Coulson ‘was behind spin over Osborne, cocaine and dominatrix’

The allegation by the lawyer representing Natalie Rowe has raised new questions over the appointment of Coulson as director of communications for the Conservatives in 2007, despite him having to resign from the now defunct tabloid because of phone hacking that took place at the newspaper under his watch.

Coulson claims he knew nothing of hacking at the News of the World, but he has been arrested by police carrying out investigations into the allegations and alleged bribery of police officers.

It has been claimed by Coulson’s predecessor, Rebekah Brooks, that it was Mr Osborne who pushed for him to be employed by the party after leaving the newspaper.

Ms Rowe was interviewed on Australian television yesterday claiming that the News of the World ran the story on its front page because her phone had been hacked.

She had sold it to the Sunday Mirror with a picture of her at a party with Mr Osborne in 1994, with what appeared to be cocaine on the table in front of them.

In an interview with Australia’s ABC television, Mark Lewis, Ms Rowe’s lawyer, was asked about the “downplaying” by the News of the World of story.

He said: “The editor at the time was Andy Coulson, and I think that’s worth remembering because of the future relationship that we have between the Conservative Party, the Prime Minister and Andy Coulson.”

He added: “The editorial (in the News of the World) could have been written the other way. And if it would have been written the other way it would have finished his career I’m sure.”

He went on: “The decision on which spin to give to the story by the editor of the News of the World particularly was something that determined his future in politics.”

Ms Rowe, who also uses the name Jennifer Shackleton and was engaged to Mr Osborne’s friend William Sinclair, a descendent of one of Britain’s biggest landowners, said she did not take cocaine that night because she was pregnant.

However, she insisted that Mr Osborne did take the drug. She said: “It’s been said in the newspapers that he was at university. He wasn’t. At the time he was working for William Hague.

“I remember that vividly because he called William Hague insipid and I didn’t know what the word meant. I do now.

“So he definitely was in government by then, but I think he was getting more and more of a high profile.

“So there was definitely, there was cocaine on that night on the table. George Osborne did take cocaine on that night. And not just on that night. He took it on a regular basis with me, with his friends.”

She added: “There were more witnesses, not just me, that witnessed George Osborne taking cocaine. So it’s, you know, there are other people out there that know the truth.

“On that particular night he had taken a line. And I said to George jokingly that when you’re Prime Minister one day I’ll have all the dirty goods on you. And he laughed and took a big fat line of cocaine.”

The story, which first surfaced in 2005, was one of a series of unproven allegations about drug taking in Mr Osborne’s and Prime Minister David Cameron’s pasts.

Last night, a source close to the Chancellor said: “This story is more than five years old, was widely covered at the time and was roundly dealt with. Nothing has changed.”

The source also dismissed any links with Coulson’s employment and the story.

In 2005, Mr Osborne said: “The allegations are completely untrue and dredging up a photo from when I was 22 years old is pretty desperate stuff.

“This is merely part of an absurd smear campaign to divert attention from the issues that matter in this leadership contest and I am confident that people will not be distracted by this rubbish.”

The controversy did not appear to affect Mr Osborne yesterday as he made a statement in parliament yesterday on the Vickers Report into banking reform.