Morning Hearing on 09 July 2012

Lord Black of Brentwood gave a statement at this hearing

Hearing Transcript

(10.00 am) LORD JUSTICE LEVESON Module 4 concerns the way forward, and in particular, the future approach to complaints and press standards, along with the availability of remedies. It therefore includes in particular the way in which the existing functions of the Press Complaints Commission, PCC, should be exercised. This will obviously involve a detailed consideration of the proposals advanced by Lord Black of Brentwood in his capacity as chairman of the Press Standards Board of Finance, PressBoF, and Lord Hunt of Wirrell, as present chairman of the PCC. It will additionally consider a large number of other submissions, only in respect of some of which will it be necessary to call oral evidential for the purposes of elaboration. I say immediately that I am conscious that an enormous amount of work has been put into considering the way forward by a number of organisations and I am very grateful to everyone involved. The fact that I do not consider it necessary to require any particular suggestion to be discussed orally should not be taken as an indication that I have rejected it or that I believe it to be of less value than ones that are the subject of further evidence. Although I do not undertake to analyse every single idea in my report, I have read all of them and will take them all into account. So that everybody can see what has been suggested and have the chance to think about the ideas as the evidence is called, all have been published on the website for some time. As part of this consideration of the future of standards and remedies, I intend to hear evidence about the potential for improvement to the data protection legislation and the responsibilities of the Information Commissioner. I will also be dealing with issues concerning the appropriate approach to competition and plurality of the media. This may also involve touching again upon the economics of the press. I have not only sought to hear from those with ideas for the future. I have also asked editors all of whom I believe have given evidence from a range of newspapers and magazines, along with others who might have an interest, actual or potential such as writers of blogs for any observations that they wish to offer on the suggestions that have been put forward. The evidence in this module will also cover a consideration of the Editors' Code and will involve a number of witnesses from the fields of philosophy and ethics who have been concerned with aspects of the work of the Inquiry, including Professor Baroness Onora O'Neill of Bengarve, who in the Reith Lectures in 2002, has published extensively on media freedom and other aspects of the communication. Finally, I have required Deputy Assistant Commissioner Akers to return to provide such update as she can in relation to operations Weeting, Elveden and Tuleta, in each case remaining consistent to my determination not to prejudice ongoing investigations or, as some cases have been initiated, prosecutions. Thus I will not be concerned with precisely who is alleged to have done what to whom, but I will want to be aware of the width and breadth of her enquiries, so as to ensure that I have captured as much of that evidence about the practices of the press as possible. I will also be keen to know whether the co-operation to which reference has previously been made continues to be extended and is evident from anyone else should different press interests have been implicated. In that regard, it is of interest that Virgin Atlantic saw fit to self-report to the Information Commissioner what appears to have been identified breaches from within its organisation of the data protection legislation. I ought to deal with one other aspect of the material the Inquiry's received. In response to the invitation that has been posted on the website from the outset, many hundreds of members of the public have offered both evidence and their views, whether by letter or email. I am grateful for the interest that so many people have shown in the work of the Inquiry, and I trust that, as intended, everyone has received an acknowledgment and an assurance that if the Inquiry wishes to take what they have said forward and in more than a few cases that has happened one of the Inquiry Team will be in touch. Pressure of time and the focus of the Inquiry has meant that for most, it has not been possible to go further, but that is not to diminish my thanks to them for their interest. Some evidence will, however, continue to be read into the record and I will also be incorporating into the record all the press cuttings that have dealt with the Inquiry from the outset. Reverting the timetable, after the evidence which I have outlined, I will then move on to hear closing submissions. In large part, written submissions have been made to the Inquiry as it has progressed, both of generic nature for example, dealing with credibility and aspects of law and also related to specific modules. Requests for specific assistance have also been met, and I am presently waiting for submissions as to the identity of "the press" for notice under Rule 13 of the Inquiries Rules 2006 in line with my ruling. Equally, I am very happy to receive closing submissions in writing, the deadline for which I now extend to 19 July. Indeed, in the main, written submissions are preferable, but I have recognised that it is only fair to provide all core participants with an opportunity, should they wish to do so, to make oral submissions. Those core participants who have responded to my invitation will be able to address the Inquiry for the time that they have sought, but everybody should understand that I have made it clear that the time available is limited and not open-ended. I ought to make it clear that I do not intend to invite counsel to the Inquiry to make a closing speech. Although core participants will have made their final submission, I do not rule out hearing further evidence. First, there remain certain loose ends in the perception of what the evidence reveals. If these are not resolved to my satisfaction, I am likely to require them to be addressed. Second, again by way of example, it is likely that in the autumn, I will require Deputy Assistant Commissioner Akers, or her replacement should by then she have retired, to provide a further update on the investigations being conducted by the Metropolitan Police and potentially other police forces in relation to other investigations. It is obviously sensible that the report should be as up to date as it can be. Needless to say, such hearings will be notified in advance, and if any core participant wishes to adduce evidence or make submissions in response, that will also be appropriate. My touchstone of fairness will remain to the end. My willingness to hear further evidence also means that if there is any further significant event which it is considered could substantially and significantly affect the Inquiry or its terms of reference, it will remain possible to notify the Inquiry Team, but that step should only be taken in truly exception cases. Save for the circumstances I've outlined, the general collection of evidence has now concluded. Yes, Mr Jay. MR JAY The first witness today is Lord Black, please. LORD BLACK OF BRENTWOOD (recalled) LORD JUSTICE LEVESON Lord Black, you gave evidence on oath previously, therefore there's no need for you to be resworn. Questions by MR JAY MR JAY You have provided the Inquiry with two further witness statements. The first is dated June 2012 and has four documents annexed. It's under tab 37 of the bundle that you should have. LORD JUSTICE LEVESON Yes. MR JAY There is a further statement dated 5 July 12, which is under tab 88. Both statements, I understand, are given in your capacity as the chair of PressBoF; is that correct?
