LORD JUSTICE LEVESON
Yes, Mr Jay.
Sir, the next witness is Mr Jonathan Stephens, please.
LORD JUSTICE LEVESON
Thank you. MR JONATHAN STEPHENS (sworn) Questions by MR JAY
Thank you, Mr Stephens. Your full name, please?
A. My name is Jonathan Stephens.
Q. You've provided us with a witness statement at short notice, dated 22 May. There's a standard statement of truth appended to it, so this is the evidence you are putting forward to our Inquiry; is that right?
A. Yes, it is.
LORD JUSTICE LEVESON
Mr Stephens, thank you very much, and particularly thank you for responding at such short notice to our request. When we originally devised this particular part of the Inquiry, although the bid was clearly a feature of it, I don't think certainly I anticipated that it would involve the sort of analysis that it has involved, and it seems clear that in the context of the relationship between the press and politicians and the conduct of each, the third side of the triangle, as it were, namely the Civil Service in connection with the bid, obviously became important and that's why you're here and I'm grateful.
A. No, very happy to be.
Mr Stephens, you are currently the Permanent Secretary at the Department for Culture, Media, Olympics and Sport, and you have been since October 2006; is that right.
A. That's right.
Q. Thank you. In terms of your general roles as permanent secretary, you define those at paragraph 3 of your statement: principal adviser to the Secretary of State across the range of his functions, responsible for the management of his department, but you don't include special advisers
Q. within that category, and you're also responsible to Parliament as accounting officer. May I be clear, though, responsibility for special advisers, whose responsibility?
A. Management of special advisers is for ministers who appoint them. That's set out in both the Ministerial Code and the code of conduct for special advisers.
Q. Does it follow, therefore, that all aspects of discipline, training and supervision are for ministers alone and not for the Civil Service?
Q. In terms of the performance assessments, though, that we see, there's one in the bundle which relates to December 2011, do not the Civil Service have any role in relation to that?
A. This was the first time in my experience that appraisals have been done in respect of special advisers. It's a new system that's been introduced, and I was asked to contribute, I think along with some other civil servants, and ministers and possibly others as well.
Q. If a Permanent Secretary, as a matter of hypothesis, were aware of inappropriate conduct by a special adviser, would not that Permanent Secretary draw that matter at least to the attention of the Secretary of State?
Q. So does it follow then that if you had seen the fruits, as it were, of KRM 18, the 163 emails, at the time, and of course you didn't, that is something that you would have drawn to Mr Hunt's attention?
A. As indeed I did once I did see them.
Q. So would it be fair to say that responsibility for special advisers did fall within your bailiwick, as it were, at least to the extent to which it would necessarily impinge upon the managerial and other functions of the Civil Service, which you headed, in relation to this department?
A. Well, what I certainly had was and any Permanent Secretary would have is a very strong interest in ensuring that special advisers understand their role, are performing it appropriately in respect of ministers, in respect of civil servants and others. What I didn't have was formal management in respect of them, so I didn't appoint them, I didn't manage them, wasn't responsible for their conduct or discipline, and nor could I dismiss them.
Q. But if the conduct of a special adviser necessarily impinged upon the core business of the department, then it would fall within your responsibility and you would be required to draw that to, at the very least, the minister's attention?
A. As you say, if I became aware of inappropriate conduct, behaviour, then I would regard it as part of my duty to advise the Secretary of State of that, but it would necessarily be advice.
Q. Does it follow from that that there's some sort of over-arching duty, it might be said, to supervise the special adviser to ensure that inappropriate conducts and behaviours do not occur?
A. Well, the position, I think, is very clearly set out in the Ministerial Code. It is that the conduct and management of special advisers is for the minister, who appoints them. As I say, I don't appoint special advisers, I don't manage them, I'm not responsible for their discipline, and special advisers leave when their ministers leave. What I certainly have, I think any Permanent Secretary would have, is I take a close interest in special advisers. They're an important part of how the department works. I take an interest in ensuring that that relationship is healthy, and I seek to support it.
Q. In terms of training and supervision then of special advisers, insofar as there is any, that resides responsibility for it resides with the minister; is that a fair summary?
A. In terms of conduct and management. To give a full picture, I think I should say that these are rather unique posts. They're unique posts working direct to ministers. They don't go through a normal recruitment process. They leave their post when the minister leaves their post, and so I certainly have never seen them being line managed in the way that, for example, within the professional Civil Service, people would expect to be line managed. That is just not the way, in any department, that these posts are managed.
Q. Although it is or may be relevant that the code of conduct for special advisers was a matter that you personally drew to Mr Smith's attention when he started, you didn't leave it to his Secretary of State to deal with; is that right?
Q. Can I move forward, please, to paragraphs 9 and 10 of your statement at page 13563 or 2 on the internal numbering. You're dealing with the ways of working within this department. DCMS is a relatively small department by Whitehall standards, would you agree?
A. Yes. We're about half the size of the Treasury.
Q. You say in paragraph 10, Mr Stephens, that you become personally involved when either officials consult you for some reason or you choose to involve yourself in a particular issue, either usually either because it's of central importance to ministers or the department or it provides a good opportunity to monitor. Did you feel that the BSkyB bid issue fell within that category, namely being of central concern to ministers or the department?
A. Yes, it was, so I was particularly concerned when at very short notice we took over responsibility to involve myself and satisfy myself that consideration of the bid within the department was properly undertaken.
Q. Yes. Presumably you saw immediately the obvious political and legal risks which attended the treatment of this bid?
Q. In terms of the legal risk, it's self-evident, judicial review from either side, really.
Q. That obviously goes without saying. So much money at stake that anybody might take the risk of a judicial review.
Q. In terms of the political risks, how did you analyse those?
A. Well, any issue concerning the media is of intense interest to politicians generally, and indeed to the rest of the media, and not only that, but the particular circumstances in which we had been asked to take over responsibility, obviously only heightened the scrutiny still further.
Q. Yes. It was an already very hot potato with the Murdoch dimension and with the Cable dimension super added it became a boiling hot potato.
A. Indeed, indeed.
Q. So overall accountability, therefore, for the management of this bid was effectively yours, would you agree?
A. I'm accountable for all the advice and ultimately what goes on within the department, as I set out in my statement. The way, of course I mean that covers the whole range of issues that the department deals with, so I normally expect the individual policy items or individual issues to be taken forward by a lead policy official who would usually report to me.
Q. That was Mr Zeff, I believe?
Q. He was the lead official and he reported directly to you, and therefore during the conduct of the bid, although you didn't take day-to-day responsibility for what was going on, that was Mr Zeff
Q. you had a reasonably high level of superintendence, would that be fair?
A. Yes. Particularly at the beginning. Over time, I was satisfied that the process was being conducted well, so I became slightly less involved, but at any stage I could find myself drawn back in for any reason.
