UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE
To be published as HC 143-i

House of commons

oral EVIDENCE

TAKEN BEFORE THE

Culture, Media and Sport Committee

Regulation of the press

Tuesday 21 May 2013

David Newell, Adrian Jeakings, David Montgomery, Christopher Thomson and Ashley Highfield

Evidence heard in Public Questions 476-599

USE OF THE TRANSCRIPT

1.

This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.

2.

Any public use of, or reference to, the contents should make clear that neither witnesses nor Members have had the opportunity to correct the record. The transcript is not yet an approved formal record of these proceedings.

3.

Members who receive this for the purpose of correcting questions addressed by them to witnesses are asked to send corrections to the Committee Assistant.

4.

Prospective witnesses may receive this in preparation for any written or oral evidence they may in due course give to the Committee.

Oral Evidence

Taken before the Culture, Media and Sport Committee

on Tuesday 21 May 2013

Members present:

Mr John Whittingdale (Chair)

Mr Ben Bradshaw

Angie Bray

Tracey Crouch

Philip Davies

Paul Farrelly

________________

Examination of Witnesses

Witnesses: David Newell, Director, Newspaper Society, Adrian Jeakings, President, Newspaper Society, David Montgomery, Chairman, Local World, Christopher Thomson, Chief Executive, DC Thomson & Company Limited, and Ashley Highfield, Chief Executive Officer, Johnston Press PLC, gave evidence.

Q476 Chair: This is a further session of the Committee’s examination of the future regulation of the press, and we have this morning a panel representing the regional and local media, and I would like to welcome David Newell and Adrian Jeakings, the Director and President of the Newspaper Society; David Montgomery, Chief Executive of Local World; Christopher Thomson, Chief Executive of DC Thomson; and Ashley Highfield, Chief Executive of Johnston Press. Ben, just to start.

Mr Bradshaw: I think it would be helpful for Committee Members and others if you could outline who the Newspaper Society speaks for.

Adrian Jeakings: We speak for the local and regional press, about 1,100 newspaper titles and 1,600 websites, 31 million readers a week and about 62 million people using our websites in a month. We employ about 30,000 people of whom about a third are journalists.

Q477 Mr Bradshaw: Could you unpick, as far as you can, the kind of relationship that there is between the local, regional and national papers? My excellent local newspaper who used to be part of the Northcliffe Group is now part of Mr Montgomery’s group, but there has always been co-ownership across regional, local and national papers. What is that landscape like now? Is it completely separate or are there still mutual interests?

Adrian Jeakings: There are still some co-owners, if you will, Trinity Mirror and, to some extent, The Daily Mail, in that they own part of Local World. Businesses other than Trinity Mirror tend to be run separately. As organisations we have a separate trade organisation for the regional and local press and there is a separate one for the national newspapers.

Q478 Mr Bradshaw: Following on from that, how easy therefore is it for you as an organisation to separate the interests of regional and local newspapers from those of national newspapers, not least in the context of the issue we are discussing today?

Adrian Jeakings: They are very different businesses. We have an independent board and we can discuss independently what our issues are. We can also meet with the equivalent body of the national press and talk to them, and we have spoken to them.

Q479 Mr Bradshaw: You feel that you do represent truthfully and fully the interests of local and regional newspapers, even when they are not the same as those of the major national titles?

Adrian Jeakings: Our board at the Newspaper Society is made up of over 90% of the local newspapers so, yes, I would say we did represent them.

Q480 Mr Bradshaw: Can you point to any major areas of where the Newspaper Society has a radically different position on this whole charter issue from the big titles that dominate the press corps?

Adrian Jeakings: We would rather not have regulation but if we are going to have regulation then we think the press charter is the right way to do it at the moment, and we have participated in preparing that charter. As you know, David Newell was one of the signatories.

Q481 Mr Bradshaw: How do you respond to the criticism that we have received from the National Union of Journalists and from Hacked Off that the Newspaper Society is doing the national newspaper titles’ bidding in your approach?

Adrian Jeakings: We do not believe that we are doing the nationals’ bidding. We have debated this at length independently and of course we always have the option of not going with what the national newspapers choose to do, however for the moment we are.

Q482 Chair: We are obviously going to come back and look in some greater detail at the specifics of the possible regulatory structure, but before we do that it might be helpful just to hear from you how you see the current state of the local newspaper industry and its future? You may remember this Committee did an inquiry a few years ago into local and regional media in which we heard some pretty sort of apocalyptic predictions of what the local newspaper industry would look like in three or four years’ time. Is the financial outlook still as bad as it was? Are you optimistic? How do you see things?

Adrian Jeakings: We are an industry in transition, clearly. We are investing to change our business models. We are investing in people to raise the professional standard of what we do and we can see a bright future for our industry. There are different business models in different companies. One of the key things that we do not need at this point, however, is to have a burdensome regulatory system imposed on us and the associated costs. Leveson exonerated us from the malpractice that led to his report in the first place. Indeed he said that we play a key role in society, that we should not have any additional burden and suggested that Government should do what it could to help us.

Some of the things that could be done to help us would include stopping council newspapers, curtailing some of the BBC’s local activities, sharing of content, allowing a more sensible, realistic, if you will, media merger regime for local newspapers, and many other things. We are the most trusted medium in the UK, and yet we do not get what we consider to be our fair share of Government advertising, so we would very much like Government to work with us and use our media.

Q483 Chair: Can I ask each of the three of you who represent major publishers how you see the current state of the industry and the way forward? David, perhaps, to start.

David Montgomery: Every day is a fight for survival. We have a screen in our main centre, which shows circulation of our papers dropping between 2% and 15% per year, and on a comparative seven-day trend we can see the evidence with our own eyes that that trend is not abating; and advertising we watch monthly, sometimes weekly, and the same trend occurs in print advertising revenue. So it is a fight for survival but we do have a lot of ideas, which will need investment. As Adrian says, every company has its own particular strategy but it is all roughly in the same direction, which is to increase the dissemination of our content across all the platforms, not just print but online and mobile, and that takes considerable money. Local World’s investors have, at the moment, designated £10 million to invest in that particular activity and that is being done against the backdrop of these declining revenues, and I think the financial market’s view that print is finished. Therefore it is an act of faith and is a considerable responsibility for people who are active in print publishing to attempt to find a new operating model; but it is truly a fight for survival.

Christopher Thomson: Yes, I endorse that. It is a very challenged industry. If you look back to 2002, revenues were down from about £3.1 billion to £1.3 billion in advertising revenue alone, so just on a daily front, and most of our papers are daily papers. The Aberdeen paper and the Dundee paper were down from £1.3 billion to about £565 million. You can imagine that is a huge cut; it is 70% of our advertising revenue. Of the revenue that has been lost about 10%, 15% of it is Government revenue, so that is about £200 million, £300 million have been lost, to echo the point you were making just now.

Having said that, I think the industry has responded and our papers have certainly responded very well. We have had to take out about 50% of our costs since 2007-08, and if you think about any other "industry" that would be almost unparalleled. We have very dynamic wonderful staff, wonderful people, who have had to take a lot of pain, and we are coming through it. Some of our titles are now steady at around the 4%, 5% drop in advertising, which is better than the industry average of 9%. The circulation drops in our titles have steadied at about the same sort of figure. We need to get these into a sensible area of decline so that regrettably we have to put our prices up from time to time. You cannot put the price up if your circulation declines at 10%, then you would be effectively finished relatively quickly.

I would say that the industry is steady, having done a huge amount of very painful work and that we have a very good future in print but also online, and we need help.

Ashley Highfield: I would agree with what has been said. I would say that in the last 18 months, two years, the financial markets are starting to wake up to the opportunities of the newspaper industry. I think we were oversold generally. We are not alone, Trinity Mirror, Johnston Press share prices have tripled, quadrupled in the last couple of years and we are seeing investment from people who, I guess, know the industry, the JP Morgans and Cazenoves, and so on.

What we are faced with though is a very difficult period right now, the transition to digital. Our overall audiences, and I think I speak for all of us, are up, that is the relevance of local media, local brands in our communities has never been stronger. But of course a substantial amount of our traffic now comes from online rather than in print. None of us have made the transition from print pounds to digital pennies work for us yet. It will. We believe in that and the investors believe in that. But certainly right now, and over the next couple of years, we face some very real challenges but challenges that Government can certainly help us with.

Q484 Chair: Can I ask you to perhaps say a little bit more about what, Ashley, you have just described as print pounds to digital pennies? All of you see movement online to more digital distribution of content as an essential part of the future. On the other hand, nobody seems to have been able to make it produce the kind of returns that you traditionally have received from printing newspapers. Do you think you can generate the same sort of income in due course or are you just going to have to adjust to a completely different kind of economic model?

David Montgomery: We are going to have to reinvent the model. We cannot keep taking costs out but employing the same production techniques for print, we have to go truly digital, so that in three or four years from now I think that much of our human interface will have disappeared. In line with other digitised businesses, we will have to harvest content and publish it without a human interface, which will change the rules of journalists.

Q485 Chair: When you say "human interface", do you mean journalists?

David Montgomery: Journalists collecting stories one by one is a highly unproductive process, and journalists will almost certainly have to have new skills, greater responsibility for self-publishing on the different platforms. We cannot sustain a model that is from the Middle Ages virtually, where a single reporter covers a single story, comes back to the office, writes it up. All of that is highly wasteful so journalists will, I believe, transform into managers of content, a lot more content, in their daily routine, and publishers of content. So that puts a very different light on regulation, for instance, because the local content will not go through the traditional processes because the industry cannot afford that. It has to have an operating model that much content, much advertising is self-served. So the challenge is to make that conversion because the old operating model is unaffordable. That means that the next transition that happens in print will be a move towards digitisation in a complete sense, not just moving content online.

Q486 Chair: Do you agree with that vision?

Christopher Thomson: I do. On the figures-I have some figures here, which I can let you have-you are talking about a total of about £1.56 billion for the industry’s advertising of which a maximum of about £100 million has been replaced with digital, so it is still a tiny 5% to 10% figure. Some people are higher, David’s business may be higher, Ashley’s may be higher or lower. It is still a relatively small part and that is what we have to somehow get to grow. So it is the reach but also the advertising revenue that may come in to help that, or it will have to be some form of subscription.

Ashley Highfield: I never see a world without local journalists. That is what we do. Local journalists on the ground in the community and local ad sales people on the ground in the community. It is our USP. If you look just today on the BBC website, top story they have in Leeds is about the Hepworth Gallery in Wakefield. Now the BBC do not have any journalists in Wakefield and rather disappointingly, in spite of the recommendations of the Graf review, they do not link at all to the local press. We have a title in Wakefield, the Wakefield Express. We have 14 journalists on the ground in Wakefield.