A. Indeed.
Q. And you're content to attest to the truth of both statements?
A. I am. LORD JUSTICE LEVESON Lord Black, it's abundantly clear that you've been involved in a great deal of work and I am very grateful to you for the effort that you've put into it. Thank you.
A. Thank you, sir. MR JAY First of all, Lord Black, you make it clear that the four documents you've annexed, including the proposal, have undergone a continuing process of consultation within the industry and that process endures. In paragraph 8 of your first statement, you refer to three consultation exercises; is that correct?
A. That's correct.
Q. Can you explain previously, please, how those consultation exercises have taken place and on what basis?
A. The first consultation exercise took place over Christmas and early in the new year and related to the broad architecture that Lord Hunt had outlined to a meeting of publishers, editors, other senior industry figures before Christmas, and that was on the structure of the proposed new regulator, and that took place for a couple of weeks early in the new year, when we invited comments as to his proposals. After Lord Hunt and I gave evidence to the Inquiry at the start of February, when it was clear that further work was going to be needed to this, we undertook a consultation on an initial draft contract and set of regulations, again, across the industry with publishers through the trade associations, and publishers obviously would be responsible for dealing with the coordination of responses from within their own companies. That took place, I think, in early March. We received back, as you can imagine, quite a significant number of comments about the document at that point. We then took it away and revised it further, revised the set of regulations and also the articles the draft articles of association for the proposed new regulator, and then a further consultation took place on those revised documents in May. The deadline was very tight in order to get it in to the Inquiry before the beginning of June. The process throughout has been that we would use the trade associations, which are the representative bodies of the industry, to distribute it to their members, but we also made sure that the documents were made available to those who were not members of a trade association so Northern Shell, for instance and those digital publishers, such as the Huffington Post, who are part of the system but not a part of the traditional architecture.
Q. Has there been any consultation on the possibility of a regulatory scheme with statutory underpinning as opposed to a scheme underpinned by commercial contracts?
A. During the course of the responses to the three sets of consultations, a number of suggestions have been put forward which fall outside the exact set of documentation there. You'll be aware, I think, from evidence that's been given to you during the course of Module 1 of the Inquiry, that a number of editors have seen the possibility of some form of statutory underpinning for the system. It's my belief that the vast bulk of the industry remains opposed to that and that is very much the flavour of the response that I've received through those consultation exercises.
Q. In paragraph 4 of your statement, about eight lines down, you refer to some national publishers having argued for even tougher controls. Is that a reference to those who have argued for some form of statutory underpinning?
A. It is.
Q. Are you able to identify those national publishers who have argued for such a system?
A. It is mainly those that have spoken to you at this Inquiry. You will have heard from Mr Blackhurst and Mr Lebedev at the Independent. They saw that this was a possibility that might be considered. The Guardian has been obviously extremely active in putting forward proposals and scrutinising them, and it's looked at the possibilities of that. There was a leader in the Financial Times which, again, raised the prospect, but none of them, I think, has argued for a fully fledged statutory system. They've been looking at the whole question of whether some form of statutory underpinning might be necessary. But beyond those three, I can't think of one.
Q. Are we to regard some form of statutory underpinning then as a synonym for "even tougher controls", and if so, why?
A. Could you repeat the question, sorry?
Q. Are we to regard some form of statutory underpinning as a synonym for "even tougher controls", and if so, why?
A. I think that actually the system that we're proposing is an extremely tough system. It's a very robust system. In many ways, I think it probably goes further than a statutory system could, so I don't regard the use of the word "statutory" as meaning necessarily "tougher". I think that we've gone a very long way to proposing a regulator with muscular new powers of investigation and enforcement that arguably might not be able to be achieved in a statutory system.
Q. Your statement argues in principle against a statutory system?
A. It does.
Q. But is it the gist of your evidence then that a statutory system could in fact be less tough than the system you are putting forward, and if so, what is the principled objection to a statutory system?
A. The objection to a statutory system is one which relates to the nature of the free press. I have always believed and I believe it is a view across the bulk of the industry that self-regulation is the guarantor of press freedom and interference from state control. I think the moment that statute enters the system, we're into a very different system where governments and the state can exercise some form of control in that system, however limited it might appear to be at the start. So what we have set out to do is to look at the problems of the past, work out ways that we can improve them in future, produce a tough, modern system of regulation that is fit for a digital age, and to do so based on contract, without the need for any form of statutory intervention.
Q. If a statutory system is or could be less tough than the system you are proposing, it could only be because there are restrictions within the statute itself which makes it less tough and those restrictions would, by definition, be preventing the state from intruding into the very areas you're referring to. So what is the principled objection then to a statutory system which either matches the system you are putting forward or perhaps is less stringent than the system you're putting forward?
A. I think there are a number of objections to statute. The first is a question of practicalities. This is a very, very fast-moving industry. When I'm doing my day job, I can see the pace of change, which is breathtaking. I do not believe that any form of statute would be able to keep up with the degree of change within the industry, whereas a system of self-regulation could do so. Secondly, I think that in the statutory system you might actually therefore be in a position of losing coverage for the system. If there was a statutory system, there may be some publishers who decide: "We'll try and get out of this. We'll domicile our websites [or whatever it might be] abroad." Thirdly, I think that statute would almost certainly import into the system considerable legal challenge. There is the question of whether publishers who are very committed to self-regulation would challenge the whole basis of the system in the first place, but if there was a statute, I think it would mean that there was constant legal challenge to the decisions of a regulator. So I think there are very a very practical set of reasons from the point of view of the way our industry operates against statute on top of the philosophical objections that I've just made about the way in which it would actually bring the state into the editorial regulation of the newspapers for the first time. There's a whole other set of issues which you probably don't want to touch on now, Mr Jay, with regard to how one would actually get any statute through Parliament, which this Inquiry has looked at on a number of occasions, but I would be happy to expand on that if you wanted me to.
Q. You really put forward three pragmatic reasons against statutory regulation. The first is that the self-regulatory system is more likely to be adaptable to fast-moving change in the industry
A. Correct.
Q. If the statute were correctly drafted, particularly in relation to secondary legislation, changes in the industry could be catered for, couldn't they?
