describing educational standards as "a crime against the younger generation and we are determined to do something about it".

Asked whether Mr Gove was close to him, he responded: "I wish he was."

An exchange of emails released to the inquiry revealed how far advanced the plans for the academy had become before it fell victim to the Government's spending squeeze. An email from the Department for Education (DfE) in January 2011 disclosed the company had stipulated that it did not want to replace a failing local school, which is the traditional model for academies.

"It would need to be a new school and it was important to News International that the new building made a significant statement about News International's commitment," a DfE official wrote.

But he replied: "The conclusion of the very tight spending review is that there is no funding line for new academy provision available to the department."

The company's corporate affairs manager, Daisy Dunlop, replied: "Many thanks for your reply and for your honesty about the situation. I will relay this to my colleagues."

Despite the setback, she told the department last May that the firm was interested in establishing a free school in Newham and asked for advice on deadlines for any application. Six weeks later the phone-hacking scandal erupted and the exchanges ended.