I agree with David, that the long-term model may not sustain that level of journalists on the ground, but there will always be journalists and always substantially more than either a pure online player-Huffington Post or Google or MSN-or someone like the BBC. That is our role, and will always be our role. But it will need to change. Again, I think that Government can help, whether it is in how we protect our intellectual property, how we get linked to from the BBC. There are a range of initiatives that could help us.

Q487 Chair: All three of you paint a picture which is a long way removed from the traditional practice that we are familiar with. David, I think your group owns the papers certainly covering Paul Farrelly, Ben Bradshaw and myself, and yet you are suggesting that we are going to have to get used to the fact that there is not going to be a local reporter turning out to the flower show or at the scene of an accident to take statements and put it in the paper. This is going to be user-generated content that your journalists will just sit and filter. Is that a-

David Montgomery: I do not think that is entirely the true picture. Moving from a very limited medium like print where there are geographical restrictions, under physical restrictions and how much content you can carry on to the digital platforms means that you have to enrich content, so I think all of us are optimistic that we will enrich local content, we will develop more modules or channels of local content, but to do that, and compete with the rest of the digital world, we will have to employ different sorts of skills. Therefore, although you will see journalists on the ground, and you will continue to see that, they will be harvesting much more content and managing that content and disseminating that content direct to the publishing platforms. So it is an optimistic picture, but the transition we have to go through is going to involve an upgrade of skills of every participant in the business and journalists, in particular, will have much wider responsibilities, which of course is not just a commercial proposition but is a challenge in terms of recruitment. It is also a challenge in terms of regulating content and maintaining standards. So the picture we are painting is not one of pessimism, it is one of a positive story that is possible but a new operating model has to be invented, not just for the commercial interests of the companies but also for the participants in the business.

Q488 Chair: So you are hoping to attract more and more people to see your content through providing pictures, films, additional content, but they are going to be doing so more and more through the online offering rather than the printed version.

David Montgomery: Exactly.

Ashley Highfield: Undoubtedly.

Q489 Chair: But the online version will be free?

Ashley Highfield: That is the big question. The model at the moment is advertising funded. We all have iPad apps as a subscription. I think we all believe in a world of a greater bundled subscription where you can get the weekly paper, your daily iPad app, maybe some content online that will be through a porous paywall; we will all have slightly different models but I think we all see a hybrid future. It is just quite tough getting there. Obviously we are not the only ones, from The Times to The Sun we are all trying different business models.

I do think though that the one thing that this change is bringing about for us is to be extremely careful with our cost base of the business. If we are going to sustain plurality of voice in communities and to keep journalists on the ground, all other costs have to be extremely tightly managed, and that leads inevitably to conversations about consolidation within the industry because we need to be scale in order to make those cost savings, in order to keep journalists on the ground.

Chair: Perhaps we should move on then, having set the backdrop to look at some of the specific issues that are ahead. Tracey Crouch.

Q490 Tracey Crouch: When the Leveson Inquiry was announced I received emails from current and former journalists talking about the pressure within newsrooms, and how that could lead to perhaps some bad practices in some instances. What was very clear from the emails was that local newsrooms were not exempt from this pressure. I am not suggesting that local journalists are doing things they should not be doing, but clearly there is pressure for them to achieve, and with everything you have just set out about the financial constraints and the future of the industry, do you think that local and regional newspapers should be exempt from any kind of regulation at all?

Adrian Jeakings: I think the PCC did a good job of handling complaints for the local press. I can see that there is now pressure to replace it with something larger. Our issue is not with whether there should be regulation or not, but rather with the way that the regulation is implemented and the cost penalty it might impose on us.

Q491 Tracey Crouch: Can you quantify those costs at all, because you are talking about a bright future but these regulations could have associated costs?

Adrian Jeakings: I think there are two potential impacts. One is purely financial in the sense that the cost of running a complex regulator will be higher than the costs that we are currently paying, and estimates vary from at least twice as much to five times as much. The other impact I think is on our journalists’ ability to report on stories without fear of being tied up in a complex, burdensome and possibly punitive process as a result of the regulation.

Q492 Tracey Crouch: David, I think you were going to answer the original question.

David Montgomery: I was painting a picture of how I believe the journalist role will change, the demands on individual journalists will be much greater, the editing process that content goes through traditionally will no longer exist because of the demands of the industry to be competitive online and on mobile, in particular, and in that context, a regulatory system that concentrates on monitoring the behaviour of the more extreme members of our trade in printed pages is no longer appropriate, and therefore the industry itself has to build in safeguards. So if you are putting more onus on the individual journalist as a publisher as well as a journalist, you need to raise your standards as an industry as far as recruitment is concerned. Certainly as far as Local World goes, we will impose a very stringent level of criteria, and only employ journalists in the future, and we will also impose our own discipline on those journalists who would expect to carry greater responsibility as they self-publish a lot of content.

It is less of a problem clearly in the local market and local content than it would be in the national newspaper market, but in a way we have left behind the regulation that is being proposed at the moment. We are in a new world, and in that new world we have to recognise that the integrity of our historic brands is still our most valuable asset, and the standard of content and the quality of the people that provide that content, whether they are sourcing it from contributors or from other sources, or whether they are generating it themselves, has to be maintained to preserve the value of our brands.

So it is something that challenges us as an industry to be tied up with a cumbersome, administrative and financially demanding regulatory system that does not even suit the needs of today, and the future, that is just going to hold us back.

Q493 Tracey Crouch: But I think surely that complexity exists now anyway in many respects. It is for the newspaper groups to navigate their way through the regulatory regime. I am privileged to have University of Kent Centre for Journalism neighbouring my constituency. What I am very interested in is that Professor Luckhurst very much shares your view on these issues; Professor Cathcart, who teaches students himself, would share a different view. You talk about how it is about the ability of those going into the industry to work with a tether to anything else, surely it starts at the ground and the local newspaper groups are the starting point within that system, that structure. Most journalists who go on to work in national newspapers have started in local newspaper groups, but navigating your way through the regulations is not for the individual journalists, surely it is for the editors and for those groups that operate within them to make sure that the pressure within the newsrooms is such that it allows journalists to still be free and chase those stories without doing bad things in the process.

David Montgomery: It is a shared responsibility. Those of us who have gone through a formal journalistic training scheme had it drummed into us that we, as journalists, have no greater rights than the individual citizen. That was how we operated, that we assumed the essential role for journalists and we knew what was right and wrong. That used to be the traditional entry scheme, certainly when I was training. Many of the people who have caused the problems in journalism, particularly national journalism, did not receive such training.

Q494 Tracey Crouch: So that is where it went wrong?

David Montgomery: I think to a large extent, yes. People simply did not know what was right or wrong in terms of their practice as a journalist.

Q495 Tracey Crouch: What do you think are the most important aspects of a press regulator, from your point of view?

Ashley Highfield: From a regional press point of view, we were, as you know, exonerated by the Leveson Inquiry and he said that any future framework should not impose any additional burden on the industry. So we start from that perspective, and it is important to understand that perspective. We are a conglomeration of 220 small newspapers, but if I give you a typical newspaper, The Boston Standard-unfortunately not Boston, Massachusetts, but Lincoln-and that does 6,000 papers a week, and therefore it makes about £3,000 of circulation revenue and about £6,000 of advertising revenue a week, so it is about a £500,000 a year paper, and the costs are about £400,000 all in: a 20% margin, making £100,000. If that paper started getting vexatious or group litigation against it, it would either stop printing the paper at all or it would decide not to go anyway near certain stories that have lobbying bodies that would jump on them with no fear of having to pay for any arbitration. That is a very real risk to us. So that has to be the primary concern for me, that any framework does not end up burdening as such, that either you end up with a lessening of journalism, because we just will not go there or, in the worst case scenario, some of our smaller papers being pushed into unprofitability.

Q496 Tracey Crouch: Do you think that local newspaper groups deal with complaints well at the moment? The Kent Messenger Group are constantly telling me that they will print, if necessary, a front page apology already, and have done so in the past-

Ashley Highfield: I think Leveson again did not just exonerate us but praised our approach through the PCC, which we are 40% of the number of complaints but had no criticism levied against us. I think that is a pretty strong endorsement by Leveson.

Q497 Tracey Crouch: Adrian, do you have any views on the overall press regulation and what is important to local newspapers?

Adrian Jeakings: I think there are two key important things. The first is obviously cost containment, which we have talked about a lot, and when I say "cost containment" I mean the impact on our organisations both directly and indirectly. Secondly, I think independence. It needs to be independent of political interference. It needs to be capable of being independent of pressure from lobby groups. We are already seeing some anecdotal evidence that people are using Leveson as a club to threaten editors.

Q498 Tracey Crouch: At local newspaper levels?

Adrian Jeakings: At local newspapers levels, yes, absolutely.

Q499 Tracey Crouch: Are there any parts of the Leveson recommendations that you welcome?

Adrian Jeakings: Well, we welcome the recommendation that the Government should help us as an industry; absolutely.

Q500 Chair: Ashley Highfield has specifically pointed, I think, at the arbitral proposal as being the biggest concern for the local and regional newspapers. Is that generally held by everyone that that is the one thing you are most anxious about?

Christopher Thomson: That and the group representation. Those two together could be catastrophic. At the moment, each of us can complain as individuals. The PCC was set up effectively so if we had offended anyone, then they could bring that to the PCC as an individual. But the suggestion now is that potentially, although Leveson leaves scope for the new regulator to say no, almost any group representation from a district council, a political party, a charity, a business, a pressure group, providing they are not quite lobbying, could interfere in the democratic process of a newspaper publishing stories and thus hobble the press. The danger would be that you end up with press releases going out that the pressure group says, "This is the story, print it or else we will be on your back". That is a real problem for democracy and a real problem for cost because we would have to hire more people. You can imagine that your editors and your journalists could be tied up in multiple pressures that do not exist at the moment. I know this is not what Leveson would have wanted or would have thought would happen but at the moment we have no one saying that is not what is going to happen.

Q501 Chair: I understand your concern. This Committee took evidence a couple of years ago from the press about the very considerable concerns about the cost of defamation actions in the courts and the chilling effect that that was having. In a sense, the Leveson recommendation was supposed to help you, in that it was meant to mean that people would not employ Carter-Ruck in order to jack up the costs, and this would be a cheap and easy way.

Christopher Thomson: I think that is the arbitral point, a slightly different point from the group representation point.

Q502 Chair: That is the arbitral point, yes, but you are saying the arbitral point is one of the ones that is now causing you most concern.