A. My experience of looking at statute, even through secondary legislation, in two years in the House of Lords is that these things get stuck in a degree of Parliamentary aspic from which it is often difficult to withdraw oneself. I think it highly unlikely that Parliament would ever allow for further regulation to be made by negative resolution. There would always have to be a further resolution of the House in order to do that, so Parliamentary process is important, and the way that statute would set things in concrete is actually a crucial, practical matter.
Q. But if the industry changes because of changes in technology, in order to embrace new entities, there would either have to be agreement within the body itself to embrace those entities and/or the entities themselves would have to agree to fall within the new system. Aren't we agreed as to that?
A. Indeed.
Q. But isn't that at least as problematic as the problems you are throwing up in relation to a statutory system, whether it has primary or secondary legislation to deal with these aspects?
A. I don't think so. If it was a new player that was entering the market, if they were willing to be part of the system and prepared to sign the contract that related to it, then that is a relatively straightforward process. I also think that on the basis of the way that we need to operate the contract and you'll appreciate that the documents that you've been given are a contract framework that we need to make sure that changes to that contract can be made easily in order to capture that essential practical flexible essence of self-regulation. I don't want to put anything into a legal framework that is going to kill that and I don't think the two are mutually exclusive.
Q. Yes, but at the very least, it depends on the agreement of the new entity to participate in the system, doesn't it?
A. It does.
Q. I won't deal with your second practical objection now, but the third one LORD JUSTICE LEVESON Just before you move from the first, wouldn't it mean that if you did want to change the contract, absolutely everybody would have to agree?
A. The contract terms in here, sir, make a provision that a majority of the members would need to agree, and in those circumstances, the contract would be regarded as changed. So it would not give every single player a lock on changes to the contract. That would indeed pickle it in aspic. LORD JUSTICE LEVESON Even more so than anything else.
A. Even more so. LORD JUSTICE LEVESON So it becomes a legal question, whether you can do that.
A. Which we're advised we can. MR JAY We'll come back to the general variation provision in due course, but you're right; under this system, it depends apparently on the majority, not on unanimity. The third basis of objection on pragmatic grounds is that there will be the increased possibility of press entities challenging the decisions of the statutory regulator; is that right?
A. Or indeed they may not wish to join the statutory regulator in the first place.
Q. Yes, but they may be forced to join it.
A. If they're forced to join it, then that an entirely separate debate about the penalties that might be available to those who don't, so it seems to me there would be a number of possible legal challenges. Publishers may decide, depending on the nature of the statute, that it was contrary to Article 10 rights and challenge it on that. Alternatively if a statutory system was up and running again, depending on the nature of it then both complainants and publishers may seek to challenge the decisions of the regulator, either on a standards investigation or indeed in an individual complaint against the terms of that. So I think again what it is doing in a system of self-regulation, where contracts have been voluntarily entered into, you are doing it with the willing co-operation of the publishers. A statutory system which would be forced on a majority of unwilling publishers is likely to become a target to be aimed at rather than something a framework within which to be worked for the benefit of both the public and the public interest.
Q. But the public would say that if you have a system which depends at base on willing co-operation, you're more likely to have decisions thrown up by the system which are favourable to the press, and it's for that reason that they're not taking on the body. But if you have an independent body with statutory force, it may, of course, be making decisions which the press doesn't like, but that's the whole point of it. The press, of course, can go by way of judicial review or whatever, but that in fact is a merit of the system, not a demerit, as you're putting it.
A. No, Mr Jay, you misunderstand me. Publishers will willingly enter into the contract. It's my belief that publishers will willingly enter into the contract. Once they're in the contract, then the element of voluntarily co-operation disappears. They are then bound by significant terms into a regulator with robust powers, and if they don't abide by those terms of the contract, then I would expect the regulator to use the force of that contract to enforce them. So the element of willing co-operation I'm talking about relates to the vital first step of getting them into it. Once they're into it and the contract is a long-term contract, then the powers of the regulator are going to be very significant. I think the public should take very much comfort from that, and indeed the responsibilities of the regulator will be very transparent because the terms of the contract will be public.
Q. What exactly has Northern Shell said about their willingness to join?
A. Northern Shell has been part of the consultation process throughout. They were present at the meeting that we had before Christmas with Lord Hunt. They have commented on each of the rounds of the consultation document and their lawyers have been involved in that. There is a statement in here relating to their willingness to take part, subject to detailed contract terms which I cleared with Northern Shell before putting it in my witness statement, and that I understand to be the current position.
Q. Is it your understanding that if the contracts are more or less those which we see in your document, they will sign up, or is it your understanding that they will think about it?
A. I would expect every publisher to think about it when they see the detailed terms of the contract. My own publisher, if he came to me and said, "Should we sign this contract?", I would want to make sure that we scrutinised it in enormous detail before that, but certainly the responses that have come back to the contract framework on which the detailed framework will be based have received very broad support, including from Northern Shell. LORD JUSTICE LEVESON That's rather like saying something's signed subject to contract. Until you've signed it, it's meaningless.
A. We can't, sir, get this to the final stage of producing a final contract until I think we're fairly clear that there is a cause and a reason to do so. You'll appreciate the industry has put a great deal of work, as you very kindly said earlier, sir, into getting to the stage that we've got to. The process of finalising a final contract is going to be an extraordinarily expensive one, both for PressBoF and indeed for individual publishers, and I think it is important that before we get to that stage we listen to the comments that have been made during this Inquiry, listen to the to points that you raise with us today, sir, listen to the other issues that are raised during Module 4, some of which may impact on the detail of that contract. Indeed, since putting these documents in at the start of July, I have come across three particular points that I think probably need to be included in it. One of it relates to coterminous legal proceedings, one relates to the need to have a hearing before sanctions and the other relates to the role of the regulator in any changes to regulations. This is a moving target. I would be very anxious to try to get to the stage where we can produce a detailed contract as soon as possible but I think it would be premature to do that at this stage. All I can do is give you my assurance of where we've got to is where I believe the broad mass of the industry is prepared to buy into. MR JAY Have we reached the point where the industry as a whole has said, in effect: "We agree in principle to sign up" to the documents we can see in our bundle and which you have disclosed or is it the position that they are saying, "We still need to ponder on the detail; in effect, we need to think about it"?