Q. What was your assessment of Mr Hunt's relationship with Mr Smith?
A. I thought it was a close working relationship. They had worked together in opposition for, I think, a couple of years or so and had clearly formed a close working relationship when they came into government.
Q. You have plenty of experience of seeing how special advisers interact with ministers and it can
Q. vary from case to case and you sum it up in paragraph 15 of your statement, do you not: "A special adviser who understands the issues that an effective relationship understands and abides by his proper role and works well with the department." So in terms of understands and abides by his proper role, that's an assessment you're making over certainly observation from May 2010
Q. when Mr Smith arrived in the department.
Q. Obviously, you can't speak to any earlier point. Did you feel that Mr Smith correctly understood Mr Hunt's thinking about the big issues of policy?
A. Yes, I thought he was well tuned in to the Secretary of State's thinking.
Q. Is it the role of a special adviser to be well tuned in to a Secretary of State's thinking?
Q. I suppose it's obvious, isn't it, that if the special adviser speaks out, he is speaking out for his Secretary of State; is that right?
A. Yes, and that is one of the things that a special adviser can do on behalf of his minister, whether in interactions with the department or indeed elsewhere, and the better the special adviser, the more reliable a guide they are to the Secretary of State.
Q. And, I suppose, the less the special adviser needs to speak to the Secretary of State to ascertain his or her view, because the special adviser is intuitively attuned to that view, is that it?
A. That can be true as well.
Q. May I ask you now what happened before 21 December 2010, which of course is the watershed date?
Q. Paragraphs 17 and 18 of your statement.
Q. You rightly say that advice was given by you to the Secretary of State on 12 November 2010 and copied to Mr Smith.
A. Just to be clear, the advice was not from me personally, it was from an official within the department, but it was copied to me.
Q. Thank you. We actually have page numbers for this now. So it can probably be put on the screen, 13573. Basically, the recommendation was, and you set it out, don't you, in your witness statement
Q. "There is no role in the process for DCMS and we recommend that you do not have any external discussions on the merger nor write to BIS about it. If you want to contribute, you could write a letter stating facts backed up with evidence, provided it recognises the final decision is for the Business Secretary of State acting alone. However this carries risks to the robustness of the decision." The main concern there was, of course, the quasi-judicial role occupied by Secretary of State BIS, wasn't it?
Q. The term "quasi-judicial" is one which is expressly mentioned in this memorandum of 12 November, isn't it?
Q. Out of interest, is quasi-judicial a concept which is well familiar to DCMS in the sense that does DCMS exercise quasi-judicial functions?
A. Yes, we do, and it would be an expression that would be reasonably familiar in most government departments.
Q. But before 21 December 2010, DCMS did not exercise, on my understanding, but you'll correct me, regulatory functions, which necessarily carried with them a quasi-judicial ambit, would you agree with that?
A. Well, we exercise a number of regulatory functions, including around the National Lottery and gambling, for example, and indeed, the general principles of public law and the undertaking of statutory functions is bread and butter of most government departments.
Q. All government departments necessarily discharge common law and statutory functions, which are, I suppose, defined or characterised public law duties, but a quasi-judicial function is somewhat more particular, would you agree?
A. Um I absolutely accept your word for it.
Q. But you'd rightly say, in terms of the National Lottery and gaming, I think you are right that DCMS would exercise a quasi-judicial role in those limited areas in the strict sense of the term, so we can agree with that. So this is a concept with which you are reasonably familiar, although it wasn't sort of central to your business, as it would have been to BIS; is that right?
A. I've never worked in BIS, so I can't speak about BIS.
Q. The background though to the memorandum of 12 November, was it your understanding that the Secretary of State wanted to become involved, at least to the extent of expressing his policy view to Dr Cable?
A. I don't actually recall having a personal discussion with the Secretary of State about this. It's possible there may have been one in passing, but what I recall was being aware from other officials that the Secretary of State was asking whether, as Secretary of State for media, he had a role or could express a view in the matter, and that was how the advice originated.
Q. Because the email, which you've also included at 13575, which is from your private secretary
Q. it's going on to a number of officials: "You have just discussed with Jonathan. He would like some further information on the extent to which the Secretary of State is entitled to express a view in the process (in his capacity as Secretary of State). Jonathan felt that there had been previous cases in which this had been possible." Then there's a further email which is along similar lines. Did you know what view the Secretary of State wanted to express in that context, Mr Stephens?
A. No, I don't think I did at that stage, no.
Q. Without knowing the exact detail of what he might have wanted to impart to Dr Cable, did you know generally the gist or thrust of the message which he wanted to get across?
A. No, not at that stage.
Q. When did you become aware of what view, if any, Mr Hunt wanted to get across?
A. I can't recall knowing around this time at all of what view he wanted to express.
Q. Did there come a time, though, when you were aware that your Secretary of State was, at least in policy terms clear about that favourably disposed to the bid?
A. What I was aware of at the time was his public statement, although I have to admit it didn't figure particularly significantly for me because, of course, this wasn't our responsibility at the time and we had many other issues to be concerned with.
Q. But the context here of the Secretary of State wanting to speak to Dr Cable in his capacity as Secretary of State
Q. so there's a reasonable level of formality to it, you must have known, generally speaking, what the purpose of that interaction was going to be, weren't you, Mr Stephens?
A. Well, I all I recall about it I don't recall a discussion with him personally. I recall officials saying he's just asking whether, as Secretary of State for media, he has a role and can express a view on a merger in the media sector.
Q. Okay. We'll come to a later email in a moment, but what happened in the interim is that legal advice was given from within the department, I think by the legal director, on 19 November.
Q. That starts at 13579. I'm going to summarise it. The legal advice was, in the conclusion, 13581: "Whilst there's nothing legally which formally precludes the Secretary of State CMS from making recommendations to the Secretary of State BIS to inform the latter's decision as to whether to refer the public interest considerations in this merger to the Competition Commission. It would be unwise to do so. This is because the task of assessing the impact of the merger on media plurality is expressly given to Ofcom." Also, mention might have been made, but it's implicit, on the quasi-judicial role of Secretary of State BIS. So was this advice drawn to your attention, to the best of your recollection?
A. This advice? Yes.
Q. The general message then was presumably clearly understood?
Q. On 7 December 2010, there's another email, again from the legal director, 13582. It says this: "Thanks I appreciate that the advice is not what JS and possibly JH want to hear but I think it amounts to 'do nothing, do not try to convey your thinking to VC, he must act quasi-judicially and only through formal processes'. Further, and in any event, the clear legal advice to VC would be that you cannot hear JH on this matter and VC shows all the signs of taking that advice, so the matter would be academic." So that's making it two points, first point crystal clear: don't convey your thinking to Dr Cable because he is charged with making the decision; is that right?
A. Just to be clear, I think that this is an internal minute to I think, to other legal advisers, so it's not actually to anyone able to take action on it, it's just essentially saying, "This is the advice we've conveyed", and I didn't see that. At the moment, it's just an internal note.