Christopher Thomson: I think on the arbitral point, the difficulty is there are two views here. I think Hugh Tomlinson has very well outlined it that it could be much cheaper. The difficulty is when you look at it from the other end of the telescope you could find that you could have 500 claims instead of-I think it was suggested there may only be a handful, but if there were 500 or 1,000 of those claims and they each cost £3,000 or £4,000 to the regional press, you are going to have a very significant amount of money. So my suggestion would be, and as the industry have suggested, we should try it, see what happens and if it does not work then we need to think again. If it does work then fine.

Q503 Mr Bradshaw: Could we examine this in a little bit more detail because this is an area where I have real concern with your evidence? In the evidence you gave to the Committee, you said, "The proposed arbitration service under Leveson or Parliament’s Charter would open the floodgates to many thousands of legal claims against regional and local publishers." What is your evidence for that? This is from the Newspaper Society.

David Newell: Could I respond to that? The Press Complaints Commission handled about 3,000 cases a year directed to regional and local newspaper titles. We think under a new regulator that number will inevitably rise. We have analysed those 3,000 complaints and we feel that a heavy percentage of those could be dressed up as legal claims and would go into the arbitration service. So our concern is not about the large cases that people in Leveson thought would be dealt with by arbitration, which would be cheaper, less costly, more effective; our concern is that the cases that are currently dealt with speedily and effectively by the PCC in relation to regional and local newspapers, a high percentage of those will be dressed up as legal claims, and because the arbitration service will be free at the point of entry it is almost inevitable that people will tick the box to say that they want that case dealt with by way of arbitration and there will be a heavy cost burden, not only to administer the arbitration scheme but to handle each individual case.

It is interesting that Hugh Tomlinson, I think, when he gave evidence and when he responded to evidence has made it very clear that no arbitration system has of course yet been road-tested and it is possible, like many other attempts to find a way of resolving disputes at a lower cost, it will not be successful. He says the way forward would be for there to be a pilot. We have argued that the way forward is that there should be a pilot to see whether arbitration works, to see whether having a small administrative fee that people have to pay before they go into arbitration works. Our fear is the floodgate argument. We understand that others take a different view, and that is the reason why under our press Royal Charter we suggested that there should be a pilot.

Q504 Mr Bradshaw: You have acknowledged just then, Mr Newell, that for a case to go to arbitration the complainant would have to show that their case would be capable of going to court. In other words, their legal rights have been breached. Why would there suddenly be a floodgate of thousands of these cases when, as far as we are aware at the moment, there are 10, 20 a year that end up going to civil litigation?

David Newell: Because there will be the opportunity for people to obtain compensation at no financial risk to themselves.

Q505 Mr Bradshaw: But they will not obtain compensation if they are not allowed to enter the arbitration system because they do not have a case.

David Newell: It will be very easy for a lawyer to dress up a case as being a legal claim. The arbitration system operates in a way that for an arbitrator to rule that a case is frivolous or vexatious there will have to be some form of hearing or process, and it has been estimated that to knock out a frivolous and vexatious case by a way that complies with article 6, in terms of the way in which arbitration law operates, might cost £500,000 a case.

Q506 Mr Bradshaw: So why in the evidence that PressBof made to this Committee four years ago did the Newspaper Society say, "The majority of complainants who go to the PCC actively choose some form of conciliation, preferring to get their complaint remedied by a correction, apology or published letter rather than some form of compensation." Why should this suddenly change?

David Newell: I think what will change it is that there is no barrier to a person trying to get compensation.

Q507 Mr Bradshaw: Could you turn this round the other way in that the system, as it currently operates, has a chilling effect on local newspapers, who are sometimes very nervous or reluctant to take on powerful local people, individuals, or organisations for fear of litigation, so they do not do the story? Whereas under Leveson proposals if the person that you reported on for wrongdoing did not go to arbitration then they would not have a leg to stand on, so it is an argument to say that Leveson helps you do your job more thoroughly and more robustly than the current system that chills you because of fear of litigation.

David Newell: The view of editors that we have consulted would not support that. I would like to quote as an example, the Express & Star, Wolverhampton, which is the largest selling evening newspaper in this country, and has not had a legal claim against it. It has not had a writ issued against it, I think I am right in saying, for the last four or five years. The overwhelming fear of that particular company is that its culture of handling complaints, where the complaint goes to the editor and is dealt with in a sensitive and speedy way-and where necessary and where in this case it is going to the Press Complaints Commission-will escalate upwards and there will be a significant number of cases going to arbitration.

We are asked to provide evidence on this, and it is interesting in a meeting that Adrian Jeakings and I had with Maria Miller two weeks ago, she very much wanted, with officials, there to be a discussion about our concerns about arbitration, about the possibility of a pilot, about the possibility of people going to arbitration having to pay a fee. I personally accept that you cannot predict exactly how the system will operate. That is why we feel there should be a pilot. The problem with the three party leaders’ Royal Charter is that it becomes mandatory that there is compulsory arbitration, that you have to pay a fee to go to arbitration, and that system, because of the way in which the Government’s proposed Royal Charter operates, does not allow for the flexibility of change unless there is two-thirds majority in both Houses of Parliament.

If I can just say that the two other central concerns that we have about the Government’s Royal Charter proposals are, first, the involvement of politicians, and second, the lack of flexibility to deal with these very sensitive issues that could have a very damaging impact on regional and local newspapers, particularly small weekly newspapers who have been sucked into this particular system. While local authority publications have been given an exemption from the whole system, small weekly newspapers are caught by the system.

Q508 Paul Farrelly: I don’t want to lose track of the issue that Mr Thomson raised, but I just want to pursue this issue of arbitrational costs, and I am sure we will return to it later in the session. Mr Newell, you have said that you have done some analysis of what has come to the Press Complaints Commission, and this has formed the basis of your conclusions about opening the floodgates and so-called dressing up. Could you send us that analysis?

David Newell: Yes, certainly.

Q509 Paul Farrelly: I think that would be very useful for us, because for us it is very unclear when Leveson lauded the local press as to why suddenly floodgates should open against the local press that would lead to this massive increase in costs. Was Leveson right or wrong that the local press were not transgressors?

David Newell: It is interesting that Leveson, I think I am right in saying, did not take evidence from regional and local publishers. He took some evidence from regional and local editors. I do not believe that when he was looking at arbitration he was looking at it through the lens of how existing complaints are dealt with, and making freely available the possibility of getting £300 compensation or £1,000 compensation could corrupt the arbitration system that he envisaged and was seeking to establish. He did not look at it bottom up, he looked at-

Q510 Paul Farrelly: From your analysis, is the local newspaper industry so bad that floodgates will suddenly be opened? Or is it not, as Leveson said it was not?

David Newell: I think, as I have said already, the PCC handles about 3,000 complaints a year and that is from an industry of over 1,100 titles. I do not think that level is particularly high. I think what the analysis shows, that inaccuracy-

Paul Farrelly: I am just coming on to that.

David Newell: -can often be dressed up as a legal claim. Privacy claims as well, where there has been minor infringement to people’s privacy, could lead to cases brought through the arbitration system. My central point is that if you look at how-

Q511 Paul Farrelly: So you are saying the bar, that stands there with the court if people wish to pursue their legal rights already, is being lowered by Leveson? That is essentially the complaint.

David Newell: I am saying that the real issue is how, under the proposals of the Royal Charter, do you handle those cases that are frivolous and vexatious, that because the service is free are made into a claim by way of arbitration, you can filter those out at nil or nearly nil cost. The legal advice we have received, and the legal advice that the Department for Culture, Media and Sport have received, is that if you are offering arbitration it has to comply with article 6 of the European Convention on Human Rights, and you cannot in a routine way filter out small cases. There has to be a semi-judicial process that filters out a case, even if that case appears to be, from a common sense point of view, frivolous and vexatious. The unit cost of doing that-

Q512 Paul Farrelly: It would be very useful to see your analysis so we can dip into what breaches of code of inaccuracy you think could be dressed up as compensation claims. We have seen one example of a legal opinion commissioned by the newspaper industry, which the Government takes issue on, on breaches of ECHR on exemplary damages. So in many senses you get the legal opinion you want to pay for, don’t you?

David Newell: I think that is an unfair comment, particularly as we are not being dictatorial on this. We are suggesting that there needs to be a pilot.

Christopher Thomson: I think a lot that is in Leveson is absolutely fantastic. I think the great danger is, and I think it has been highlighted here, the unintended effect. It sounds wonderful to have an arbitration setup. I would endorse that, certainly for the sort of claims that the Chairman was talking about, but you could have the unintended effect on the sort of claim. This may not be a legal point, but we had a case in the past where we put the wrong photograph on a murder case, something that was completely accidental, immediately apologised, and still taken to the PCC because it was such a bad event. Could that be dressed up into some form of libel claim-?

Q513 Paul Farrelly: It could already be-not dressed up, but under the laws of libel it is a libel.

Christopher Thomson: It could be, but it was something that was completely accidental. It was not deliberate, it was not something that was in the national press that was drummed up, it was something that was completely accidental.

Q514 Paul Farrelly: This is a no change situation, because it is a libel as it stands.

Christopher Thomson: It could end up with a £5,000 or £10,000 civil-instead of going to court, but in the past it would have been sorted out, it would have been one of the 3,000 cases, which I think end up normally with 20 real slaps across the wrist for the industry. But you could just get that unintended effect. I think all we are saying as an industry, if it was an individual proprietor, is if we found that was what was happening and you found £500,000 or £1 million that is-

Q515 Paul Farrelly: The law is the law as it stands, people have the right to do that anyway. You are effectively saying that the real objection is you are lowering the bar on costs to deter people.

Christopher Thomson: The problem that the journalists and editors will have of course is that-this all adds into the group representation point-you just find less and less things get covered.

Q516 Paul Farrelly: Before I hand back to the Chair, Mr Thomson, I just wanted to ask you a question on what I wanted to come in on, which was your suggestion that somehow the thrust of the Royal Charter agreed and debated here in Westminster would put you in the position where you would be at the mercy of lobbyists who could direct you to, as you said, publish their press release. Let’s take an example. The Scottish Society of Beekeepers comes out and says, "We do not believe that neonicotinoids are harmful to bees and therefore we do not support any suspension of their use whatsoever." You are saying that under this Royal Charter you will be under pressure from the Scottish Society of Beekeepers to publish that in its entirety with no dissent, no wavering-just one example-because they might sue you, or take you through a costly arbitration?