A. I don't think those two are mutually contradictory. The first is certainly true and the second is the way that any normal publisher would do business. This contract is going to be handing a regulator, for the first time in the newspaper industry's history, very serious powers, and I would expect that, subject to everything what's been said today and indeed, sir, subject to your final report that actually the industry would want to scrutinise the final terms of any contract. I would be happy if you said to me nothing could make me happier than if you said to me today: go away and produce a detailed contract which you think publishers will then be prepared to sign, because that would be further real progress. The other point forgive me for going on, but, I mean, which is a vital one, is that when publishers sign this contract, they are going to be signing up to funding for the regulator going forward over a five-year period, so they're actually going to be signing a substantial cheque, in effect, a virtual cheque, over that period. Again, I would expect publishers to say to me: "We need to know how much this is going to cost before we can sign a contract." At the moment, I can give them some fairly broadbrush views about it. I can talk to them about the way which no doubt we will come on to later the enforcement aspects of it going to work in a financial way, but I am going to have to make sure that the costs of all this, at the end of the day, are going to be manageable by publishers, something your draft criteria quite rightly highlight, and I can't do that until we finish this process and hear all the various issues that are raised during this module.
Q. Is it the case then that every term in the draft contract and the articles of association of the new company is in principle still open for negotiation?
A. I would not expect to see any dilution of what is in the draft contract framework.
Q. You would not expect to see it, but is it in principle open for negotiation?
A. If a legal issue was raised that I've not so far been aware of that was a significant objection to one of these issues that are in here, then obviously we would have to take that into account. But that's why I say I would not expect to see any significant dilution of the terms that are in there, because everybody has agreed them.
Q. Am I right in deducing that every press entity or each press entity is expected to sign up to exactly the same contract as everyone else?
A. Correct.
Q. When you say in paragraph 6, Lord Black, that the industry stands ready to implement the proposal outlined as soon as it's appropriate, can you give us a timescale for that?
A. Forgive me, Mr Jay, this is
Q. Page 00067, paragraph 6 of your first statement.
A. I have a different
Q. We're not in the proposal; we're in the introduction of your third witness statement, sorry.
A. Oh, okay.
Q. When I say "first", I mean first for today's purposes. In fact, it's in your third.
A. Forgive me, I have it now. Can you just repeat the question for me?
Q. Yes, you say in the third line: "The industry stands ready to implement the proposal outlined in the attachment to this witness statement as soon as it's appropriate." Could you give us a timescale for that, please?
A. That timescale is going to depend on the outcome of this Inquiry. We have been very clear. You, sir, have been add adamant throughout that this is an iterative process and we've sought to take this corpus of work forward in the same way. We've got it to the stage that you've received today. As I've said just now, we need to do further work on that. The next significant piece of work is the actual formulation of the detailed contract and the costings that go with that. That will obviously take some degree of time, but I don't think it would be prudent to pre-judge the outcome of your Inquiry, sir.
Q. So to be clear, the contracts will not be signed before the report is signed off; is that right?
A. That depends very much on what you say to me today.
Q. Are you saying, Lord Black, that if the Inquiry were to say to you that the contracts must be signed before the report is signed off, then you would reconsider? Is that what you're getting at?
A. This is very much a chicken and egg again, that would depend on the timing of your report. But if I can the costs to the industry of getting to this stage and this is an industry which you have very kindly appreciated throughout your inquiry, sir, is under serious commercial pressure have been not insubstantial. There are going to be further considerable costs going forward. I, as a representative of a publisher as well as chairman of PressBoF, have to be prudent in the management of those costs. As I said earlier, I would be happy to go away if the message and signal you give me today is that you would like to see detailed contract terms by the time you report and push the button on that.
Q. A cynical member of the public and I emphasise that might say: well, a great incentive here is the sword of Damocles which this Inquiry itself is hanging over the press, because the press may, rightly or wrongly, fear that something much worse may be borne out of this Inquiry, but as soon as the Inquiry has reported, that sword of Damocles, subject, of course, to what the Inquiry says, is removed, isn't it?
A. I think this may be a two-stage Damoclean sword, in that there is the sword of Damocles from this Inquiry but then there is the sword of Damocles which will sit robustly in the hands of the government after that. So I would not expect to be free from Damoclean territory for a while yet.
Q. Yes, but perhaps the larger sword is that which this Inquiry threatens, isn't it?
A. I don't think I'd better get into a jousting match in terms of LORD JUSTICE LEVESON There's been a Damoclean sword for at least 20 years, hasn't there? We've gone through the last 20 years with that sword of last-chance saloon hanging over the head of the industry
A. But arguably, sir, that's probably the way that if a system of self-regulation is maintained, that it always should be. I would never expect, if we maintain and put into place a new system of independently led self-regulation, that that sword of Damocles will ever go. Governments come and go, they have different priorities. You've heard a different view about press regulation from representatives of the Labour Party here. So I don't pretend and I have never believed that if we were to put this into practice, as I absolutely hope we can, that we're ever likely to be out of that territory. I think that would be a folly, sir. MR JAY Have you had the chance to read the report from the Media Standards Trust which has been provided to this Inquiry? I think it runs to 112 pages.
A. I won't say that I've read every single word of it, but I've looked at the main recommendations.
Q. The point that Dr Moore and his colleague makes, rightly on wrongly, is that this Inquiry presents a golden opportunity but the window of opportunity is quite short and as and when it closes we'll be back to the default position, which is the press lives with a system of self-regulation, however it is defined or whatever its detail amounts to, it is free from the genuine spectre of state regulation. That's true to some extent, isn't it?