Q. The second point is really the bit between the dashes on the first line: "I appreciate that the advice is not what JS [that's you] and possibly JH wanted to hear." Which rather suggests that the desire was that some sort of approach could be made by JH to VC. Do you accept that?
A. Indeed. I mean, he'd asked if he could do that.
Q. It's almost as if that's something which you were merely comfortable with but you wanted to achieve possibly or probably because you knew your Secretary of State wanted to do that, is that fair or not?
A. I certainly knew that that's something he was asking about. I didn't see this comment at the time. I think what it refers back to is what's recorded in my earlier note on 13576 of 15 November, in fact, the note from my private secretary, and I recall this. As I said, I don't recall any discussion I had with the Secretary of State. I recall the original advice going up and it triggered in my mind an interest, and actually what proved to be a role, in the sense of I misunderstood the issue, I remembered from previous responsibilities in completely different departments occasions when other Secretaries of State had been able to comment on what seemed to me equivalent decisions so I asked a question: are we absolutely sure about this? Quite rightly, the professional lawyers came back to me and said, "You got it completely wrong, yes, we are sure about it", and I left it at that and none of that was reflected in any advice to the Secretary of State.
Q. The other point is the advice being given before DCMS acquired responsibility for the bid on 21 December in relation to BIS would apply by parity of reasoning to DCMS, once it had the quasi-judicial functions which had been bequeathed to it. Would you agree with that?
A. Yes. In the context of we had to approach the matter quasi-judicially, absolutely.
Q. Presumably you didn't understand JH's purpose to be, if he could speak to VC in this context, to oppose the BSkyB bid?
A. As I said, I really I didn't, as I recall, have any discussion with the Secretary of State. I don't recall anything about what he was seeking to achieve.
Q. But you must have known because just like the SpAd is attuned to the thinking of the Secretary of State, the Permanent Secretary I'm sure is as well you must have known what Mr Hunt's position would have been on this and what he might have wanted to say to Dr Cable; isn't that fair?
A. Actually, my recollection is I didn't particularly at that time. It was a small issue on something that we were not responsible for, and there was enough to occupy us with what we were responsible for at the time.
Q. Okay. Can we move forward to 21 December, when there is a small explosion of a neutron bomb, and things happen very quickly. The Permanent Secretary at number 10 phones you at paragraph 19 of your statement and he asks for an immediate view as to whether Jeremy Hunt had made any public comment on the proposed merger which might appear to be pre-judging it?
Q. You make it clear that you were aware of one public utterance
Q. and you asked special advisers to assist; is that right?
A. That's right.
Q. You didn't include any private comments he might have made within the ambit of your request?
A. I didn't ask for that, no.
Q. Why not?
A. First of all, because I wasn't asked for it. Clearly, if I had been aware of anything like a conflict of interest or anything like that, which was relevant, I would have thought it right to draw it to the attention, but at the time the focus was on public comments.
Q. You didn't, of course, see the internal memorandum which, in the end, went to the Prime Minister, I think on about 19 November, is that right?
A. That's right.
Q. It may be difficult to answer a hypothetical question, but had that been drawn to your attention, what if anything would you have done in relation to this issue?
A. It's difficult to know. As you know, it's a hypothetical line of I think, first of all, I thought to myself that it was known about, and also I think I'd have observed from the text that I've now seen, which I didn't see at the time, that there was a focus on abiding by the legal provisions around plurality, and thought to myself that reflects a similar sort of understanding as in the Secretary of State's public comments on 15 June.
Q. We know there was further legal advice obtained from within the department at 17.30 hours that afternoon. I don't think you were sent it, although we're going to bring it up on the screen, 10001. This is part of evidence that Mr Hunt has disclosed and, therefore, isn't in any bundle at the moment. This is in the context of the public utterance which you referred to.
A. I don't have it up on the screen.
Q. It's going to arrive very shortly. (Pause) That's the one. This is the legal director speaking: "When did JH say it? I assume it was shortly after News International announced its intention to buy out the other shareholders in Sky. Therefore at a time when JH was not responsible for policy in this area. If so, it is not helpful and tends towards an element of pre-judging the issue. That said, the view is far from definitive, as is demonstrated by the wish not to second guess decision-making by regulator and it isn't clear to me so unhelpful and enough to draw comment and perhaps challenge but probably not fatal when a well reasoned decision is made with conclusions based on all the relevant evidence." Can we be clear, did you see this at the time, Mr Heywood?
A. Mr Stephens.
Q. Mr Stephens.
A. No, I didn't, because I was actually
LORD JUSTICE LEVESON
Once you've done this for long enough, all the names get mixed up.
A. And most of them are Jeremy, as well. I didn't see this at the time because I was actually at home on the first day of Christmas leave.
Q. Certainly. We can see what happened to it, but I think it was forwarded to Mr Hunt and then it went on to Downing Street at the top, and the decision, therefore, must have been made that evening. Does that accord with your recollection?
A. I don't have the timings in front of me. My recollection is that, actually, the decision was made at or around the time of this email.
Q. You tell us in paragraph 20 that you had a conversation with Mr Hunt. It could have been that evening, the following day, it's not going to matter.
Q. "We discussed and agreed on the importance of handling the merger in a way that was fair and robust to legal challenge." What did you explain to Mr Hunt were the risks here?
A. This wasn't a formal sit down and exchange. I was at home. I don't quite know where he was. I think it was one of the calls about how we handle this new responsibility and all the implications of it for the department, because not only did responsibility for the bid come over but also a responsibility for a range of other policy matters and other staff and all of that. So it wasn't an opportunity to explain or advise on the detail of the consideration of the bid, but what was uppermost in both our minds was the circumstances in which he'd taken over responsibility and the risk that that made manifest of legal challenge and the need to proceed in a way that was above scrutiny and robust to legal challenge.
Q. Certainly above scrutiny, that's certainly right. You also say in your statement: "He would need to be careful in his dealings with News Corporation." What did you mean by "careful" in that sentence?
A. I meant to indicate to him that there needed to be a shift in his relationship, in the sense that he had been Secretary of State for media and therefore used to engaging with all the key players in the media world on quite a regular basis, and that now, with the responsibility for the bid, he needed to be careful around that relationship, to move it on to a more formal basis.
Q. So informal communication between the Secretary of State and News International or News Corporation was, in your view, risky; is that right?
A. Well, on all but the most anodyne of bases.
Q. Would that include informal communication from those within your department, setting aside the Secretary of State?
A. Yes. I mean, I think it goes to the whole department is an emanation of the Secretary of State.
Q. We have the picture: this is the hot potato, we have to be careful, we have to put it on a formal footing.
Q. Probably obvious, Mr Hunt, did he accept what you were saying to him on that occasion?
A. Yes, yes. I recall him, not surprisingly as you say, it was a hot potato being very concerned to handle it correctly.
Q. The following day there was a meeting when officials from BIS turned up, as it were, to hand over the bid. The evidence we have of it, at least as to what was said, is at 13583. Do you have that? That is the email of 22 December, timed at 17.44 in the afternoon.