Christopher Thomson: Leveson took a lot of evidence from Baroness O’Neill about scientific matters and so on and so forth, and much of it is to be applauded, but I think one has to look at things in context. What you would find in the New Scientist is slightly different from what you expect to find in the Courier or indeed in the Boston paper, so I think a lot of this all depends-

Q517 Paul Farrelly: You can generalise the example I am giving. I just find it inconceivable that this Charter could put you or me as a former journalist in that position.

Christopher Thomson: Looking at the Government’s suggested Charter, I am to some extent a supporter of some parts of that, but I would find it almost impossible to sign up to a Charter unless someone can say to me, "Right, Christopher, the regulator is going to accept precisely these sorts of claims and certainly not those sorts; we will not take them from political parties or charities or companies," whether from the beekeepers or not, I don’t know, but it would have to be absolutely crystal clear, because otherwise I would not know what I am getting myself into. I could easily be finding that my worst fear, which is that you have this huge chilling effect, is correct, and that we end up with press releases. To some extent, there are occasionally press releases in local newspapers anyway, because they are taken from journalists that we trust for the very reasons that we are talking about. But one has to be so careful that we do not go down that route. I think it is a very serious risk and a very large cost.

Q518 Mr Bradshaw: But the Government’s Charter is completely explicit that the arbitration service cannot accept complaints from the-

Christopher Thomson: Again it is back to the margins. There is quite a difference between official lobbying and other activity. Where do you draw the line between lobbying and influence and threats from an organisation? We will have PR companies at our door, in my view.

Q519 Mr Bradshaw: Just tell them to "bog off".

Christopher Thomson: How do we do that? We have a group representation claim then.

Q520 Mr Bradshaw: That is not allowable under the Charter. The only thing that is allowable into the arbitration service is a breach of rights. You said a moment ago, Mr Thomson, that you supported part of the Parliament’s Charter. Which bits do you welcome and support?

Christopher Thomson: I don’t not support that part, providing we know precisely what it means. As you can tell, I do not know what it in fact means. Therefore I would prefer to have a situation from the Press Charter, which made very clear that it is only in certain circumstances. At the moment, I do not know what one is signing up to. If I had been asked to sign up to that form of regulator I would have to say, "We have a new board, please explain to me precisely what it is you are asking me to agree, because I cannot agree to it unless I know it." At the moment I am, as you can see, slightly at sixes and sevens on what it means. I can read the Leveson Report and see lobbyists taken out of that but I do not know what else that leaves in. It is a traditional legal problem.

Q521 Paul Farrelly: The Charter leaves it in the industry’s hands to set the regulator. What we are talking about are the recognition criteria, so in a sense a regulator and procedures to convince a recognition panel, "Yes, this is sensible." So it leaves it very much in the press’s hands to provide that clarity.

Christopher Thomson: The regulatory board?

Paul Farrelly: Yes.

Christopher Thomson: I agree.

Q522 Paul Farrelly: The regulator that will be set up by the press itself and they will apply the recognition.

Christopher Thomson: Good men and true on the regulatory board, but they would have to come then to explain, because one could not sign up unless one knew that one could sign up to that. It is back to the cost point. I do not know the scale of what is being asked because you are talking about potentially hundreds of thousands of pounds, millions of pounds. The question was asked earlier, "What could this cost?" At the moment I think the cost of the PCC is about £1 million to us. The cost, if we start adding all these elements in, you are talking above, four, five, six and you could be into very large costs when you add in the cost that the industry internally has to bear to increase the governance.

Paul Farrelly: We are probably coming to that later on.

Christopher Thomson: All I am saying is it is a very severe concern. I am very happy to have it allayed. At the moment that is why you are getting this push back, because these are serious concerns. Maybe we do not understanding the legislation as we should but that is the concern. I take your point.

Q523 Angie Bray: I wonder whether one of the other consequences that would appear to have flowed from the Leveson Report has been what seems to be a curtailment of a close working relationship between journalists and their local police? A lot of people have expressed concern that the police have interpreted the Leveson Report as saying that this relationship needs to be much more carefully managed and that kind of free flow of information has dried up. Certainly as a London MP I am aware that there have been strong signals from senior officers in the Met that these relationships need to be much more formalised and therefore that kind of casual but useful weekly meeting does not take place any more. I wonder whether that is something that you wanted to speak about.

Adrian Jeakings: I think there is some anecdotal evidence that that is happening. Whether it is happening systematically or not, I do not know. There are clearly positive aspects to the relationship that exists or has existed with the police and also some negative aspects sometimes. I can only speak for my own company and we are not seeing yet, although it may happen, a major change.

Ashley Highfield: I have not heard that, it is something I am going to take away and ask my editors if they have seen evidence of it. We don’t have London papers, but I will look into that.

David Montgomery: I have heard no reports of less contact with police, but clearly, as a matter of principle, there should be as much free association between local journalists and the emergency services generally, and we are trying to build on that in the new operating model where we will clearly want to harvest content from emergency services. We already have one example of that running inside Devon with the Coastguard, who supply a lot of video and pictures and accounts of their daring deeds. So increasingly I think the relationship has to be enriched and not that the police or any of the other emergency services somehow retreat into the shadows; that would be a detrimental effect on local media.

David Newell: Can I just say we are surveying editors’ positions on this in terms of what they are finding on the ground and we will make it available back to this Committee?

Angie Bray: Okay, thank you.

Q524 Mr Bradshaw: Can I just ask about these surveys? They have come in for some criticism from Hacked Off or various other organisations, that the surveys conducted on your editors have been self-selecting online surveys and only a small minority have responded. How do you respond to that?

David Newell: We have done a number of surveys. I think that the criticism that has been made of some of the surveys is misplaced because it has been assumed that all 1,100 newspapers have a separate editor whereas in terms of the database the Newspaper Society holds of people that have editorial rank, there are about, we think, between 300 and 400 editors. Most of those surveys that we have done have a response rate between 10% and 20%.

Q525 Mr Bradshaw: Sorry, did you want to come in, Mr Thomson?

Christopher Thomson: I wanted to just make the point that of course the regional and local press are so much part of the local community it would be a great shame if as a result of what has happened, and it is understandable why there might be distancing, that you lost that tremendous bond where people are all fighting together or working to the benefit of their-our people go into work every day thinking, "How can I help our readership? How can I help our local area?" If there was a sign of that, if it was something we should bring back to you in some way, it would be very concerning.

Ashley Highfield: I think if anything the trend is going the other way. If you pick up a local newspaper, whether it is the Harrogate Advertiser or Leinster Express and flick through every page and count the amount of contributed content it is astonishing. It is around about a third already of the editorial content of our papers is contributed almost always for free from the community. That is the trend that will only increase in relationship with the emergency services, with the community. Some of our titles, like The Scotsman, we are introducing a new framework, Friends of The Scotsman, where we get more contributors from eminent members of society so they feel even greater ownership in their local newspaper. It is something to take away and ask but I think, to support David and Christopher, the trend is the other way.

Q526 Mr Bradshaw: Just going back briefly to the issue of costs, which Mr Thomson spoke about a moment ago, the costs of the overall administering for the new regulator, do you accept that the Royal Charter not only provides for fair and differential terms for different types of publisher but requires an approved self-regulator to deliver this?

Christopher Thomson: Yes, I am not quite sure though what that means. Again one of the problems is you can see that in the Charter and then, "What does it mean?" I think the difficulty is we start with, say, a figure of £1 million that the regional press-is that the right figure-contribute to the PCC. When you extend it out you start getting that figure to go up, I think even the lower estimates-had we even done our own Charter, which is also less available-would be probably getting on for £2 million, and if you put it within all the context of arbitration, you can pick a figure. Do you have 20 arbitral matters or do you have 500? Somewhere in the middle probably would be where you would end up. So you add another £2,000 or £3,000 per time and you can end up with £3 million or £4 million.

Then you go back to my concerns about, which may be ill-founded, group representation. I hope they are. But you keep adding these on though to our concerns and we start to see figures of £2 million, £3 million, £4 million, £5 million just for the regional press potentially. In fact the national process. That may be scaremongering but it is the concern we have, which instead of having £800,000 or £1 million, we have suddenly doubled, quadrupled and some of the very small titles-we are quite big, our titles are big daily papers-could be put out of business even by a small allocation of that figure. It is the internal governance.

I think the industry has been perhaps rightly admonished. We are all representatives of proprietors here. We are proprietors, in essence, and one of the things that has been left out of the debate is the degrees at which the industry chairmen and chief executives have been admonished by the Leveson Inquiry that something went wrong. I think that is one of the strongest things we will all-if we have not already-be putting in place, governances in our companies to make sure that these sort of things will not happen. That the chairman and chief executive, as well as the editors, can take ownership of this, and it doesn’t just require a bit of legal redress. Much of it is very worthy in Leveson and I don’t mean that in the pejorative sense; it is very, very good. But I think the real way to solve some of the problems that happened is to hold the proprietors accountable to make sure they then hold their editors accountable. As David was saying, training is absolutely fundamental. We should not lose sight of the fact that the admonishment has been severe, even for us perhaps in the regional press, and I would not overplay this because we were not entirely free of-as we can see from referrals to the PCC. But Leveson certainly gives a white card to us.

Q527 Mr Bradshaw: But given that Lord Leveson gave you a pretty clean bill of health, and given that there is this requirement, and given that Paul Dacre has said in terms that he thinks there should be a polluter pays principle when it comes to the balance of funding of the new regulator, why are you so lacking in confidence of your ability in the regional local papers to fight your ground and make sure it is the national boys who pay the costs?

David Montgomery: The answer to that is, in our frustration, there isn’t a meaningful dialogue going on at the moment to achieve a single system of regulation because quite obviously, from what you have heard today, one system of regulation does not suit all. However, the industry represented by all of us here believes that one system of regulation would be the best solution in promoting press standards. To some extent regional papers take their responsibility to discipline their, shall we say, more colourful colleagues in the national press seriously as well. But if there is to be one system of regulation we all agree on then it should be flexible enough to regulate, where appropriate, weaker, more fragile newspaper titles and therefore to have a single arbitration system that affects everybody is clearly not right.

Whatever the complexity of the arbitration system, everybody agrees it is going to cause us more administrative and financial burdens when we already have in the local and regional press a pretty effective way of dealing with things. We must also recognise that ability to tweak one system of regulation does go to content in the end. We do not have a culture in the local and regional press where people are chasing stories about the local town clerk running off with the mayor’s wife, having absconded with the poll tax for the year and set up home in Florida. We don’t do that because it doesn’t happen very often, but also you have more pressing issues in terms of serving content to the community. You have more humdrum matters to deal with and that is the essence of local journalism. To think that the same system works or should work in the same way for the tabloid national papers as for The Cornishman or the Leicester Mercury is simply not correct.