A. But if I may and to spare the blushes of this Inquiry, this is an opportunity which has already been fulfilled. This is an industry which, back last summer, before the deluge which began I think probably almost exactly a year ago this week, had a system of self-regulation, complaints handling of which it was proud. During the course of that year, it has come an enormously long way. The process of getting to this stage in a diverse industry which ranges from single publisher local newspapers to the biggest national newspaper companies has been a very substantial one. What we're proposing here is for the first time to hand to a regulator robust powers of monitoring, enforcement and compliance. For the first time, we're proposing to hand over to a regulator a power of financial sanction. For the first time we're proposing to underpin that regulator. This is completely different from anything that's ever gone before and it is occasionally easy to say this is PCC plus or son or daughter of PCC, but it's not; it is a completely fresh start. That has only come about, I think, because of the opportunity that this Inquiry has given us to be able to analyse the things that have gone on in the past and see how we can try and rectify them for the future. So I would agree with the Media Standards Trust; this is a golden opportunity. But I think the industry has gone a long way to fulfilling that opportunity and now what we want is the benefit of trying to put it into practice and show how it works.
Q. In the existing system, there isn't the ability to fine, but the existing system doesn't depend on implied contracts, does it?
A. The implied contracts have never been tested. I don't believe the Press Complaints Commission could ever have tried to exercise a power to fine without the sort of contractual basis that we're now proposing.
Q. You don't agree that this sounds like the sort of argument which would have been indeed, was advanced back between 1990 and 1993 on exactly the same factual basis, namely that there was a need to constrain the press because of excesses in some sections of the press?
A. I think if you look back to what happened between 1990 and 1993 and I appreciate the Inquiry has looked at it in some detail two things were happening. First of all, there was a genuine concern about the way that the Press Council handled complaints from members of the public, and the Press Complaints Commission was a real answer to that, and actually I think the debate needs we need to remember that the framework of the debate was how complaints are handled. Secondly, the other thing that happened at that time until 1990, there had been no code which bound all publications, and actually the move from Press Council to Press Complaints Commission did actually produce that significant change. In terms of the scale of the change we're talking about here, those were relatively minor achievements at the time. You were moving from a body which wasn't terribly good at handling complaints to one which was much better. You were moving from a body which was making up the rules pretty much as it went along to one where there was an attempt to codify the rules, which I think has been actually largely successful over the years, now, to a very, very different system, which is not just regulation but has all the tools of regulation at its disposal. That's a much, much more profound debate than took place in 1990.
Q. You don't see the difference being one of quantity really rather than one of quality?
A. No, absolutely not.
Q. Can I go back to the point which you pick up in paragraph 10 of your third statement at the bottom of page 00068, where you refer to statutory regulation of the written word would be "an unacceptable impingement on press freedom". That, of course, would be true if statutory regulation did impinge on the written word, by definition; are we agreed?
A. I've never seen a model of statute proposed which would not in some way invite the state into the regulation of editorial content.
Q. Can we analyse that? The contract scheme which you are advocating both defines the extent to which regulation may impinge on press freedom and limits that extent. Are we agreed?
A. Yes.
Q. So to be clear about it, the Editors' Code defines the extent and it also limits it, doesn't it?
A. The Editors' Code sets out the obligations of the editors and in the same way, it sets out the rights of the in fact, the rights of the public.
Q. Analytically, why isn't it possible to devise a statutory scheme which is precisely to the same effect, namely it defines the extent to which the regulator may impinge on press freedom and expressly limits the extent to which the regulator may impinge on press freedom? There's absolutely no difference between such a statutory scheme and the contractual scheme which you are outlining, is there?
A. But there is a fundamental difference, that the contractual basis which we are putting forward is that which the newspaper industry will put into place. There is that is a very real difference from one which politicians put into place. That is the I mean, at the end of the day, that is the two sides of this coin. Either you have politicians involved in it and Parliamentarians in putting into place a scheme for the regulation of the press, or the newspaper industry does it.
Q. The difference then lies in the entity which, as it were, imposes both the impingements and the limits on the impingements. In the one case it's because the industry itself agrees to do it; in the other case it's because Parliament which, after all, is democratically accountable and entitled to decides to do it. But in terms of what is done, there is no difference between the two systems I am outlining, is there?
A. Well, I suspect the code and the sort of things that we're talking about here, as I said earlier, may go further than a statutory system possibly could.
Q. What's the answer to my question, please?
A. I there is a fundamental objection that I have and I believe that the bulk of the industry has in allowing the state to write the rules of a regulator that governs editorial content. It's not just writing the rules, but presumably producing the style of the system and the type of the system that will be there to enforce it. It's not a circle, I think, that can be squared. It is a fundamental philosophical objection to the role of the state in the content of newspapers and magazines.
Q. I would understand the objection if the state were, by definition, doing more than that which the contract permits, but I think we'd agreed that in principle and in practice we can have a contract system which has limits to what the regulator can do and we can have a statutory system which has the self-same limits. The only difference resides in who is imposing the limits. Aren't we agreed about that?
A. No, because a statutory system would just be simply opening the door into government involvement. It is my view that over time that would LORD JUSTICE LEVESON But that's, with respect, a different point, isn't it? That's your point that once you let Parliamentarians into this, they're going to run amok with the press. That's a different concern. The question I think that Mr Jay is getting at is that there is no difference in principle between what a statute could do and what a contract could do.
A. It depends on what sort of statute is being proposed, sir. LORD JUSTICE LEVESON Well, that means there may be a statute which does not create a difference between what the statute could do and what the contract could do.
A. The fundamental philosophical objection to it would remain! MR JAY One could turn it around, Lord Black, and say this: if the statute, with the appropriate constraints I've been talking about, has the democratic underpinning and accountability of the public at large, that, by definition, philosophically, to use your term, is preferably to a system which depends ultimately on what the industry wants to do, because the statutory system, framed in those terms, is reflecting the public interest, the public will, where your system merely reflects what some would say the industry wishes to get away with. Do you see that?