Q. You were present, Secretary of State was present, Minister of State was present, the lead policy official, the lead lawyer and Mr Smith.
Q. "BIS officials outlined the Secretary of State role in the process and the various legal considerations." Do you think that the term quasi-judicial was mentioned on that occasion, Mr Stephens?
A. I think it's very, very likely.
Q. Was that concept explained?
A. Yes. As I recall it, in this meeting and the subsequent meeting, officials took the Secretary of State and others quite carefully through the statutory functions, the stage that had been reached, the next steps, and in particular, rehearsed the need to approach the decision with an open mind on a basis that took account of the relevant considerations, ignored the irrelevant, that it was even-handed and avoided bias or the appearance of bias.
Q. It's the avoidance of bias or the appearance thereof which you feel was mentioned on that occasion, do you?
Q. Okay. Paragraph 23 now, please, Mr Stephens. Just one point I'd ask you to elaborate on because you've summarised the rest of what's key to what came out of the BIS meeting. You see towards the end of paragraph 23: "He needed to take an even-handed approach, giving all sides an appropriate opportunity to make representations." Would this exclude, in your opinion, private representations made by one party to the department?
A. I think it depends what you mean by "private". If you mean unofficial or yes. I think representation should be on an official basis. If you meant at a stage in the process representations from one side, then there were stages in the process where that was appropriate and, indeed, in some sense required by statute.
Q. Subject to any statutory requirement which would indicate otherwise, and there probably were some to protect confidentiality, representations would usually have to be shared. If one party makes a representation, you have to share it with the other party. That's the general principle, isn't it?
A. That is the general principle, but also, as I understand it, and as was explained to us, I mean, the starting point of all of this is the interpretation of the application of the statute in question, and as I said, under the Enterprise Act there are certain stages of the merger where there is a privileged position for, in particular, the merging parties, to be informed of, be consulted about decisions that the Secretary of State is minded to take and to be able to make representations on them that does not imply an equivalent right to representations at the same time to opponents, if you like. Indeed, that was the process that was the statutory obligation that the Secretary of State was under in the run-up to his announcement on 25 January, and then, again, once the Secretary of State was through that, in the period where he was considering whether there were undertakings in lieu which might meet the plurality concerns identified by Ofcom, as I understand it, the legal advice we had was that there was, at that stage, a necessary, if you like not legal language, I'm sure exclusive discussion with the merging parties, who were the only parties who could obviously offer and provide undertakings in lieu, until it was possible to establish that there were undertakings in lieu which could meet which could offer remedies, at which point then the Secretary of State would go out to wider public consultation on an open basis, equal to all parties.
LORD JUSTICE LEVESON
Does that mean this: that the Secretary of State charged with this responsibility could obviously talk to the parties who wished to merge about the arrangements so that he could understand them, so that he could test them, and satisfy himself that they dealt with, perhaps, his initial concerns, but that there would then come a time when he would have to share that material with others who might object, and equally, if the objecting parties had material, he would have to share that with the merging parties, so that all could see, in an open and transparent way, what was being said by the other?
A. Well, I certainly understand that a necessary part of the process was an open period of consultation, in which all parties could consider, consult together, on, in this case, the undertakings in lieu that were under consideration. I simply don't know at this stage in legal terms whether that involved an obligation to share each other's representations with each other at that stage.
LORD JUSTICE LEVESON
Well, we can consider that.
I think your analysis is correct, but we'll come back to that if necessary. You say in paragraph 24, Mr Stephens, that the requirements which the Secretary of State reinforced the need for were clear to all participating in the meetings, including special advisers. May I ask you this: how did you form a judgment that everybody was clear about those requirements, including special advisers?
A. Well, I was in the meetings where they were addressed and in most of the early internal meetings where these requirements were repeatedly come back to, and I formed a judgment from participating in those meetings that it was crystal clear what were those requirements.
Q. Right. But the devil might be in the detail. If you look at paragraph 25c and g, you make it clear that the special adviser Mr Smith was going to support the Secretary of State in understanding and working through the advice and process.
Q. You say in 25g: "Specific action points routinely fell to [people] and, on occasion, to Adam Smith." Then you say in paragraph 38: "I also knew that Adam Smith was in contact with News Corporation on questions of process and procedure." Can we be clear about this evidence, Mr Stephens? How did you know that Mr Smith was in contact with News Corporation on questions of process and procedure?
A. Well, he was part of the team of officials who were handling the bid, and I knew that that required a degree of contact with News Corporation I quite quickly became aware that Adam was participating in as I expected and thought was normal the external meetings with News Corporation, and, as I say, was on occasion following up on points of process and procedure with News Corporation, and I am conscious, with other officials within the department, were sometimes in receipt of press notices and things like that.
Q. Did you know with whom he was in contact at News Corporation?
A. Not by name. I personally did not know by name at that stage.
Q. Did you know the role of the person with whom he was in contact?
A. Not specifically by title, but I think I assumed it was a person with access to the chief executive.
Q. So whether you call that individual a lobbyist or, to give him his exact title, he was Director of Public Affairs, did you have the general idea that Mr Smith was in contact with an individual who carried with him that label?
A. As a general idea, it would be someone of that. I didn't know that particular label.
Q. But the concept which underlies it was familiar to you?
Q. Why did you think Mr Smith was in contact with that individual?
A. To follow up on matters of process and procedure, to reinforce, on occasions, messages that the Secretary of State had delivered personally or in correspondence to News Corporation.
Q. To follow up on matters of process and procedure. Why couldn't that all be done more formally by email or by letter from within the department straight out either to News Corp's lawyers or, in extremis, I suppose, to Mr Michel personally?
A. Sorry, are you asking why
Q. Why is it necessary for Mr Smith, a special adviser, to have this role? You've given it two categories. The first one is follow up on matters of process and procedure. I'm exploring that one with you. Why was that necessary?
A. Well, just to ensure that if there were any questions or any areas of doubt or uncertainty, that those could be resolved and answered.
LORD JUSTICE LEVESON
Was that just using a person who was available? Because, on the face of it, one would have thought that process, procedure, those matters was very much a task for officials rather than for a policy adviser to a minister.
LORD JUSTICE LEVESON
I don't know. I'm asking.
A. My experience in these roles is that often there is a mix between roles and that it can often be sometimes useful for similar messages to be passed on both channels. Certainly in this case, most of the contact was through legal advisers, as I would expect. There were some exchanges with policy officials and I thought there were some exchanges of the equivalent nature with Adam Smith. My experience in a number of government departments it is that there is not a rigid distinction between special advisers and officials, necessarily.
This is a process, though, which you told us 15 minutes ago needed to be put on a more formal relationship and Mr Hunt was advised he needed to be careful. This is paragraph 20 of your statement.
