Reports that Matter

An Inquiry into the Culture, Practices and Ethics of the Press

The Industry Funding Body

Section 58 of 140

The Industry Funding Body

9.1 The model presented is one of "independently led self-regulation".143 The industry is represented in the system largely by the IFB, which has various roles and responsibilities.

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Each of those roles have already been touched on in the paragraphs above, but this section sets out the totality of the IFB's role in relation to the proposed self-regulatory regime.

9.2 Lord Black said:144

"In any self-regulator regime there will always be a need for the industry to be involved in some way. In this case, the publishing industry's chief involvement will be through the operation of the Code Committee [….] and some form of industry co-ordination body to be responsible for funding. This is currently provided through the Press Standards Board of Finance. Its structure and role may change so for the purposed of this note this entity is referred to as the Industry Funding Body."

9.3 The IFB is obviously responsible for setting and collecting the membership fees. The IFB would

set both the overall level of funding to be provided to the Trust and the distribution of that funding between the regulated entities.145

9.4 The IFB has the power to enforce the contract between a publisher and the Trust in respect of the payment of the membership fee.146

9.5 The IFB is responsible for the Editors' Code. Any changes to the Code will have to be approved by the Trust Board.147

9.6 The IFB is responsible for appointing the two industry members of the appointment panel that appoints the Chair of the Trust.148

9.7 The IFB must approve any changes to the Regulations.149

9.8 The IFB is responsible for the Sanctions Guidance which will be used in setting the level of any fine as a result of an investigation.150

  1. Incentives to membership 10.1 It is recognised by the industry that it is important to have incentives for publishers to join the

proposed system. Four such incentives are outlined in the proposal submitted to the Inquiry by Lord Black. These are:

(a) the provision of press cards; (b) the use of agency copy through the Press Association; (c) a "kitemark" for publications which are part of the system; and (d) the way in which advertisers can support the system.

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Press cards

10.2 Press cards are currently issued under the banner of the UK Press Card Authority (UKPCA)

by 17 gatekeepers ranging from the NPA to the National Union of Journalists. At present the press card simply confirms the identity of the holder and the fact that they meet the criteria of their gatekeeper, which loosely means that they are engaged in journalistic work.151

10.3 Lord Black told the Inquiry that under the proposal the issuing of press cards would be limited

to journalists working for publications who were signed up to the self-regulatory regime, or other organisations such as a relevant industry body or a trade union.152 The basis on which bodies were accepted as 'relevant' in this context has not been set out in any detail.

10.4 In addition to a limitation on who could be issued with press cards, the proposal is that the

courts, Parliament, local councils, police, and sports and entertainment bodies would agree only to deal with journalists accredited with the new press cards.153 The Inquiry has seen no evidence of any discussions between the industry and these bodies on the proposal, nor has any evidence been taken from those bodies as to their willingness to participate in such an approach.

Access to agency copy

10.5 Paul Dacre, editor in chief of Associated Newspapers told the Inquiry that the newspaper

industry owns the Press Association (PA) and that there are "significant steps afoot" to examine how the service could be denied to publishers who were not members of the new self-regulatory system.154 This proposal was described by Lord Black as "legally challenging", particularly because of the competition issues raised; these are dealt with later in this Report155 and will be the subject of a report to the PA Board by September 2012.156

Kitemark

10.6 The provision of a kitemark as a badge of quality would be a matter for the Trust itself. Mr

Dacre suggested that such a mark could be carried alongside corrections and clarifications columns to tell the public how to make a complaint and provide information on the process.157 Lord Hunt said that those who join the new regime should carry its badge with pride.158

Support from advertisers

10.7 No detailed proposal in relation to what support advertisers could give to the self-regulatory

system has been provided. Mr Dacre suggested that advertisers, in particular Government and public sector bodies, might be persuaded not to advertise in newspapers which were

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not subscribers to the scheme.159 The Inquiry has seen no evidence that any discussions have been held with any bodies which might be able to deliver a proposal in this regard and I cannot think of any commercial reason why advertisers would wish to go down this route, which could threaten to deprive them of access to one route to what might be a significant market.

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  1. Introduction

1.1 The last Chapter set out the key features of the model presented by Lord Black on behalf of

PressBof and the industry. This Chapter analyses that proposal, in particular in relation to the criteria set out in Chapter 1 above.

  1. Effectiveness

The model must be perceived as credible by the industry

2.1 In the criteria for a new effective regulatory regime I said that a new model must be perceived

as credible by the industry. One aspect of that credibility is the willingness of the industry to participate in it. It was recognised by Lord Hunt that a new system would not be perceived to be effective if a 'big fish' were not a part of it, accepting that Northern and Shell qualified as a 'big fish' for these purposes.1 He went further:2

"Q. ... of course if they don't sign up and the devil is in the detail, then immediately the credibility of the new system would have been fatally undermined. That must follow, mustn't it? A. Yes."

2.2 Lord Black also accepts this by implication when he identifies the withdrawal of Northern and

Shell from the PCC as evidence of a "significant structural problem" within the existing system.3 My own strong view is that no system of press standards regulation could be considered to be credible if one or more national newspaper publisher were not covered by it in some way, without any consequences as a result.

2.3 So, does the model proposed by Lord Black meet that test? The proposal was submitted to the

Inquiry by Lord Black in his capacity as Chairman of PressBoF, which is the co-ordinating body for the newspaper and magazine publishing industry's trade associations. Those trade associations said:4

"While a lot of detailed work is still to be done, the proposals have the broad support of the organisations and their members. The proposals are being further developed in the light of comments received as part of the ongoing consultation process."

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2.4 Whilst this model has been offered to the Inquiry by the industry as a whole, some national

publishers argued for 'even tougher' controls.5 Lord Black explained that that editors at The Independent, The Financial Times and the Guardian had wanted to look at the whether some form of statutory underpinning might be necessary.6

2.5 These proposals have been the subject of three consultation processes, first on the broad

architecture, then on an initial draft contract and set of regulations, and finally on a revised set of those documents together with draft articles of association for the new company. The proposal submitted to the Inquiry is the result of that extended consultation process.7 The consultations were primarily conducted through the trade associations, but the documents were also made available to those in the industry who are not members of any association.8

Industry readiness 2.6 Despite this extensive consultation process within the industry, it is clear that the proposals

have not been developed to a stage where many, if any, publishers are yet willing to sign a contract with the new regulator. Section 6 below looks in detail at the evidence the Inquiry has had from the editors of national and regional newspapers, magazines and blogs about their views of Lord Black's proposal and the extent to which they are now ready and willing to sign up to it. In summary, however, there are a handful of national newspapers which are signalling a clear willingness to join, almost irrespective of the final detail of the contract. A substantial number of other national titles have indicated willingness, in principle, to join but have indicated concerns on matters of detail and, in some cases, principle as well. Those national titles belonging to the Northern and Shell Group have indicated significant concerns about the proposals and reservations about joining the system.

2.7 Among both magazines and local and regional newspapers there is broad support for the

principles that underpin the proposals, coupled with a natural caution about committing to a contract where the details remain to be settled. A number of the editors who have given evidence have identified issues with the proposals that remain to be addressed, and which would prevent them from signing up to the proposal as currently drafted. None identified any points of principle that would prevent them joining at all if the proposal could be amended to meet their concerns.

2.8 The editors of blogs who have provided evidence to the Inquiry largely felt that the proposal was irrelevant to them and offered them nothing. 2.9 It is clear from this that Lord Black's proposals enjoy wide support throughout the newspaper

publishing industry, and that magazine publishers are also generally sympathetic to the approach. However, the nature of the views expressed is evidence of the process by which the proposals have been developed, with the national press at the heart of the structure. The fact that a number of major national newspaper publishers are willing to tell the Inquiry that they are committed to signing up to the proposed scheme is undoubtedly a positive sign. However, the fact that some of the national publishers are still expressing doubts on points of detail means that there must be doubt about the ability of PressBoF to secure the agreement even of these publishers to the model as presented. Further, the significant concerns on points of principle expressed by editors from the Northern and Shell group publications must indicate doubt about the likelihood of Northern and Shell ultimately deciding in favour of membership of the proposed body.

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2.10 Under these circumstances, whilst it is clearly possible that all national newspapers would

be prepared to join a system along the lines proposed, I cannot conclude with any certainty that the system proposed by Lord Black would have any greater coverage among the national press than the PCC currently does. This must be regarded as a significant flaw, albeit one that could be remedied by all major national newspapers signing a contract for membership of the new system.

2.11 A new regulatory system must work for the whole press and the emerging digital market, not

just for the national press. The local and regional press, with some magazines and online news providers, have identified a number of concerns about the compliance burdens, the cost, the ability of that part of the press to influence the system and the ability of the regulator to vary the contract without the support of all members. These are real concerns and I would anticipate that the publishers will want to see real answers to them before agreeing to sign up to the system. It might, for example, be sufficient to re-balance the burden of the costs between local and national publishers but, without detail, it is impossible to say. It would obviously be important from a credibility perspective that resolving these concerns should not significantly weaken the independence or regulatory power of the body proposed.

Incentives to join

2.12 Lord Black sets out four potential incentives that could be developed to encourage membership

of the system. The first would be to limit the provision of press cards to journalists who work for an organisation that had signed up to an ethical code.

2.13 The Inquiry has been provided with a copy of a proposal which was considered by the UK

Press Card Association (UKPCA).9 The proposal would involve two changes to the process by which press cards are currently issued. First, the cardholder would have to make a declaration that they would abide by an appropriate ethical code. Second, there would be a requirement for the ethical compliance of the cardholder's employer or, if he or she was freelance, his or her main client, professional association or trade union.10

2.14 The proposal would not include any change in the process by which foreign journalists

are able to be issued with press cards.11 The UKPCA note that, in respect of broadcasters and newspaper and magazine publishers who are members of the industry self-regulatory body, there would effectively be no change to the current system. Broadcasters are already regulated by Ofcom and the UKPCA would accept membership of the new self-regulatory body as sufficient evidence of ethical compliance.12

2.15 The UKPCA notes that press agencies and picture agencies would need to become ethically

regulated by subscribing to an appropriate code. The Press Association (PA) is currently subject to the PCC code.13 There would also be significant changes for individuals who operate on a freelance basis and for those organisations, such as professional organisations and trade unions, who act as press card gate keepers for them. In these circumstances the UKPCA would expect the gate keeper organisation to have or subscribe to an appropriate ethical code. It is noted that the NUJ already has its own code. In addition, these gatekeepers would have to certify that, where they were issuing a card to a journalist who is an employee,

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that the employer is itself signed up to appropriate ethical regulation. In other words, a union could "not issue a UK press card to an employee of a newspaper not signed up to the PCC's successor".14

2.16 In the case of unaffiliated freelancers (those who are not members of a professional association

or a trade union who acts as a gate keeper for the UKPCA) a UKPCA subcommittee would be established to consider eligibility; those found to be eligible by the subcommittee would be helped to find a gatekeeper.15

2.17 Some significant questions remain unanswered by the proposal. Specifically it is recognised

that the scheme would need to deal with questions of eligibility, complaints, misuse, misbehaviour and breaches of ethical codes. The UKPCA proposal says that withdrawal of a card should only be by decision of the gatekeepers' committee.16

2.18 This proposal was considered by the UK Press Card Association on 10 July 2012 but did not

achieve the 75% majority required for a rule change. The UKPCA has no plans to revisit this issue.17 Mike Gannatt, the Chair of the UKPCA, gave it as his opinion that this was due not to any objection in principle to incorporating an ethical dimension to accreditation, but to the attempt to link that with a regulatory regime:18

"The kitemark proposal foundered over its additional intention to coerce compliance with self-regulation. This created insurmountable conflicts of opinion and interest."

2.19 Despite the UKPCA decision, it is worth considering the merits and disadvantages of the

proposal in case it should be raised again. A number of witnesses to the Inquiry have raised substantive concerns about it. Harriet Harman QC MP pointed out that the risk with this proposal that citizens and bloggers could be excluded from access to public information. The many private organisations, such as sports clubs, who hold press conferences might not want to be a part of such a proposal. The more significant risk was that individual journalists might lose their accreditation when a wider culture within a publication was to blame. Essentially, she said, this proposal was akin to licensing and could inhibit a free press.19

2.20 Angela Philips echoed all of these concerns, saying that it would, in effect let the tabloid press

decide who was going to be allowed to be a journalist.20 There would be no way to protect a journalist who fell out with management at his or her newspaper who could then simply revoke his or her press card.21 Similarly, Ofcom noted that there would be some definitional difficulties in defining a journalist in a digital environment and that such a system could potentially have a restrictive effect on rights of freedom of expression.22 The Media Standards Trust regarded the proposal as:23

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"flawed; it is outdated in an age of digital media; discriminatory against the individual blogger or concerned citizen; most likely at odds with the commercial interests of many of the organisations it seeks to engage with; and perilously close to a licensing of journalism by non-state means."

2.21 By contrast, the Media Regulation Roundtable24 and Professor Roy Greenslade25 noted the proposal was a worthwhile potential benefit to being a member of a self-regulatory system.

2.22 I share the concerns of those who liken this proposal to the licensing of journalists. It seems

to me that the risk of this working in a way which is damaging to competition and freedom of speech is high. It also seems to me that it puts individual journalists very much at risk of being expected to take the consequences of ethical breaches that they may have been pressured into by the culture or practice operating inside the newsroom in which they were working. In addition to those concerns, I am not convinced that those who want to get their message across to the media will see any benefit in cooperating with this proposal, so its effectiveness as an incentive to membership of a self-regulatory regime may well be limited. I do not regard this as either a sufficient, or a desirable, approach to encouraging publishers into a self-regulatory standards regime.

2.23 The second incentive proposed is that the Press Association was looking to see whether it

could provide an incentive to membership of the self-regulatory body by varying the terms on which it supplies services to non-members.26 A proposal of this sort would undoubtedly raise serious questions about compatibility with competition law. PressBoF has helpfully set out the arguments that support the theory that such an arrangement could be considered.27 Even if it were to be in breach of s2 of the Competition Act 1998, such an arrangement might be allowed if it were inherent to the regulatory proposal or if it could be objectively justified as being in the public interest in raising the professional and ethical standards of the press. It is not possible to take a view on whether a proposal of this sort would, in fact, meet any of those tests without seeing the detail of the proposal. Even if it were to meet those tests it would also have to be proportionate and the least restrictive method of achieving the desired outcome: I am not at all satisfied that this would be the case.

2.24 The impact of this proposal would also depend heavily on what was involved. There is a

substantial difference, for example, between refusing to supply publishers with copy or supplying them on different terms and conditions. In any case, other press agencies exist and it is possible that a publisher outside the system may be able to replace PA services.

2.25 The third incentive proposed is access for members to a kitemark to signify quality, and the

fourth is an entirely undefined suggestion that the advertising industry might be able to help. I look at these ideas in a little more detail later on, but essentially there is little to suggest that either would be particularly effective as incentives.28

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2.26 I cannot escape the conclusion that this package of incentives, particularly given the position

now reached by the UKPCA, does not constitute a compelling argument for any publisher to join the body if they were otherwise not inclined to do so. I am very keen to find incentives to persuade publishers into independent voluntary regulation and I find it somewhat disappointing that the industry, with their own knowledge of what is important to them, have not managed to come up with a more compelling package than this.

Contract issues Contract term

2.27 Membership of the system would be by a five year rolling contract. The contract would

require members to pay the agreed levy for the duration of the contract and would bind members to comply with the provisions of the contract, including compliance with the code and co-operation with investigations, even if they were otherwise to leave the system during the term of the contract.29 Should such a five year contact be signed, it would provide a reasonable degree of certainty for the system for five years. However, there is no certainty over what might happen next. Lord Black suggested two possibilities:30

"It could work on a 12-month rolling cycle after the five-year term has ended. There is another possibility, that the five-year break term could be used to review the terms of the contract and publishers, if they agree, could then enter another five-year contract."

2.28 The continuation of the system proposed by Lord Black beyond the initial five year period

would be entirely dependent on the willingness of the industry to enter into a further contract. Furthermore, it is entirely possible that at that point the majority might decide to create a much less robust system. Lord Black told the Inquiry that he could not see circumstances in which that would happen. Instead, it would be an opportunity for consideration of how well the system worked and any improvements that could be made.31 He said:32

"So it's a break-point that should work, I think, in both ways."

2.29 In practice, this must represent a very real risk to the sustainability of the proposed model

beyond the first five year term. I recognise that no system of regulation could be expected, or wished, to last for ever, but this degree of built in failure seems problematic. Nor is it clear to me how this could be remedied. I entirely accept that it is not possible to bind people to a contract in perpetuity, in which case this would appear to be a fundamental problem with a system which is held together only by contract.

Transfer of title 2.30 Should a member wish to transfer a title to a non-member they are required to use "all

reasonable endeavours" to ensure that the new owner is a member of the regulatory scheme.33 This stops short of the more obvious requirement that a title may not be transferred

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unless the new owner signs a contract with the scheme. Lord Black explained that the looser formulation was intended to protect the position of proprietors of local newspapers, where a degree of consolidation in the market is expected and proprietors are reluctant to have their hands tied in the matter of potential purchasers. However, Lord Black pointed out that most transfers of titles were likely to be between publishers who were already members of the system so the issue would not arise often.34 I recognise the concern expressed in relation to the economic difficulties faced in particular by local newspapers. However, this is a rather obvious weak link in the argument that the contract binds newspapers into the system.

Contract variation

2.31 The structure of the system is that all publishers would enter into a bilateral contract with

the regulator. Those contracts would all be identical. The contract could be varied where a majority agrees to variation. The precise mechanism for this is not set out in the proposal put to the Inquiry. Lord Black explained that the majority would have to be calculated on the basis of weighted votes:35

"If it wasn't weighted votes, you could have a situation in which, because they are much greater in number, the magazine publishers could change the contract by outvoting everybody else. So we need to have (sic) find some way of doing that which gives no group of regulated entities a power of veto over changes, but that the voting procedure reflects the nature and diversity of the market. I can't pretend we've cracked that one."

This is a potentially significant issue. Some in the industry have raised their unease about being subject to a contract which could be varied without their agreement. Clearly the exact nature of the weighting will be an important issue for all in the industry and may be difficult to resolve. Should it not be possible to reach agreement on a method of varying the contract by majority, the only alternative would be for any change to require unanimity; this would make changes extremely difficult to achieve.

Enforcement

2.32 As further explained in paragraphs 5.23-5.35 below, the contract model is designed to

introduce a measure of internal enforceability. I underline 'internal', because it is of the essence of the contractual arrangement that it is not intended to be enforceable at the suit of a third party – a reader, say, or member of the public. It relies in other words on a credible prospect of (expensive and uncertain) litigation proceedings between the press organisations themselves to enforce the contract against each other. There must be real questions about that credibility in real life. The likely motivations of press organisations to contemplate suing each other to retain commitment to the contract are very far from clear. In any event, classically, contractual disputes tend to be settled commercially by the payment of compensation rather than the specific enforcement of the terms of a contract. Even within the terms of the contract, there is at the very least an area of doubt and complexity about the extent to which financial penalties could be enforced in a contract action.

  • K — 34

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The model must be perceived as credible by the public 2.33 Any new model must also be perceived as credible by the public. The industry has not

attempted to conduct any consultation with the public on the proposals put forward or taken any steps to understand public expectations of press standards. Lord Black told the Inquiry that this was due to a lack of opportunity to do so but suggested that newspapers would be uniquely well placed to "take the temperature of the public" on the proposals if that was felt to be helpful.36 Similarly, Lord Hunt said:37

"One thing which I had been contemplating is that at some stage we ought to have a public consultation, but I felt that to do anything in that direction would be wrong pending the result of this Inquiry."

2.34 I find it extraordinary that, given the acceptance by Lord Black and the newspaper industry

that the current system of press regulation has lost public confidence, they did not regard public views on the matter as of sufficient interest or importance to make any effort to ascertain them. I find it more extraordinary that, having had its attention drawn to this point by the Inquiry, there is still no sign of the industry making any effort to understand public expectations in relation to press standards. This lack of interest in the views of the public may be symptomatic of the approach that the press has consistently taken towards regulation over many decades. It demonstrates the extent to which the press continue to prioritise their own interests, with consideration of the wider public interest only in as much as it applies to the importance of protecting the freedom of the press, and only then to the extent that they can appoint themselves the arbiter of it.

2.35 The Inquiry placed Lord Black's proposal on the Inquiry website and sought comments from

interested parties and the general public. For the most part the responses have been from those already engaged with the Inquiry.

2.36 A submission on behalf of the Core Participant Victims said:38

"The Module 4 CPVs have considered the submissions and evidence of Lord Hunt and Lord Black. The Module 4 CPVs all agree that the proposal advocated by Lord Hunt and Black for a new contractual self-regulatory body would not be a satisfactory solution. The proposal is considered to be an insufficiently clean break from the current PCC and the failings associated with that organisation. In the event that this system was established, it is anticipated by the Module 4 CPVs that complainants would be likely to prefer court proceedings as a forum for seeking redress."

2.37 Harriet Harman QC MP listed her concerns with the proposal:39

"Our concerns are: The system would remain voluntary – newspapers would be free to choose whether to opt in or not. Members of the public who wanted to complain about non-members would have no redress

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It is by no means certain that all publications will sign the contract, whether new entrants to the market would sign in future, or whether signatories would renew any contract There would be a chilling effect on the system as adverse adjudications could deter proprietors from signing the contract or renewing the contract The system would not be independent – it would still be run by the industry, for the industry Contracts would be between the press itself – they would not necessarily help the public."

2.38 The Media Standards Trust similarly raised concerns that there were insufficient incentives

either to join or to stay in the system and that the reliance on goodwill to keep publishers in the system would make it difficult to impose any meaningful sanction on a publisher.40

2.39 The British and Irish Ombudsman Association said that they did not consider the proposed

model to be appropriate because it would be wrong for the dispute-resolution body not to be independent of the regulator and the remedies proposed were too limited.41

Benefits to the public

2.40 It is important to note that the proposal put forward by Lord Black gives no rights of any

sort to members of the public. The contracts are between the publishers and the regulators. Third parties have no rights under the contract and nothing else in the proposal gives those who are either customers of the press or victims of press behaviour any rights in relation to complaints or redress. Lord Black acknowledged this, but suggested that the rights of third parties would be protected by the potential to take an action for judicial review.42 Whilst it is arguable whether the Trust, as envisaged in this proposal, would be subject to judicial review, Lord Black repeated to the Inquiry that it would be unlikely that the industry would contest that point.43

2.41 This is not a sufficiently credible answer. It is surprising, given the evidence that has been put

before the Inquiry of the harm that the press can do, and have done, to the lives of ordinary individuals, that the industry has not felt it necessary to address anywhere in the system the rights of individuals. I have said, many times, that any new regulatory system must work for the public and for a system to work for the public it should have the rights and interests of the public at its heart. This proposal manifestly fails that test.