A. The public has two interests in this area, Mr Jay. The public, where something has gone wrong and there is a complainant who is aggrieved or a group who is aggrieved or whatever, should have a legitimate belief their complaints, their grievances will be dealt with. But there is a broader public interest as well, which I would expect members of the public to look at if they were debating this issue in the Dog and Duck or wherever they might be. It's not just the nature of the regulatory system, but it's actually what they read in their newspapers and I think most people, on mature reflection, would look and think: "We don't want the chilling impact which flows from state intervention to have an impact on how our newspapers scrutinise those who are in positions of power." So I have to look at it from both points of view.
Q. Because you don't know what view the public has taken on your proposed system because, as paragraph 9 of your third statement correctly points out, there has been no opportunity for public consultation; is that correct?
A. That's correct. There are a number of reasons. There's one principal reason for that. We put these documents into the Inquiry at the start of June. Since then, they have obviously been on the Inquiry's website and I imagine, sir, you may be getting comments through from members of the public. We haven't had a opportunity to undertake, in a way actually only newspapers can, a serious consultation with members of the public. As my statement says, if, over the course of the summer, you would find it helpful for us to do that, we would be happy to do it. Local and regional newspapers in particular happen to be an extremely good way of taking the temperature of the public on sets of proposals that are put to them.
Q. Is it fair to say that the industry at the moment has taken no steps to understand the public expectations of press standards?
A. I think that this Inquiry has actually been an extraordinarily good sounding board for public expectations. We've, of course, listened extensively to MPs and others, who are very much in touch with their constituents, but in terms of opinion polling and so forth, no, we've not undertaken that. But I come back to the point we would be happy to do so.
Q. In terms of how the public interest will work under the new system this is paragraph 11 of your third statement you say, about three-quarters of the way down, that it's the industry's intention that the new regulator should be an independent body who will, as it were I paraphrase define the public interest. That definition is going to come from a committee with a majority of editors on it under your system, isn't it?
A. The Code Committee will change. At the moment, it is, as you know, made up just of editors. The proposal is that there will be five new lay members. That, I think, will be almost 30 per cent of the committee, who will inject for the first time a very real public element into it all. I would also expect that the regulator will be robust in putting forward its own views about the way that the public interest is going to work. It will have the power to do that over the regulations, and any changes to the code will have to be approved by the regulator in the first place. So there is considerable public involvement and public lock on that. What I'm saying here is we need to take in the Code Committee, working with the new structure if we're able to put it into place, is going to need to look at all the things that have come out of this Inquiry, work out whether a more robust or tighter definition of public interest is possible and I don't think it's prudent for the industry to try to guide that from the start.
Q. The Code Committee is comprised this is clear from your appendix 2 at page 00113 of serving editors, although we don't see the number there I think it's five serving editors; is that right, Lord Black?
A. Is this the chart?
Q. Yes.
A. The Code Committee I think is currently 12 serving editors.
Q. We, but under the new system, it's going to be five serving editors, is it?
A. On the Code Committee? No it will be the same number of editors and five public members.
Q. No, sorry, I think it's three public members.
A. But the trust chairman and the chief executive will also be public because they're obviously not industry representatives. So that makes the five.
Q. That's fair enough. The serving editors will be five as well; is that correct?
A. The existing number is 12 and the proposal would be that I think it would remain 12.
Q. Oh, remain 12?
A. Yes. So the public members will be about a third of the committee.
Q. So out of a body of 17, there will be up to five public members. The trust chairman need not be a public member. It could, in principle, be a press member, couldn't it?
A. No, the trust chairman has to be a public has to be somebody who I think the articles make clear that he or she cannot have any connection with the industry or any of the constituent parts of it.
Q. So 5/17ths under the new system is public, 12/17ths is serving editors; is that right?
A. That's the current proposal, which came from the Code Committee itself.
Q. Which hasn't come from the public in any way, has it?
A. I'm sure the Code Committee would be happy to listen to the views of the public if the public has a different set of perspectives on that. As I've tried to emphasise during this, this is a this proposal is a snapshot of where we are at the moment. If there is a very strong view that comes through Module 4 that that figure is not robust enough, then we can look at it further before the ink is dry on sets of contracts and so forth.
Q. Do you have the sense that if the proposal were to be that there should be parity, at the very least, and possibly even a majority of public members on the Code Committee, the industry would wear that or not?
A. I think that the Code Committee is, in effect, the only because there are independent majorities throughout the rest of this, the Code Committee is the only genuinely self-regulatory bit. I think there is significant moral authority that comes from a code which is written by a committee with significant public involvement but that is written by editors. So I think there would be some fairly robust views expressed about a view that there should be parity on that.
Q. Which I think means that you don't believe that the industry would wear parity or majority of public members; is that fair?
A. It's not for me to, I think, answer without consulting them but my own view is that it would be unlikely.
Q. Okay. LORD JUSTICE LEVESON Is that because they carry the authority of their newsroom or because they're experienced journalists? There are lots of people who are very experienced journalists who occupy academic positions in colleges throughout the country. What about them?
A. As a well, it seems to me no reason why they shouldn't be one of the public members. LORD JUSTICE LEVESON Why shouldn't they be those who represent the industry?
A. Because this has always been the Editors' Code and it has always been the view that it is important that editors write it. That is the way that their newsrooms buy into it. That is the way the publishers buy into it. LORD JUSTICE LEVESON But why does it need to be called the Editors' Code? Why isn't it simply a code of conduct?
A. Because I believe LORD JUSTICE LEVESON Of course everybody will pay the very greatest attention to what those who are in the industry actually think, but why should they have the pen to write it?
A. I think it comes back in part, sir, to the nature of the speed of change within the industry. Editors are within their newsrooms every day. They are the ones that understand the impact of the rules that they are making in a way that with respect, some of my best friends are academics but they don't live in newsrooms. They are not au fait with the change the massive changes that are going on in the industry and how the rules need to change in order to reflect that. I do think if you're going to have a living document which is practical, that those who are at the cutting edge of the news operation every day need to be the ones who have the input into it. LORD JUSTICE LEVESON It might be thought they have a certain degree of self-interest.