The other dimension we have talked about is that content is getting disseminated across all the platforms, not just in print, and we will make mistakes. In the local press we will make mistakes, lots of mistakes. The difference again with the national newspapers is that our editors are not arrogant. Our editors are very quick to apologise and we do it swiftly. The culture is you make a mistake, you put it right.

Q528 Mr Bradshaw: You seem to be making an argument for a separate arbitration system for the local and regional press, which is perfectly open to you under the Leveson proposals, no?

David Montgomery: Or possibly even no arbitration system for the local press.

David Newell: The problem with the Government proposals, and I think it is an important point to make at the moment, is that the only Royal Charter application in front of the Privy Council is that of the industry. The Government has not submitted a Royal Charter to the Privy Council so that currently the position is the Privy Council is considering the industry’s Royal Charter. The problem with the Government’s Royal Charter is it does not have within it the flexibility some of its advocates make out. There is one set of recognition criteria and one recognition panel, and the ability for a regulator for regional and local newspapers, as Mr Bradshaw was suggesting, is there but it would have to meet the precise recognition criteria set down for everyone, nationals, magazines and regionals, and it would be the same recognition panel. The flexibility for there to be a regional press regulator with its arbitration scheme or no arbitration scheme is just not there in the structure that the three party leaders signed up to.

Furthermore, if that structure was to be granted a Royal Charter, and we hope it is not, but would be very, very difficult for that to be changed to meet any teething problems or issues about how arbitration works or group complaints operate. It would require-something we do not like-Parliament to agree to any change. Even a change in an arbitration system from no charge to £250 a claim charge, under the Government’s proposals, if it went to a Royal Charter, would require Parliamentary approval with two-thirds majority in both Houses of Parliament. We think that is fundamentally inflexible and directly contrary to Leveson’s view that there should be a system of independent self-regulation. This is allowing Parliament an enormous degree of control even over these complicated details we have discussed earlier.

Q529 Chair: My understanding was that it did not require a two-thirds majority of both Houses to change the Royal Charter. That was if the Royal Charter provisions governing a change to it were going to be changed. There is provision within the Royal Charter for changes to be made as long as it follows the procedures set out within the Royal Charter. What is the problem with that?

David Newell: My understanding of it is that it would require Parliament to agree. Once the Royal Charter is established and the recognition criteria are established, my understanding is for those provisions in the Royal Charter or the recognition criteria to change would require Parliamentary approval.

Q530 Chair: The Government and the cross-party agreement has produced a Royal Charter that you plainly have a certain dissatisfaction with in various aspects, as we have heard. Nevertheless, if that is the Royal Charter that is put in place it has always been perfectly possible for some parts of the industry to remain outside it. You could take the risk. You could say, "We are the regional local press. We don’t ever find ourselves in this position the tabloids have done. We haven’t had successful libel actions and that kind of thing." Would you consider continuing outside the provisions of the Royal Charter?

David Newell: That would be something that individual publishers, and there are many of them, will have to decide. The sovereignty or freedom to publish is a very important freedom in this country and we feel in some senses the whole Royal Charter process impinges on that important freedom. But the risk small publishers would have if they stay outside the system is the risk of exemplary damages and the very great cost rules that would apply to publications outside the system.

The fear of the small publisher who gets caught up into this, who Leveson has exonerated, is that they might be forced to join a regulator they do not believe they should have to join to protect themselves from a system of damages and cost rules that are heavily targeted on one section of the media from which other sections of the media are exempted. That seems to be a double attack that we don’t believe Leveson really intended.

Q531 Paul Farrelly: I wanted to follow up on your question to start, Mr Chairman, with Mr Thomson, Mr Highfield and Mr Montgomery. But lest there be any suggestion that I might be in the pockets of the panel, can I declare that between 1995 and 1997 I worked for The Independent on Sunday for which at the time Mr Montgomery had ultimate management responsibility.

The question I have firstly to Mr Thomson, then Mr Highfield and then to Mr Montgomery is this. It is inconceivable that the Charter debated in Parliament will not be submitted to the Privy Council. If the Privy Council chooses to adopt the Charter that was debated here rather than the PressBof version, will your newspaper group refuse to join a regulator that is capable of being endorsed by the recognition panel under such a Charter? Would you refuse to join that?

Christopher Thomson: I would have to take instructions from my board, of course, but the last thing we would want is further discredit heaped upon publishers where there is sufficient discredit already there because of the Leveson Inquiry and what came out of that, even though it was nothing to do with any of us sitting around the table here. To defy a law of Parliament is not something our company would have anything to do with. What we could do in those circumstances is set up a separate body, that would be one possibility, but of course then you come to the cost. We have looked at that and the ability to do that would be quite difficult because we are looking at a cost of £1 million and a bit to set up a modest version of what might be there.

Unless I could personally get my colleagues round the table, or a sufficient number of them, by saying, "Will you come in with me for £1.5 million?" or the magazine businesses or some of the websites-one would have to cast around to see if one could find that-if I could not find more than 20% of the industry to do that I would be absolutely stuck.

Q532 Paul Farrelly: But the Charter makes clear that the industry sets up the regulator, so you have to have confidence that the industry can set up a regulator that is sensible and gives total latitude whether or not to accept third-party or group complaints. Would you say, at the end of the day, if the Privy Council opts for the Charter debated in Parliament, it would be unlikely that your group would stay outside the system?

Christopher Thomson: It comes back to some of the points I made before. I would need very clear guidance from the regulator. If this was the regulatory panel, I would have the same sort of questions as we are having now and if they couldn’t give me assurance that the arbitrator was not going to deal with this or the group representations were not going to be dealt with-if they could give me that confidence I could probably find a way of signing up. If they were unable to give that confidence I would have to go away and set up a completely different body or stay outside it.

Q533 Paul Farrelly: You are not coming here today giving an ultimatum that unless the Privy Council adopts the PressBof version you will stay outside?

Christopher Thomson: I think it is inappropriate to use that sort of language. We are the people caught in the middle here, with the bullets flying above. In the gilded cage of Westminster, that we are all part of in a sense, we have Hacked Off on one side and the nationals on the other side, and we are here representing 1,100 newspapers that have had relatively little thought in all this. We just want some help from your good selves to put some of these points across to the party leaders and the people who control this operation to say, "Look, these are reasonable people. They work in communities like each of you do. We have the same desire to help our communities and constituencies as you do."

Q534 Mr Bradshaw: You are appealing for help, Mr Thomson. Hacked Off claims that they offered to meet the regional papers to discuss your concerns during all of this process and that request was not taken up.

Christopher Thomson: The Newspaper Society will answer for itself, but in a sense is it appropriate for everyone to negotiate between Hacked Off and ourselves? Maybe it is. Maybe that is a solution, I am not sure. We are trying to get on the agenda our real concerns. If someone can address those real concerns I don’t really mind who it is.

Q535 Mr Bradshaw: Mr Newell, on behalf of the Society, are you prepared to discuss your concerns with the victims?

David Newell: We have only recently received a request from Hacked Off to see them. At the moment it is quite difficult for there to be a dialogue just with Hacked Off in the sense that we are party to the Royal Charter application before the Privy Council. That is a legal process that is ongoing. We are party to discussions with the political parties at the moment. In many ways my perspective is that it is time for the Government to decide where it wants to be on all this. I think the Royal Charter process that was signed up by the three party leaders was misguided, particularly as it happened in circumstances where the industry was not party to the final negotiations. They were cut out of them and I think that was wrong.

I think it is also misguided in the sense that we now all have to become vague experts on Royal Charters and how they operate. When Oliver Letwin came up with the idea of a Royal Charter, and I think he would be the person broadly claiming the credit for it, he started from a standpoint that Royal Charters operate in circumstances where the industry to be regulated consents to a Royal Charter being imposed on it. There is no example we can find where a Royal Charter device has been used, as opposed to legislation, whereby a Royal Charter has been imposed on an industry sector without its consent.

The industry’s Royal Charter-it is a perfectly appropriate process for us to have applied for a Charter and indeed it is the common way for Royal Charters to happen; it is a group of interests, in this case the newspaper and magazine industry, applying for a regulatory system to apply to them. That is the normal way in which a Charter is granted. In fact, it is interesting that there is already a Royal Charter in existence that covers journalism. The Institute of Journalists has a Royal Charter granted by Queen Victoria still in existence. It has within it a code that applies to all journalists that are members of the Institute of Journalists.

It is an important discussion that needs to take place: in what circumstances should charters be used as opposed to legislation? In a way, in the charter process, the Queen in Council, bypasses the legislative process altogether, and it is one of the dangers of the state using the charter process to regulate an industry unless there are circumstances in which there is consent.

The industry-the regionals, the nationals and the magazines-negotiated in good faith with the three party leaders up until a few days before there was a political agreement over the Royal Charter, and we thought we were very close to getting an agreement. Once that agreement was not obtainable, to use the Charter, in effect, as a substitute for legislation is a wrong approach. I think the Charter the industry has come up with is very close to the Government’s proposals and has merits. As I have said, there is a legal process underway at the moment and we hope a Royal Charter is granted.

Chair: Mr Farrelly is correct. The idea that the Royal Charter for the press is going to be granted when it is fundamentally different from what Parliament has said it wants is just inconceivable. The only way you will get a Royal Charter is if the press and Parliament sit down and agree what it should be.

Q536 Paul Farrelly: I want to come along to some elements of PressBof but I want firstly to ask the same question I originally posed to Mr Highfield.

Ashley Highfield: I think we have substantial issues with a Government Charter that potentially significantly raises the costs to us, does not provide true independence from politicians, is inflexible and potentially opens the door to vexatious group complaints. These are the core issues. We are a pure regional player. I don’t have any national newspaper leaning on my shoulder. We are a PLC, though, with foreign investment, so it would be a decision ultimately for the board and the shareholders.

Q537 Paul Farrelly: As it stands then, you seem to be a little bit more hard line. As a message to your shareholders are you saying to us now it is unlikely that you will sign up to a system unless the PressBof Charter is adopted?

Ashley Highfield: No. I am saying we have some substantial-and I think we have made them very clear-issues with the Government Charter and I would hope exactly what John says, that we can sit down and have meaningful dialogue with Government and reach an agreement coming out of this. As it stands we were quite clearly exonerated by Leveson and yet we are about to be punished, and punished in a way that is going to hit my shareholders’ pockets.

Q538 Paul Farrelly: Mr Highfield, your response is less nuanced than Mr Thomson’s, so can I ask you, when were you last a working journalist?