What difference will it make?

2.42 The credibility of the system must also depend on the impact that it would have. The Inquiry

sought evidence from editors as to the practical differences that the proposal would make if it was implemented. The detail of those responses is set out below,44 but the overwhelming answer was that it would make no practical difference whatsoever. Some editors noted that

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they would have to make procedural or administrative changes, but there was no suggestion from any editor that Lord Black's proposal would require any changes to the ethical conduct or approach to standards within their title.

2.43 It is fair to say that all the editors who provided evidence argued that standards in their

newsrooms were already high and it might be argued that the question could be said to assume, for each title, that change was necessary. I simply note that the abuses of which the Inquiry has heard evidence, and which are documented in this Report, have happened under the current systems of standards governance in place within newsrooms and that all have recognised that the public has lost confidence in that system. If the proposals put forward by Lord Black would not make any practical or cultural difference, then it is difficult to see how they could be said to be a sufficient answer to the problem that the Inquiry has identified.

Scope and membership 2.44 The proposal includes provision to allow the Industry Funding Body (IFB) absolute discretion

to refuse membership. Lord Black explained that this provision was essentially to allow the industry to refuse membership to top shelf publications, whose membership would be wholly inappropriate because they would only give rise to complaints about taste and decency, which was outside the scope of the body.45 I find this problematic. First, it is difficult to see why it should be the IFB, rather than the Trust itself, which takes decisions on whether or not it is appropriate for a publisher to be a member of the Trust. Secondly, and of greater significance, the provision as drafted allows the IFB to refuse membership to any publisher for any reason, giving rise to the possibility that a publisher could be excluded for commercial or other reasons. Finally, I do not understand the problem about taste and decency. If such a complaint is outside the scope of the code (as at present), it will be very easy to deal with it. It seems to me that it is essential that any regulatory body, self or otherwise, should be open to all in the industry to participate in on a fair, reasonable and non-discriminatory basis.

  1. Fairness and objectivity of standards 3.1 This criterion specifies the need for a credible statement of ethical standards, set in a way that is sufficiently independent of media interests to command public respect.

3.2 Under Lord Black's proposal the Code Committee would retain responsibility for defining the

standards to be complied with by the press, including the definition of the public interest, albeit with the regulator having to approve any changes to the code. The Code Committee would comprise 17 members, of whom 12 would be serving editors, with three public members and the Chair and Chief Executive of the regulator.46 This clearly puts the definition of the public interest in the hands of industry, not of the public as represented by the majority independent members on the Board. Lord Black was reluctant to contemplate the idea that the Committee might instead, have an equal number of public members and serving editors:47

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"I think that the Code Committee is, in effect, the only – because there are independent majorities throughout the rest of this, the Code Committee is the only genuinely self- regulatory bit. I think there is significant moral authority that comes from a code which is written by a committee with significant public involvement but that is written by editors. So I think there would be some fairly robust views expressed about a view that there should be parity on that."

He indicated that, in his opinion, the industry would be unlikely to accept such a change.48

3.3 If one were to accept that it is reasonable for the industry to be in a majority in writing

the code, it is also worth considering whether it is appropriate that those representing the industry should be serving editors. Lord Black argued that this was essential:49

"this has always been the Editors' Code and it has always been the view that it is important that editors write it. That is the way that their newsrooms buy into it. That is the way the publishers buy into it."

3.4 Lord Black denied that serving editors would have a degree of self-interest in how the standards set in the code:50

"LORD JUSTICE LEVESON: It might be thought they have a certain degree of self- interest. A. They have self-interest in making the code work. MR JAY: I think it was you, Lord Black, who used the phrase "buy into it", which is a synonym for self-interest, isn't it? A. No, I don't think it is a synonym for self-interest. I meant "buy into it" in terms of they are the ones that have got to make sure their colleagues stick by the letter of it, they're the ones that have to deal with any complaints that come in under the terms of it. They need to know that it is a practical document. They need intellectual buy in, as much as anything else."

He argued instead that only serving editors would have the practical day-to-day understanding of what life was like in newsrooms and how the rules needed to change to reflect that.51

3.5 I simply do not accept that. Whilst I recognise the importance of having a strong editorial

voice advising on standards, it seems to me quite wrong that editors should actually be responsible for setting standards. It would be quite reasonable for the Trust Board to be advised by the Code Committee, constituted as Lord Black proposes, but the Board should retain responsibility for the code. It is arguable that the Trust Board does have the final say on the code in this proposal, as they would have to agree any changes to the code, but the distinction is important. Whatever mechanism is put in place as to the weight to be attached to advice from the Code Committee, I am not clear that allowing serving editors to set the code provides sufficient independence from the industry to command public respect.

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  1. Independence and transparency of enforcement and compliance 4.1 This criterion covers the mechanisms for enforcement and compliance, the independence of the bodies carrying out those roles and the methods by which they do so.

'Independently led self-regulation' 4.2 Lord Black presented the model as 'independently led self-regulation':52

"it is a self-regulatory system because it is generated from within the newspaper industry and relies on the newspaper industry for funding, but it is independently led in that all the component parts of the regulator have very clear independent majorities in it and that those independent majorities are guaranteed by the independent appointment processes that the trust board will put into place. So it is self-regulation but it is led and managed by a wholly independent body."

4.3 It is worth considering what is meant by 'independently-led' here and the extent to which

the proposals address the fundamental requirement for independence. The first issue that commonly gives rise to an impression that the current system is not independent is the presence of serving editors on both the Code Committee and the Complaints Committee. The proposal before the Inquiry retains both, albeit with the addition of an independent voice in the Code Committee.

4.4 Lord Black defended this position:53

"I used the phrase earlier "independently led self-regulation". If the "self" in that phrase is to mean anything, then it has to mean the presence of editors on the Code Committee, albeit buttressed by a minority of lay members, and it has to mean the expertise of senior serving newspaper figures on the complaints committee, again, though, in a substantial minority. What we've tried to do here is to make sure that actually the complaints arm and the standards investigation arm are structurally shielded from the industry funding body, whose powers are significantly diminished from the existing Press Standards Board of Finance, which is why the key in this body is the presence of this new trust board."

4.5 I do not accept that the concept of 'self-regulation' requires the presence of serving editors

either on the body that sets the standards, although, as I have indicated, I recognise that it would certainly be desirable that serving editors should have an advisory role in standards setting, or on the body that takes decisions on complaints. Self-regulation can equally mean self-owned and self-designed regulation, by independent people, led by a Chairman appointed by a panel which included 'self'. The Industry's unwillingness to address public concern on this matter is a real indication that the proposal to a significant extent represents a broad continuation of the status quo rather than a fundamental shift in attitude or an acceptance of the need for independent regulation.

4.6 The second issue that has been raised, particularly in the context of Mr Desmond's decision

to leave the PCC, is the way that a few powerful individuals have been able to dominate the system. This has been an observed flaw in the existing system and Lord Black acknowledged K

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that there is nothing in the new system to prevent it from recurring or continuing.54 This therefore remains a weak point in the proposed system, which would need to be addressed for the new system to be genuinely independent.

Objects

4.7 It has been pointed out by a number of commentators that the proposal is very much focused

around the industry's interests. This is particularly evident in the formulation of the objects of the Community Interest Company that would be the regulator:55 "Activities which benefit the community, in particular to promote and uphold the highest professional standards of journalism." […..] "Having regard at all times to the importance in a democratic society of the freedom of expression and the public's right to know." There is nothing in these objects about the rights of individuals or the importance of the public interest in other rights beyond freedom of expression, such as an individual's right to privacy. Lord Black argued that these concepts were embodied within the phrase "the highest professional standards of journalism".56 I can see no reason why it would not be sensible for these matters to be reflected explicitly in the objects of the regulator, and I welcome Lord Black's statement that he has no objection to the Article 8 rights being set out.57

Independence from Government

4.8 This criterion, which is clearly extremely important, requires that the enforcement of

standards should be independent of Government. Lord Black argued that the only way to ensure this independence was to have full self-regulation with no statutory involvement of any kind. I look in detail at the arguments surrounding statutory recognition of self-regulation and statutory underpinning to self-regulation later in the Report.58 Here it suffices to say that the proposed industry model has no point of contact with Government and would certainly remain independent from Government.

Structures and appointments

4.9 The independence of the system will depend largely on the structures, but also on the independence of the procedures by which key post holders are appointed.

The Trust Board

4.10 The most important appointment, self evidently, is the Chair of the Trust Board. The

appointment of the Chair, who would have no press background, would be made by a four person panel with two industry members and two public members, making a unanimous decision.59 Lord Black defended this process as "independent of press interests" on the

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grounds that it was a "balance" with neither press nor lay interests having control of it.60 I do not find this entirely convincing. A requirement for unanimity across an equally weighted panel effectively gives a veto to either side. That is certainly balance of a kind, but it puts a considerable amount of influence in the hands of the industry in relation to what should be an independent appointment. Lord Black indicated that the proposal in front of the Inquiry was the industry's "best current shot"61 and that he would look at an alternative model that would provide a majority of lay members on the panel.62 In my opinion, it is of fundamental importance that the Chair of any regulatory body should be independently appointed, and a mechanism that puts a veto in the hands of the industry does not constitute an independent process.

4.11 The other members of the Board would be three lay people and three press representatives.

The lay people would be appointed by an independent process to be determined by the Board. The industry representatives would be individuals with senior editorial or publishing experience, but not serving editors, and would be appointed by the IFB.63 If the issue around the appointment of the Chair were resolved, these procedures would appear to provide for independently appointed independent members to hold the majority on the Trust Board. It would also be important that, if those appointed with editorial or publishing experience remain in employment, they are appointed with true independence and not merely as proxies.

The Code Committee 4.12 The Code Committee would comprise 12 or 13 industry members, drawn from across the

industry.64 These 12 or 13 would be serving editors but no evidence has been presented on how they are to be "drawn from across the industry". The Chairman and the CEO of the Trust would automatically sit on the Code Committee, and the Trust Board would appoint a further three public members who may, but do not need to, be members of the Board or of the Complaints Committee.65 The proposal to introduce public members to the Code Committee must be regarded as a positive step.

4.13 I have already set out my views on the extent to which it is inappropriate to have serving

editors responsible, albeit subject to the approval of the Board, for setting the standards to which they are expected to adhere. I do not, therefore, regard the Code Committee, in a standards setting capacity, as sufficiently independent of industry. As I have equally made clear, however, I do think that the body as described could operate appropriately as an advisory body with the Trust Board having final responsibility for the code. I appreciate that advice from such a body would have to be accorded appropriate respect, that it would be important for editors to 'buy into' the code and that the Trust Board would therefore be extremely reluctant to approve a change contrary to the views of the Committee but, although to some extent symbolic, the difference is important. As will equally be clear when considering the Complaints Committee below, the suggestion that those in charge of the regulated entities should be responsible for the code pursuant to which they are regulated is not one that would (or should) command support.

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The Complaints Committee

4.14 The Complaints Committee comprises the Chairman of the Board, seven lay members

appointed by an independent process, and five working editors.66 One concern would be that having serving editors on the complaints body creates the perception, at the very least, of a lack of independence. Indeed, it is the presence of serving editors on the Complaints Committee that gives rise to the concept of editors marking their own homework. Ed Richards and Colette Bowe from Ofcom gave their clear opinion that:67

"in terms of code setting, in terms of sanctions, in terms of corrections or anything of that kind and in terms of policy making overall, you need to have a bright line separation between those who are regulating and making decisions and those who are regulated, and I think any breach of that [….] means that you will immediately undermine the perception and indeed in reality the actuality of your independence."

Lord Black argued that the industry view was that:68

"these need to be people who are absolutely at the cutting edge of their trade."

He said that the independence of the Complaints Committee was adequately ensured by the independent majority on the Committee and the right of appeal to an independent assessor:69

"I think that body is constructed so that it has a tangibly clear independent majority on it, and we're also, as you're seeing at the bottom, building in an independent assessment of that. So if there was a member of the public who had any concern about the process in the way it had been handled, that one of these minority editors had had some sort of undue influence, that independent assessment, which would be by somebody who had nothing to do with the newspaper industry, would be thrown up."

4.15 The possibility that retired editors, for example in academic positions, or an NUJ representative,

could provide the required knowledge to the Committee was dismissed by Lord Black, although someone who edited a 'website within a newspaper' might be considered.70

4.16 Again, I do not consider that this brings the required degree of independence from industry

to the enforcement of standards. An argument is often advanced that doctors sit on the British Medical Association disciplinary panels so there cannot be a problem with editors on the Complaints Committee. The problem with this argument is that individual doctors are not to be compared to editors: there is only a very small pool of national editors to draw from, making it impossible to create a panel where the members would not know the people on whom they were adjudicating and have views about them and their title. I have not considered whether it would be appropriate for there to be a role for a serving editor to be able to provide written advice to the Complaints Committee, but I do not accept that the Committee should have serving editors sitting on it.

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The Compliance and Investigation Panel 4.17 The Trust Board would maintain a 'pool of experts' from whom they could appoint a

Compliance and Investigation Panel when the need arose. The names of the people in the pool would be published and each specific panel would be appointed, by the Trust Board, to suit the specific demands of an investigation.71 The basic structure here seems sufficiently independent from any relevant interest. The Inquiry has not been given enough information about the methods by which the experts will be appointed to the panel to take a view on the adequacy of those processes, but there are no immediate concerns here.

The Industry Funding Body 4.18 The Inquiry has been given no information about the composition or, of appointment procedures for, the IFB as Lord Black explained:72

"while we have been able to establish some general principles about its operation, the details are still in progress, and will need to be subject to a further round of industry consultation."

Clearly the IFB will not, and cannot, be independent of industry. It is undeniable, however, that there is very real merit in it being considerably more transparent so that the public are aware of the different influences within the IFB. The most significant point of interest is around the relationship between the IFB and the Trust Board.

Relationship between the IFB and the Trust 4.19 One of the arguments put forward by Lord Black as to the enhanced independence of his

proposal, by comparison with the PCC, is the fact that the IFB has a relationship only with the Trust Board, not with the operational parts of the regulatory organisation. This assertion bears closer scrutiny, in particular as it impacts on the investigations and compliance role of the regulator. An exchange between Mr Jay and Lord Black sets out clearly the extent to which the Trust Board, with whom the IFB have their direct relationship, has responsibility for all the significant decisions in relation to an investigation:73

"Q…but are we agreed to this extent: that trust board approval is required to establish an investigation? Is that right? A. Yes. Q. Trust board approval is also required to take action to enforce the contract in relation to an investigation; is that right? A. Yes. Q. The trust board, you've told me this earlier, handles appeals against a finding of the compliance and investigation panel. A. By setting up a new panel. Q. By setting up a new bundle (sic). And the trust board must take the decision on raising any fine in relation to an investigation; is that right?

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A. Correct. Q. And the trust board also ratifies changes to the code, doesn't it? A. Yes."

4.20 Whilst there is nothing objectionable in the Trust Board having these roles in respect of

investigations, it is not possible, in the light of this, to also argue that the IFB, by interacting only with the Trust Board, has no interactions with parts of the body that are taking regulatory decisions. The Trust Board is quite clearly taking regulatory decisions here; indeed, it is responsible for all of the most significant regulatory decisions in relation to an investigation. Lord Black argued that this would not matter as investigations would be funded from a ring-fenced enforcement fund, which is to be established at the outset and will not be the responsibility of the IFB.74 This is not a sufficient argument. The influence of the IFB derives from its position as the funding body for the regulator, but is not therefore limited to matters that fall to be funded by it. The risk, surely, is that the Trust Board might seek to avoid causing friction with the IFB in relation to investigations in order to preserve a good relationship on the wider funding issue.

4.21 The IFB has a number of other roles in the system. It is responsible for the code, although

the code must be agreed by the Trust. The Trust is responsible for the Regulations, though they must be agreed by the IFB. These complementary roles provide a model of regulation in which the industry has a very strong say, both through being in the lead in setting standards and having a veto over the Regulations governing the maintenance of those standards. Lord Black argued that this was a very important system of checks and balances, to protect the industry from a regulator which might want to make changes that would destroy the industry whilst simultaneously protecting the regulator from any attempt by the industry to scale back regulation. He did, however, suggest that a stipulation could be added to the contract that no changes to the contract or to the regulations could ever dilute the power of the regulator.75 In relation to changes to the code, Lord Black said that the Trust Board would have the ultimate responsibility for a change, with the IFB essentially having a role in managing a prior consultation process. He recognised that this was not what the documents provided to the Inquiry set out and that some redrafting would be necessary to achieve that effect.76

4.22 The powers of the IFB, which run throughout this proposal, undermine claims to independence

of the regulatory system. Lord Black talks of independently led-self regulation but it is not clear that leadership in this system can come from the Trust. Rather, there is a joint system of leadership between the Trust and the IFB in which the IFB has the lead in many important issues, in particular the funding of the body, the definition of the code and setting sanctions guidelines; it also has significant influence in many others, such as the appointment of the Trust Chair and changes to the Regulations. Removing the IFB from decision relating to appointments, the code, the Regulations and sanctions would go a long way to enhancing the independence of the proposed system.

Complaint handling

4.23 Members of the new system will be expected to try to resolve complaints directly with

the complainant in the first instance. The intention here is to improve transparency and accountability within publishers, as well as to reduce the workload for the regulator.77 This is a sensible development.

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Third party complaints 4.24 The proposal would give the regulator the power to take up a third party complaint where

there has been a significant breach of the Editors' Code and there is a substantial public interest in allowing the complaint to be brought.78 Lord Black gave evidence that the new body, in line with current practice in the PCC, would always be able to take third party complaints on a matter of accuracy.79 That is not reflected in the drafting of the regulations, which would appear to restrict third party accuracy complaints to "significant breaches" with a "substantial public interest". Lord Black provided assurance that it was not intended to have that effect, but on the contrary was intended to make it easier for groups to bring discrimination complaints under the discrimination clause of the code;80 it remained important, however, for the regulator to have discretion over when to take up third party or group complaints on issues such as discrimination.81 As it stands, this wording appears to significantly raise the threshold for third party complaints about accuracy. I accept Lord Black's assurance that this is not the intention but it is important that that point should be clarified.

Compliance reports 4.25 The proposed scheme introduces annual compliance reports which would set out compliance

systems and report on any compliance breaches and the steps taken to remedy them. These reports form an important part of the standards function of the new model. The reports would be sent to the Head of Standards and Investigations (an official position at the Trust) whose team would analyse the reports. It is anticipated that this will lead to dialogue with the publishers about the actions that they have taken over the year and the extent to which the report demonstrates active compliance with the standards. Once the reports are finalised it is expected that they will be published. The contract would require regulated entities to be open and cooperative towards the regulator and to disclose any significant breaches of the code promptly.82 It would be open to the Trust to take action, including potentially the launch of a full scale investigation, to require the reports to be full and frank should that be necessary. The process of reaching agreement on the annual report between the publisher and the regulator would be a proportionate one, taking into account the size and nature of the publisher.83

4.26 This proposal strikes me as an eminently sensible one. It must be right that the primary

responsibility for compliance lies with the company and they should be encouraged to take that responsibility seriously. A requirement of this sort should significantly enhance the transparency of compliance across the industry and put pressure on management within each title to ensure that they have a good story to tell. It might also be reasonable to suggest that newspapers should publish their annual compliance reports in their own pages to ensure that their readers have easy access to the information.

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4.27 The proposal also requires publishers to identify a named senior individual within each

company who is responsible for the maintenance of standards, compliance with the code of practice, reporting annually to the regulator and then dealing with the follow up from the regulator.84 Arguments may be made about whether that senior individual should, of necessity, be the editor or the proprietor but, in any event, this also seems like a sensible innovation that could, if operated properly, encourage real change within organisations.

Whistleblowing

4.28 Lord Hunt raised a concern that had not been picked up by the industry proposal, namely that

there should be a whistleblowing hotline into the new regulatory structure for those who feel that they are being asked to do things which are contrary to the code.85 It is a shame that this has not been taken on board by the industry proposal: it is obviously sensible.

  1. Powers and remedies

5.1 The sanctions available to the regulator differ substantially depending on whether an issue is

dealt with via the complaints arm or the standards arm. The Complaints Committee has the power to issue an adverse adjudication, and to negotiate the wording, size and placement of a correction or apology, but it cannot impose a fine, even in an egregious case.86

Complaints

Lack of adjudication

5.2 Lord Black explained that conciliation remained at the heart of the proposed complaints

process because "the bulk of complaints will lend themselves to conciliation."87 ibid evidence of Jamie East to Joint Committee on Privacy and Injunctions Q336, http://www.parliament.uk/documents/ joint-committees/Privacy_and_Injunctions/JCPIWrittenEvWeb.pdf p35, lines 8-11, Lord Smith, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Afternoon-Hearing-22-May-20121.pdf http://www.pcc.org.uk/cop/evolving.html para 44, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Witness-Statement-of-Lord-Macdonald- QC1.pdf; Letter of advice not published http://www.guardian.co.uk/media/greenslade/2012/may/01/rupert-murdoch-newsinternational p67, lines 8-21, Neville Thurlbeck, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript-of- Morning-Hearing-12-December-2011.pdf pp27-28, lines 11-16, Gordon Brown, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Morning-Hearing-11-June-2012.pdf pp29-30, lines 13- 2, ibid p68, lines 18-25, Dick Fedorcio, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Afternoon-Hearing-13-March-2012.pdf p40, lines 15-19, Gillian Shearer, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Afternoon-Hearing-26-March-2012.pdf p108, lines 11-19, Sir Christopher Meyer, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/ Transcript-of-Morning-Hearing-31-January-2012.pdf pp66-67, line 22-2, George Osborne, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Afternoon-Hearing-11-June-2012.pdf p37, lines 8-19, Stephen Dorrell MP, ibid p12, para 47, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Witness-Statement-of-Vince-Cable- MP.pdf pp1-9, Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Exhibit-SA-–-D8.pdf pp2-3, para 3.1, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Lord-Black-of-Brentwood- Annex-B1.pdf p64, lines 9-12, Lord Black, ibid p54, ibid There have been three resignations by previous chairs in the last four years Part I, Chapter 9, para 2.8 Ibid, at para 39 It would be open to the regulator, in the case of a serious breach that could nonetheless be resolved to the complainant's satisfaction by way of conciliation, to reach a full-scale adjudication. The Complaints Committee can call on a publisher to take disciplinary action against an editor.