A. They have self-interest in making the code work. MR JAY I think it was you, Lord Black, who used the phrase "buy into it", which is a synonym for self-interest, isn't it?
A. No, I don't think it is a synonym for self-interest. I meant "buy into it" in terms of they are the ones that have got to make sure their colleagues stick by the letter of it, they're the ones that have to deal with any complaints that come in under the terms of it. They need to know that it is a practical document. They need intellectual buy in, as much as anything else.
Q. Not emotional buy in, then?
A. Intellectual buy in. I'm happy to rest on that, Mr Jay.
Q. Okay. The long-term contracts you refer to in paragraph 12, Lord Black, these are the five-year terms; is that correct?
A. Yes.
Q. First of all, you refer to the serious financial consequences attached to leaving. Those consequences are limited to this: that the publisher will have to pay for the balance of the five-year term whatever the agreed levy happens to be; is that right?
A. Indeed.
Q. I think the legal advice you've received and it would certainly be my understanding of the law is that the recalcitrant publisher could not be forced to remain in the system against its will; is that correct?
A. In terms of membership fee?
Q. Yes no, it can be forced to pay the fee but it can't be forced to continue to remain in the system.
A. My understanding is that while and you may need to talk to one of my expert colleagues on this point, Mr Jay, but my understanding is where they've signed up to the contract, they will be bound by the regulations even if they've left the system during that five-year period. LORD JUSTICE LEVESON You've mentioned legal advice. I know that you have received some advice because you've told us about Mr Andrew Green, Queen's Counsel. Are you prepared to share that legal advice with us publicly?
A. We have a further submission that was made to the Inquiry, sir, on Friday, which deals with the main points that you asked us to address. From Mr Andrew Hunter QC. LORD JUSTICE LEVESON I haven't got it yet. Right.
A. Which is a public document. MR JAY At the end of the five-year term, anybody is free to give notice of termination; is that right?
A. Yes.
Q. And this will work on a 12-month rolling cycle, won't it?
A. It could work on a 12-month rolling cycle after the five-year term has ended. There is another possibility, that the five-year break term could be used to review the terms of the contract and publishers, if they agree, could then enter another five-year contract. I don't rule out such a similar long-term opportunity after that. I think the advice we've been given is that you can't bind a publisher in perpetuity into a contract, therefore we have to have a fixed-term at the start, but personally, for the purposes of practicality apart from anything else, I would hope that at the end of that five-year period, the publishers were prepared to enter into another long-term commitment.
Q. There has to be a matter of asperation, though, because the majority could decide at the end of five years to create a much less robust system, couldn't they?
A. I can't see the circumstances in which that would happen.
Q. Well, they could, couldn't they?
A. At the end of the five-year term, the terms of contract have to be renewed and reviewed. I would actually look at it another way, that there would also be an opportunity for the members of the public for Parliamentarians, Select Committees, everybody else to have their say into the terms of into the way that the terms of the contract might operate in future. So I would see it as an important moment where we could look at what has happened. There may be improvements that we could make to it to strengthen the protection of the public or deal more systematically with new entrants to the industry or whatever. So it's a break-point that should work, I think, in both ways.
Q. The system, which depends ultimately on buy-in or consent, depends equally on the goodwill of those who are participating and when the five years runs out, that goodwill or lack of it could take us in one of several directions, couldn't it?
A. We then get into the issue, which I suspect you want to come onto in due course, of the incentives to remain in the system, because obviously if there are significant incentives to remain in the system, which I suspect will probably have increased over the years, then there will be every reason for the publisher to be willing to sign into another five-year contract. I think that's an important part of it.
Q. The degree of goodwill and buy-in I referred to applies at first base as well, that ultimately you're reliant on that for Northern Shell to sign up, aren't you?
A. We're reliant on, I think, a number of things. First of all, goodwill. Secondly, the Damoclean sword we've talked about, and thirdly a point I feel passionately about I think the industry has always wanted to make self-regulation work. This is an opportunity for it to do something completely different and I would expect that actually that desire to show that publishers are responsible, editors are responsible, and actually we want to make the system work, is the third leg of that tripod which will force people into the contract in the first place. But I think they probably work together. LORD JUSTICE LEVESON Could I ask: you've constantly referred to self-regulation. Do you mean that or do you mean independent regulation?
A. I think this is independently led self-regulation. LORD JUSTICE LEVESON Independently led self-regulation?
A. Because it is it is a self-regulatory system because it is generated from within the newspaper industry and relies on the newspaper industry for funding, but it is independently led in that all the component parts of the regulator have very clear independent majorities in it and that those independent majorities are guaranteed by the independent appointment processes that the trust board will put into place. So it is self-regulation but it is led and managed by a wholly independent body. MR JAY We'll come to the degree of independence. We have already discussed the Editors' Code Committee, defined, I think, as the Editors' Code Committee in the appendix. But the driving force, as you rightly point out, is the industry itself and that's why you define it as being a form of self-regulation; is that correct?
A. Correct.
Q. And any system, by definition, which had a statutory element framework or underpinning in your view would not be self-regulation?
A. Correct.
Q. Even though in such a system there could well be significant press representation; is that right?
A. I believe it would be state regulation.
Q. We've defined our terms according to your lexicon, although, looking at Dr Moore's evidence, he would define the statutory underpin system as equally one of self-regulation because there would still be a significant press component or press representation within such a system. Do you accept that?
A. No, I don't I don't I don't believe that statutory underpinning is simply a term of art for a form of statutory control. I don't believe there is a halfway house between them.
Q. I think we're in danger of going back on a debate we had about 20 minutes ago, namely that it depends precisely
A. Which I'm delighted to do.
Q. on what the statute provides, because the statute can contain its own constraints which prevents the regulator from entering into the very areas which cause you philosophical concern. I think we're agreed about that, aren't we?
A. I think that my philosophical concerns are probably my own underpinning in this area.
Q. If we look at the rest of the introductory section now, Lord Black. Quite a lot of the devil is in the detail, I'm afraid, so we're going into the detail, of course, as well. We've probably covered fairness and objectivity of standards because you refer to the Editors' Code there, which we have discussed.