Q. It's quite possible for all these exchanges to take place formally between lawyers or preferably by public pronouncements by the Secretary of State or his officials. Why is it necessary for matters of doubt or uncertainty, to use your terminology, to be discussed informally between a special adviser and a News Corp lobbyist?
A. It's not particularly necessary but it, in my experience, was not unusual for these sorts of issues. There were matters of process and procedure and were matters of reinforcing messages that the Secretary of State had already sent to be passed on in this way, and as I say, the way that this operated was that Adam Smith was a part of this small team that was handling the bid and sometimes, in many cases when the Secretary of State was reviewing next steps, action would be passed out, action would often be picked up by legal advisers, by policy officials, and sometimes by special adviser. Some of the examples of that is when he, for example, became involved in issues over redactions of documents prior to their publication.
Q. Certainly. You said it was not unusual that matters of process and procedures should be dealt with in this way, but are you not referring there to the more orthodox policy context, which would be food and drink to this department, rather than this particular quasi-judicial role? You see the distinction? Are you saying that in a quasi-judicial function it would be usual for there to be these informal exchanges?
A. My experience in a number of government departments is that on any issue of central significance to a minister, the special adviser would very often be involved and might handle issues of process and procedure and presentation like this.
Q. Process, procedure and presentation, the special adviser, of course, having political experience but not necessarily much Civil Service experience; is that right?
Q. You explained it as being a matter of central significance to the minister, so the special adviser then would be expected to follow his minister's political lead, wouldn't he?
A. I'm not quite sure what you mean by that.
Q. Well, that the minister had a policy view or political view, the special adviser, to the extent to which he expressed a view, would be expected to follow his minister's view, wouldn't he?
A. Well, if you're meaning to suggest there the Secretary of State had a policy or political view that was apart, once he entered into this process, the view he was forming on the basis of the evidence in front of him, then no, because the Secretary of State was careful to enter the process with an open mind. I mean, I was particularly struck by the way in which, as soon as he became responsible, the Secretary of State very quickly focused on the requirements of the process, understood very clearly the requirements of the process. In my experience, rather more so than perhaps some if not many ministers would in this in an equivalent case, and became very insistent on the importance of abiding by the requirements of the process and in particular following legal advice at every stage.
Q. What was the basis for your confidence that Mr Smith would follow the same rigorous approach?
A. My confidence was that he was hearing the same advice in all the meetings and also that he was well attuned to the Secretary of State and the Secretary of State was very clearly saying there must be a rigorous process here, we must follow legal advice at every stage, and was actively seeking that, and at that stage I hadn't worked for the Secretary of State for a long time, but even to me, that was a marked change in natural style and approach for the Secretary of State that I was confident would be picked up, was being picked up by everyone.
Q. You said earlier on that the special adviser would also be expected in his interactions with News Corp to reinforce messages given.
Q. Would that necessarily be limited in the natural and ordinary course of things to the narrow issue of legal and procedural messages?
A. Well, and the messages of substance that the Secretary of State was giving in the course of process. So, for example, the messages that he conveyed in the meetings directly with News Corporation.
Q. But the special adviser inevitably would get to learn things which went beyond that which had been transmitted in a formal meeting, wouldn't he?
Q. So there was a risk here, to put it at its lowest, that the special adviser might start communicating those things in the context of reinforcing messages to his interlocutor, would you agree?
A. There was a risk that anyone privy to that sort of issue could do so.
Q. Wasn't it almost inevitable, though, particularly in the context of a process which had to be kept rigorously clear and transparent, that over the course of what became a lengthy process the boundary lines would become blurred?
A. I don't think so and, in respect of officials, I don't think they did become blurred.
Q. Clearly, it's your view that they did in relation to Mr Smith, otherwise you wouldn't have written the last sentence of your witness statement; is that right?
Q. But I think my point is this: that you would expect an official who is impartial and, insofar as opinion may be held, to suppress it, because that's what civil servants do, to behave in a certain sort of why, but why would you expect a special adviser not inhibited by the same self-denying ordinances to behave in exactly the same way?
A. Because those were clearly the requirements that were reinforced in every main meeting that the Secretary of State had and that were the subject of repeated direct legal advice, not just from our own legal advisers but from expert counsel in the course of those meetings, and that was the bread and butter of those discussion, the bread and butter of those discussions was asking when can we meet News Corporation, when do we need to meet other people, what can we share, when whom, at what stage, what are our obligations, if we show this to one side, do we have an obligation to show it to others? That was the constant discussion in all these meetings.
Q. Did you ever hear feedback from Mr Smith in relation to any particular discussions he'd had with Mr Michel?
A. I don't recall doing so, no.
Q. You refer to various emails, and we've seen them earlier this morning with Mr Smith, which it's clear that departmental officials were aware that he was interacting with Mr Michel. Were these matters ever drawn to your attention?
A. No. As far as I can see from what I've been able to observe, the sort of issues that departmental officials were aware of, where there was a degree of contact with Mr Michel, were issues such as I've described, matters of process, of procedure or otherwise unexceptional.
Q. Would you have expected Mr Smith's interactions with News Corp to have within noted or evidenced in some way, in case disputes arose as to what happened?
A. I would have thought that to be incredibly wise.
Q. Was Mr Smith given any advice to such effect, to your knowledge?
A. I don't recall on that specific occasion. I think there was a general expectation that it's sensible in external dealings when you're having exchanges to record and share it with the department.
Q. Did you receive a general message from Mr Smith, directly or indirectly, that he in his terminology had been bombarded with material from Mr Michel?
LORD JUSTICE LEVESON
If he had been talking to Mr Michel, as he was, would you have expected a note to be circulated?
A. Yes. Yes, I would. Unless it was a completely anodyne matter or a matter sort of simply of arranging to receive a document or something completely anodyne.
LORD JUSTICE LEVESON
Well, you've seen these emails.
LORD JUSTICE LEVESON
Some of them may be described as anodyne, but that's not the first word that would come to mind to describe them.
A. No. No.
LORD JUSTICE LEVESON
Is there a process take it away from the bid whereby special advisers do write memoranda or notes for the benefit of officials of their communications with people?
A. Sometimes, yes.
If you look at what others were doing, the lawyers, naturally enough, would have taken a full note of whatever communication they had with News Corp and BSkyB. The officials evidently would have done the same; is that right.
Q. You'd expect the special advisers to do the same. Were you not surprised then that there was no evidence, or very little evidence, coming back from Mr Smith of his interactions with News Corp?
A. I thought that the evidence we were seeing was by and large the extent of his interactions.
Q. Which therefore would evidence very limited interaction; is that right?
Q. Did you think that surprising, though, with Mr Smith's task to be the point of contact with News Corp on matters of practice and procedure and to reinforce and follow up messages that there was so little evidence of that which was coming back to the department?
A. I didn't understand that he was the single point of contact. He was one of a number of points of contact, and what I understood and observed was that most of the contact I and the officials were aware of was conducted through legal advisers.