5.3 My concern in this context is that a great proportion of the complaints made to the PCC

currently are rejected at the first point of contact, and the vast majority of those that are looked at are resolved through mediation. Just because it has proved possible to resolve a complaint to the satisfaction of the complainant without a formal adjudication there is no guarantee that a breach of the code was not committed; indeed, the reverse is likely to be the case on the basis that the clear cases will be conceded and redress provided. On the other hand, only those few that go to a full adjudication ever get to the stage at which a breach of the code is recorded. This allows the fiction that only a handful of breaches of the code occur each year to go unchallenged.

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5.4 Lord Black told the Inquiry that it would be open to the regulator to decide that it wished to

adjudicate more. In particular this would be helpful for the regulator when considering best practice guidelines which would tend to be informed by adjudications. Lord Black accepted that there was no principled objection to setting some sort of threshold above which cases would automatically go forward to adjudication:88 "Q. Do you think it might be better to have a sort of threshold written into the regulations which, if the regulator thought that there was prima facie evidence of a serious breach of the code or breach of the code which was other than minimum or raised minor questions of inaccuracy, then unless the complainant wished otherwise, almost as a matter of obligation, the regulator should take that forward to an adjudication? A. I would expect that to be the best practice of the regulator. If there's a case for writing that in, if it can be codified in a way which can be written into regulations, then I wouldn't see a principled objection to that……I would hope it would be a matter of best practice, but if there is merit in codifying it, we will."

5.5 I think this is very important: the regulator must have a clear sense of the scale of code

breaches that it is dealing with both in relation to individual publishers and in relation to the industry as a whole. This information about breaches of the code would be of critical importance to the management at the individual publishers and to the regulator in its role of promoting and maintaining standards. It is also important that mediated complaints are recorded, with code breaches identified. It is difficult to see how systemic failures in code compliance could be detected if code breaches are not identified as such by the Complaints Committee.

Remedies and sanctions available for complaints 5.6 The remedies and sanctions available to the Complaints Committee are described as:89

"…a ladder of sanctions from a fairly straightforward correction through to a breach of the code that's remedied and identified in statistics, through to a formal reprimand of the editor, right up to where there has been a very serious breach and that leads to a referral from the complaints arm to the publisher because it raises contractual disputes…"

5.7 Whilst this was presented as a change, the only thing that this proposal adds to the current

armoury of the PCC is the power to refer the matter to the complaints arm. Lord Hunt did not dissent from that, saying "it's a simple codification of it…."90 ibid p56, lines 15-23, Camilla Wright, ibid p19, lines 11-13, ibid http://www.pcc.org.uk/cop/evolving.html, para 28, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Witness-Statement-of-DS-Philip-Williams.pdf p10, para 6.7, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Thomas- Mockridge.pdf p4, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Submission-by-Trans-Media-Watch.pdf http://www.pcc.org.uk/assets/696/Code_of_Practice_2012_A4.pdf p8, para 29, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Second-Witness-Statement-of- Richard-Wallace.pdf p41, lines 7-21, CC Andy Trotter, ibid pp71-72, lines 23-14, Paul Peachey, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Morning-Hearing-14-March-2012.pdf pp1-2, Richard Thomas, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/RJT-Exhibit-17.pdf Stephen Glover, 13 June 2007, http://www.dailymail.co.uk/news/article-461603/The-magnificent-self-delusion-Mr- Blair.html pp82-83, line 24-9, Andy Coulson, ibid p3, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Exhibit-to-Rt-Hon-Baroness-Virginia- Bottomley_Privacy-Media-Intrusion-17-July-1995.pdf Article 4A, ibid; p277, Dr Vince Cable, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Exhibit- VC1-2.pdf p7, Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Exhibit-SA-E2.pdf; p11, Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Exhibit-SA-E1.pdf J p5, para 24, ibid p8, line 23, Lord Black, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Transcript-of-Afternoon- Hearing-9-July-2012.pdf p55, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Media-Standards-Trust.pdf K p42, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Reuters-Institute-for-the-Study-of-Journalism- submission-April-2012.pdf Part I, Chapter 9, para 4.19 Ibid, at paras 45-46

5.8 It is notable that the regulations do not appear to give the regulator the power to determine

where an adjudication or apology should be placed. Lord Black suggested that it was possible that this could be changed but that it would be a matter for the Code Committee, subject to Trust Board ratification, to change.91 I welcome Lord Black's implication that this is an area where some movement may be seen, but it is, again, surprising that the industry has not already moved on this issue if they are inclined to do so. It is, frankly, absurd that the regulator should not have the power to determine the location of an adjudication or apology.

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Compensation

5.9 The regulator is given no powers to award compensation. The explanation for this is that

if compensation were available to complainants through the regulatory process it would complicate the conciliation process.92 Lord Black suggested that if the regulator were to have the power to award compensation then complainants would always tend to want the regulator to deal with their complaint rather than getting the individual publisher to deal with it; furthermore, it is likely that the publisher would be even more defensive than presently is the case.

5.10 There is also another substantial difficulty. Although it might be possible to specify a right

to compensation for a breach of the code that did not involve breach of the civil law (as can be awarded by Ombudsmen for maladministration), in the main the issues likely to lead to a reasonable expectation of compensation are those which give rise to a claim for civil damages. If the regulator had the power to award compensation, it is likely that it would be sought as a matter of course; instead of providing what should be speedy redress by way of apology and correction, arguments will develop about the extent of the breach and the way in which compensation should be approached. There is a real risk that lawyers for both sides would become involved, with the result that the system could collapse under its own weight. An arbitral arm could provide swift financial redress in appropriate breaches of the civil law. In the circumstances, I am inclined to agree with Lord Black that it would be better for the complaints arm not to have the power to award compensation.

5.11 Limiting the sanctions available to the Complaints Committee to those set out in paragraph

5.6 does mean that, short of legal action by a complainant, a publisher is unlikely to suffer financial penalties for a single abuse, no matter how egregious it might be. However, in the event of a complaint about a particularly egregious breach of the code, it would be possible for the Complaints Committee to refer the matter to the Investigations arm, which could then, with the approval of the Trust Board, initiate an investigation. This could culminate in a fine if the single egregious breach were considered to demonstrate a complete failure of internal governance within the company.93

Contemporaneous civil proceedings

5.12 The proposal does not allow for the regulator to hear a complaint if it is the subject of current

legal proceedings. A joint submission from ANL, GNM and TMG points out that s114 of the Broadcasting Act 1996 prevents Ofcom from considering fairness cases where the matter is the subject of proceedings in a court of law.94 That submission argues that the nature of defamation means that it is essential that both sides in a civil case should be able to argue their case freely, and that the existence of parallel regulatory proceedings might make it difficult for the defendants to offer a full defence because of regulatory concerns. Notwithstanding that, Lord Black conceded that there was a case for allowing the regulator to look at pure code or ethics issues that are unconnected to the libel proceedings whilst those proceedings are underway.95

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5.13 Lord Black further considered that there was nothing to stop the Complaints Committee

considering a complaint before a libel action was brought, and went further saying that he would expect the new regulator to take the view that this could happen.96 Lord Black also expressed the view that a successful court action might "almost be an automatic trigger for a full scale investigation,"97 p5, para 18, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Witness-Statement-of-Mazher- Mahmood.pdf p102, lines 2-9, Paul Staines, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript-of- Morning-Hearing-8-February-2012.pdf the PCC advances the argument that it is not and never has been a regulator in the proper sense of the term, nor a fortiori were its predecessors; what it has done and how it has portrayed itself is analysed in Part J Chapter 2, but the term is used for present purposes p9, lines 19-24, Lord Black, ibid p9, lines 9-15, ibid p1-2, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Supplemental-Submission-by-Transmedia- Watch1.pdf p37, lines 3-7, Colin Myler, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Afternoon-Hearing-14-November-2011.pdf pp34-36, lines 19-24, Rebekah Brooks, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript- of-Afternoon-Hearing-11-May-2012.pdf pp10-11, lines 15-21, Paul Dacre, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript-of- Afternoon-Hearing-6-February-20121.pdf; http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Submission-on-behalf-of-Neil-Morrissey.pdf p13, para 29, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Second-Witness-Statement-of-Anne- Campbell.pdf p5, para 3.5, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/10/Submission-from-ACPO-Interim- Guidance-for-relationships-with-the-Media.pdf p5, para 13, ibid pp45-49, passim, Gordon Brown, ibid p66, para 196, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Witness-Statement-of-David- Cameron-MP.pdf p19, lines 19-25, Lord Wakeham, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Morning-Hearing-15-May-2012.pdf p20, para 59, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Witness-Statement-of-Adam-Smith. pdf; pp20-50, ibid pp47-48, paras 99-102, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of- Stephen-Abell.pdf p5, para 26, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Lord-Black-of-Brentwood-Annex-C1. pdf p69, lines 15-23, Lord Black, ibid p16, para 14, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Professor-Roy- Greenslade-of-City-University.pdf Baisnee, O and Balland, L, 'France: Much Ado about (almost) Nothing?' in, Eberwein et.al, Mapping Media Accountability – in Europe and Beyond, p71 Application 33400/96, [2003] ECHR 359 thus ensuring that the regulator would look at the standards implications of successful civil action against a publisher.

5.14 I remain to be convinced that there is any particularly unique problem associated with

defamation that makes it impossible for court and regulatory action to be taken simultaneously. It seems reasonable that a court should be able to stay the regulatory action if continuing it would endanger the civil action, but that is no reason for a blanket ban on the regulator considering regulatory issues without waiting for any legal action to be completed first. I very much agree with Lord Black that a new regulator should take the view that a complainant can bring a complaint prior to taking legal action if they so wish, and I would consider that it should be made clear in the contract and regulations that this is the case.

Investigations 5.15 An investigation can be triggered by a number of events, described as "serious or systemic

breaches". It is accepted that this could include one serious breach where it was clear that the breach had arisen because controls were not in place in the newsroom to prevent it.98

Process 5.16 An investigations panel, once established, would have the power to view documents and,

in theory, to summon witnesses. It was accepted, however, that, whilst the power to view documents could be enforced through the courts, the power to call witnesses would not be enforceable,99 although failure on the part of a publisher to provide a witness once called for would constitute a breach of an obligation.100

5.17 The investigation procedure is set out in some detail, requiring a substantial amount of

oversight by the Trust Board and offering a number of opportunities for the investigated party to make representations or appeal. First, the investigation can only be established by the Trust Board.101 The regulated entity has an opportunity to make representations that the investigation should not be set up.102 If a dispute arises between the Head of Standards and the regulated entity it must be referred to the Trust Board.103 Any requirement to bring legal proceedings to compel production of documents must be approved by the Trust Board.104 Once a report has been prepared in draft it must be sent to the regulated entity, which has 28 days to make submissions.105 The regulated entity is then invited to the meeting of the investigation panel to discuss the draft report in order to be able to make further representations.106 The

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preliminary decision of the panel must be sent to the regulated entity, which then has 14 days to make comments.107 Once the investigation panel has made its final decision, having had the benefit of all these submissions, the regulated entity can appeal to the Trust Board for a new panel to be set up to look at the matter again.108 The regulated entity then similarly has the opportunity to make representations to the review panel preliminary findings.109

5.18 There can be no objection to procedural fairness, and it is right that the subject of an

investigation should have an appropriate opportunity to make their case and to ensure fair treatment. However, the process described above appears somewhat extreme and could be thought to give so many opportunities to the regulated entity to challenge every single step so as to frustrate the investigation and make it very difficult for the regulator to reach a conclusion, particularly if that conclusion was adverse. Lord Black defended the process, arguing that:110 "I don't think it can be overstated quite how serious an adverse finding from the standards and compliance panel of the new regulator would be, and therefore I think the regulated entity needs to be dealt with fairly and proportionately and that means they should have the ability to put their case at certain points during this. That would just seem to me to be natural equity and natural justice."

5.19 He went on to say:111

"I think it highly unlikely that during the course of an investigation a regulated entity would take every single opportunity to try to derail it, but even if it did, then the trust board and the investigation and compliance panel must plough on and it will get to the right place in the end."

5.20 I am not sure that this is acceptable. These provisions have obviously been drafted to take

into account the anxieties of the publishers about the implications of an investigation and I do, of course, recognise the need for them to have a full say in the process. However, if there is to be any value in the investigations process, which is itself the only genuinely new part of this proposal from the industry, then it is essential that it should be capable of operating without continually being frustrated by those subject to regulation. I do not have a particular view on what is the right number of opportunities for an investigated party to appeal against the process but I am clear that, as currently drafted, it goes too far in that direction with the serious risk of entirely undermining that effectiveness of the investigation remit of the regulator.

5.21 I note that the investigations process is entirely between the regulator and the publisher.

There is no role at all for the victim, or victims, of the behaviour that has given rise to the investigation. There is no opportunity for them to submit evidence to the investigation, and no opportunity for them to challenge the outcome of the investigation. I recognise that if an investigation is looking at systemic failures of governance it may not be easy to identify the victims. There is no reason, though, why this should prevent the investigations process allowing a role for victims (or, at the very least an obligation on the part of the standards investigator to consult the victim) where an investigation relates to one or more specific events in relation to which victims can be identified.

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Fines and Sanctions Guidance 5.22 The regulator has the power to impose fines and sanctions, but this must be done in accordance

with the Fines and Sanctions Guidance issued by the IFB.112 Whist it is entirely reasonable to have fines and sanctions guidance, I am completely at a loss as to why that guidance should be set by the industry rather than by the regulator. Lord Black did not provide any insight into this, but pointed out that once the guidance had been incorporated into the contract the IFB would have no power to amend it.113 This is a minor point, but is indicative of the extent to which the industry has kept to itself control of the tools that the regulator has.

Enforcement 5.23 As a result of the contractual nature of the proposal, the regulator has only one method of

enforcement of its decisions, whether in relation to a complaint or an investigation, which is to take action in the courts for an order for performance of the contract. There are a number of implications to this. The first, and most obvious, is the cost that the regulator would incur in seeking to get his decisions enforced. There will always be a matter of judgment for the regulator as to whether it is a good use of his resources (both in time and money) to take proceedings. It also means that, even where a regulatory decision has been taken according to the Regulations and all possible appeal routes have been exhausted, the publisher will still be able to argue as to whether the fine or other decision can be properly enforced under the contract.114 This adds a layer of expense and complexity to the regulator's enforcement processes.

5.24 It is argued, rightly, that if a publisher were to fail to comply with reasonable requests from

the regulator, or with regulatory decisions, that this could lead to the opening of a full scale investigation. However, the same concerns apply to the enforcement of the outcome, or indeed the conduct, of any investigation. There is a risk that the proposed system could be frustrated by a publisher who, although having joined the system, was not inclined to cooperate and who could appeal every decision and argue every point, with the risk that the regulator would either have to devote a substantial amount of his resources to dealing with the problem or abandon the attempt to enforce decisions. This strikes me as a structural flaw in the proposal, although I do not immediately see a way around it. A body which derived its authority from statute or by reason of statutory underpinning would similarly be open to challenge on every decision and might similarly face a concerted effort to frustrate its ability to make and enforce decisions. The contractual system does, however, provide an extra level of potential challenge that would not be available in a system, independently appointed, which derived a measure of authority by law.

5.25 A further point also arises, which is about the willingness of the regulator to take any action

in court to enforce the contract. Any decision to take action against a member to compel disclosure of documents must be approved by the Trust Board, and it seems likely that any decision with the reputational, operational and financial implications of taking legal action against a member would generally be referred to the Board.115 I have already referred to Lord Black's assertion that the complaints arm and the standards investigation arm are structurally shielded from the industry funding body. This is certainly true in terms of direct appointments

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and day to day operation but the argument wears thin in relation to enforcement if the decision to enforce a judgment of the regulator sits with the Trust Board. This could be avoided by giving the Head of Complaints and the Head of Standards the power to take action against member companies, for enforcement purposes, without reference to the Trust Board, but it is hard to reconcile that with the Board's overall responsibility for the regulator and, in particular, its budgetary responsibilities.

  1. Cost

6.1 The estimated cost of the proposal is £2.25m per annum, with a separate enforcement fund

plus set-up costs.116 The cost of the PCC has been in the region of £1.75-£1.95m per annum in recent years.117 The proposal is that the industry would pay the full cost of the new system, as they currently pay the full cost of the PCC. This was presented by Lord Back as an essential aspect of a self-regulatory system and a demonstration of the industry's commitment to standards:118

"The industry invests in the regulatory system as a sign of its commitment to protecting the public and putting right things which have gone wrong."

6.2 It was made clear by a number of witnesses that one of the keys to any independent regulatory

system was the independence of its funding. Ofcom recommended that any system should be based on fixed long term (three or four year) funding agreements which, once fixed, could not then be influenced by the funding body. Others have emphasised the need for funding to be sufficient to enable the regulator to carry out its duties effectively. I have dealt elsewhere with criticisms that although the PCC was funded adequately to operate the complaints and mediation service, that funding was sufficiently limited to prevent them from exploring other powers, such as powers to investigate, which theoretically were open to them. Lord Black's model seeks to address both points.

Adequacy of funding

6.3 The body described in the proposal includes the Trust Board, a Complaints Committee and

the associated complaints arm, with a full time staff, an Independent Assessor, a Head of Standards and Compliance, with a small full time team, and a panel of experts from whom investigations panels can be drawn. The Board, the complaints arm and the Assessor will be funded from the main budget of £2.25m. This is a larger body than the PCC because, under the PCC model, the Board and the Complaints Committee are the same body. Investigations undertaken by investigations panel will be funded from the separate enforcement fund. It is not clear whether the full time administrative staff in the standards and compliance arm will be funded from the main budget or from the enforcement fund. If the full time staff is to be funded from the main budget this is an expense not currently incurred under the PCC model.

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The enforcement fund 6.4 The enforcement fund is set to start at £100,000,119 thereafter being supplemented by any

fines, or contributions to investigation costs, that are levied. If the permanent standards and investigations staff were to be funded from this £100,000 it is hard to see how there would be any capacity at all for ad hoc investigations; this would effectively render the standards arm irrelevant. I therefore conclude that the permanent staff will be funded from the main budget, with the enforcement fund being held in reserve to pay for investigations when the need arises. It is suggested that, with the addition of fines and cost contributions, the size of the enforcement fund might rise to £500,000. Given that cost contributions can only at best replenish what has been spent on an investigation, this must mean that there is an expectation that fines will be levied. It is not clear what is to happen to the enforcement fund should early investigations not result in any fines, for it is obviously quite wrong for decisions to be made about financial penalties based on the needs of the regulator rather than the gravity of the behaviour of the regulated entity.

6.5 It is worth recalling that cooperation with an investigation is expected to be enforced as

a contractual obligation through the courts if necessary. The enforcement fund would be exhausted quickly should there be the need for any such enforcement action; there is a risk that this could be exploited by a publisher who might adopt an attitude, not unknown in litigation, of fighting every single decision and appealing every decision until the other party runs out of money. Lord Black took the optimistic view that:120

"I would hope that in a system into which publishers voluntarily entered into a contract that they wouldn't do that."

6.6 This is only a partial answer. Publishers may voluntarily enter into this agreement because of

the fear of what might happen otherwise, but the fact that these changes have explicitly only been offered because of the threat posed by the Inquiry indicates that the proposal presented is not one born of conviction but of expediency. These are not changes that the industry was eager to make and, consequently, the idea that publishers will cooperate with investigations because they join the system voluntarily rings rather hollow. It is not inconceivable that some would join the system voluntarily because they can see the weaknesses in the system that would allow them to frustrate its effective operation.

6.7 When these points were put to him Lord Black effectively agreed:121

"That may well be the case. I think we've tried in the best way we can to make sure that the trust board has the powers and the money available to enforce the contract. I think it's always going to be an issue to do with the nature of contract. If one party wants to grind everybody down with legal action, that is going to happen, but in any structure of law that's going to be the case."

6.8 The concept of providing a ring-fenced enforcement budget is a good one, but in order to

be effective it must be enough to allow the regulator to be able to undertake investigations even where the publisher concerned might not cooperate. A regulator who cannot afford to take enforcement action will lose credibility with both the industry and the public. I am not

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well placed to say what the appropriate level of an enforcement fund should be, but what is proposed has the appearance of a very limited and inflexible enforcement budget that may simply be wholly inadequate to do the job in hand, with no obvious mechanism for addressing such difficulties if they arise.

The operational budget

6.9 Lord Black stressed that the £2.25m figure was an estimate. He suggested that the new

complaints arm would be dealing with far fewer complaints than the PCC because improved governance in newspapers would lead to fewer complaints, and more of those complaints that are raised would be dealt with successfully by the publisher rather than the regulator.122 Against that I set the larger administrative role, with the need to support the Trust Board and a full time standards and compliance team in addition to the current PCC structure, and Lord Black's assertions, reflected above, that the new regulator might move to adjudicate a higher proportion of complaints in order to ensure that a breach of standards was properly recognised and properly dealt with.

6.10 Lord Black said that if there were a need for more funding then the industry would have to sit

down with the new regulator and look at how much the elements of the new system would cost. He said:123

"I have no doubt that sufficient funding will be made available to the regulator to fulfil its function."

I cannot be so sanguine. Lord Black acknowledged that the level of funding to be made available to the regulator was solely in the hands of the industry. The requirement to pay will be in the contract that publishers sign with the regulatory body, but the amounts that they pay will be fixed by the IFB. There are no requirements on the IFB to meet the needs of the regulator, who will have to make do with whatever is provided by the IFB. Again, my concern is not specifically about the level of funding estimated to be required for the core operations of the regulator, but about the absence of any power on the part of the regulator to set the funding levels required.

Independence of funding

6.11 This brings me to the most significant issue in relation to funding. Publishers will sign contracts

with the regulator that bind them into the system for five years, and those contracts will require them to pay the fees set by the IFB. So far, so good. However, Lord Black was clear that this commitment was to the principle of funding, not to any particular amount:124

"I can't give you guarantees over a five-year period. The industry might face a complete economic collapse in that time. What we are doing is making a commit through contracts to provide funding over a five-year period. I think it unlikely that we would be able to actually build exact figure into that contract because of course, the needs of the regulator may change over time."