Ashley Highfield: I have never been a working journalist.

Q539 Paul Farrelly: Okay. As a former working journalist-

Ashley Highfield: Is that an issue?

Paul Farrelly: No. I am just giving you a perspective and asking you if you agree or disagree. As a former working journalist taking on some big oligarchs, the Russian Mafia, Pakistani corruption, I would see some comfort in the procedure for arbitration as it is laid down here. As a former working journalist, it was the threat of going to court, without using such a process, that made for the real chilling effect. Do you see no merit in that line of thinking?

Ashley Highfield: Nobody is arguing about a properly run regulatory body. What we are saying in the regional press is that something that provides us with an inflexible overhead could have a really big impact on this industry, which is going through a very painful transition where some of our titles are sufficiently small that something like this, if implemented clumsily and without the flexibility to change it down the line, could have a really serious impact on us.

Q540 Paul Farrelly: So that is a maybe and then a perhaps-perhaps you have confidence in the industry that it is able to set up a sensible regulator.

Ashley Highfield: I certainly have confidence in the press industry’s Royal Charter proposals.

Q541 Paul Farrelly: But the Royal Charter is asking the press to set up its own regulator. Okay, Mr Montgomery, the same questions.

David Montgomery: Obviously the revelatory work you did in journalism is way beyond the remit of local newspapers and therefore the fear of court action from Russian oligarchs doesn’t exist in our segment.

Q542 Paul Farrelly: You may choose to write about a Russian oligarch if your newspaper circulates in Hammersmith and Fulham.

David Montgomery: Well, it doesn’t, but it is unlikely that the press at a local level would engage in that high-octane type of journalism. I keep coming back to this point: one set of regulation doesn’t necessarily suit all segments of the printed press. Again, as both Christopher and Ashley said, the decision of Local World has to be taken by the Local World board and, for the record, although there are national newspaper shareholders sitting on our board and they have a share in the company, our corporate constitution forbids them to exercise material influence, so it would be the independent directors of our board, who represent the majority, who would make this decision finally.

I think the industry should stand together. I think the Royal Charter is flawed but I repeat the point that we could arrive at a satisfactory agreed Royal Charter if there is engagement between Parliament and the members of the press, particularly the local and regional press. We have a responsibility in the regional and local press to bring about something that will be respected not only by Parliament but also by the public, and we will play a big role in selling that to the public in terms of something that was fair and would work.

You have heard enough to understand we are united in the fact that we accept responsibility as an industry even though we as regional and local members of that industry have not been responsible for the Leveson Inquiry or the transgressions committed by our colleagues.

Q543 Paul Farrelly: I have a few questions for Mr Newell on the PressBof Charter but can I ask one question of you all about the PressBof Charter? Right to the end, almost to the end, the last clause of schedule 3 in the cross-party Westminster debated Charter, the last clause in terms of the recognition criteria said, "The membership of the regulatory body should be open to all publishers on fair, reasonable and non-discriminative terms"-now I come to the bit the PressBof Charter strikes out-"including making membership potentially available on different terms for different types of publisher." Why on earth, if costs are an issue, would the local newspaper industry be supporting a PressBof Charter that strikes out the explicit reference to membership being open on different terms, on the basis that the polluter should possibly pay?

David Newell: Could I answer?

Q544 Paul Farrelly: No, no. I am asking the members from the regional press.

Christopher Thomson: I had not been fully aware of that, but having been aware-

Q545 Mr Bradshaw: Now you are aware of it, aren’t you rather worried by it?

Christopher Thomson: The total cost of this will no doubt be divided up in some way.

Q546 Mr Bradshaw: Aren’t you being manipulated by the national guys? Going back to my first question, you were not even aware that PressBof strikes this out?

Christopher Thomson: This is a very detailed legal process with 75 extra clauses. My understanding is that PressBof does not do that but I may be wrong.

Q547 Paul Farrelly: It is a side-by-side comparison. I want to come to Mr Newell in a moment but why would you sign up to that if you are worried about costs?

Mr Bradshaw: Go away and think about it and write to us with your responses, will you, because this is an incredibly important bit of the system you came here to support, which you now realise actually pulls the rug from under your feet.

Christopher Thomson: I don’t think that is a fair summary. I thought this is what Leveson says effectively, "Please try and have one regulator and one system." He does leave it possibly open, although he says that it is not his preferred route, to have different classes within that, and it is true that the Government version does have that in it.

Q548 Mr Bradshaw: This is the funding issue. This is making the national boys pay for the new system rather than you. PressBof has struck that out in what my colleague just read out.

Christopher Thomson: It depends what the arrangements are ultimately for paying for the whole thing, at the end of the day.

Q549 Mr Bradshaw: Why are you as local and regional newspapers putting up with this? Why are you accepting it?

Christopher Thomson: We are all trying to see whether we can come up with what Leveson wanted, which was one regulator and one body. There are so many questions here about what this is going to cost and not cost, if one party is right that the arbitration doesn’t cost so much or costs more-we can come back to you certainly with that point. I don’t think it is quite so fundamental as you say.

Q550 Paul Farrelly: I wanted to ask Mr Newell some questions, but you were keen to come in on that.

David Newell: Yes. I remember that clause and the reason why it appears in the form it does in the PressBof Charter is that we were concerned to ensure while there should be a system that would allow the regionals, if they wanted to, to set up an independent regulatory body and apply to the recognition panel, we were concerned to ensure there would not be a negotiation between individual newspaper groups and the regulator as to how much each particular group should pay. In the past there have been concerns and difficulties over the financing of the Press Complaints Commission where some like-for-like companies have sought to say, "We will become a member of the independent regulatory body but on condition we pay X minus 30% or X minus 10%." That was the reason for the change. It was not in any way meant to, as it were, restrict the ability of the magazine sector, the online community or the regional community to set up their own regulatory bodies or, as a class, for them to be charged on a different basis, given their particular structures.

Given the interpretation you placed on it, I will most certainly take that away and we will discuss it as a team and come back to you on it. But it was most certainly not intended to restrict the ability of different publishing sectors to come to their own arrangements with the regulator.

Q551 Paul Farrelly: Frankly, if I were the Director of the Newspaper Society, as David Newell is, I would be saying-to David Newell, in fact, as the Director of the Newspaper Publishers Association-"I am not having that. I would like that bit in." You are in several places at once, are you not? PressBof, Newspaper Publishers Association, Newspaper Society. It is a good job they are all in the same building.

David Newell: They are not all in the same building.

Q552 Paul Farrelly: Do they share staff?

David Newell: If I can explain my own position, I am the full-time employee of the Newspaper Society. I am a director of PressBof because I a nominated as a director of PressBof by the Newspaper Society to look after regional and local newspaper interests within PressBof. I am not the only regional press person on PressBof, there are two regional publishers on PressBof as well.

Q553 Paul Farrelly: When were you appointed to the Newspaper Society?

David Newell: About 20 years ago.

Q554 Paul Farrelly: Okay. You have been in this role for 20 years?

David Newell: I started off as a lawyer with the Newspaper Society. I then became Director for the Newspaper Society.

Q555 Paul Farrelly: How long have you been at PressBof?

David Newell: I am a non-executive director of PressBof as a representative of the regional and local newspaper industry.

Q556 Paul Farrelly: Since 1997?

David Newell: Yes.

Q557 Paul Farrelly: Okay. What was the purpose of PressBof?

David Newell: The purpose of PressBof is that it is in effect the co-ordinating group of the four trade associations that fund the Press Complaints Commission and those four trade associations are the Newspaper Publishers Association representing nationals; Newspaper Society representing regionals; the Scottish Newspaper Society representing Scottish publishers; and the Periodical Publishers Association representing the magazine industry.

Q558 Paul Farrelly: The Press Complaints Commission failed, which is why we are having these questions now.

David Newell: As we said earlier, of course the Press Complaints Commission in some areas came under criticism and is subject to recommendations of the Leveson Report but in relation to how it handled complaints in regional and local newspapers, it has been and remains extremely successful.

Q559 Paul Farrelly: Nothing in the Royal Charter stops a future regulator doing that. But do you think one of the reasons potentially for the failure of the Press Complaints Commission-for instance, the phone hacking or the McCann case-was that it was too close to the industry it was supposed to regulate? Do you think there was an element of that at all?

David Newell: I am not here today to defend the whole record of the Press Complaints Commission and definitely not to defend the record of the whole industry. What I am here today to do is to defend regional and local newspapers, who were exonerated by Leveson and have been caught up in a Government Royal Charter set of proposals that will not be helpful to the industry.

Q560 Paul Farrelly: Sorry, was the answer to my question yes or no?

David Newell: The answer to your question is that the industry and some parts of the industry behaved in a criminal way and criminal proceedings are now taking place-

Paul Farrelly: The question was about the regulator.

David Newell: -and in relation to the regulator, the Press Complaints Commission handled complaints well but its remit and the way in which it operated was not fit for purpose in terms of the challenges set by criminal actions that were found to have taken place.

Q561 Paul Farrelly: You have been a director of PressBof for 15 years-if my maths is correct-and the question is, given the failure of the PCC, a system that PressBof funded and in some respect oversaw, why should the public trust a Royal Charter that has emanated from PressBof rather than one that has been debated and haggled about in public with cross-party agreement and the support of victims of the abuse of that press?

David Newell: The industry Royal Charter has not emanated from PressBof. It has emanated from the industry and the four component parts of the industry that I described. I think the most important part of the industry Royal Charter is, if the Royal Charter is granted, the first thing that happens is PressBof disintegrates. PressBof will be no more and the industry’s Royal Charter proposal removes the roles that PressBof used to have, save for its role in relation to funding the body.

Q562 Paul Farrelly: Let us start at the beginning, shall we, because you concede that independence is a key issue in terms of public confidence in a regulator. Let us start at clause 1.2 of the PressBof Charter that says, "The members of the former PressBof shall be the first members of the recognition panel." Is that a typing error?

David Newell: No, but it then says that they will resign.

Q563 Paul Farrelly: Afterwards. But it is not a very auspicious start, is it?

David Newell: But from a legal point of view, on legal advice, if you are applying for a Royal Charter, an existing body has to be the body that applies for the Royal Charter and is granted the Royal Charter. What we lay out in that Royal Charter is, having been granted the Royal Charter, certain things happen, and the first thing that happens is that the industry representatives on PressBof resign and are replaced through an independent appointments system by a panel that becomes the recognition panel.

Q564 Paul Farrelly: Parliament’s Royal Charter does not start from having PressBof being the first members of the recognition panel.