Q. Were you aware of the general position within the department regarding the bid and what the ultimate objective might be?
A. The very clear objective set by the Secretary of State was to conduct the process in a fair and robust manner.
Q. If the message or the inferences which may be drawn from the materials we've been looking at in the 163-page exhibit bundle is along the lines of positivity emanating from Mr Smith. Just imagine that as a hypothesis. Are we to draw the inference that that positivity does not reflect the underlying view of the department at the material time?
A. The very strong view of the department throughout this process led by the Secretary of State was that our job here was to conduct a scrupulous process, to consider the issues on the basis of the evidence in front of us, to reach a fair and unbiased decision, and that was the Secretary of State's overriding concern, to my observation, at every stage throughout this, and he was very concerned about how to manage and achieve that, given that he well understood that the process would almost almost whatever he did, come under sustained political and press attack, and that is why he chose to go down the road of seeking independent advice from the independent regulators at every stage before every substantive decision, and also seeking to clear every significant move he made at every stage with legal advisers, and indeed he was most insistent we brought in external expert counsel.
Q. Can I ask you about paragraph 29 of your statement. You rightly say his approach was influenced by the circumstances in which he assumed responsibility for the bid: "He considered that these required him to take particular care to remove any perception of unfairness to News Corporation." Why was there a need for that, Mr Stephens?
A. Well, the circumstances in which he had taken over responsibility for the bid and the comments by Dr Cable which brought that about was obviously uppermost in everywhere's mind.
Q. The reality is, that you were well attuned to the politics of this, that Dr Cable had said something extremely unfortunate which indicated possibly an anti-Murdoch stance and that was well understood. But you knew that the Secretary of State wasn't in that camp at all or within a million miles of it. That's the truth, wasn't it, Mr Stephens?
A. I knew the fact of his public statement, which I thought was again quite a considered and careful judgment that was particularly careful to emphasise that he wasn't second guessing the regulators, and once he assumed responsibility and it was the advice to him, and which he readily accepted, that he must put previous views to one side, he must approach the matter with an open mind on the basis of the evidence in front of him, and that was, to my observation, the approach he took.
Q. Test it in this way. If we're in BIS before 21 December 2010, one can quite imagine the Permanent Secretary, of there well understanding what Dr Cable's position might be because he would possibly write about it and warning him not to be unfair to News International, but it's rather odd that the Secretary of State now changes, we know the position of the Secretary of State, you knew the position of your Secretary of State, and you're still concerned to avoid a perception of unfairness to News Corporation. Is that really the position?
A. I think it's a rather natural concern, given all the furore and focus on the comments that were made, that that could give rise to a perception of unfairness.
Q. But to News International rather than the other way around. Shouldn't that have been the greater concern?
A. Dr Cable's comments were about News International.
Q. Of course they were, but we now had a new Secretary of State who was from a different political party and you knew full well where he understood. This perception of unfairness to News International, although extant before 21 December, was no longer remotely feasible, was it?
A. No, I think that's completely unrealistic, to be honest. This was the big dominant political issue. Although this is a Coalition government, two parties in it, the government is a single government. The Secretary of State is notionally a single person, although responsibility was transferred from one Secretary of State to another, and I think it was very palpable that there might be a perception of unfairness to News Corporation. This was within the context of ensuring a fair and overall objective process and ensuring that the issues were properly considered on their merits.
Q. But all the political commentary when Mr Hunt acquired the bid on 21 December wasn't on the basis, "Oh, there might now be unfairness to News International. It was more along the lines, as you well know, he might be favourably disposed to News International. I'm still not understanding this line in paragraph 29 of your statement.
A. What I'm understanding there is that you know, and I emphasise that this was within the context of care and concern to achieve an overall fair process to all those considered but, given Dr Cable's comments, it seemed natural to think that they gave rise to the possibility that News Corporation could, for example, cite those in a future JR as reasons for challenging the outcome.
Q. Okay. The last point in paragraph 29, you say your Secretary of State was determined, amongst other things, to hear directly their points of view rather than deal with them only through written representations, so that includes the possibility of meetings which occurred
Q. and the possibility of more informal communications, doesn't it?
A. Well, he was focused on meetings. That was what he was he sought advice on he thought it was right, once he'd received the Ofcom report, to meet with News Corporation as one of the merging parties to hear their views directly.
Q. Can I ask you, please, about paragraph 36 now, because you've covered the intervening matters in your earlier evidence. You say: "The overall conduct of the bid, including what it was appropriate to discuss or consult with News Corporation was overseen through the process the Secretary of State and I had established, particularly his regular meetings." Be absolutely clear what the process was. It was what was discussed at the meeting on 22 December, what was discussed at subsequent meetings, but did it include any supervision of the special adviser?
Q. You say, towards the end of this paragraph: "Separate from these meetings and the advice offered in written submissions and orally in meetings, I was not asked for and did not offer separate advice on contacts with News Corporation." But that presupposes, indeed as you've explained, the existence of such contacts, doesn't it?
Q. I suppose the real point is how you assessed the risks, if any, which emanated from the fact of such contacts. Would you agree?
Q. Are we to deduce from your evidence that you assessed those risks to be either nugatory or minimal?
A. I assessed that those risks were mitigated very significantly by a number of factors. First of all, the very public way which responsibility had been transferred to us, which brought home, in a way that was unmissable, the consequences of private comments becoming public. Second, the Secretary of State's very strong and marked insistence on following a rigorous and scrupulous process and acting in a way that was fair and even-handed. Third, the presence and availability within the room for these discussions of our own legal advisers and the presence of expert legal counsel. All of those factors together gave me confidence that all those involved in the process, Secretary of State, officials, special advisers, all understood the importance of following this scrupulous process.
Q. Can I suggest three factors which possibly you underestimated, Mr Stephens, just for you to comment. First, you put excessive faith, perhaps, in the experience and good judgment of the special adviser. Would you accept that?
A. With the benefit of hindsight, clearly, yes. As I said, and as his appraisal reflects, which I strongly agreed with, at the time I thought he showed good understanding of the role and good judgment and was careful in how he undertook the role.
Q. Okay. There are four risk factors I want to identify. The second is that the special adviser would not necessarily understand exactly what the term quasi-judicial meant and what it entailed, in particular its differentiation from the standard policy function which the Secretary of States ordinarily undertake. Would you accept that one?
A. I really struggle to see that, to be honest, because in these discussions the requirements of the process, the Enterprise Act, the quasi-judicial obligations was meat and drink of the discussion, and with expert counsel there making the points, and I can still this was something I experienced myself. I can still see in my mind's eye, as the Secretary of State would ask, "What can I meet, when can I share with one side" that counsel Daniel Beard would lean forward and say, "Let's start with the first principles here: you have to be seen to exercise your functions on the basis of relevant considerations, not irrelevant considerations; you have to be seen to behave in an even-handed way, without bias or the appearance of bias", and in this particular case that means I mean, I summarise, but that happened repeatedly and over a number of occasions, and left me in no doubt that the requirements were clear.