  • K — 122

pp72-73, lines 17-1,Lord Black, ibid

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6.12 The effect of this proposal, therefore, is that the IFB will set the budget for the regulator on

a year by year basis. This has practical implications for the regulator, which may not be able to plan its operations effectively on a long term basis, but much more significantly it has implications for the independence of the regulator.

6.13 The IFB is comprised of representatives of the industry that the regulator is regulating. It is

easy to see how a regulator which is dependent for the next year's funding on the goodwill of its regulated bodies might be expected to operate with a light touch, and to seek to avoid conflict – particularly with those publishers who have the most influence on the IFB. I noted earlier that the composition and appointment processes of the IFB remain entirely opaque, so the public will never even know who wields that influence and, therefore, who the regulator is most likely to want to propitiate.

6.14 This direct relationship between major publishers and the core decisions over funding of

the regulator is possibly the single biggest problem with the proposal that Lord Black has presented. There are, of course, ways in which it could be ameliorated. A system which envisaged a fixed budget for the full five year term would significantly address the concerns about the continual need for the regulator to appease his funders. A system which required the budgets to be set by negotiation between the regulator and the IFB would give the regulator more power to articulate, and fight for, the resources he needs to do an effective job and to make it clear to the public if this need was not being met.

Transparency of funding 6.15 A final point on funding is the extent to which it is apparent who is funding the regulatory body.

The funding of the PCC is shared between national newspapers (59.1%), regional and Scottish newspapers (34.4%) and magazines (6.5%).125 However, due to what is described as 'trade association politics', Lord Black was unable to tell the Inquiry how the national newspaper share of the funding is made up.126 He indicated that there might be greater transparency on this issue in the future, but was not able to give any guarantees.127

6.16 This is a matter for concern and I would urge those responsible to resolve the matter so that there is full transparency over the funding of any self regulatory body.

  1. Response of editors and proprietors to the PCC and

PressBoF proposals

To what extent is the industry ready to sign up to these proposals?

7.1 The Inquiry sought evidence from those editors who had previously given evidence as to

the extent to which they were ready and willing, on behalf of their titles, to sign up to the proposals presented by Lord Black.

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Views from national newspapers

7.2 Some of the national titles have indicated a firm readiness to sign up to the proposal, specifically the Telegraph Media Group,128 Trinity Mirror129 and Associated News.130

7.3 Lionel Barber, editor of the Financial Times, expressed a willingess in principle to join the

scheme, but warned that his view of the proposals might change as the details evolved:131 "I am happy to state that in broad terms I am supportive of the proposals and if the discussions to finalise them continue as they have to date, then I would anticipate recommending to the FTL board that FTL becomes a signatory to the contract. I would add that Lord Black's system appears to preserve the largely useful and effective service of complaints handling and mediation currently carried out by the PCC. It is important to note that Lord Black has made clear that the proposals as submitted to the Inquiry remain a draft that is subject to industry comment and which may also need to evolve dependent on the recommendations in the Inquiry's final report. As such my view of the proposals may change depending on any changes made to them in the course of future consultation. As you might expect, there is certainly some devil in the detail to be worked out before the contract is ready for signature."

7.4 Within News International there was support for the principles underpinning the proposal but still, according to the editor of The Sunday Times, a need to sort out details:132

"I am ready to commit to the broad principles of the new contractual obligations though, of course, the final authorisation by News International will be made by the News International CEO in consultation with all three Editors. Whilst there are a number of details about the proposal that have yet to be worked out, I am hopeful that all industry participants will be able to reach final agreement." "I am in principle in favour of the proposal to bind participating members of a new press body by contracts."133 ABC circulation figures February 2012, http://www.pressgazette.co.uk/story.asp?sectioncode=1&storycode=48913 &c=1 p106, lines 19-23, Paul Staines, ibid p17, Sir Christopher Meyer, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of- Afternoon-Hearing-31-January-2012.pdf p50, lines 3-7, Keith Surtees, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript-of- Afternoon-Hearing-29-February-2012.pdf p1, para 2, ibid pp41-42, lines 21-6, Max Clifford, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript-of- Afternoon-Hearing-9-February-20121.pdf p5, para 16, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-Dick-Fedorcio. pdf p42, lines 9-14, Gillian Shearer, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Afternoon-Hearing-26-March-2012.pdf p14, para 41, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/First-Witness-Statement-of-Richard- Thomas-CBE.pdf Marr, A, My Trade: A Short History of British Journalism, pp 160-161 para 2.75 above in Application 13585/88: Observer and Guardian v United Kingdom (1991) 14 EHRR 153, para 60 p13, Frederic Michel, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Exhibit-FM171.pdf pp86-87, para 194, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of- Stephen-Abell.pdf p92, lines 13-21, Lord Black, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Transcript-of- Morning-Hearing-9-July-2012.pdf p1, para 4, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/08/Third-Witness-Statement-of-John- Witherow3.pdf schedule 2, Defamation Act 2009 For example, submissions by: Newspaper Publishers Association, http://www.dbcde.gov.au/__data/assets/ pdf_file/0020/146351/Newspaper_Publishers_Association.pdf; and News Limited, http://www.dbcde.gov.au/__data/ assets/pdf_file/0006/146283/News_Limited.pdf K [2001] EWHC 32 (QB) "The Sunday Times is ready to recommend in principle that the regulated entity (Times Newspapers Limited) enter into these contractual obligations…..There is some finessing in the detail of the framework proposals still to be done which I would hope can be achieved by discussion between participants."134 http://www.associatednewspapers.co.uk/free-division p107, lines 2-8, Paul Staines, ibid http://www.pcc.org.uk/about/index.html Decision log dated 10 August 2006 (not published) p99, lines 19-22, Derek Webb, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript-of- Afternoon-Hearing-15-December-20111.pdf pp63-65, lines 1-14, Dominic Mohan, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript- of-Afternoon-Hearing-9-January-2012.pdf; pp115-117, lines 6-3, Dominic Mohan, http://www.levesoninquiry.org.uk/ wp-content/uploads/2012/02/Transcript-of-Afternoon-Hearing-7-February-2012.pdf p5, para 13, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Witness-Statement-of-Ed-Stearns.pdf p52, lines 10-23, Anne Campbell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Morning-Hearing-26-March-2012.pdf pp69-70, lines 18-10, Richard Thomas, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript- of-Morning-Hearing-9-December-2011.pdf pp64-65, lines 23-12, Andrew Marr, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Morning-Hearing-23-May-2012.pdf p41, lines 13-21, Rebekah Brooks, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Morning-Hearing-11-May-2012.pdf p37, lines 12-24, George Osborne, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Afternoon-Hearing-11-June-2012.pdf p5, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Witness-Statement-of-Michelle-Stanistreet. pdf; pp2, 5-9, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/First-Submission-by-Media-Standards- Trust.pdf p44, para 90, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Lord-Black-of- Brentwood1.pdf pp1-3, para 4, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Third-witness-statement-of-James- Harding.pdf s44, Defamation Act 2009 pp78-79, lines 24-4, Lara Fielden, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Transcript-of- Afternoon-Hearing-13-July-20121.pdf Coco v AN Clark (Engineers) Ltd [1969] RPC 41 at 50

They were not able to indicate readiness to sign contracts now.

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7.5 Alan Rusbridger, editor of the Guardian, indicated that, if Lord Black's proposal was adopted

after the Inquiry, the Guardian would be prepared to sign up to such a contract, subject to negotiation.135 However, he was clear that the proposal did not have his unqualified support:136

"…we believe that improvements are needed including ending the role of an industry funding body and strengthening the carrots and sticks for participation in a voluntary system. Above all we believe that a more ambitious system is required as part of a new settlement between the press and society that reflects the needs of both in today's world. Significantly, that would include a system of alternative dispute resolution that better serves complainants and publishers: strengthened protection for public interest journalism so that the new framework encourages the best in journalism rather than merely protecting against the worst; and improvements to the media plurality framework which is not a separate issue, but lies at the very heart of the culture, practice and ethics of the press."

7.6 Chris Blackhurst, editor of The Independent, said that he was broadly supportive of Lord

Black's proposals, in particular in relation to the contractual basis for the relationship with the regulator and the regulator's investigative and fining powers.137 However, he went on to outline three key issues on which the group would need to see more detail before being able to commit to enter into the new system. First, that the system proposed might not be sufficiently compelling to persuade all publishers into it, and that:138

"…without the complete support of at least the major publishers, the new system may not have sufficient credibility in the eyes of the public and will be hamstrung from the outset."

Second, Mr Blackhurst raised a question about the appropriateness of the maximum fine proposed and the levels at which fines were likely to be levied, and finally, he expressed concern about whether the proposed budget of £2.25m was realistic and what the actual costs might be.139

7.7 By contrast, Northern and Shell were clear that they were not yet willing to sign up to the

scheme; they had specific concerns about the proposal. The editors of The Daily Star, The Daily Express, The Sunday Express and The Daily Star Sunday all expressed reservations about aspects of the proposals:140

"The Daily Star Newspaper is not ready or committed to sign up to the Proposals in their current form and in any event, this commitment can only be made at board level. Certainly any decision to sign up to a contact under which there is the potential for incurring fines of up to £1,000,000 is a decision which would be taken by the board of the Company.

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In addition, I personally have concerns in respect of who will be selected to run the new regulatory body, how the decision will be made as to who runs it, and how decisions are made more generally in terms of how the body will be funded."

And:141

"At present, and with the Proposals in their current form, I would not be able to recommend to the Board that The Daily Star Sunday sign up to these contractual obligations contained in the Proposal for, among others, the following reasons: The proposals appear to take a 'one size fits all' approach to the contractual obligations to which we would be expected to adhere. I do not think that this would be in the best interests of the Group titles, other national and regional newspaper titles and the public. Indeed, I would go so far as to say that I consider the proposals as drafted do not appear to represent equally the interests of those in the industry; The proposed contract and its associated penalties are too draconian. The contract could damage the commercial prospects and the very future of many titles that are bound by it. For example there is no redress if a publisher believes the regulator is behaving ill an inappropriate manner. The Proposals do not appear to address any potential wrong doing for which there is not a ready adequate protection in place under the law; The proposals includes(sic) provision for the regulator to decide to carry out an investigation and impose a sanction even after civil and/or criminal proceedings have taken place, irrespective of whether any such proceedings result in the Newspaper being found liable and/or guilty. This list is illustrative of my concerns and is not to be considered exhaustive."

7.8 Similarly, Ian Hislop, editor of Private Eye, which is not currently a member of the PCC, said:142

"Private Eye is not "at present fully ready and committed" to enter into these contractual obligations."

He explained that, whilst he did regard the proposal as a "significant improvement" on the PCC, his concerns with the proposal centred around the importance of independence and impartiality of any panel or committee involved in decisions on complaints. He further identified that none of the incentives proposed by Lord Black for membership of the new regulatory body would, in fact, provide any incentive to Private Eye.143

Views from the Scottish, Welsh and regional press

7.9 Moving away from the UK national titles there is clearly much more work to be done before

publishers are ready to sign up to the scheme. None of the Scottish, Irish, Welsh or regional titles who gave evidence to the Inquiry said that they were ready to sign up to the PressBoF proposal in its current form, though they all supported the broad principles upon which it is based. For example, Ian Stewart, editor of the Scotsman, said:144

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"I agree with the general thrust of Lord Black's proposal, though I have reservations with regard to its likely cost and the bureaucratic burden it could impose. Nevertheless, bearing in mind JP's commitment to the PCC and its Code, I am confident that the company will continue to support the principle of self regulation, though whether it will support all aspects of Lord Black's proposals I do not know."

7.10 A number of regional titles raised concerns about the cost, bureaucracy and other details of

Lord Black's proposals, generally pointing out that there was a need for more clarity and more negotiation. For example, Anne Pickles, Associate Editor of Cumbrian News said:145 "so far as I am able to do so, I'd suggest CN would not immediately be ready to commit to all the specifics of Lord Black's proposals for self-regulation. That's not to say they are dismissed as wholly inappropriate or unworkable. But they do beg more time for careful consideration and perhaps some amendment." Jonathan Russell, editor of the Glasgow Herald, was very supportive in principle but raised a number of concerns that would need to be resolved:146 "As an editor, I believe the publications for which I have responsibility are ready and committed in principle to entering into these contractual obligations, subject to clarification of certain detail and any conclusions the Leveson Inquiry itself may reach. I also believe my view broadly reflects the attitude of Newsquest Media Group as a whole." And:147 "However, I do not see the system as fully developed in Lord Black's proposals and I do think there will be the need for some mechanical adjustments here and there. On my reading of it, the framework leaves the Regulator to decide whether and what changes should be made, and then the Industry Funding Body has to approve them. It puts the publishers, locked into the endless contract, at the Regulator's mercy if the system does not work smoothly from day one. In reality, I expect the Regulator will be sensitive to concerns of this kind and will listen to us. But I have to note the lack of an express provision for the members themselves to propose changes without actually having to terminate or threaten to terminate the contract: a safety-valve, if you like. There is also a concern over the extra workload which may be placed on the senior member of staff tasked with dealing with PCC issues. This cannot become more onerous than it currently is. On the other hand, I appreciate that the public need to see a strong Regulator in place, serving a set of established principles and who is not at the beck and call of the members. I think editors like myself have to accept that this is a leap of faith we have to make in order to win back the trust of the public."

7.11 Lord Black did not seek to consult with those blogs currently outside of the PCC so it is no

surprise that Paul Staines (Guido Fawkes) and Camilla Wright (Popbitch) indicated that they were not ready to join the system. Nonetheless, Ms Wright's assessment of the proposal offers some relevant insights into whether such a system would be likely to be welcomed by the new internet providers such as Popbitch:148

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"The proposal set out by Lord Black is undoubtedly a well-meaning attempt to provide a basis under which the major newspaper publishers, who have seemingly on occasions ignored the already established PCC code when it suited (thus creating the culture, practices and ethics for which this Inquiry was established to investigate), might be persuaded to follow their own code. As such, the proposal appears to be written by and for the vested interests of the newspaper business. It appears to have almost no relevance to editors of independent web publishers such as myself. Being asked, as an obvious outsider to the national newspaper industry, to sign up to a contract whose architects and principal beneficiaries were the same media bosses in this gentleman's club, undoubtedly has limited appeal. The composition of the trust board and complaints committee would appear to be drawn from, and relevant to, national newspapers rather than digital media."

What difference would these proposals make?

7.12 The Inquiry also sought the views of editors on what specific differences membership of

a system of the kind set out by Lord Black, underpinned by contractual obligations, would make to the culture, practices and ethics of their publications. The responses are informative. Among the national titles, only James Harding149 and John Witherow150 from The Times and The Sunday Times, Chris Blackhurst151 from The Independent and Lloyd Embley152 from Trinity Mirror, indicated that procedural changes would be required. Not a single editor indicated that the changes would have the effect of raising standards in respect of their own publication and most said that there would be no practical effect whatsoever: "In my first witness statement, I explained the basis upon which The Daily Express operates. In light of those matters, I do not think that joining a system such as that described in the Proposals would make any significant difference to how The Daily Express is run."153 p8, para 25, ibid pp111- 112, lines 8-4, David John Collins, ibid p6, lines 1-20, Inayat Bunglawala, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of- Afternoon-Hearing-24-January-2012.pdf p15, lines 5-21, David Perry QC, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Transcript-of- Morning-Hearing-4-April-2012.pdf pp58-65, lines 6-18, Colin Myler, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript- of-Afternoon-Hearing-14-December-2011.pdf; p3, para 23, http://www.levesoninquiry.org.uk/wp-content/ uploads/2011/12/Witness-Statement-of-Colin-Myler1.pdf; some interpreted the restrictions as a complete ban on the use of private investigators: see p59, lines 8-12, Ian Edmondson, http://www.levesoninquiry.org.uk/wp-content/ uploads/2012/02/Transcript-of-Morning-Hearing-9-February-2012.pdf pp14-16, lines 17-8; pp29-31, lines 20-18; Charlotte Church, http://www.levesoninquiry.org.uk/wp-content/ uploads/2011/11/Transcript-of-Afternoon-Hearing-28-November-20111.pdf pp4-5, lines 7-21, Timothy Gordon, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Afternoon-Hearing-20-March-2012.pdf p18, para 43, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-Lord-Blair.pdf p80, line 12-17, David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Morning-Hearing-14-June-2012.pdf he was appointed to that post in June 2007 p34, ibid See for example PCC, pp1 – 2, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Exhibit-SA-U12. pdf; pp9-13, lines 13-6, Peter Hill, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of- Afternoon-Hearing-12-January-2012.pdf p6, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Submission-by-Paul-Dacre1.pdf p4, para 12, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Second-witness-statement-of-Hugh- Whittow.pdf p11-12, ibid [2008] EWCA Civ 446 at para 36 "I would not expect that membership of a system based on contractual obligations would have a material impact on the running of the Daily Star newspaper."154 p6, para 19, ibid p107, lines 2-8, Paul Staines, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript-of- Morning-Hearing-8-February-2012.pdf http://www.pcc.org.uk/complaints/makingacomplaint.html pp16-17, lines 18-2, ibid p111, lines 4-25; pp114-115, lines 9-2, Derek Webb, http://www.levesoninquiry.org.uk/wp-content/ uploads/2011/12/Transcript-of-Afternoon-Hearing-15-December-20111.pdf pp14-16, lines 17-8; pp29-31, lines 20-18 Charlotte Church, ibid p42, lines 4-11, CC Andy Trotter, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Morning-hearing-28-March-2012.pdf p49, lines 5-20, Lord Blair, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of-Morning- Hearing-7-March-2012.pdf p1, lines 8-14, David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Afternoon-Hearing-14-June-2012.pdf paras 83-84, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Witness-Statement-of-Jack-Straw- MP.pdf p36, ibid Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Exhibit-SA-–-D4.pdf p7, ibid para 7, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Second-witness-statement-of-Dawn-Nessom. pdf K 155 P3, para 8, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Witness-statement-of-Tony-Gallagher- signed-.pdf pp11-12, lines 20-3, ibid K Goodwin v NGN Ltd [2011] EWHC 1437 (QB) at para 87 "As the editor of The Daily Telegraph, while there will be new requirements placed upon us, I do not envisage that the existence of a new self-regulatory system will have much practical impact upon the publication."155 p6, para 20, ibid p3, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Submission-by-The-BPPA1.pdf as of the end of May 2012 p17, lines 3-13, ibid pp115-119, lines 19-4, Derek Webb, ibid pp9-10, lines 10-10, HJK, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of-Morning- Hearing-24-November-2011.pdf; http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Witness-Statement- of-HJK.pdf pp45-46, lines 11-3, Ed Stearns, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/lev030412am. pdf; p8, para 21, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Witness-Statement-of-Ed-Stearns. pdf p72, lines 13-15, Dick Fedorcio, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Morning-Hearing-13-March-2012.pdf p73, lines 20-22, Rebekah Brooks, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Morning-Hearing-11-May-2012.pdf pp1-3, Richard Thomas, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/RJT-Exhibit-39.pdf p38, ibid Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Exhibit-SA-F1.pdf Part K, Chapter 4 pp12-13, lines 21-2, ibid Peck v UK (2003) EHRR 41 at para 57 "I would anticipate generally that there would be a continuation of the changes to the culture, practices and ethics that have been occurring at newspapers over the past five to six years."156 p13, paras 29-40, ibid Part F, Chapter 6 for a fuller discussion p49, lines 1-20, Stephen Abell http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of- Afternoon-Hearing-30-January-2012.pdf (This suggests a complainant success rate of 60%) pp15-16, lines 22-8, ibid pp119-120, lines 25-13, Derek Webb, ibid pp31-36, lines 22-25, Joan Smith, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript-of- Morning-Hearing-21-November-2011.pdf For example, p107, lines 16-20, Thomas Pettifor, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/ Transcript-of-Morning-Hearing-20-March-2012.pdf p73, lines 3-13, ibid p79, lines 6-10, David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Morning-Hearing-14-June-2012.pdf p1, Richard Thomas, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/RJT-Exhibit-40.pdf p3, paras 9-10, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Witness-statement-of-Tim- Colbourne.pdf Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Exhibit-SA-F2.pdf pp23-24, lines 14-11, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Transcript-of-Afternoon- K Hearing-9-July-2012.pdf pp3-4, paras 9-10, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Third-witness-statement-of- Lloyd-Embley.pdf p13, lines 3-5, ibid [2001] Fam 430