David Newell: You refer to it as Parliament’s Royal Charter. It is not really Parliament’s Royal Charter, is it, because that Royal Charter has not been debated and approved by both Houses of Parliament? But the three party leaders’ Royal Charter is a different form of Royal Charter because it is a state-sponsored Royal Charter, which is a different mechanism.

Q565 Paul Farrelly: Sorry, I thought there must have been a practical joker in the office putting in rogue words, because it does not give an auspicious signal.

David Newell: I think this is a very serious process and, on legal advice, it is the way in which a Royal Charter can be granted that has the independence and role that the current system and PressBof does not currently have.

Q566 Mr Bradshaw: I will let colleagues come in. I just want to pick up a few more issues. The appointments committee that sets up the new recognition panel, four people, one of whom should, in the opinion of the chair and of the industry, represent the industry’s relevant publishers. You are de facto seeking a veto of one member of the appointment’s committee right from the start, are you not?

David Newell: The appointments committee will be independent of the industry. It will have a majority of members that are independent of the industry and over the last few weeks, I think it has been made clear that any suggestion that the industry should have any power of veto over the appointments-

Q567 Paul Farrelly: No, but you are seeking veto over one member of the appointments panel. Okay. Let us just skip through. We have the recognition panel, independence is important but your Charter loosens up the definition of the involvement of editors. In other parts of your Charter you remove the function of the recognition panel to pronounce on the effectiveness of the recognition system and give it no power to say, "This is not working. Enough is enough" without a veto of the industry. But let me now just quickly finally move to another aspect of independence, which is political independence. The Royal Charter debated here omitted politicians in their entirety from either the recognition panel, its staff or advisers or the board of the regulator. That included members of the House of Lords who have been affiliated with a political party over the last five years. You have reinserted members of the House of Lords. Why?

David Newell: I think it is important that the right people emerge as independent people of stature on these bodies.

Q568 Mr Bradshaw: This is Hunt-Black, is it not? It just Hunt-Black all over again.

David Newell: I think it is very important that you look at who are the chairs of Government appointed regulatory bodies and other regulatory bodies. There is one example that comes to mind. Lord Smith is chairman of the Advertising Standards Authority. He is chairman of the Environment Agency. That is an example of someone that, if we adopted the three party leaders’ Royal Charter-

Mr Bradshaw: We want the politicians out. You are putting them back in again.

David Newell: -he would be excluded from being a candidate for that role. We have not done a trawl of this but I am sure you will find there are other examples of former Cabinet Ministers who sit in the House of Lords, who by the Government, or by independent agencies, have been appointed to bodies of the equivalent status. Lord Curry may be another example.

Q569 Paul Farrelly: You have also allowed Members of the European Parliament back in. Why is that?

David Newell: For the same reason.

Q570 Paul Farrelly: Members of the European Parliament? I suggest that had the cross-party Charter allowed Members of the European Parliament to be in there, we would have headlines, "Brussels to lord it over us". You have put them back in. It seems bizarre.

David Newell: The reason for it is that we did not want to be too prescriptive. We did not want to automatically rule out the gene pool of people that, on their merits, through an independent selection system, may be appropriate people to serve on the independent regulatory body or to chair it.

Paul Farrelly: Chair, there is plenty more to come on to, but I should allow other people to come in.

Q571 Mr Bradshaw: I just want to pick up, Mr Newell, on one thing you said. I think you said or you implied that this had not been debated and voted on in Parliament. It was debated and voted on in Parliament in the Commons and only 13 MPs voted against the party leaders’ Royal Charter, as you call it. I don’t know if you are suggesting if it had been voted on in the House of Lords, the result would have been very different. From the tone of the debate in the Lords, I don’t think it would have been, would it?

David Newell: My point is that the party leaders’ Royal Charter has not been subject to parliamentary scrutiny. It is interesting. For example, it has not been subject to regulatory impact assessment, either in terms of the cost burden that it will have on the industry or in terms of its compliance with the European Court of Human Rights or similar measures. The point that I am making is that the scrutiny that it has been given is not the same scrutiny that would have been given to legislation of any sort.

Q572 Mr Bradshaw: You don’t want legislation.

David Newell: No, we don’t.

Q573 Mr Bradshaw: You would rather have a Royal Charter than legislation?

David Newell: Yes.

Q574 Angie Bray: Can we turn now to one of the other requirements from Leveson? Do you see the logic of trying to get everyone to have to sign up to the proposed regulator? Does that make sense or do you think it is unnecessary?

Adrian Jeakings: I think it makes sense from a public point of view to have a single regulator. If, for example, every company were to have its own regulatory body that would make it incredibly difficult for people to make a complaint, so there is merit in having one regulator, yes.

Q575 Angie Bray: The regulator’s credibility rests on the fact that everybody is signed up to it?

Adrian Jeakings: I think it rests on a substantial proportion of the industry being signed up to it, preferably everybody but there will inevitably be some publications, I suspect, that will not.

Q576 Angie Bray: Mr Highfield, do you want to say something about that?

Ashley Highfield: Sorry, say again?

Angie Bray: Do you want to say something about that? Whether or not you believe that the credibility of the regulator rests on the notion that everybody is going to sign up?

Ashley Highfield: I would say the credibility of the regulator certainly depends on the vast majority of the industry being behind it and signed up to it. If there are one or two small bodies that remain outside it then they will be exposed to the exemplary damages, but I don’t understand that there are going to be any major exceptions to this. The vast support of the industry is behind the press’s Royal Charter proposals.

Q577 Angie Bray: What do you think should happen if there is any kind of significant publication that does not join up? What do you think the penalties would be for that?

Adrian Jeakings: I think that is already set out in the disclosure of information, is it not? There are exemplary damages if you do not sign up.

Q578 Angie Bray: You would support that approach, would you? It is a big stick to say, "You come inside my tent or you get thumped."

Adrian Jeakings: It is probably an effective way to do it.

Q579 Chair: Can I just clarify? I was not quite clear from your answer. You collectively represent the vast majority of the local and regional newspaper publishers. Are you saying you do not think that it would be possible or you would not want the possibility of a regulator separate from say, the tabloid regulator? You would not want to have a different regional local newspaper regulator that would seek its own approval from a recognition body? Because there is nothing preventing you doing that, but you are saying you think there should be only one regulator. Is that correct?

Christopher Thomson: The difficulty is the cost. We have looked at this. I have looked at this. I am not sure if any others have looked at this. But the problem always comes down to the cost. Say David and I, or two or three of us, got together, we might represent 20% of the industry, 25% of the regional press industry-the Trinity Mirror, Local World-if you could not get more than 50%, and even if you got more than 50%, you are going to have the same regulator with the same group of complaints, the same arbitrary system, but you do not have the overhead covered by more companies. So it is not impossible but it would mean we would certainly have to be scaled back in group complaints, in arbitral scale, in all sorts of things. We did wonder whether we could set one up for half a million or something very sensible. The immediate thought was exactly that, could we have one for the regional and local press? Would this not make a lot of sense? Yes, it does, in theory. But unless you can get a governance body put in place, and Parliament is asking for three parties, even the industry’s own setup, as David was rightly saying, we have to get our house in order. We need more disciplines in there. Once you start to build that in, you then find the cost is going up and you are already getting into a more expensive situation, probably for a number of us, if we went into this, than the existing setup costs for the entire regional press. That is where the difficulty comes. I know that the angle of the questioning was, "Are we in the pocket of the national newspapers and the tabloids?" No, we are not but we are trying to find a way of cutting through this so that you could have one regulatory body. You could have one body that regulated all. But it is extremely difficult because we feel that we are rightfully asking for our points to be taken into consideration and it is very hard to get a dialogue going. It is almost as if there isn’t anyone at the other end and that makes it very difficult to get to what would be a very simple-

Q580 Chair: If you would allow the recognition body that flexibility, that would permit them to say, "The regional and local newspaper industry does not require the same degree of regulation. It has got a clean slate. It has shown no need to have the kind of tough regulation that tabloid newspapers might," and so give you a "regulation lite" as it were, compared to the other bits of industry, that would be attractive to you.

Christopher Thomson: That would be attractive. It is our understand that that is not possible under the current framework of the-

Angie Bray: This is just the one regulator?

Mr Bradshaw: It is possible, is it not?

Chair: No, it is not because the recognition body is required to-

Mr Bradshaw: But it can then do what it likes.

Chair: Not if the regulator-

Mr Bradshaw: That is another argument.

Christopher Thomson: You are right. It is theoretically possible, but we are all worried about it. Also we are having pressure put on us, not by the rest of the industry particularly but if you read Leveson, he is saying one body, one system and so you think, "If we go away off on our own and do that, are we deserting the rest?" Does that make sense, with your point, you have different bodies for different people, magazines-

Q581 Mr Bradshaw: I can quite understand Mr Newell’s position that he does not want to talk to Hacked Off, or Hugh Tomlinson, because it is in the Government’s court, but what have you got to lose by opening channels of communication to people like Hugh Tomlinson who you yourself quoted earlier as having one view about the cost of arbitration, for example. He might be able to help you through some of these concerns that you have and arrive at a place where we make progress.

Christopher Thomson: His view may well be right. He is a very eminent QC. What I am saying is what the "industry" asks for is flexibility. If he is right, he is right but we will see it in practice. If he were wrong, let us make sure there is real flexibility built in, whether it is flexibility to have a separate local regional regulator or flexibility on some of these issues, without having to go back to Parliament. You do not want to be wasting your time. It is not a question of 66% or whatever it is. You have better things to do than worry about all of us, so if there was some flexibility built in there we would probably in the end achieve the compromise that is needed.

Q582 Angie Bray: Even were you to have a separate regulator, would you envisage it operating along the same principles? For instance, would you continue to wish to apply the big stick, as I said earlier, of the exemplary damages to those who did not sign up to your regulator?

Christopher Thomson: The ideal would be to have exactly what we have at the moment, because there are no further rules.

Adrian Jeakings: I think flexibility exists on the current proposal so, to be completely clear on this, we have not considered whether we would still want the exemplary damages to apply or not. However, I believe that they are now enshrined in legislation, so what we want or not is slightly irrelevant.

Q583 Angie Bray: Do you think that, nevertheless, the regime that is envisaged will possibly push more newspapers to go online rather than to continue printing as they have done?

Adrian Jeakings: I think the print/digital argument is adjacent. Virtually all of our newspapers are already in print and online. The current complaints regime covers print and online and the proposed new system covers print and online.

Ashley Highfield: I think this may be a different question. As our business migrates increasingly online are we playing on a fair and level playing field in the online environment, with pure online players under the same regulatory framework, particularly if some of them are offshore?

Q584 Angie Bray: Online but offshore?