Q. The third point out of my four: the power of advocacy and sophistication of the lobbyist. Although you didn't know him personally, or know his exact title, you knew the sort of role he was occupying and that it was his job, really, to push as hard as he can to extract as much as he possibly could. Nothing necessarily inappropriate in that, but there was a particular risk, therefore, that the special adviser needed to be alive to and perhaps warned about. Do you accept that issue?
A. Certainly with the benefit of hindsight I wish we had warned him, and indeed I think one would necessarily want to warn anyone in contact with him.
Q. The fourth point: the special adviser, apart from self-evidently to advise the Secretary of State, is speaking on behalf of his Secretary of State and would regard it as reasonable, indeed second nature, when speaking on his Secretary of State's behalf to express his Secretary of State's opinion, because that, after all, is what he does. But in this situation, where he to do that, obviously dangers might ensue. Would you agree with that risk factor?
A. Well, that applies to anyone in the department. I mean, that is you know, any relatively senior official engaging on an issue with an outside party, would be seen and thought of as speaking on behalf of or acting on behalf the Secretary of State.
Q. It doesn't quite work like that as a civil servant. The civil servant, of course, understands and it bound to fulfil the Secretary of State's policy objective, but everybody understands, speaking to a civil servant, this is someone who is neutral and impartial and will always play it absolutely with a bat face up, as it were. But a special adviser is not constrained by that self-denying ordinance, as I put it earlier. The special adviser properly could speak politically on behalf of the Secretary of State, and that is a particular risk in this situation, would you not accept?
A. Well, not within the requirements of this process. Within the requirements of this process, those requirements applied to everyone: the Secretary of State, the special adviser and the official. No more could the Secretary of State, in his meetings with News Corporation, express a political objective than could a special adviser or indeed an official.
Q. Do you think that it was really part of Mr Smith's function in interacting with News Corporation to, as it were, keep them happy over an increasingly lengthy and tense process, which was, after all, taking much longer than everybody thought or hoped would occur?
A. Well, to the extent that it was part of his role to explain matters of process and procedure, you know, and I don't know whether that made them happy or not, but in that sense of explaining matters of process and procedure that was part of his role.
Q. Did you understand it to be part of your Secretary of State's objective not to lose the bid through delay, because that would not be advantageous to the interests of this country?
A. No, I understood the opposite from the Secretary of State. I understood him explicitly and repeatedly in meetings and particularly with the regulators to say that it was important that they took as much time as they needed to properly consider the issue and that what he wanted from them most was clear and unambiguous advice, regardless of what that advice was.
Q. I'm sure the Secretary of State correctly understood that it was essential that he took advice and that advice was given in such time as appropriate for it to be provided in, but I'm looking in terms of the overall policy objective of the Secretary of State. Wasn't it your understanding that the Secretary of State certainly did not want to lose this bid through delay?
A. No, that was not my understanding, and I perhaps give the expression that the Secretary of State understood. In fact, the Secretary of State took the initiative of seeking independent advice. I mean, his approach, I recall him discussing this, was, as we've discussed before, this was an extremely hot potato to handle. He was conscious that, with the best will in the world and however he approached it, whatever decision he took, that there would be huge and intense criticism from one side or the other. What he was most concerned about was how to buttress and reinforce the fairness of the process as a whole and, therefore, its wider public and political support, and that is what led him to take the initiative beyond what was required in statute of seeking to act always on the advice of independent regulators to such an extent that actually the fairly regular discourse in meetings was whether he was so emphasising that he would act on their advice that he was in danger of fettering his discretion, and, indeed, in practice he created a process in which the opportunity left to him, had he wanted it, and he didn't want it, to manipulate it, you know, for political or other end, was in practice vanishingly small. In practice, also, I mean I think it's also perhaps not helpful to characterise this as sort of for or against the bid. His approach was to consider it on the merits under the powers available to him, which were concerned with plurality, and what he and he was concerned to reach a proper decision on the basis of plurality, and of course the decision and the outcome and the various decisions along the way that he was taking was actually that, in respect of plurality, understood to be news and current affairs, the bringing together of the Times, Sun, News of the World newspapers with Sky News, it was clear that that was, and the position he took up on the advice of independent regulators, was that he was not going to allow that to happen, but the bid, the wider bid could only proceed on the basis that that bid, in respect of news and current affairs, did not proceed and that News Corporation voluntarily, in effect, divested themselves of Sky News. So, in that sense, the decisions he took were all about actually blocking and frustrating that aspect of the bid.
LORD JUSTICE LEVESON
Okay. I give the shorthand writer a break, so we'll just have a few minutes. Thank you. (3.07 pm) (A short break) (3.14 pm)
Mr Stephens, the circumstances of Mr Smith's resignation
Q. there was a meeting on the morning of 25 April, which was a Tuesday. Were you involved in that meeting?
A. This is the day of his resignation?
Q. That's right.
A. Yes. This is, sorry, a meeting with the Secretary of State?
Q. I believe so.
Q. Was it your advice that Mr Smith should be asked to go?
A. Yes. I said to the Secretary of State, having reflected on it overnight and having discussed it with others, that I thought that the nature, content, extent, depth of the contact suggested by the emails revealed the previous day meant that this was far beyond what could be considered appropriate.
Q. Given that Mr Smith's position was, and he'd expressed it, that the emails did not, in fact, truly reflect the nature of his contact with Mr Michel, why did you act on the basis of their appearance rather than Mr Smith's version of events, is it were?
A. There were clearly a number of issues and disputes around the emails, not least I mean, the obvious one, they all claim to be speaking to Jeremy Hunt when they weren't. There were a number of other areas of uncertainty around them, but even allowing for all of that, it was clear that there was an undisputed degree of contact that was that hugely surprised me. It was far beyond what I considered appropriate or defensible in the circumstances, and I'd I mean, I'd discussed and reflected on that with others, other officials within the department, who were also surprised, and indeed discussed it with the Cabinet Secretary and others.
Q. Did you have the chance at least to skim read some of the emails yourself?
A. Yes, I did.
Q. Was there material you saw which you felt could only have come from within the department, in other words could not have been made up by Mr Michel, because he would not have known about it from any other source?
A. I did not have the time or the ability at that stage to conduct a sort of detailed examination, investigation of the document, but what I saw that was undisputed, as it were, was a degree of contact and about subjects that are just clearly inappropriate from my view.
Q. In terms of the extent to which the emails appeared to express the Secretary of State's own view, did you feel that those emails incorrectly set out that view?
A. I to I didn't conduct an examination in that degree of depth. The Secretary of State said to me very clearly that the nature and extent of the contacts had not been known to him and were not authorised by him.
Q. In relation to the resignation statement, was it the Cabinet Office who wanted to make the amendment which we heard about?