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Consequently, we do not consider that the culture, practice and ethics of our journalism would be significantly altered by membership of the kind of system proposed by Lord Black."157 p5, para 17, ibid Part F, Chapter 6 http://www.pcc.org.uk/complaints/makingacomplaint.html p16, lines 12-17, ibid pp120-121, lines 24-2, Derek Webb, ibid pp58-67, lines 1-17, Tessa Jowell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Morning-Hearing-21-May-2012.pdf p47, lines 10-22, Commissioner Hogan-Howe, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/ Transcript-of-Morning-Hearing-20-March-2012.pdf pp74-75, lines 6-12, ibid p76, lines 1-4, Rebekah Brooks, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Morning-Hearing-11-May-2012.pdf pp74-76, lines 10-19, Gordon Brown, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript- of-Morning-Hearing-11-June-2012.pdf p38, Rupert Murdoch, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Exhibit-KRM-18.pdf pp86-88, paras 194-198, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of- Stephen-Abell.pdf; pp1-9, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of- Louise-Hayman.pdf; p4, para 8, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Witness-Statement- of-Tom-Crone.pdf; p5, para 14, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement- J of-Tony-Gallagher.pdf ; pp1-2, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of- James-Harding.pdf ; p2, para 5, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement- of-Liz-Hartley.pdf p7, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Submission-by-Paul-Dacre1.pdf p3-4, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-from-Chris-Blackhurst.pdf p13, lines 9-15, ibid [2004] 2 AC 457 "We do not foresee membership of this system altering our approach to any great extent, That said, we would work with the new regulator to ensure that our approach is entirely aligned with their standards and processes"158 p6, para 18; p13, paras 29-40, ibid; p2, para 6, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/ Witness-Statement-of-Peter-Wright.pdf Part D, Chapter 7 p12, lines 13-23, Lord Black, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript-of- Morning-Hearing-1-February-2012.pdf p54, lines 18-25, Philip Williams, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript-of- Morning-Hearing-29-February-2012.pdf pp121-122, lines 13-6, Derek Webb, ibid See the Computer Misuse Act 1990 p9, lines 2-18, Commissioner Hogan-Howe, ibid p73, lines 16-20, ibid pp81-82, lines 23-10, David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript- of-Morning-Hearing-14-June-2012.pdf, and http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Letter- from-Linklaters-regarding-Rebekah-Brooks-communications-with-Prime-Ministers.pdf see the full text of Paul Dacre's speech: http://www.pressgazette.co.uk/node/42394 p40, Rupert Murdoch, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Exhibit-KRM-18.pdf p1, Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/SA-B183.pdf; p10, para 12, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Stephen-Abell.pdf p17, para 53, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Lord-Hunt-of-Wirral. pdf p4, para 10, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Third-witness-statement-of-Alan- Rusbridger.pdf p17, lines 16-21, ibid Application 44787/98, Judgment 25 September 2001 "Lord Black's proposals complement new governance that News International has already introduced."159 p14, para 45, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Witness-Statement-of-Paul-Dacre.pdf Part F, Chapter 5 p49, lines 18-20, Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of- Afternoon-Hearing-30-January-2012.pdf p55, lines 16-23, ibid p57, lines 2-13, Ian Edmondson, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript-of- Morning-Hearing-9-February-2012.pdf pp45-48, lines 20-23; pp52-54, lines 3-20, Ian Hurst, http://www.levesoninquiry.org.uk/wp-content/ uploads/2011/11/Transcript-of-Morning-Hearing-28-November-2011.pdf; pp2-4, para 10-15, http://www. levesoninquiry.org.uk/wp-content/uploads/2011/11/Witness-Statement-of-Ian-Hurst.pdf p8, para 22, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Witness-Statement-of-Ed-Stearns.pdf p2, para 3, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-Sir-Paul- Stephenson2.pdf pp82-83, lines 19-5, David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Morning-Hearing-14-June-2012.pdf pp75-76, lines 24-3, Gordon Brown, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Morning-Hearing-11-June-2012.pdf p40, ibid p56, para 129, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Stephen- Abell.pdf p8, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Submission-by-Paul-Dacre1.pdf pp3-4, para 13, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Third-witness-statement-of- Dominic-Mohan1.pdf p32, lines 12-20, ibid K [2008] EMLR 20, [2008] EWHC 1777 (QB) at paras 124‐134 "I do not therefore believe that Lord Black's proposals, if implemented, will have any effect whatsoever on the quality of the FT's journalism or the culture of the FT's newsroom."160 p13, para 39, ibid pp54-55, lines 19 -20, Stephen Abell, ibid p56, lines 1-24, Philip Williams, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript-of- Morning-Hearing-29-February-2012.pdf pp60-61, lines 23-1, Ian Edmondson, ibid pp67-69, lines 25-18, Jane Winter, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript- of-Morning-Hearing-28-November-2011.pdf and p1, para 2, http://www.levesoninquiry.org.uk/wp-content/ uploads/2011/11/Witness-Statement-of-Jane-Winter.pdf p23, para 59, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-AC-Cressida- Dick.pdf p8, para 23, ibid p83, lines 8-18, David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Morning-Hearing-14-June-2012.pdf para 32, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Witness-Statement-of-Jack-Straw-MP.pdf pp28-29, lines 11-21, George Osborne, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript- of-Afternoon-Hearing-11-June-2012.pdf p10, paras 12-16, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Stephen- Abell.pdf; p1, para 1.1, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Tim- Toulmin.pdf p7, para 24, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Second-witness-statement-of-Lionel- Barber.pdf p33, lines 16-21, ibid para 125, ibid

7.13 The message was essentially the same from the editors of the non-national press and

magazines who provided evidence on this question: "If JP were to agree to Lord Black's proposals, I am confident that compliance with them would make little practical difference to the way my staff and I operate."161 p14, para 44, ibid pp16-17, Sir Christopher Meyer, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of- Afternoon-Hearing-31-January-2012.pdf p56, lines 13-21, ibid p61, lines 2,19, Ian Edmondson, ibid pp3-4, para 10-14, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Witness-Statement-of-Sienna- Miller.pdf; p35, lines 11-20, Sienna Miller, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript- of-Morning-Hearing-24-November-2011.pdf The Inquiry understands the position in West Midlands Police has changed, however, this does not change the analysis. p8, para 23, ibid pp83-84, lines 22-9, David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Morning-Hearing-14-June-2012.pdf para 85, ibid pp30-31, ibid Of which there were approximately six a year, usually reserved for cases of undue delay and failing to publish adjudications with due prominence: see the evidence of Tim Toulmin; p27, lines 11-18, Tim Toulmin, http://www. levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of-Morning-Hearing-30-January-2012.pdf p2, para 5, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Witness-statement-of-Ian-Stewart1.pdf pp46-47, lines 19-3, ibid para 98, ibid "Membership of a system of the kind set out by Lord Black, underpinned by contractual obligations, would do little - if anything - to alter the culture, practices and ethics of Cumbrian Newspapers."162 p14, para 44, ibid pp109-110, lines 20-7, Keir Starmer QC, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/ Transcript-of-Morning-Hearing-4-April-2012.pdf; Note not published p65, line 19-21, Colin Myler, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Afternoon-Hearing-14-November-2011.pdf John Ryley, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Exhibit-JHR1.pdf Mr Ryley further explained that Sky News conducted a review which concluded in July 2011 which found no evidence of illegal or improper conduct on the part of Sky News journalists accessing any third party e-maiIs, save for the two instances detailed at pp4-6, para 10-14; pp6-21, para 17-52, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/ Witness-Statement-of-John-Ryley.pdf ; pp2-4, lines 15-21; p10, lines 2-13; pp21-22, lines 9 -12; p35, lines 6-18; pp36- 38, lines 21-10, John Ryley, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Transcript-of-Morning- Hearing-23-April-20121.pdf p53, lines 4-9, Chief Insp Sally Seeley, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript- of-Afternoon-Hearing-20-March-2012.pdf p10, lines 10-24, Sir Paul Stephenson, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript- of-Morning-Hearing-5-March-2012.pdf p84, lines 10-13, David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Morning-Hearing-14-June-2012.pdf pp46-51, lines 13-25, Jack Straw, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Morning-Hearing-16-May-2012.pdf p40, Rupert Murdoch, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Exhibit-KRM-18.pdf p3, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/RPC_DOCS1-12374597-v1-PAUL_DACRE_S_ SEMINAR_SPEECH.pdf p2, para 5, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Witness-statement-of-Anne-Pickles.pdf p54, lines 17-21, ibid At paras 127-128, ibid "If it were to be implemented, we do not consider that the system envisaged by Lord Black will have any effect at all on the current culture, practices and ethics of our respective newspapers."163 p8, para 27, ibid Keir Starmer QC, succeeded Lord Macdonald as the Director of Public Prosecutions on 1 November 2008 p66, line 3-14, Colin Myler, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Afternoon-Hearing-14-November-2011.pdf pp44-71, lines 17-13, Brendan Gilmore, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/ Transcript-of-Morning-Hearing-9-May-2012.pdf p8, para 14, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-Chief- Inspector-Sally-Seeley.pdf p12, lines 14-23, ibid David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Exhibit-DC-2.pdf p50, lines 2-19, Jack Straw, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of-Morning- Hearing-16-May-2012.pdf p42, Rupert Murdoch, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Exhibit-KRM-18.pdf p47, lines 9-22, Lionel Barber, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of- Morning-Hearing-10-January-2012.pdf p2, para 5, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Terry-Hunt-Editor-of- East-Anglian-Daily-Times1.pdf p56, lines 16-21, ibid see Eady J in CC v AB [2006] EWHC 3083 (QB) "In terms of the stories we carry and the way we go about our work, Lord Black's proposals would make little difference to us….."164 p4, para 10, ibid; pp1-2, para 4, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness- Statement-of-Peter-Wright.pdf p110, lines 19-23, ibid p66, lines 11-13, Colin Myler, ibid Part E, Chapter 3 p54, lines 6-9, Chief Insp Sally Seeley, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript- of-Afternoon-Hearing-20-March-2012.pdf p8, para 23, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-Sir-Paul- Stephenson2.pdf p6, Rebekah Brooks, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Exhibit-RMB-11.pdf p50, lines 3-4, ibid pp16-17, para 63, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Witness-Statement-of-Vince- Cable-MP.pdf p23, lines 2-20, Sir Christopher Meyer, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript- of-Morning-Hearing-31-January-2012.pdf pp1-2, para 5, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Adrian-Faber-in- response-to-Module-4-Questions.pdf pp65, lines 3-13, Lord Hunt, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Transcript-of- Afternoon-Hearing-9-July-2012.pdf Goodwin v NGN Ltd [2011] EWHC 1437 (QB) at para 90 "Notwithstanding the reservations I have in respect of the Proposals as they currently stand, I do not think that 'there would be any particular differences in the way OK! Magazine is run if such a system were to be introduced."165 p13, para 41, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Witness-Statement-of-Paul-Dacre. pdf; pp3-4, paras 9-11, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Peter- Wright.pdf note not published; p111, lines 4-9, ibid pp68-69, lines 24-15, Colin Myler, ibid Richard Thomas, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Exhibit-3.pdf p54, lines 6-15, Chief Insp Sally Seeley, ibid p13, lines 6-22, Sir Paul Stephenson, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Morning-Hearing-5-March-2012.pdf p75, lines 1-2, Rebekah Brooks, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Morning-Hearing-11-May-2012.pdf Part C, Chapter 4 p16, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Witness-Statement-of-Vince-Cable-MP. pdf; see also p1, Jeremy Hunt, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Exhibit-JH13- MOD300008089-MOD300008106-docs551-565.pdf, which includes the comment, "I am picking my fights, some of which you may have seen, some of which you may [sic] haven't seen". See also http://www.telegraph.co.uk/news/ politics/liberaldemocrats/8217253/Vince-Cable-I-have-declared-war-on-Rupert-Murdoch.html p5, Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Exhibit-SA-–-D8.pdf pdf p3, para 9, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Second-witness-statement-of-Lisa-Byrne. K p72, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Media-Standards-Trust.pdf Ntuli v Donald [2010] EWCA Civ 1276 at para 55

7.14 Having said that, some responses did emphasise that changed processes would be required:

"One clear area of change would be within our administration. All correspondence with statutory bodies, members of the public and the courts concerning complaints are carefully filed. However in honesty our systems for recording the route of decision making over particular stories would have to be improved in order to satisfy the the (sic) demands of an annual audit, I do not think this would take much."166 p5, para 15, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Witness-Statement-of-Paul-Dacre. pdf; p3, para 9, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Peter-Wright. pdf p111, line 20, ibid p52, lines 3-6, Tom Crone, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript-of- Afternoon-Hearing-13-December-20111.pdf pp115-117, lines 14-4; pp118-119, lines 1-7; pp121-122, lines 3-14, Sharon Marshall http://www.levesoninquiry.org. uk/wp-content/uploads/2011/12/Transcript-of-Morning-Hearing-20-December-2011.pdf p76, lines 15-22, CC Stephen House, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Morning-Hearing-21-March-2012.pdf p9, para 26, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-Sir-Paul- Stephenson2.pdf p74, lines 6-10, Rebekah Brooks, ibid Para 1, Part II, Sch 2, Broadcasting Act 1990 p17, para 64a, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Witness-Statement-of-Vince-Cable- MP.pdf pp39-40, lines 13-22, Lord Wakeham, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript- of-Morning-Hearing-15-May-2012.pdf p2, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-from-Mike-Gilson-Belfast- Telegraph.pdf pp89-90, ibid Goodwin v NGN Ltd [2011] EWHC 1437 (QB) at paragraph 102

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"Therefore, I believe that any specific difference would be more about further strengthening the current practices at my publications, and the checks that are already in place (such as the need to verify any potentially contentious stories with at least two independent sources and to seek advice from the legal team as necessary). It is also likely to make the journalists more aware of the consequences of not complying, I believe that any such changes will only make a publication stronger."167 p13, para 41, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Witness-Statement-of-Paul-Dacre. pdf; pp3-4, paras 9-11, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Peter- Wright.pdf note not published pp117-118, lines 23–13, Derek Webb, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript- of-Afternoon-Hearing-15-December-20111.pdf pp93-94, lines 14-5, Nick Davies, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Morning-Hearing-29-November-2011.pdf p82, lines 11-22, CC Stephen House, ibid p17, lines 8-17, Sir Paul Stephenson, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Morning-Hearing-5-March-2012.pdf p75, lines 7-12, Rebekah Brooks, ibid Para 2, Part IV, Sch 2, Broadcasting Act 1990. Para 5(a) afforded the Secretary of State the power to vary the percentage by Order. pp63-64, lines 8-7, Dr Vince Cable, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Morning-Hearing-30-May-2012.pdf p1, Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Exhibit-SA-I26.pdf p6, paras 19-20, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Second-witness-statement-of- David-John-Brookes.pdf pp65, lines 3-12, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Transcript-of-Afternoon-Hearing- 10-July-2012.pdf At para 103, ibid "Insofar as PressBofs submission may though require us to collect and store information on stories that we might be asked to justify at a later date, whereas currently we may have discussions about these types of stories, under PressBofs proposals we would likely have to note conversations and decisions made regarding these types of stories."168 p7, lines 6-10, Martin Clarke, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Afternoon-Hearing-9-May-2012.pdf para 14, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Witness-Statement-of-David-Perry-QC.pdf pp3-4, para 5-8, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Witness-Statement-of-Julian- Pike1.pdf pp40-41, lines 12-7, Alex Owens http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Afternoon-Hearing-30-November-2011.pdf p87, lines 10-12, Rob Shorthouse, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Morning-Hearing-21-March-2012.pdf pp77-78, lines 20-8, Catherine Crawford, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/ Transcript-of-Morning-Hearing-29-March-2012.pdf See above at paras 2.85 – 2.87 Owen Gibson, http://www.guardian.co.uk/media/2002/may/10/broadcasting.politics; pp11-12, http://www. levesoninquiry.org.uk/wp-content/uploads/2012/05/Exhibit-TJ53-to-Witness-Statement-of-Tessa-Jowell2.pdf p17, paras 64b-65, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Witness-Statement-of-Vince- Cable-MP.pdf p58, lines 4-19, Baroness Buscombe, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript- of-Morning-Hearing-7-February-2012.pdf p4, para 10, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Second-witness-statement-of- Timothy-John-Gordon.pdf p81, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Media-Standards-Trust.pdf K At paras 119-123, ibid. The order at first instance was varied by a consent order in the Court of Appeal narrowing the scope of the information about VBN to less than that permitted to be published by the order at first instance: JIH v News Groups Newspapers [2012] EWHC 2179 (QB) at para 13 "None, other than in terms of the additional paperwork required under the new regime, for example, in terms of annual returns to the regulator. The bureaucratic burden would not be an insuperable objection to participation in a new scheme. The underlying culture, practices and ethics would, most likely, remain the same."169 p4, para 10; p6, paras 19-20, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Witness-Statement- of-Paul-Dacre.pdf p18, lines 5-20, David Perry QC, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Transcript-of- Morning-Hearing-4-April-2012.pdf p18, lines 11-14, Julian Pike, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript-of- Afternoon-Hearing-13-December-20111.pdf pp111-113, lines 6-10, Nick Davies, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Morning-Hearing-29-November-2011.pdf pp51-52, lines 13-7, Lord Blair, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Morning-Hearing-7-March-2012.pdf p10, para 27, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-Sir-Paul- Stephenson2.pdf See above at para 2.74 Part I, Chapter 9 pp64-65, lines 18-23, Dr Vince Cable, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript- of-Morning-Hearing-30-May-2012.pdf pp57-58, Sir Christopher Meyer, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of- Morning-Hearing-31-January-2012.pdf p7, para 12, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Third-witness-statement-of-Ian-Hislop1.pdf K p90, ibid [2012] EWHC 1296 (QB). The Claimant is pursuing an appeal against this decision. Permission to appeal has been granted by the Court of Appeal but a hearing date has not yet been fixed. Any conclusions to be drawn from the case will have to be reviewed in the light of the appeal

7.15 The only response that suggested that any substantive change would be required was that from Paul Staines, who runs the Guido Fawkes blog, who said:170

"It would bog us down in bureaucracy by opening a channel for politically motivated nuisance complainants. Every single article we write that voices an opinion is challenged by our readers in the comments, on Twitter and via email. If we were obliged to respond to complainants we would be overwhelmed. It is ridiculously impractical given the volume of specious complaints."

Not all blogs took the same line. Camilla Wright, editor of Popbitch, said that "it would be unlikely to have much effect."171 ibid This is addressed below p57, lines 4-11, Tom Crone, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/11/Transcript-of- Morning-Hearing-14-November-2011.pdf p16, lines 6-18, Alexander Salmond, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of- Afternoon-Hearing-13-June-2012.pdf p6, lines 9-21, Jeff Edwards, https://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Afternoon-Hearing-14-March-2012.pdf pp22-23, para 57, ibid p18, para 8.6, James Murdoch, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Witness- Statement-of-James-Rupert-Jacob-Murdoch.pdf; pp55-56, lines 25-3, Rebekah Brooks, http://www.levesoninquiry.org. uk/wp-content/uploads/2012/05/Transcript-of-Morning-Hearing-11-May-2012.pdf pp3-4, Tessa Jowell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of-Morning- Hearing-21-May-2012.pdf pp2-4, Norman Lamb, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript-of-Afternoon- Hearing-26-June-2012.pdf The available evidence is covered in Part C, Chapter 3 above p2, para 5, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Response-from-Camilla-Wright-to- Module-4-questions.pdf P2, para 10, ibid [2005] EWHC 3003, [2005] EWHC 3003 (QB) at para 135. Subsequently approved by the Court of Appeal, [2006] EWCA Civ 1714, [2007] 3 WLR 194 at paras 21-22

7.16 It is difficult, in the light of these comments, to conclude that the press themselves believe

that the system proposed by Lord Black would drive up standards. It is true that, in all cases, it is said that there would be no impact from the proposals because the relevant title already respects the PCC standards. However, in the light of the practices that have been identified by the Inquiry this view, at least in some parts of the press, must display a degree of complacency that argues against the prospect of real change under the proposed system.

  1. Summary and conclusions

8.1 The proposal put forward by Lord Black does represent a significant improvement on the PCC

as currently constituted and I recognise and appreciate the efforts that he and others have gone to in order to be able to present this proposal in such detail to the Inquiry. However, this proposal does not, in its current form, meet any of the criteria that I set out in May.

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8.2 I have repeatedly made it clear that in order to be considered effective a new regulatory

regime would have to work for the public as well as for the industry. That means that, besides promoting the highest professional standards of journalism and the importance in a democratic society of free speech and freedom of expression, a new regulatory regime must cover all significant publishers; it must also be capable of raising standards while at the same time protecting both the public interest and the rights of individuals. This proposal fails to meet the requirement for effectiveness on two of those points.

8.3 First, the proposed contractual basis has some benefit in keeping publishers within the

system for a period of time once they have signed up. However, it does nothing to require them to sign up and the evidence before the Inquiry makes it clear that there is a substantial distance to go before all significant publishers could be persuaded to join the system. In those circumstances it is not possible to say with any confidence that this proposal would have sufficient coverage within the industry. Furthermore, I realistically have to identify that the main incentive to any publisher to sign up to this system is the threat that the Inquiry will recommend some form of regulation that is less to their taste. Once this Report has been published, that power to bring publishers to the table will no longer exist, so to the extent that publishers have not yet signed contracts there can be no reliance on them ever doing so.

8.4 Even if all significant publishers were to join this proposed contractual system there is

no guarantee that the system would continue to operate, or to operate at the standards currently proposed, beyond the first five year period. In addition, titles may leave the system if ownership is transferred to a non-member. This does not provide sufficient long term stability or durability.

8.5 A number of incentives have been proposed to entice publishers into the system and to

keep them there. Unfortunately those incentives are very weak and it is difficult to see them having any impact on a publisher who does not in any case consider membership to be in his interest.

8.6 Second, the proposal is structured entirely around the interests and rights of the press,

with no explicit recognition of the rights of individuals. The system gives no rights at all to complainants and the regulator is set up without any remit to protect the rights of third parties. At its heart, an effective regulator should have the interests of those likely to be affected, alongside the interests of freedom of expression and the freedom of the press.

8.7 A new system must have an independent process for setting fair and objective standards.

In my opinion, this proposal fails to meet that test by leaving the setting of standards in the hands of the industry, albeit with a check by the Trust Board. A relatively small change to the proposal, making it clear that the Code Committee is advisory and that the Trust Board is responsible for establishing and altering the code, would go a considerable way to deal with this concern.

8.8 A new system must have an independent enforcement and compliance mechanism. This

proposal makes real advances under this heading. I welcome the emphasis on improving internal governance within publishers. I support the proposal that complaints should be dealt with in the first instance by publishers. I endorse both the requirement for an annual return on compliance to the regulatory body and a named senior individual within each title with responsibility for compliance and standards. These are real innovations and are very welcome. However, the proposal still has serving editors on the body making decisions on complaints and this does not provide the required degree of independence of enforcement. K

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8.9 I welcome the proposal for a standards and compliance arm, with both its ongoing monitoring

role and its ability to carry out investigations. Again, these are both real innovations and are much needed. However, there are substantive concerns about the ability of this part of the organisation to function effectively given the procedural arrangements proposed. I am sure that this could be resolved by addressing the procedural issues, but they are not insignificant and it would be important to have an independent review of the operation of the standards arm after a short period, say a year, to ensure that they had been addressed effectively and to consider the possibility of making further procedural changes if they were needed.

8.10 Overall, however, I have serious reservations about the independence of the appointment

process for the Chair of the Trust, and about the role of the Industry Funding Body throughout this model. I believe that sufficient independence cannot be achieved while the industry has a veto on the appointment of the Chair, has the right to define the standards and has the right to define the sanctions available. All these concerns could be remedied by reducing the IFB's role in the operation of the proposal.

8.11 A new system must have the ability to offer meaningful remedies of correction and apology

to those who have been harmed and to apply effective sanctions to those who continue to breach standards (or fail to comply with directions as to correction and apology). The remedies offered to individuals under the proposed system are exactly the same as those currently offered by the PCC, albeit with some potential improvements in transparency. This does not seem to me to be sufficient. The regulator should have the power to determine the prominence and placing of an apology, correction or adjudication and all breaches of the code should be identified and recorded as such, even where the publisher cooperates with a mediated settlement.