Ashley Highfield: Correct.

Q585 Angie Bray: Can you just outline your concerns there?

Ashley Highfield: I know because I ran one of them. MSN is a large online publisher but it is not held in the same framework that we are. You have bodies like Huffington Post who say they would sign up, but what if they don’t?

Q586 Angie Bray: I am on the record as saying I think that a lot of online can be a bit like the Wild West, and it is a lot more difficult to tame it. It goes back to my issue around the exemplary damages and whether or not the big stick is going to be the right way forward because it could drive more people offshore and it could drive seriously damaging competition, I would have thought, for some of your papers.

Adrian Jeakings: It could drive more people offshore but it is very hard to publish local news offshore. We are embedded in the communities where we publish, so the idea of offshoring the Eastern Daily Press is inconceivable.

Q587 Angie Bray: But nevertheless there are ways of news gathering that clearly go on and they are offshore and they can remain outside the regulatory regime.

Adrian Jeakings: Yes. I think they are gathering different sorts of news and where they are not, they are tending to, if I can use the term, "parasite" on the news that we are gathering, very often at no payment to ourselves, which is another issue.

Ashley Highfield: Which is another issue about intellectual property rights, and some of the moves that have been in Germany and France to start making sure that aggregators and search engines pay their proper dues to content providers.

Q588 Angie Bray: Absolutely. But of course the danger can be that they can spice up the news in a certain way that makes it eminently more readable for some certain audiences.

Chair: I think we are straying rather a long way from what we were meant to be discussing.

Angie Bray: Mr Montgomery, would you like to comment on this? Do you think we are going to see more newspapers going entirely online and no longer printing at all?

David Montgomery: Yes, I think that will probably happen. Online does give us an opportunity as well, because we can cover areas, hyper-local areas, for instance with very focused local content, a lot of it self-contributed and that is one of the positive aspects of online. But we all believe that print has a long way to go and can be developed and evolved in a way that will continue to give a service to our local communities in print. The reason that I believe that there should be one system, but one system that recognises that there are local differences, is because I think the system will be stronger.

I think that Leveson has had a dramatic effect on the industry as a whole and what I would say is, provided the board agrees, I would take a very strong view if we got into one system and our national newspaper colleagues transgressed, abused the system as they have done previously. I think they did abuse the Press Council and the Press Commission system as well, at national level. The local press did not. I think the fact that you get one system is going to make it stronger and strong, not just in the sense of promoting standards but also stronger in the sense of trying to deal with the issues that arise online because we will not have the same control as we had in print. Having a fragmented system of regulation is going to be hugely cumbersome and that is why, to echo what Christopher said, can somebody talk to us to get some sort of common ground between the current Royal Charter that has been promoted by Government and where the differences occur within the different segments of the press. I think that would be a great step forward. I am pretty sure that the local and regional publishers would exercise an awful lot of influence over their national colleagues in those circumstances.

Q589 Angie Bray: Do you think that the Leveson Report paid enough attention to the online issue?

David Montgomery: No. No. The world has changed. Leveson was legislating for the printed pages of the News of the World and that does not apply to any of the local and regional publishers and actually precious few publications at all. The fact is that if there is a mystery about some element of public life, as there was at the weekend, the identity of somebody that the public wanted to know, you might not read it in the print but you will read it online. So regulating just for print is behind the times.

Ashley Highfield: Take a scenario that a successful blogger in a community who is outside the framework as currently, would not want to come in and publish online with us because they would then be scooped up into a regulatory framework that they do not wish to be in. Part of our role, as David said, going forward, is going to be more the aggregator of voices online, the curator, and this regulation potentially goes against that.

Q590 Angie Bray: This was really a report about the past rather than about the future, in many ways?

Ashley Highfield: It is. It is an analogue report for a digital age.

Christopher Thomson: Whatever is agreed in terms of regulation needs to be flexible. I think that is the message. Either we negotiate that with-

Chair: I am keen that we wrap up since we are reaching 12.30. Paul?

Q591 Paul Farrelly: I think this has been really useful because I think your responses from the local newspapers have been more considered and more nuanced and less hysterical than some of the responses from some of the national newspapers. With some of the coverage it would seem any angle, any mud will do. But I am concerned as to whether the Newspaper Society that represents you, as it stands, is really putting your considered viewpoint across where you have differences with some of the transgressors. I have read the Newspaper Society briefing document of April 2013 and it does not read to me like a considered side-by-side pros and cons also a reality check document. It reads to me as if it could have been written by the editor of The Daily Mail. Just let me give you one example that is contained in the PressBof alternative that you are supporting.

Let us take the editorial code. This briefing from the Newspaper Society says that at the end of the day the "editor’s code will no longer be an editor’s code". What is wrong with what is in the cross-party Charter that says, there should be one-third independent people, one-third editors, one-third journalists. Journalists happily work on the regulator that is part funded by the Government to ensure its independence, in Germany for example. What is so wrong with that? At the end of the day, many people have said that the code is not the problem, it is enforcement that is the problem, and you would have had more chance of serious enforcement of a code to uphold standards if the chair of the code committee had not been editor of one of the worst transgressors. Would you die in the ditch for the editor’s code no longer being an editor’s code? What is wrong with the cross-party Royal Charter proposals?

Christopher Thomson: Can I answer that? It is a very good point. For me, the editor’s code is in a sense the editor’s code. If we, as chairmen and managing directors, are going to hold our editors to account even more than we have in the past, it seems to me the editors have to buy into that. It has got to be part of their DNA. I would not suggest that the editors should necessarily have 17 seats, as they have at the moment. But some of us know why they have 17 seats, because it is such a huge industry, you want as many people from magazines, from this, from that, from newspapers and regionals and so on you can have. Our own Damian Bates from Aberdeen is on the committee. He is proud to be on that and really takes an interest. As you would know, he is a journalist.

Three-three-three looks too legalistic. It looks like pressure from journalists, rightly, pressure from the editorial, pressure from the independent body, so why not make it three-three-three or six-six-six? But the practical need is for us to be able to hold our editors, whoever they may be, to account. Whether we are holding the editor of The Daily Mail to account in some way or whether it is us. For me it seems to be absolutely critical that I know that my editor has bought in to that code. If he transgresses it or if he allows anyone to transgress it, by golly, he is going to hear about it. But if you allow it to be a sort of committee approach where you might find the editors not agreeing with what is there and there being some debate and dissension, I think it becomes very difficult. I understand why it was designed by Brian Leveson that way, but for me it puts a barrier in the way of the governance going right through the company and saying, "You will abide by that," because if there is any whiff that any part of that code has been changed in a way that the editors do not approve of-I think probably Brian Leveson would have looked at it and he would have said, "Ah, but there are three journalists and there are three editors, and they will always agree so you will have six against three." But as you know, that will not be the way it works.

Q592 Paul Farrelly: That is not the way it works.

Christopher Thomson: It could be looked at it in that way, in a simplistic way. I think one of the problems we see is-

Q593 Paul Farrelly: We have a battle cry here, "The editor’s code will no longer be an editor’s code." It is not nuanced, is it?

Christopher Thomson: I think you have to look at all this and you could say, "A plague on all your houses." You could say, there is the tripartite one, there is the industry one. Bang heads together and get some commonsense in here but there is a concern from us, certainly from myself, if the editor’s code is no longer an editor’s code, or could become not an editor’s code, then how do we hold our editors to account for that? It makes it more difficult. That is my own personal position. The Newspaper Society may have a different view on that.

Q594 Paul Farrelly: My final question is to the Newspaper Society, John. Just in terms of framing the atmosphere in which we have a rational or irrational debate over the way forward. Ben referred earlier to a poll that you did that was about the climate of Leveson. It was before the Royal Charter proposals were published or debated. You said that you got between 300 and 400 editors you thought. Let us take that as not a margin of error but the fluidity of the industry. Your poll, which prompted headlines in The Times, "Local press held to ransom after Leveson, say editors" had 37 of those editors from 300 to 400, i.e. 10% responding, and was based on 46% of editors believing that their relationships with the readers were negatively affected by the Leveson inquiry. By my maths, that is 17 editors out of 300 to 400. Do you think that the way the results of that poll were framed contributed to a rational debate of where we are with Leveson?

David Newell: I think it is a snapshot of the editors that responded. It was part of something we do each year called "Local newspaper week". As I said earlier, it is consistent with the sort of response that we get from some of these surveys. The numbers of titles that those editors covered would be considerably more than the 30 to 40. It was a snapshot of opinion at a time of those that responded and reflects very clearly, in terms of the anecdotal evidence that we have received from talking to editors and publishers talking to their own editors, that there is a fear that Leveson has created a climate where newspapers are more timid in certain areas.

Q595 Paul Farrelly: The 49% thought there was no effect. So 18 editors is only a small number of between 300 and 400 but it is one more than the number of editors who thought they had got a negative relationship with their readers.

David Newell: As I have said, it was a snapshot done in local newspaper week. It is not a survey that we have put in as a formal submission to any committee but it reflects the views of the editors that responded to the survey.

Q596 Paul Farrelly: My question is whether the Newspaper Society, representing the interests of local newspapers-which includes the way and the environment in which these proposals are being discussed-are differentiating yourselves with this sort of thing from the more hysterical parts of the media who believe that what is being proposed is an end to freedom as we know it.

David Newell: You put these questions to me personally. I am Director of the Newspaper Society. I report to a board made up of regional and local newspaper publishers. I believe that they feel that the way in which the Newspaper Society is conducting itself is appropriate and representative of their positions. But many of them are here and they can tell you otherwise if they want to.

Q597 Mr Bradshaw: Just a very final question, Mr Newell. The Free Speech Network features quite prominently on the Newspaper Society’s website. Can you tell us who funds it? It has paid for adverts very critical of Leveson as well. That is the context of my question.

David Newell: The Free Speech Network is a co-ordination of work being done by the four or five trade associations that I referred to earlier alongside some independent groupings. It does not have a budget. It does not need a budget because it is run as a co-ordinating group.

Q598 Mr Bradshaw: But someone must pay for the adverts that it has taken out. Significant adverts critical of Leveson.

David Newell: I am not aware of what the arrangements are in relation to the advertisements, but most certainly the Free Speech Network does not have a budget from which it is paying for advertisements as far as I am aware.

Q599 Mr Bradshaw: Does it include any News International executives?

David Newell: Free Speech Network is open for anyone to come along to. News International are members of the NPA. News International will have attended some of the meetings alongside other national newspaper groups, including The Guardian.

Chair: I think that was all we had. Can I thank all five of you for coming?

David Newell: Thank you.

Prepared 4th June 2013