A. We were in touch with them, as I would expect to be in a situation of this sort. They made a couple of suggestions on a draft, that was no more.
Q. I think the amendment which Mr Smith took issue with was the addition of the words "I believe it was part of my role", which Mr Smith resisted, and I think you accepted that Mr Smith could retain his wording, as it were. Is his evidence right about that?
A. Yes. In fact, I recall very clearly this. I was very concerned. It was a very difficult traumatic situation for Adam, and indeed for the department who had worked closely with him and respected him, and I recall wanting to meet with him myself, specifically, to ensure he understood and was happy with the final version of the resignation statement. I drew his attention to the extra suggestions and I actually suggested to him that I thought most probably "I believe" was one that he wouldn't want to accept, and he agreed with that.
LORD JUSTICE LEVESON
Mr Stephens, of course I am concerned, I repeat again, with the relationship between the press and politicians and the conduct of each, for those are the terms of reference with which I know you are extremely familiar. But circumstances have caused me inevitably to have to look at this, and I think really reflecting what you've just said to Mr Jay this could probably be described for the department and certainly for Mr Smith as a calamity. Would you agree?
LORD JUSTICE LEVESON
I'm sure, in the interests of good administration of justice, quite apart from my asking these questions, that led to the statement, you will have considered what went wrong. You have an extremely able, highly regarded young man, who isn't in any sense mischievous and if I'm expressing judgments here, then they're subject to anything anybody may want to say who is very keen to do the right thing, but who has got into a degree of contact which you yourself have described and I don't need to express a view at this stage in the context of a comparatively small office, where people know what's going on. How has this happened?
A. I, if I may say so, very much share your views of Adam Smith. I had a high regard for him. We worked very closely with him and very successfully, I think, over two years or so. It's a matter of intense regret to me that this happened. You ask my opinion as to how it happened. I suppose the I don't know, is the immediate answer, but the judgment I've formed is that, sadly, Mr Smith I personally believe against his will and against his intentions was drawn into almost what seems to me to be a sort of web of manipulation and exaggeration, and was inadvertently, I think, drawn beyond what he intended to do or wanted to do, but unfortunately he was drawn beyond it.
LORD JUSTICE LEVESON
Presumably you've expressed at least concern or thought about how this wasn't picked up in some way. Do you have any views to offer on that?
A. I struggle with that, to be honest, because, as I have said in my evidence, I was present myself in the key meetings, certainly in the early days, and was very conscious from those of what, in my judgment, were clear requirements established and a very clear explanation of the legal obligations. As you say, it is a small office, and one in which, certainly, I seek to make myself regularly available, certainly to ministers, special advisers, senior officials. I meet with them weekly. So I struggle to understand why, as, you know, what seems to be he came under intense pressure, he didn't talk to someone about that. It didn't need to be me, it could have been someone else.
LORD JUSTICE LEVESON
Of course what he says, and you may not have had the chance to hear him as I have, is that actually he believes that he was in having the contact that he had, the extent of the contact, he was acting as a buffer for the Secretary of State I think that was his word, not mine and that although he may go along with things, he wasn't actually saying anything ever that was inappropriate, and that if one picks through the language, there are some things that he positively disagrees with, but others that he explains, well, he may have said something like this, and then I would have said, "Yes, I see that", and then that's been translated to he's on side with it and that's a possibility which I'll obviously have to consider, to such extent as necessary for my terms of reference. But it does raise questions also about the relationship between departments and their special advisers. That's certainly outside my terms of reference, but is there anything, on the basis that all this is being played out in public, and I'm obviously going to have to say something, is there anything that you would want to offer on steps that can be taken to ensure that able young advisers have ways of avoiding this sort of problem in the future?
A. The first thing I think I would say is that I have to be clear that I think, as I've said, the extent, the number, the nature of these contacts was, in my judgment, clearly inappropriate and not just in one or two disputed cases. I think that's a judgment I just have to place on the record. In respect of the lessons to be learned, I'm sure there are important lessons to be learned. Indeed, already and, in my experience, for the first time within government, the Cabinet Office, Cabinet Secretary and head of the Home Civil Service have issued guidance to departments on quasi-judicial procedures, which includes covering the behaviour and conduct of special advisers, if they're involved in such decisions, the need for guidance for them, the need for them to record external contacts
LORD JUSTICE LEVESON
So you're way ahead of me?
A. and if it would help, we can provide, obviously, a copy of such guidance, which was issued in the immediate aftermath of this, and which, I think it was immediate guidance, but it will no doubt be reviewed, you know, in due course, to see if there are other further lessons to be considered in due course.
LORD JUSTICE LEVESON
I'd certainly like to see what has emanated. Secretaries of State are obviously extremely busy people. They have many calls upon their time, and enormous pressures about their daily lives. I appreciate that their special advisers come with a political perspective, which is why they are exempt from the normal requirements of impartiality within the Civil Service and, again, it might be said this is outside my terms of reference, but I'll ask it anyway: is there room for some mechanism for management which doesn't just jump straight from the special adviser, as it were, climbing straight up the ladder of a snakes and ladder board up to the Secretary of State, not because I'm there by expressing criticism of the Secretary of State or indeed the special adviser, but simply for good HR management personnel purposes?
A. I think you make a powerful case. What I've observed is that in every department what you say about Secretaries of State or ministers in charge of departments is true and, in my experience, they do not provide, could not possibly be expected to provide, the sort of line management care and supervision in practice that you would expect within a large organisation and I would expect to see in respect of permanent civil servants within the department. That, as I tried to say earlier, is in the nature, to some extent, of the job. I do think that this is an area worth continuing to look at. I think special advisers, as a group, bring enormous benefits do their Secretaries of State and to their departments, and I think I'm not aware of the details, but I am conscious that, centrally, more efforts have been made, I think particularly since the last election, for example, to try to offer training centrally to special advisers and, to my knowledge, for the first time ever, in my experience, there has been an appraisal system
LORD JUSTICE LEVESON
The 360 degrees.
A. around special advisers. I think the problem in terms of actually inserting a line manager is the problem of that line manager, I suppose, could conceivably be another special adviser at the centre or something like that, but then that would be quite a remote presence not actually actively involved. I'm not saying that rules it out, but I'm considering some of the possibilities.
LORD JUSTICE LEVESON
I'm not seeking to solve this problem and I just don't think it is my job to do so, but I would be very unhappy if some good didn't come out of this calamity. I am very conscious that civil servants at different grades have mentors in grades above them. It just seems that nothing like that exists for special advisers and I understand the problems and I suppose that if I were to conclude that some of the aspects of this part of the terms of reference can be explained in that way, I can link recommendations to it without exceeding the terms of my brief, but whatever I do, I think it certainly, in my view, repays consideration.
A. I agree.
LORD JUSTICE LEVESON
Right. Mr Stephens, thank you very much indeed. Thank you. It's 10 o'clock on Monday. (3.34 pm)