8.12 As has been made clear earlier, the creation of the investigations process is to be welcomed,

and both the investigatory powers and the range of the sanctions available do look to be potentially effective if publishers cooperate. I repeat, however, that this process cannot be effective if it is prevented from operating by oppressive procedures; changes therefore need to be made to ensure that this does not arise, even where a publisher might try to frustrate the process.

8.13 An effective regulatory system must be adequately financed and have sufficient independence

from its funding body to operate independently. I have significant concerns on both those fronts in relation to this proposal. First, the sums proposed both for core funding and for the enforcement fund look tight. This is particularly the case in relation to the enforcement fund which could easily be used up on investigations into a recalcitrant publisher. Second, the role of the Industry Funding Body throughout the proposal and the fact that the funding will not be settled in advance for the full contract period, give far too much influence to the IFB. It is welcome that the industry is keen to fund this regulatory regime itself without input from the taxpayer or from complainants; however, the extent to which the largest players must shoulder the bulk of the burden of the cost for the good of the industry as a whole, along with the extent to which the funding mechanism should be open and transparent, are also issues which would have to be addressed.

K

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Chapter 4 Other Proposals Submitted to the Inquiry

  1. Introduction 1.1 Chapter 2 above described the proposal that has been put to the Inquiry by Lord Black, as

Chairman of PressBof, on behalf of the industry. There have been some 45 other proposals for complete or partial regulatory regimes submitted to the Inquiry and many more submissions with ideas and comments on the way forward. I am very grateful to all those who have taken the time and gone to considerable trouble to offer their assistance to the Inquiry in this way. Whilst some of these proposals are complete in themselves, I intend to consider all the elements of a regulatory regime that have been put forward, rather than to describe each model as presented. All of the submissions are part of the evidential record of the Inquiry and can be seen in their entirety on the website. Rather than looking at each individual proposal for an entire answer it is more useful to look at the range of proposals made each of the issues covered, by way of building up a complete picture of the ideas that have been submitted.

  1. A new regulatory body 2.1 All the proposals submitted have made two basic assumptions. First, that the Press Complaints

Commission (PCC) as currently constituted is not delivering adequate regulation of press standards and, second, that some form of new regulatory body is required. The first of those assumptions is important only in that it reinforces the conclusion I have already reached1 that leaving the current system unchanged is not a credible option.

2.2 The second assumption, that a new press regulatory body is required, is more interesting

and requires some examination. All those submitting proposals for the future envisage the establishment of a new body with responsibilities for press standards. These proposed bodies obviously differ significantly in their scope, authority and powers, but no one has suggested that press standards could be supported adequately though changes to the general law or through strengthening law enforcement. Neither has anyone suggested that improvements in internal governance in the press would, of themselves, be sufficient guarantee of adequate standards.

2.3 This does not mean that the creation of a new press standards body is the only possible

answer to the problems with press standards identified in this Report. It does, however, mean that I have not received evidence on potential alternative approaches.

  1. Functions and structures 3.1 A variety of functions for a new press standards body to cover have been put forward.

Essentially they fall into the categories below.

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Setting standards

3.2 By 'setting standards' I broadly mean the establishment of a code of practice that sets the

minimum standards to which relevant organisations are expected to adhere and against which their conduct should be judged. Three different approaches have been adopted to standards setting. The first is that contained in the industry proposal, namely that the setting of standards should be essentially a matter for the industry, albeit with some lay input, and that it should sit outside of any body with responsibility for enforcing the standards. This position is put forward by Lord Black and supported by all publishers or editors who have commented on the issue. It is also the position supported by Lord Prescott's working group.2

3.3 The second proposition is that standards setting should be the responsibility of an independent

regulatory body that is also responsible for enforcement of the standards. This is the position put forward by the Campaign for Press and Broadcasting Freedom (CPBF),3 the Co-ordinating Committee on Media Reform,4 Ofcom,5 the Media Regulation Round Table6 and Professor Roy Greenslade.7

3.4 The third proposition, only explicitly put forward by Max Mosley,8 is that there should be

separate independent bodies which set the standards and enforce them. This would allow for statutory enforcement of press standards without the standards themselves being set by a statutory body. A joint submission on behalf of the Core Participant Victims (CPVs) argues for separate mechanisms for rule making, adjudication and investigations, but is not specific in terms of whether this means separate bodies.9

Promotion and enforcement of standards

3.5 Where the issue is addressed specifically, all the proposals submitted envisage a new press

standards body having a broad regulatory role involving the promotion and enforcement of standards. This is often described as requiring investigative powers.

Complaints handling

3.6 All the proposals submitted envisage that some part of their proposed regulatory structure

would have the responsibility to hear complaints about breaches of a press standards code. In most cases the proposals are not specific about the degree of relationship between the more general standards enforcement role and the complaints handling role. In the case of the industry proposal, it is quite clear that it is envisaged that both are done by the same body, albeit by different parts of that body. The British and Irish Ombudsman Association was clear

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that a true ombudsman, dealing with complaints, would be separate both from the body that set the standards and the body that enforced standards more generally (although they made no comments on whether those two roles should be separate).10

Championing freedom of expression 3.7 Some proposals explicitly recommend a role for the press standards body in acting as a

champion for freedom of expression or the freedom of the press.11 The National Union of Journalists (NUJ) says that the primary duty of a new press standards body should be to ensure the freedom of the press from both the state and editors and owners.12 The Media Regulation Roundtable sets out two objectives for their proposed new Media Standards Authority, one of which is:13

"To promote and protect the right of the media to publish information on public interest matters and the right of the public to receive it by promoting and protecting public interest journalism in all its forms and by protecting and encouraging high standards of ethical and responsible journalism."

Adjudication of civil claims 3.8 Adjudication of civil claims is considered as essential in a number of proposals. Specifically,

Early Resolution, the Alternative Libel Project and Max Mosley build their proposals around the provision of dispute resolution procedures. The Early Resolution proposal suggests a statutory basis for the regulator and the adjudication process, ensuring that all relevant claims are dealt with though this means.14 Similarly, Mr Mosley proposes a structure based around a statutory tribunal with authority over all printed press, its agencies and the internet.15 By contrast the Alternative Libel Project and the Media Regulation Roundtable suggest that access to a cheap, fast and fair way of resolving defamation claims would be a strong incentive to publishers to join a voluntary regulation system.16 The CPVs argue that the regime should oversee issues covering libel, privacy and harassment (as well as broader standards concerning accuracy, publishing and information gathering) but do not present any specific proposals as to how that should be done.17

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Pre-publication functions

3.9 Few of the proposals address the question of whether the press standards body should have

any functions prior to publication. Early Resolution recommends that the issue of advisory 'desist notices', to deter actual or threatened media misconduct, is an important function.18 The Media Regulation Roundtable proposes a specific role for the media standards body of providing pre-publication advice, including being able to request a publisher to demonstrate evidence of an appropriate public interest prior to publication of material that invades an individual's privacy.19 This approach was strongly criticised by Sir Charles Gray of Early Resolution,20 who argued that involvement of a standards body prior to publication in that way would constitute an interference with the freedom of the press.

Roles for other bodies

3.10 George Eustice MP, in his proposal, suggested additional roles for bodies other than the

proposed press standards body. Specifically, he suggests that Ofcom should have a role in ensuring adequate governance within press organisations. He does not suggest that Ofcom should have any role in dealing with disputes about individual news stories,21 but does suggest a right of appeal to the Information Commissioner in respect of privacy cases. He proposes that this right to appeal should apply in respect of all media, irrespective of whether they were participants in any system of voluntary regulation.22 This is perhaps best considered in relation to the suggestions for reform of the Data Protection Act elsewhere in the Report.23

3.11 A different approach was put forward by the Media Standards Trust (MST) and the

communications consultant Tim Suter. Both proposed a system based around a statutory oversight body that would have the role of approving self-regulatory bodies. Under this approach the focus is not on the functions of the self-regulatory body itself, but the minimum requirements that such a self-regulatory body should have to meet. Under the MST model the oversight body would only approve bodies that meet: (a) minimum commitments within a code of practice; (b) basic requirements of a contract of membership, including sanctions; (c) adequate independence; and (d) adequate governance arrangements with regard to proportionality, accountability, consistence, transparency and targeting.24

3.12 Under Mr Suter's proposal the oversight body (which in his case is the Ofcom Content Board)

would have to satisfy themselves as to:25

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(a) governance arrangements guaranteeing independence from both Government and industry; (b) adequate regulatory scope, industry coverage and powers; and (c) adequate operational and funding arrangements.

3.13 The oversight body would establish basic rules around independence and effectiveness but

the rest would be for the self-regulatory body, which would have at least the standards setting and complaints roles otherwise described.

3.14 Under this approach the oversight body would have significant powers to determine the

regulatory framework, but no regulatory powers over press organisations themselves. The effect of an oversight body withholding its approval from a self-regulatory body, or of a press organisation refusing to join an approved self-regulatory body, is a key point under these proposals and is considered later in this chapter.

  1. Should coverage be voluntary or mandatory? 4.1 The proposals submitted to the Inquiry are split on whether compliance with press standards

that go beyond the existing criminal and civil law should be voluntary or mandatory. Those arguing that regulation or adherence to standards should be voluntary offer four reasons as to why. First, there is an argument that any form of mandatory regulation of press standards is an infringement of the freedom of the press. Lord Prescott warns that a mandatory system risks turning into, or being perceived as, a state licensing system.26 Paul Dacre said that he feared any Parliamentary involvement would be the 'thin end of the wedge'.27 Similarly, Lord Hunt has expressed strong reservations about the risks to freedom of the press should any measure relating to regulation of the press come before Parliament.28 Lord Black argues that any form of statutory intervention would inevitably undermine the "constitutional principle" of independence.29 Ed Richards was clear that a licensing regime, such as that which Ofcom operates in respect of broadcasting, would not be an appropriate model for the press because:30

"freedom of expression works in a different way, and a more unqualified way, for the press."

The Media Regulation Roundtable asserts that compulsory regulation would have to be backed by compulsory registration and that this might be difficult to justify under Article 10(2) of the ECHR.31 Hugh Tomlinson QC said that regulation of the print media could, in some circumstances be compatible with the ECHR, particularly if limited, for example, to a set of mandatory standards for publications with a large circulation, but that general regula-

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PART K | Regulatory Models for the Future tion which might amount to a licensing regime would not.32

4.2 Second, it is argued that the effectiveness of a standards regime depends on the active support

of the participants, that a mandatory scheme would not have the support of those compelled to comply and consequently would not be as effective as a voluntary system could be.33 Mr Richards pointed out that for self-regulation to be effective it requires 'genuinely willing participants' in the enterprise. The point was also made by Ofcom that self-regulation is most likely to be effective where there is a strong alignment between the industry interest and the public interest,34 leading to the conclusion that active support could best be secured by the right range of incentives within a self-regulatory system. The Media Regulation Roundtable argued that a voluntary system would be designed to obtain the fullest cooperation of the media; as a result, it would be more likely to command support and be effective in practice.35

4.3 Third, it is argued that there are numerous practical difficulties with making a system

mandatory. Any mandatory system would require some form of legislation; it is argued that this would make the resultant system inflexible and unable to move to react to changes in the market or in technology.36 As an example, Lord Black points out that the broadcasting complaints regime is governed by the Communications Act 2003, which doesn't even mention the internet.37

4.4 Finally, issues have been raised about for whom any such regulation or standards would be

mandatory. Specifically there are concerns about the ability of legislation to identify relevant online providers in a world where anyone might contribute to news and current affairs discussion online, via Twitter or blogs, alongside big news providers (including newspaper websites).38 There are obvious difficulties about seeking to apply regulation to providers of internet services that are not based in the UK.39 Equally there might be a risk of any providers moving out of the UK in order to avoid mandatory standards regulation.40

4.5 Generally, even where there is strong support for a voluntary system, those proposing such

systems are keen for all news providers, particularly all national newspapers, to be part of the system. Lord Hunt said that the industry's proposed voluntary scheme would be 'fatally undermined' if a big fish, such as Northern and Shell, were to escape the net.41 Accordingly, all of the proposals that rely on voluntary membership of a press standards body also stress

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the need for appropriate incentives to ensure universal membership of relevant news organisations. The range of incentives proposed is considered in more detail in below.42

4.6 By contrast, those arguing for a mandatory standards regime simply point to the failure of

the voluntary self-regulatory approach over the last century and, in particular, the difficulty of ensuring that all relevant publications comply with any voluntary regime. Separate issues are also raised about the ability to require both claimants and defendants to use an alternative dispute resolution mechanism. However, whilst the rationale for making some form of standards regulation compulsory is common to a number of proposals, the concept of what might be made compulsory differs widely between them. Whether some form of mandatory standards regulation amounts to a form of licensing will depend heavily on the consequences of non-compliance. The following paragraphs briefly outline both the mandatory elements of proposals and the proposed consequences of non-compliance.

4.7 The CPVs argue that all newspapers and magazines should fall within the jurisdiction of

the regulatory regime and comply with the requirements of adverse adjudications or investigations.43 This appears to be an argument for compulsory coverage by implication, rather than specifically stated as such.

4.8 Sir Louis Blom-Cooper QC recommends mandatory coverage for a Standards Commission

that would adjudicate on complaints as well as having investigatory powers and a role to promote freedom of expression. However, the only sanction underpinning the mandatory standards would be its own publication of its critical verdicts.44 This is a proposal that enhances transparency around the standards applied by the press but would not be regulation in any usual sense.

4.9 The Campaign for Press and Broadcasting Freedom (CPBF) outlines proposals for a body that

would have the power to adjudicate on breaches of its code of ethics and order the wording and placement of publication of apologies and retractions. This would be enforceable by a court and the CPBF suggest that, where a publication is outside of UK jurisdiction, then distribution could be suspended until 'the matter is resolved'.45 This approach limits the mandatory nature of regulation to the publication of apologies and retractions, but is silent on what might happen if a publication refused to comply with a direction or a court order enforcing it. In a submission on behalf of the Labour Party, Harriet Harman QC MP makes a similar suggestion, emphasising that the important element is the ability of the body to enforce its decisions across all newspapers. In Ms Harman's model the courts would be able to fine the newspapers if they failed to comply with an order of the body.46

4.10 Mr Eustice challenges the idea that statutory regulation of any sort would have a chilling effect

on freedom of expression, pointing to the substantial statutory regulation of broadcasting, whilst underlining that broadcasting is home to 'some of the best investigative journalism in Britain'.47 The statutory provision he envisages is a role for Ofcom in overseeing governance standards in the press, with no involvement in day to day disputes on individual stories,

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and a role for the Information Commissioner in providing redress for individuals in relation to breaches of privacy. He does not set out what the consequences might be for a press organisation which refused to comply with either element of statutory regulation.48

4.11 Early Resolution propose a system of mandatory regulation that requires media disputes

that would otherwise have gone to the courts to be subject to a statutory dispute resolution scheme.49 Although not spelt out, the decisions of the dispute resolution body would be enforceable by the courts. Mr Mosley proposes a similar scheme, but with the proposed tribunal having powers to investigate and adjudicate on any breach of the rules established by an independent Press Commission. The decisions of the tribunal would be able to be appealed to the High Court and decisions of the tribunal would be enforced by the High Court.50

4.12 The NUJ proposes a statutory regulatory body with jurisdiction over all publications of a

certain size and their associated websites. Various options are suggested for the size trigger. The regulatory body would have the power to impose fines for breaches of standards as well as to order the publication of corrections and apologies in respect of the publications over which it had jurisdiction.51 The NUJ does not elaborate on the consequences of failure to comply with an order of the body.

4.13 Professor Greenslade concludes that there has to be some form of compulsion for the larger

publishers but he would rely on a system of incentives for smaller and online publications.52 The body would adjudicate on complaints and be able to order publication of an adjudication.53 Professor Greenslade does not elaborate on what the consequences would be of a larger publisher failing to comply with an order from the body.

4.14 As already mentioned, Mr Suter and the MST each propose a statutory requirement that media

organisations should belong to an approved self-regulatory body. Under the MST proposal the statute would apply only to big media companies, and would require internal governance standards in individual companies and membership of an approved self regulatory body.54 Failure to do either could result in a fine enforced, if necessary, by the courts.55 The powers of the self-regulatory body in respect of breaches of standards would be a matter for the body itself; this would be by agreement with its members, as long as it could satisfy the backstop regulator that it was sufficiently robust.

4.15 Under Mr Suter's proposal there would be a general authorisation regime, which would

allow anyone to publish but would require them to do so in a way which met any regulatory requirements set down. Ofcom would define the characteristics of media services that should be regulated, including with reference to the size of the undertaking. Those services falling with the definition would have to join an approved self-regulatory body. The Ofcom Content Board would then be responsible for approving self-regulatory bodies, in line with the

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regulatory outcomes set out by Ofcom.56 As with the MST proposal, the self-regulatory bodies would be free to define their own codes and sanctions, but would need to satisfy the Content Board that they had adequate governance arrangements, scope, coverage and powers in order to be approved. Any organisation falling within the characteristics defined by Ofcom but refusing to join a relevant self-regulatory body would be regulated directly by Ofcom, using the self-regulatory code considered by the Content Board to be most appropriate.57 Mr Suter does not say so in terms, but the ultimate sanction in a general authorisation regime is withdrawal of authorisation to carry out the regulated activity.

  1. Incentives for membership 5.1 As described above,58 where compliance with press standards is proposed as a voluntary

matter there is considerable desire to craft incentives that would encourage publishers to join a voluntary standards organisation. A number of potential incentives have been set out in the proposals submitted to the Inquiry and they are considered here.

Kitemarking 5.2 Kitemarking is the most straightforward of the incentives proposed. The issuing of a kitemark

would rest solely with the regulatory body and no cooperation from outside the industry is required. A kitemark would stand as a symbol of the quality of a publication in terms of its adherence to the professional and ethical standards set out in the code of practice. The commercial value of the kitemark would be wholly dependent on the extent to which the purchasing or reading public were aware of its existence, and of what it meant, and the extent to which that affected purchasing decisions. Essentially a kitemark has no value unless a product carrying it succeeds better in the market than a competing product without it.

5.3 Mr Dacre suggested that a kitemark would be effective. It would signal to the public which

publications had signed up to self regulation and as such would provide an incentive not only to newspapers but also to internet news providers to join the system.59 The Media Regulation Roundtable suggested that a kitemark might be of particular value to smaller publishers and bloggers.60 Lord Hunt told the Inquiry that he thought publishers would carry a kitemark with pride. He accepted that there would always be some publications which might take equal pride in not carrying the badge and signalling themselves as outside the system, but he felt that it was important to make adherence to the new regime more visible.61

5.4 I suspect that, while a kitemark might be seen as a benefit by some publishers, it is unlikely to

have a significant impact in persuading publishers who do not otherwise want to join a self- regulatory standards regime to do so.

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VAT zero-rating

5.5 An idea which was much discussed during the early months of the Inquiry was the possibility

of removing the VAT zero-rating for publications that were not members of a self-regulatory scheme. Given the currency this idea gained, it has been considered in depth and it is important that that the issues are set out. The essential background is that printed material is zero-rated for VAT purposes, that is to say, no VAT is charged or payable. It is an important point that this is not an exemption from VAT. The proposition is that a newspaper that is not signed up to a self-regulatory standards regime should, instead, have VAT levied on it at the standard rate (currently 20% in the UK).

5.6 John Evans, Deputy Director in the Solicitor's Office at HM Revenues and Customs (HMRC),

with responsibility for advising on legal issues relating to VAT, has provided the Inquiry with expert evidence relating to this proposal.62 He explains that VAT is a European tax, and that one of the intentions of the EU VAT Directive 2006/112/EC is to ensure that the application of VAT does not distort competition, whether at national or community level.63 VAT is a tax on the final consumer, not the business. The effect of standard rating newspapers supplied by publishers outside the self-regulatory system would, in fact, be an increase in price for the consumers, or a squeeze on profit margins for the publishers, depending on how the publisher chose to manage his pricing.64 Either would have an impact on competition; indeed, that would be the point of the proposals, since the aim is to provide a strong commercial incentive on the publisher to join the self-regulatory regime.

5.7 The UK does not generally have the ability to determine which products are subject to VAT and

which are not. There is no general discretion available to Member States to apply or dis-apply VAT to a particular product or service. Under the Directive, and pending full harmonisation of VAT, Member States have been permitted to, amongst other things, maintain some zero- rates.65 The zero-rate applied to printed matter (including newspapers and magazines) is one of those. The UK does have discretion to remove those zero-rates and apply VAT at the standard rate to those products or services.66 However, once a zero-rate has been withdrawn it cannot be reinstated.67

5.8 All UK application of VAT must be consistent with the principle of fiscal neutrality, which

precludes treating similar goods differently for VAT purposes.68 It follows that in order to implement the proposal described above, one would have to be confident that a newspaper published by a publisher within the self-regulatory regime and a newspaper published by a publisher outside the self-regulatory regime were not 'similar goods'.69 Mr Evans drew the attention of the Inquiry to a judgment of the Court of Justice of the European Union (CJEU)70 in which the court had been very clear that different legal regimes or different systems for control and regulation were of no relevance when assessing whether or not supplies of products or services were similar.71 Mr Evans also drew the attention of the Inquiry to a

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further decision72 in which the CJEU had concluded that similar services could not be treated differently for VAT purposes simply because one was lawful and the other was not.73

5.9 Mr Evans told the Inquiry that, in the view of HMRC, the supply of newspapers was likely

to be similar whether supplied by a member or by a non member of a self-regulating body. HMRC therefore considered that a challenge against the proposed change, either through the UK courts or by the EU commission, would be highly likely to be successful.74

5.10 It is worth bearing in mind the provision noted at above,75 that once a zero-rate has been

removed from a product or service the UK has no discretion to reinstate it. It follows that if the zero-rating were to be removed from newspapers outside of the self-regulatory regime, and that distinction was found by the CJEU to be a breach of fiscal neutrality, the UK would be unable to reinstate zero-rating for those newspapers outside the self-regulatory regime and would therefore be required to withdraw the zero-rating from all newspapers in order to preserve fiscal neutrality.76

5.11 Mr Evans made a number of other points about the proposal. If the proposal were successfully

adopted, the decision over whether or not VAT were charged on a newspaper would effectively reside with the self-regulatory body. However, ultimately HMRC must be able to reach its own view on whether those decisions were being reached in a fair way, and HMRC and the Government could become involved in a legal challenge to a decision of the regulatory body. This would effectively give the Government a significant backstop role in decisions of the regulator over who could join or remain a member of the system.77

5.12 There is also a risk that differential VAT treatment of newspapers inside the self-regulatory

system could be considered to be a state aid. Unless such aid had been cleared in advance by the European Commission (and the likelihood of getting such clearance would require detailed consideration) the aid, in the form of the difference between the levels of VAT, would have to be paid back to HMRC by the newspaper publishers who had benefited from it.78 Mr Evans also drew the attention of the Inquiry to potential risks that the proposal could constitute a barrier to freedom of establishment under the Treaty on the Functioning of the European Union,79 and that it could constitute an infringement of the right to freedom of expression under the ECHR.80 Finally Mr Evans noted that there would be a potentially significant compliance cost for small businesses who sell newspapers, some of whom may have to register for VAT where they were not already so registered, and in being able to correctly identify which publications were subject to VAT and which were not.81

5.13 It is noticeable that very few witnesses have supported this proposal during Module Four of the Inquiry. Professor Greenslade82 and Ofcom83 float it as an idea in their submissions,

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but without any detailed explanations of how it might be possible. Ms Harman,84 and the Media Regulation Roundtable85 explicitly recognise that there may be insuperable barriers to this in European law. The MST looks at the issue in considerable detail and identifies that the current zero-rating of newspapers for VAT is worth nearly £400m collectively to national newspaper titles86 but recognises that, although the removal of VAT zero-rating as an incentive to join a self-regulator scheme is possible in theory, it would require considerable political will and would likely take some years to come into practice.87 I see this as a considerable understatement. The political will and the time required to overturn the principle of fiscal neutrality are, in my opinion, incalculable. Put simply, this is not a credible option.

Journalistic accreditation

5.14 Mr Dacre first raised the possibility that the provision of press cards to journalists could be

restricted only to journalists working for publishers subscribing to the new regulatory body.88 This proposal is one of the four potential incentives to membership of the industry proposal put forward by Lord Black, and is explained in basic terms in Chapter 3 above. The proposal has now been rejected by the UK Press Card Authority (UKPCA).

Access to industry services

5.15 There are a number of services, where the newspaper publishing industry works together,

which, it has been suggested, could be withheld from those who do not join a self-regulatory press standards body. The first is access to Press Association (PA) copy. The PA is a private company, with 27 shareholders, most of whom are national and regional newspaper publishers.89 It is the main multimedia news agency in the UK and Ireland, providing newspapers with access to its news content, as well as images, listings, sport and weather information.90 The proposal is that access to PA copy might be denied, or at least supplied on differential terms, to publishers who refuse to comply with a code of practice.91

5.16 Newspapers, both regionally and nationally rely heavily on PA wire copy for content. It is a

fundamental resource, particularly with current business models, and a newspaper denied access to PA services would have to find an alternative source for such material, such as producing its own foreign and national news content, or do without such information.92 Mr Dacre argues that denying access to news publishers to the PA service would be a 'crushing blow'.93 The MST agrees that this would have a significant impact on publishers outside the system, but argues that restricting it would be undesirable because of its impact on the market.94

5.17 The second industry service it has been suggested could be denied to those outside a selfregulatory system is coverage within the Audit Bureau of Circulations (ABC) and the National

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Readership Survey. At present, ABC provides a vast range of media organisations, advertisers, academics and public members with data on circulation and web traffic. The data provided is used by the media owners and advertisers to calculate the value of advertising space. The ABC Board consists of members nominated by the trade bodies of both media owners (the NPA, the PPA, NS) and the advertising industry (Institute of Practitioners in Advertising (IPA) and the Incorporated Society of British Advertisers (ISBA)).95 Whilst ABC is the dominant provider of this data, it is open to publishers to find other sources. The National Readership Survey is governed by the IPA, the NPA and the PPA and provides data for the size and nature of the audience reached in relation to over 250 newspapers and magazines.96

5.18 Professor Greenslade suggests that this would deny such publishers the 'currency' that

advertisers use to buy space,97 thus having a potentially significant economic impact on them. The MST says that, whilst denial of access to both ABC and NRS figures would be likely to add to the costs of a publication, it seems unlikely to represent an overriding economic incentive for membership of a new regulatory system that may apply further costs to news publishers.98

5.19 The Media Regulation Roundtable notes that membership of collective commercial

partnerships such as participation in industry standards could offer a commercial incentive to join a self-regulatory standards body,99 but goes on to comment that, whilst incentives of this kind could be of some commercial value to publishers, they would not be strong enough to guarantee participation.100

5.20 The MST further argues that application of these incentives would be undesirable for two

reasons. First, that it would concentrate power within the industry, and second that it would provide direct commercial benefits to publishers through their ability to restrict the business practices of existing or potential rivals and could thus be viewed as anticompetitive.101 The question of whether these incentives might give rise to competition law problems is considered above.102 I agree that this combination of incentives has the potential to make it very inconvenient for a major publisher to sit outside the self-regulatory regime. However, I also agree with the MST that this is essentially an economic calculation and that the extent to which they could actually encourage membership of the regime will depend on the costs of the impact of not being able to access these services together with the costs of compliance with the regime. Quite apart from the legal question of whether incentives such as these might be in breach of competition law, I would also have some concerns about the potential impact on small businesses and bloggers for whom the costs of compliance might be disproportionate. It would also be essential that membership of the self-regulatory regime should be available on fair, reasonable and non-discriminatory terms to all who want to join if there are to be real commercial effects from being outside the regime.

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Assistance from the advertising industry

5.21 Lord Black suggests that there may be ways in which the advertising industry can help with

building incentives for membership of a self-regulatory standards system.103 Ms Harman suggests two specific ways in which this might be done, first by requiring publishers who are not members of the system to pay a levy on adverts carried and secondly by advertisers agreeing to withhold advertising from publications that are not members.104 The latter is also hinted at by Mr Dacre.105 The levy concept has not been the subject of elaboration in evidence by anyone and, as such, is difficult to consider here. The concept that advertisers might withhold advertisements from non-member publications would require high levels of commitment from advertisers who, themselves, have nothing to gain from higher standards in the newspaper industry. The Inquiry has not been presented with any evidence to suggest that advertisers are ready to engage, or even contemplating engaging, in discussions around this. Furthermore, it is difficult to see what incentive there would be for the advertiser whose concern is to ensure that its product or the subject of its advertisements reaches the widest possible audience. Although this might be a powerful incentive if it could be put in place, I have seen nothing to suggest that it has any prospect of being adopted and see no reason why it should be.

Access to a dispute resolution mechanism

5.22 Many of the proposals present access to an alternative dispute resolution mechanism as an

incentive to membership of a self-regulatory press standards system. Dispute resolution more generally is covered below. At this stage I am only concerned with its value as an incentive for, if it is to be seen as such, it must be something that is not available to non-members.

5.23 The Media Regulation Roundtable proposal largely centres on its proposals for dispute

resolution. Under this model, any complaint against a member organisation would go first to mediation by the regulatory body. If a complainant wished to start court proceedings in the case of a complaint of a legal wrong, then the court would stay the proceedings pending adjudication from the regulatory body's tribunal. If mediation was unsuccessful then, where the complaint relates to a legal wrong, it would go to an adjudication process. This would provide a compulsory alternative dispute resolution mechanism that would have to be used by all complainants against members of the body, and all members of the body. If either party was unhappy with the result of the adjudication process they could, by agreement, go to the body's Dispute Resolution Tribunal which would reach a conclusion binding on both parties. If the complainant was not happy with the result of the adjudication process it would still be open to him to pursue his complaint in court.106

5.24 This would serve as an incentive for publishers to join the self-regulatory standards body

because it would ensure that all legal challenges against them would go, in the first instance, through a fast, fair and cheap adjudication process, thus hopefully reducing their exposure to expensive and slow court proceedings. As set out, this proposal would not prevent individuals from exercising their right to have a court consider their case; however, they would have to

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go through an adjudication process first, and the court would be likely to take the result of the adjudication process into account when considering their case.

5.25 Sir Charles Gray (a retired High Court judge whose expertise is in media law) told the Inquiry

about Early Resolution, a voluntary service providing dispute resolution in media matters. He made it clear that Early Resolution had not been as effective as they had hoped because, whilst it was very popular with publishers, it was meeting with resistance from claimants, possibly because of the incentives acting on those advising claimants.107 For this reason, Sir Charles had reached the conclusion that a voluntary ADR scheme would not be able to act as an incentive; it would have to be mandatory, and mandatory for everyone, thus excluding the possibility of using such a system as an incentive for membership.108

5.26 The Coordinating Committee for Media Reform (CCMR) proposed an approach under which

complaints, including enforcement of civil rights, relating to those publishers that have signed up to the scheme would be dealt with through the fast track tribunal system.109 Angela Philips accepted that it would be unfair to citizens who would get treated differently depending on who has traduced them, but said it was a necessary price for a significant incentive.110

5.27 Lord Hunt raised the question of why the industry would agree voluntarily to subject itself

to a cheap system of arbitration which would potentially open them up to claims brought by members of the public who could not afford to pursue legal redress. He also asked why wealthy people would submit voluntarily to arbitration if they felt they might be able to intimidate a publisher with threats of a full court hearing.111

5.28 Taking a different view to Lord Hunt in relation to the industry, Mr Dacre suggested that

access to swift and cheap resolution of defamation and privacy cases would be a major boon for both the industry and the public, and that it would be a huge incentive for a cost conscious publisher to sign up to a new regulatory system. Mr Dacre did not explain what he had in mind in any more detail but acknowledged that legislation would be required to deliver it.112 Ms Harman suggests that damages might be capped for member organisations or be higher for non-member organisations, but goes on to recognise that it might not be acceptable for a victim to receive less compensation because they were libelled by an organisation belonging to a regulatory regime.

5.29 I agree with Ms Harman on this latter point. I do not believe that damages should be assessed

at different levels or that the press should be given additional legal protection if they are members of a regulatory system, because any injury suffered by a claimant is no less simply because the title has signed up to a regulatory regime to which it then does not adhere. But it may be that the title would be able to rely on its membership of a regulatory regime as demonstrating adherence to standards of behaviour, on the basis that a title that is not a member would have the rather more difficult burden of proving that it adhered to appropriate

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standards. The Irish model has this type of provision and they believe that proof would be difficult to achieve.113 In order to establish the incentive, it is also necessary to examine whether and, if so, how, claimants could be mandated or encouraged to use the ADR process.

5.30 A number of the proposals put before the Inquiry suggest that a publisher should be

able to benefit from some form of preferential treatment in libel proceedings as a result of membership of a self-regulatory forum. In this context, the Irish Defamation Act and its provisions for recognition of the Press Council and Ombudsman are sometimes offered as an example.114 Dealing here only with the proposals that have been made for aspects of the scheme to be adopted in the UK, this section looks at the potential for the courts to treat defendants favourably because of voluntary participation in some form of regulation and the extent to which this would form an incentive to membership.

5.31 The Alternative Libel Project suggests that membership of a self-regulatory scheme could

be incentivised by costs orders made by the courts but offers no detail as to how that might work.115 Ofcom also refers to this suggestion, but goes further and suggests that the level of damages might also be affected by whether a self-regulatory complaints handling system has been used.116 The Media Regulation Roundtable suggests specifically that additional damages might be awarded against those who are not members of a self-regulatory system and who publish defamatory material in contravention of the code of practice. No such additional damages could be awarded against a member of the system even where they were in contravention of the code.117 The Media Regulation Roundtable also proposes a form of statutory support for those wishing to bring proceedings against publishers outside of the self-regulatory system, by allowing such proceedings to be brought with conditional fee arrangements. In addition, costs would not normally be recoverable against unsuccessful claimants.118

5.32 It is possible to envisage a process by which costs might not be awarded even to a successful

defendant where they were not a member of a credible self-regulatory system that offered access to ADR. With appropriate discretion in the court, that could potentially be extended to make the defendant responsible for all costs. It could also potentially extend to consideration of the costs implications of a claimant pursuing a title through the courts when there was a cheaper, faster ADR mechanism available because the publication was in a self-regulatory system which provided such access. Such an approach might be expected to encourage any publisher who felt they were at risk of defamation or privacy actions from those with very deep pockets to be a part of the self-regulatory system.

5.33 It is less clear that any differentiation could (or even should) be applied to the level of

damages. As identified above, I find it difficult to understand why it could ever be appropriate for the remedy offered by the courts to a victim of defamation or invasion of privacy to be affected by the defendant's membership or otherwise of an industry body. By definition, having succeeded in a claim for damages, the relevant publisher will have failed to meet

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those standards. Whether a deliberate decision not to participate in a voluntary regulatory mechanism might show disregard for standards (potentially justifying aggravated or exemplary damages) is another matter but I do not see how the compensatory award could be affected.

5.34 Lord Prescott119 and Ofcom120 go further than considering damages and refer in their

submissions to the suggestion that access to certain defences in libel or defamation might be available to those who were part of a self-regulatory system. The essence of the proposal is that a defendant would be able to rely on compliance with a self-regulatory system and code of practice as evidence of responsible journalism and that this would constitute a defence. Professor Greenslade goes slightly further and suggests that a publisher standing outside of a self-regulatory system would be regarded as 'failing to favour responsible journalism'.121

5.35 The Media Regulation Roundtable makes specific proposals for a defence of 'regulated

publication,' which would allow a defendant to rely on the fact that they had complied with directions or requirements of the self-regulatory authority in relation to the relevant published material. Similarly, it would be a sufficient defence in a privacy claim to demonstrate that the public interest requirements of the code had been complied with.122 In relation to the latter, however, it is again difficult to see why, as a matter of legal fairness, such a defence should not also be available to a non-regulated entity that claims to have equal or higher standards with which it complied (even though, in the absence of membership, that fact might be more difficult to prove).

or correction, with appropriate prominence. These would be available only in respect of publishers who were not members of the self-regulatory body.123 These rights would be enforced by the courts. The effectiveness of the right to reply or correction as an incentive to membership of the self-regulatory body would depend on the relationship between the statutory right and the equivalent provisions in the self-regulatory code. If the statutory right is less onerous than the code provisions then it is unlikely to offer much of an incentive. If, on the other hand, the statutory provision were to be stronger than, or the same as, the code provision there might be some question as to the benefits to the public of the self-regulatory system. It is not entirely straightforward to see why publishers should effectively be able to opt out of a statutory obligation by joining a trade body that does not give equivalent public protection.

5.37 That is not the only problem with this idea. The critical features of a right of reply are its

immediacy and its ready availability. It is difficult to see how providing a mechanism through the courts will achieve either of these objectives.

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Exemption from ATVOD

5.38 One final incentive, suggested by the Media Regulation Roundtable,124 is that a press self-

regulatory body could take on the statutory responsibilities under the Audio Visual Media Services (AVMS) Directive for regulation of audio visual content published by its members. This would ensure that newspaper websites would be regulated by the self-regulatory body, rather than ATVOD as would now be the case if any of them were to fall to be regulated under the AVMS Directive. This would also be in line with the proposal from Jeremy Hunt MP, then the Secretary of State for Culture, Media and Sport,125 in which he hypothesises a converged news regulator that would both provide self-regulation of the press and take on the statutory role required by the AVMS Directive, to ensure that the minimum standards laid down by the Directive are met.

Effectiveness of incentives overall

5.39 In any voluntary system of regulation it would be necessary to accept that some of the

organisations who fall within the scope of the regulator might choose to sit outside the regulatory regime. If staying outside the regime is not a legal possibility, then it is not a voluntary system. It is common ground that, in order to be effective, any new system of press standards should cover all the national newspapers and at least the main magazines and regional and local newspapers. If publishers are not to be compelled to join then there must be a reason why they would wish to do so. The question that needs to be addressed is whether a sufficient package of incentives can be crafted that makes it strongly in the interest of all publishers to be a part of a voluntary standards system, without actually compelling them to do so. In the absence of a sufficiently strong package of incentives, one must either accept a voluntary standards system that some publishers chose not to be a part of, or find a way of compelling, rather than incentivising, membership.

5.40 The possible incentives examined above are a comprehensive list of those that have been

put to the Inquiry in evidence. There may well be others, but if there are I have not had them brought to my attention. I am satisfied that in kind, if not necessarily in detail, the list above includes all the obvious possible approaches to incentivisation (and some that are not so obvious).

5.41 Of those proposed, I can see merit in kitemarking. There are clear benefits to providing

consumers with information, though no evidence has been presented on whether a kitemark would have any effect on readers' buying habits. Some publishers might be keen to demonstrate that they operate to the highest standards. On the other hand, no evidence has been presented to suggest that kitemarking would be anything other than a minor incentive and those least likely to want to join a voluntary press standards body are likely to be the least concerned to demonstrate their adherence to standards.

5.42 The concept of a package of commercial benefits from membership would bear further

investigation. Any specific proposal would need to be tested against competition law. Even where limiting a commercial benefit to members of a voluntary standards body would be possible legally, it is not axiomatic that it would also be desirable. Any of these proposals would need to be looked at and evaluated in detail; this has not been possible because they have only been presented to the Inquiry in the most general of terms.

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5.43 The benefits to publishers of an ADR regime seem obvious, and if individuals could be

compelled to use such a regime that would be a powerful incentive. However, it is not possible to deprive individuals of their right to pursue or defend their rights in court and, on its own, any voluntary ADR mechanism is in my view unlikely to prove significantly compelling to publishers. I do not accept that it would be appropriate for differential damages to be awarded depending on the regulatory status of the defendant. However, there does seem to be real potential in constructing a costs regime in relation to privacy and libel cases that would make membership of a voluntary system a significant benefit to any publisher likely to face such challenges. Whether the benefit would be significant enough to encourage all national publishers into a voluntary system is impossible to forecast at this stage. Furthermore, if it is to be fully recognised within the costs regime operated by the courts, it would be highly desirable, if not essential, that the regulator providing the ADR mechanism be formally recognised and, thus, validated.

5.44 I am satisfied that there is no realistic prospect of using the VAT zero-rating, or any other

method of discrimination based on tax, as an incentive for membership of a press standards body. I conclude that restricting journalistic accreditation to members of a press standards body would be difficult and runs the risk of being a real threat to freedom of expression.

5.45 Ultimately, the one incentive that we have heard about that has been demonstrated to be

effective is the realistic threat of press standards legislation if an adequate voluntary body with full coverage is not forthcoming. Professor John Horgan, the Irish Press Ombudsman, told the Inquiry that the creation of the Irish Press Council had been under consideration for decades before eventually significant political pressure for statutory regulation of the press made the industry focus:126

"Then in the middle 90s, after the collapse of a big newspaper group, the government set up a commission on the newspaper industry, of which I was a member, and which all major newspaper interests were also represented. The report of that body recommended the establishment of a Press Ombudsman in 1996. But nothing really happened after that. Nobody took ownership of it, and it wasn't developed in any sense. Then after the 2002 general election, the then minister for justice, Michael McDowell, set up an expert group to make recommendations to him. And that expert group reported in 2003, recommending a statutory system of regulation for the press. I think it's fair to say that that lit the fire under the topic in a way that it hadn't been lit before, and the press industry realised that if this eventuality was to be avoided, they would have to come up with something that was credible, authoritative, independent and on all these fronts sufficiently acceptable to government, so the government would not proceed with its plans. They then set up the Press Industry Steering Committee, which negotiated and deliberated for some four years."

And in a subsequent exchange he said:127 p5, lines 3-14, Viscount Rothermere, ibid p52, lines 10-16, Camilla Wright, ibid http://www.pcc.org.uk/news/index.html?article=Mzg2Mw The transcripts of the interviews have not been published p126, lines12-25, Derek Webb, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript-of- Afternoon-Hearing-19-December-2011.pdf p57, line 17, Piers Morgan, ibid p4, para 13, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Witness-Statement-of-Dick-Fedorcio. pdf pp1-66, Dick Fedorcio, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Exhibit-DF1.pdf pp1-6, Richard Thomas, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/RJT-Exhibit-42.pdf pp81-82, lines 25-14, Alastair Campbell, ibid p64, lines 3-16, David Cameron, ibid p45, lines 11-20, Lord Wakeham, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/05/Transcript-of- Morning-Hearing-15-May-2012.pdf See Subsection 6 below: News Corporation and Alex Salmond p7, para 23, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Witness-Statement-of-Lord-Black1. pdf pp43-44, para 89, ibid pp92-93, lines 4-6, Lord Black, ibid pp55-56, lines 23-18, Professor John Horgan, ibid http://www.dbcde.gov.au/digital_economy/convergence_review/committee_profiles AG v Observer Ltd [1990] 1 AC 109 and Douglas v Hello! Ltd [2008] 1 AC 1 at para 307

"LORD JUSTICE LEVESON: But behind it all, do I gather from what you were saying somewhat earlier, was the threat of statutory regulation? A. Absolutely.

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LORD JUSTICE LEVESON: So in other words, it behoved the press interests to come up with a solution that was less than the club that was being held over them? A. That is absolutely the case. And in fact my membership, or our membership of the Alliance of Independent Press Councils of Europe indicates that in quite a few countries this threat has been the engine which has generated or promoted the successful establishment of press councils of the same kind in many European countries. So even though before this threat was made, there had been moves towards the establishment of something like this, the 1996 report of the commission, which wasn't under such a threat, recommended the establishment of an ombudsman. As I said, it was the real and present danger of that that created the situation in which we found ourselves."

5.46 Similarly, Lara Fielden, in her comparative study of international press councils published by the Reuters' Institute, says:128

"While..., the Press Councils considered here adopt many highly distinct approaches to their functions, frameworks, and powers, and while each has been established against a very different historical, political, and cultural backdrop, a common theme emerges in the form of the galvanising effect of the threat of statutory intervention. A recognition of the importance of ethics and accountability, and debates between publishers and journalists, may be significant. However the decisive trigger to the establishing, or reform, of a Press Council is commonly a proposal for statutory regulation that is held to threaten press freedom and results in a determined, pragmatic alternative response from the industry."

5.47 This has also been broadly the case in the UK, as demonstrated in Part D, Chapter 1, where

I note that there has been a pattern of the press undertaking to make changes when faced with a threat of legislation. The fact that these promises have often not been followed through with meaningful action may demonstrate that, in order to be effective in securing real industry action, the threat must be exceptionally credible; to date, that has not generally been the case in the UK.

5.48 Such a threat could be perceived to exist now and I have no doubt that the proposals put

before me by Lord Black spring solely from the fear that I might recommend a legislative regulatory solution and that such a recommendation might be accepted by the Government. Indeed, Lord Black described the process of arriving at his proposals as a substantial one, leading to something completely different from anything that has gone before,129 going on to say:130

"That has only come about, I think, because of the opportunity that this Inquiry has given us to be able to analyse the things that have gone on in the past and see how we can try and rectify them for the future."

5.49 Whilst it is no doubt true that the mere existence of this Inquiry has focussed minds, I do

not think it is possible to rely on any perceived threat from the Inquiry itself to encourage publishers to join a self-regulatory system. Any such threat would have to be provided by the Government of the day and credibly represent a real intention to legislate quickly should an

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acceptable industry solution not be forthcoming: that was tried by Sir David Calcutt but the effect was merely to postpone the issue until other more pressing political concerns took their place.

  1. Statutory recognition 6.1 Even in an entirely voluntary self-regulatory system it might be considered desirable to have

some form of statutory recognition for the purpose of encouraging or rewarding membership of, and compliance with the standards set by, the voluntary body. This is perhaps best illustrated by reference to the Irish Press Council, which is fully independent of Government and membership of which is entirely voluntary. An Irish Press Council could exist in any form, with any structure, but the Defamation Act 2009 in Ireland provides for a defence of fair and reasonable publication,131 with the courts taking into account the extent to which the publisher has adhered to the standards set by the Press Council or, if the publisher is not a member of the Press Council, equivalent standards.132

6.2 Recognition of this sort would require the voluntary body to have some statutory existence.

In the Irish case, the Defamation Act includes substantial detail on the composition and appointment of the Press Council and the appointment and procedures of the Press Ombudsman, but only a few overarching points about the existence and coverage of the standards code.133 It also sets out the process for recognition of the Press Council by the Parliament, once the Minister has satisfied himself that it meets the criteria set out in the Act.134

6.3 Lord Black's proposed solution did not include any incentives that would require statutory

recognition, but did include the potential to include an 'arbitral arm'. He recognised that the creation of an arbitration system of that sort would require changes to statute but was unclear precisely what sort of changes would be required.135 Lord Black was emphatic that he did not consider that any other area of statutory relationship was necessary or desirable in order to implement his proposal.136 Mr Dacre said that although the introduction of an arbitral arm would require changes to libel legislation it deserved the fullest support.137

6.4 Lord Black was strongly of the view that any statutory involvement in press regulation would give rise to concerns about freedom of the press:138

"I've never seen a model of statute proposed which would not in some way invite the state into the regulation of editorial content."

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6.5 Other proposals generally did not deal with this issue of statutory recognition explicitly.

Lord Prescott states that "some incentives will need statutory support."139 Ofcom sets out a number of potential statutory incentives, including costs in legal cases and a new defence for defamation.140 The MediaWise Trust,141 through positive reference to the Irish model, implicitly accepts the need for a statutory basis for such incentives but makes no comment on the desirability or otherwise of it. Similarly, the CCMR142 and Professor Greenslade143 implicitly accept a role for the state by promoting the application of VAT zero-rating as an incentive for membership, but do not explicitly comment on the implications of such statutory recognition. The Alternative Libel Project argues for voluntary ADR which is supported by new rules on costs and more consistent and robust case management.144 They are not precise on whether this would require legislative changes.

6.6 Professor Greenslade explicitly accepts that some legislation might be required to construct

'sanctions' for non compliance, without being specific on what that might be. He is clear, though, that this is to be an arms length relationship with statute:145

"I would therefore urge that the state's role is restricted to creating a framework at arm's length in order to create a regulator that is both independent of the industry and independent of the state."

6.7 He also argues that the judiciary should take into account whether a publisher has signed up to a regulatory system,146 but does not propose any statutory basis for that:

"just sticking to the press regulator itself, in my view it is quite clear that you are not going to keep everyone on board, not going to be able to levy sanctions against them, unless there's a method of compulsion. I have tried to devise a way in which this is as far away from state intervention as it can be."147 p9, paras 28-29, ibid p88, lines 1-24, Daphne Keller, ibid http://www.pcc.org.uk/complaints/makingacomplaint.html not published p30, lines 5-9, Neville Thurlbeck, http://www.levesoninquiry.org.uk/wp-content/uploads/2011/12/Transcript-of- Afternoon-Hearing-12-December-20111.pdf pp99-104, lines 9-6, Tina Weaver, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Transcript-of- Morning-Hearing-16-January-2012.pdf p14, para 34, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Witness-Statement-of-Ed-Stearns. pdf p41, lines 9-12, Lord Condon, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/03/Transcript-of- Morning-Hearing-6-March-20122.pdf pp71-72, para 212, David Cameron, ibid Department for Constitutional Affairs, Increasing penalties for deliberate and wilful misuse of personal data, http:// www.dfpni.gov.uk/consultation_misue_of_personal_data.pdf p26, lines 13-20, ibid p4, Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Exhibit-SA-R27.pdf para 8.2 above p1, para 4, ibid K pp22-23, lines 23-5, Professor Roy Greenslade, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/ Transcript-of-Morning-Hearing-12-July-2012.pdf [2007] EWHC 1908 (Ch)

6.8 Lord Soley suggests that a regulatory body should have the power to take a case to court if

necessary.148 It is not clear whether he means in relation to existing criminal or civil law or with respect to any new rules on standards.

6.9 Generally, it would appear that there is a divide between those, exemplified by Lord Black,

who have concerns that any reference in statute to press standards regulation would be a potential risk to freedom of expression and those who see no immediate problem with legislation that recognises a voluntary self-regulatory regime. It is not, however, clear that

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the extent to which statutory recognition of a self-regulator would need to, or could, go into detail about the scope, governance and processes of that self-regulator have been fully considered by all of the witnesses.

  1. Statutory provision

Statutory underpinning 7.1 Many of the proposals submitted to the Inquiry go beyond statutory recognition and advocate

some form of statutory underpinning for regulation of press standards. There are a number of different statutory models proposed which I briefly set out and consider here individually. The level of statutory underpinning differs from proposal to proposal. At one end of the spectrum are those that simply use statute to define the characteristics of an otherwise independent and voluntary body. At the other end are models that also use statute to compel compliance. This difference was set out clearly by Mr Suter:149

"What's the difference between statutory underpinning and state control? By state control I think everybody has set up this dangerous notion that the state would dictate what the press could do, would dictate the standards by which the press had to operate and would form judgments as to what was or was not acceptable. I see statutory underpinning as being further removed from that, or setting a framework within which the regulation happens, but where the regulation itself is carried out by independent bodies dealing directly with the press and the regulated entities."

I have essentially used this distinction in considering the models that have been presented to the Inquiry. Models that put the definition and enforcement of standards in the hands of a statutory body are considered below as statutory regulation.150

The industry position 7.2 It is worth starting by considering the industry position on statutory underpinning. Lord Black

makes it very clear in his submission that the industry rejects, as a matter of principle, any form of statutory involvement in, or underpinning of, press standards regulation.151 This is not an argument about the strength of regulation but rather about the freedom of the press from state control:152

"I have always believed – and I believe it is a view across the bulk of the industry – that self-regulation is the guarantor of press freedom and interference (sic) from state control."

7.3 Lord Black argued that self-regulation could be tougher than a statutory system and that this meant that statutory control was not needed.153 He further argued that, as a matter of

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principle, it was essential that press regulation should be free of statutory intervention.154 He raised three specific reasons why a statutory basis for regulation would be inappropriate. The first was speed. He argued that no form of statute could keep pace with a fast moving industry in the way that self-regulation could.155 I accept the point that the regulations themselves need to be capable of relatively swift amendment, but I am at a loss to see why the overall structure of regulation would need to be affected by change in this way. It is entirely possible to imagine a statutory framework, at a very high level, that would simply require some form of regulation to exist and define the accountability structures, leaving all the material regulation to a separate, possibly self-regulatory, process. This does not seem to me to be a compelling argument in relation to establishing a regulator, still less providing for the recognition of a self-regulatory body, in legislation. I note in passing that other industries also operate in a fast moving environment – for example, broadcasting and telecommunications – where the speed of technological and market change is no less then in the press and media industry, and nonetheless manage to exist perfectly well with statutory regulation frameworks.

7.4 The second reason advanced for avoiding statute was the risk of 'losing coverage from the

system'.156 The argument here is that if publishers did not want to comply with the statutory regulation they might relocate their operations outside the UK in order to place themselves outside of the jurisdiction of the statute. I can accept that this is potentially a valid argument in relation to the economic effect of any compulsory regulation. Clearly, if regulation is to be compulsory then some people may seek to evade it. This may be a simple step for those whose business is primarily online, although I am less convinced that it is a realistic prospect in relation to a printed product which would need to be imported to the UK and distributed on a daily basis. In any event, I cannot see how that is relevant to the impact on the 'coverage of the system'. A publisher wanting to avoid a compulsory system would have to take steps to do so and may or may not be able to achieve that. A publisher wanting to avoid a voluntary self-regulatory system would simply have to put themselves outside it. It is not at all clear how this would achieve greater coverage.

7.5 The third reason advanced was that a statutory system would be subject to constant legal

challenge.157 This gets to the heart of the industry's position on any form of statutory underpinning for regulation, or indeed, any proposal other than their own, which is that they will render it ineffective by whatever means possible. This was articulated quite clearly by Lord Black:158 p6, para 18; p13, paras 29-40, ibid; p2, para 6, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/ Witness-Statement-of-Peter-Wright.pdf Part D, Chapter 7 p12, lines 13-23, Lord Black, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript-of- Morning-Hearing-1-February-2012.pdf p54, lines 18-25, Philip Williams, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/02/Transcript-of- Morning-Hearing-29-February-2012.pdf pp121-122, lines 13-6, Derek Webb, ibid See the Computer Misuse Act 1990 p9, lines 2-18, Commissioner Hogan-Howe, ibid p73, lines 16-20, ibid pp81-82, lines 23-10, David Cameron, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Transcript- of-Morning-Hearing-14-June-2012.pdf, and http://www.levesoninquiry.org.uk/wp-content/uploads/2012/06/Letter- from-Linklaters-regarding-Rebekah-Brooks-communications-with-Prime-Ministers.pdf see the full text of Paul Dacre's speech: http://www.pressgazette.co.uk/node/42394 p40, Rupert Murdoch, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/04/Exhibit-KRM-18.pdf p1, Stephen Abell, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/SA-B183.pdf; p10, para 12, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/01/Witness-Statement-of-Stephen-Abell.pdf p17, para 53, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Submission-by-Lord-Hunt-of-Wirral. pdf p4, para 10, http://www.levesoninquiry.org.uk/wp-content/uploads/2012/07/Third-witness-statement-of-Alan- Rusbridger.pdf p17, lines 16-21, ibid Application 44787/98, Judgment 25 September 2001

"A statutory system which would be forced on a majority of unwilling publishers is likely to become a target to be aimed at rather than something – a framework within which to be worked for the benefit of both the public and the public interest."

This is not the attitude of an industry committed to raising standards and acting in the public interest and must be seen as what it is likely to be: an attempt to use the economic and politi- cal power of the press to defend their own interests.

7.6 It is worth reflecting a little on the evidence that Lord Black gave in respect of his objections

to any statutory involvement. Robert Jay QC pointed out that a statute could do exactly what the proposed contract does, both in terms of giving powers to the regulator and by way of

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imposing limits on what the regulator could do. Lord Black did not dissent but expressed a 'philosophical objection':159

"I – there is a fundamental objection that I have and I believe that the bulk of the industry has in allowing the state to write the rules of a regulator that governs editorial content. It's not just writing the rules, but presumably producing the style of the system and the type of the system that will be there to enforce it. It's not a circle, I think, that can be squared. It is a fundamental philosophical objection to the role of the state in the content of newspapers and magazines."

7.7 In a subsequent exchange he emphasised the point:160

"LORD JUSTICE LEVESON: Well, that means there may be a statute which does not create a difference between what the statute could do and what the contract could do. A. The fundamental philosophical objection to it would remain!" and again, later:161 "Q. We've defined our terms according to your lexicon, although, looking at Dr Moore's evidence, he would define the statutory underpin system as equally one of self-regulation because there would still be a significant press component or press representation within such a system. Do you accept that? A. No, I don't – I don't – I don't believe that – statutory underpinning is simply a term of art for a form of statutory control. I don't believe there is a halfway house between them."

7.8 It is not clear, though, that Lord Black is entirely consistent in his opposition to statutory

involvement. His proposal envisages the possibility of an arbitral arm as part of the regulatory body. This, he acknowledges, would require some form of statute in order to make it compliant with Article 6 ECHR.162 Whilst Lord Black was clear that he has no precise proposal for legislation on this issue at present, he was equally clear that his principled objection to statutory control did not apply in this context:163 "I have no idea exactly how we would manage that, which piece of legislation we could do it in. All I know is it's not immediately on offer. The point of highlighting this here is that the structure of the system would allow it, if at some point Parliament saw fit in order to – saw fit to institute it."

7.9 Lord Black was not able to articulate why this from of statutory recognition or underpinning

for a form of press regulation was acceptable to the industry whilst any other form of statutory recognition or underpinning, no matter what its form or content, could not be. The only conclusion I can draw is that statute providing for an arbitral system would be in the interests of the press whereas, in their perception at least, statute providing the framework for robust independent regulation would not be.

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7.10 Lord Hunt clearly shares Lord Black's principled objection to a high degree. However, it

is perhaps not so clear cut. He told the Inquiry that recognition of a code, as in the Irish Defamation Act, would not constitute a statutory regulatory system.164

View of others

7.11 The MST put forward an approach which would place statutory obligations on large news

publishers to regulate themselves by providing internal complaints and compliance mechanisms and by joining an external self-regulatory body.165 The statute would then establish a 'Backstop Independent Auditor' (BIA) which would oversee compliance with those obligations. The self-regulatory bodies would be responsible for setting their own standards, governance arrangements and funding but the BIA would have to approve them, having regard to a set of issues already set out in para 3.2 above.166 The BIA would have the power to fine a large news organisation that failed to comply with required governance standards167 or to join an approved self-regulatory body.168 Where a self-regulatory body is found to be in breach of required standards, the BIA would have the power to report publicly on the failure, hold public hearings, impose fines and, in extremis, remove the recognition.169

7.12 One specific concern about this proposal is the risk that a body such as the BIA, whether

an individual or a corporate entity but one with no track record, limited powers and limited duties, would simply not have the strength and credibility to stand up to the press industry should the need arise. As has been seen throughout the Inquiry, the press is very active and very able when it comes to lobbying for their interests. I have identified in Part H how successive Information Commissioners have been persuaded that they should not concern themselves with the activities of the press. It is only to be expected that the press, if faced with a new regulatory system over which they do not have complete control, will seek to mitigate its impact by whatever means are open to them. Given that this includes the potential use of their megaphone to criticise heavily any organisation, and the individuals who run it, it follows that a high degree of resilience and strength would be required by any organisation required to take on the role.

7.13 Mr Suter's proposal shares a number of features with the MST but is closer to statutory

regulation, as I have defined it here, than statutory underpinning. In Mr Suter's model, Ofcom would have a statutory duty to establish a set of regulatory outcomes, which would define what activities or media services must be subject to regulation; these could be determined by a number of factors including the size of the organisation and the nature of the services it provides, and could define the outcomes expected as a result.170 These outcomes would be rooted in four principles:171

"– respect for privacy; – respect for the truth and fair dealing in reporting;

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– upholding ethical standards of behaviour in news-gathering; – providing information to allow vulnerable audiences to make informed choices."

7.14 Under Mr Suter's proposal those services identified by Ofcom would be required to join

an authorised self-regulatory body. The authorisation process, and regular auditing, would be carried out by a re-structured Ofcom Content Board.172 The requirements to obtain authorisation a self-regulatory body are set out at para 3.3 above and relate to independent governance, scope, powers and funding.173 If an organisation falls to be regulated under Ofcom's framework, but declines to join an authorised body, then it would fall to Ofcom to regulate that organisation against the authorised code considered most appropriate by the Ofcom Content Board.174 Where Ofcom has deemed that regulation is required and no authorised industry body yet exists to define a code of its own, the Content Board would draw up a relevant code itself.175 It is this final element of the proposal that makes Mr Suter's approach potentially cross the boundary from statutory underpinning (requiring self- regulation) to statutory regulation where the regulator both sets the standards and enforces them.

7.15 Ms Harman considers an approach which would use statute to provide for the independence

of a standards body and to give it jurisdiction to enforce its decisions across all newspapers. In this model online news outlets would be able, but not required, to join the system.176

7.16 Mr Eustice recommends giving Ofcom powers to require adequate governance from newspapers to ensure that they are:177

"organised in such a way that allows them to comply with both the Editors' Code and the law."

This would not give Ofcom any jurisdiction over standards.178 He also advocates giving a right of appeal to the Information Commissioners' Office in relation to privacy complaints. This would apply to all media, including the internet, and the ICO would be enforcing existing laws.179

7.17 Ofcom suggests that statute might be necessary in order to set out the governance standards for a voluntary regulator, including appointment processes, independence and accountability.180

7.18 Sir Charles Gray, on behalf of Early Resolution, argues for the establishment of a statutory

independent media regulator and compulsory ADR.181 Sir Charles does not specify in detail what the role of the statutory regulator would be or how much should be laid down in statute but his primary concern is that compliance with standards should be statutory, as an essential

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partner to his proposed mandatory ADR route. He did not express any opinion on by whom standards should be set.182

7.19 The NUJ put forward a proposal for a statute setting up a new regulator which would be able

to take complaints, enforce penalties, carry out investigations and monitor performance. The legislation would define the membership and jurisdiction of the body and how the body was to be funded.183 The regulator would have a role in, but not control of, drawing up a code of practice.184 The regulator would have statutory jurisdiction over all publications of a certain size and their associated websites,185 as well as statutory power to fine for breaches and to insist on the size and placement of a correction or apology.186 Membership would draw on journalists, the public, newspaper owners and editors and pressure groups.187

7.20 Mr Mosley proposes an independent but non-statutory standards setting body that would

have much in common with the current PCC but with a more independent appointments process and a greater proportion of independent membership. The standards body (rather than serving editors as now) would be responsible for setting the standards.188 There would also be a statutory tribunal with the power to enforce those standards, with compulsory jurisdiction over all of the press, agencies of the press and the internet (where not subject to Ofcom).189 The Tribunal would have statutory powers inter alia to deal with complaints, to require disclosure of information, to award damages, to levy fines, to order a correction (specifying content, location and prominence), prevent publication of a story and order an item to be removed from the internet. The statute would also provide a statutory public interest test in relation to privacy matters, impose a prior notification requirement in relation to publication of private matters and provide that such prior notice is confidential.

Statutory regulation

7.21 There are some proposals that go beyond a call for statutory underpinning to self-regulation

and suggest statutory regulation which is not based around industry ownership of standards or process.

7.22 Sir Louis Blom-Cooper QC proposed the establishment of a statutory Commission on the

Media.190 Members of the Commission would be appointed by an appointments commission established for the purpose by Parliament. The functions of the Commission would be:191

(a) to receive and adjudicate on readers' complaints of breaches of the code of ethics; and (b) to carry out public inquiries, with power to subpoena witnesses and require disclosure of evidence, into press activity that has aroused public concern.

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Sir Louis does not elaborate on what powers of remedy, redress or sanction this statutory body should have.

7.23 The Campaign for Broadcasting and Press Freedom recommend the establishment of a

statutory Media Standards and Freedom Council.192 In the first instance the Council would be appointed by an appointments commission set up by the Ministers. The Council would be made up in the following proportions:

(a) media owners and editors – 20% (b) media trade unions – 20% (c) members of the public nominated by civil society organisations – 50% (d) members of the public selected by a process of application – 10%.

7.24 The Council would produce a code of ethical standards, adjudicate on complaints about

compliance with that code, administer a public right to redress and keep and publish records relating to compliance. The Council would also issue guidance and advice to the media and report annually to Parliament. Where the Council found that standards had been breached it would be able to require a printed clarification, retraction or apology in a corrections page in the publication. The Council would be able to apply to the courts for an order to enforce its ruling where necessary.

7.25 The Media Regulation Roundtable proposes a largely statutory, but voluntary, approach. Mr

Tomlinson QC explained that in his view self-regulation was not an appropriate tool:193 "Well, by "self-regulation" I understand that ultimately, whatever the industry or the body is, it's regulating itself. And it seemed to us that actually there are two interests at play. There's the interests of the media and there's the interests of the public. And unless the regulation is independent of both, you're not going to have true and effective regulation. So I don't myself agree that an independent self-regulation, if that is a meaningful phrase at all, is the proper way to proceed."

7.26 Under the Media Regulation Roundtable proposal, a Media Standards Authority would be

established by statute, with its governance arrangements set down in legislation.194 The statute would also impose a duty to uphold the freedom and independence of the press.195 The Authority would have statutory duties to establish a Code Committee (with a minority of working editors and journalists) to prepare a code of practice. The Authority would also have to establish a system of regulation, including pre publication advice and complaints handling, and to set up dispute resolution tribunals. The Authority would, however, only have jurisdiction over those who chose to join it.196

Summary 7.27 It is clear from the descriptions above that there are many different possible approaches to the use of statute in relation to securing the highest press standards. These approaches range

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from establishing in statute the characteristics of a self-regulatory body that would have some standing in civil law, through the statutory establishment of a body that would recognise one or more self-regulatory bodies, to the statutory establishment of a body that would define a set of standards to be adhered. Any of these approaches could, but need not be, coupled with a statutory requirement for compliance with a set of standards. There are a different set of questions about the use of statute in relation to improving the handling of civil cases; those are considered in section 13 below. Strong cases have been advanced for each of these different approaches and it seems to me that any of them might have merit. The essential point is that a balance must be struck between the use of statute to deliver independence from industry and the risk that the use of statute might introduce some element of state control of the press which is clearly unacceptable.

7.28 I do not accept that there is any issue of principle preventing, in any circumstance or

howsoever framed, the use of legislation in respect of press standards. The question whether any particular statutory provision might give rise to any potential infringement of freedom of expression or the freedom of the press, or even the remotest risk of such an infringement, can only be looked at in the context of the specific provision and any statutory or other protections that could be built in.