A. Yes.
Q. Paragraph 15, page 00071, is the investigations and compliance panel. Again there are lots of points of detail I need to put to you, but their powers of investigation are engaged if there are assessed to be significant or systemic breaches of the Editors' Code; is that correct?
A. There are a number of possible triggers for a standards investigation. One is systemic evidence of systemic breakdown. Another might be where an issue, either criminal law or civil law, has been resolved in a court. Another might be an issue which had been thrown up by a publisher's annual certificate back to the regulator and to the regulator's investigation on the basis of it. So there are a number of different ways that the regulator the investigations arm of the regulator might be engaged.
Q. In terms of the rubric "significant or systemic breaches", that includes or could include one serious breach, couldn't it? That's made clear, I think, by regulation 25 of the draft regulation.
A. It could include one breach where it is evident clearly evident that this has arisen because the internal controls within the publisher and within the newsroom weren't in place to be able to prevent it. Then in theory, yes, that could happen.
Q. In paragraph 17, you say that the regulator or this is your expectation will from time to time wish to issue guidance on best practice. Which arm of the regulator would be doing that, do you think?
A. I think that would be for the trust board to promulgate, probably on the basis of material that had been given to it by either arm of the body. The complaints arm of the new mechanism, which is likely be one which has the day-to-day involvement in the handling of complaints, may well come across issues of public interest on the specific complaints that need dealing with but there may also be issues that arise from a specific investigation of the standards arm, and I wouldn't want to be exclusive about either of them.
Q. Then criterion three, independence and transparency of enforcement and compliance, this is going to be best understood if we bring up, again, the structure, which is appendix 2 at page 00113. Can we spend a little time on this
A. Of course.
Q. so that it's clearly understood? The trust board, which is the entity at the centre, as it were, has an independent chairman, who, as you rightly point out, has no press background, three lay people and three press representatives, but on this occasion the press representatives are not serving editors, to contrast the Code Committee; is that correct?
A. Correct.
Q. In terms of the appointment of the trust board, we have to look it to the left at the top. There's an appointments panel for the chairman. You deal with that, I think, on paragraph 71 of the proposal.
A. Yes.
Q. Or is it 75 of the proposal? 76.
A. 75 onwards.
Q. You're looking at a panel which would have two industry members and two public members; is that right? And you're expecting unanimity within the panel to appoint someone with no press background?
A. Yes.
Q. We'll come back to that. We've already dealt with the Code Committee at the top right. The industry funding body you explain in paragraph 19 of your third statement: no operation involvement with enforcement or complaints. The relationship will only be with the trust board. Again, we'll need to look he it detail of that. That's why the arrow is, as it were
A. Into the trust board.
Q. And not downwards into the complaints committee or any of
A. Correct.
Q. the lower arms, as it were. If we look towards the bottom of appendix 2, we have the complaints committee, chairman yes, remind me, please, is that person a press representative or not?
A. No, that's the chairman of the trust board.
Q. So that person is independent. Seven lay members appointed by an independent process. Five working editors. And you explain the breakdown. Why are we having working editors there and not people who are retired or don't happen to be serving editors?
A. It comes back to the point that I was making with regard to the presence of editors on the Code Committee, that actually the experience of editors can get out of date extremely quickly. This is a body which is going to have to be looking at a whole variety of complaints in a fast-moving area. It may be dealing with digital complaints and so forth. The view the strong view that's come back from consultation within the industry is that these need to be people who are absolutely at the cutting edge of their trade. With due respect to retired editors, it is possible to get out off date very quickly with what is going on in the real world of newspapers, so that's why they are there. That is the only outside of the Code Committee, that is the only place in the system where you will find serving editors.
Q. Well, this is therefore the second place in the system where we find serving editors. You've made the point about the Code Committee and one can see that that is a living document, but here there may be or indeed, I'm sure there is an issue of public perception that you are having serving editors on a committee which is a adjudicating on complaints and therefore adjudicating on the errors of their peers. That creates a perception at the very least of lack of independence rather than the presence of independence, doesn't it?
A. I think that body is constructed so that it has a tangibly clear independent majority on it, and we're also, as you're seeing at the bottom, building in an independent assessment of that. So if there was a member of the public who had any concern about the process in the way it had been handled, that one of these minority editors had had some sort of undue influence, that independent assessment, which would be by somebody who had nothing to do with the newspaper industry, would be thrown up.
Q. You're also limiting this to editors, not, for example, including an NUJ representative or someone providing a different perspective on the industry and the maintenance of standards within the industry, aren't you?
A. Well, there may be editors who are also members of the NUJ I'm not aware but that would be that is in theory possible. I think I've also made clear in the documentation that this might include at some point a digital editor, so it might be an editor who edits a website within a newspaper. We're not limiting this to just the analogue world, as it were. These need to be people, as I said, who are extremely up to speed with developments in the industry.
Q. Moving to the right, the compliance and investigation panel.
A. Yes.
Q. This is sort of an ad hoc panel, isn't it? It's created in circumstances which you describe in your statement at paragraph 15, where there's, for example, significant or systemic breaches of the code or serious breaches of the criminal or civil law; is that correct?
A. Correct. I think it is envisaged that the trust board would maintain a pool of experts. It is impossible, I think, to predict every sort of investigation that might take place. It might be an investigation into something which related to financial journalism that would require somebody with forensic accounting background. If it had been in place at the time of phone hacking, for instance, it might be somebody who had forensic ability in that particular area. So there would be a not insignificant pool of potential people who would be available to undertake these investigations. The names of those people would be published so that members of the public would see who they were, and then this panel would be appointed to suit the specific demands of an investigation. So it will be a bespoke panel from a much wider pool.
Q. Yes. Then finally but this has to be, as it were, in a dotted box because it depends on statute an arbitral arm, which, as you rightly say, would require a statute. You refer to the defamation bill it doesn't matter what the statute is called to create it because of the article 6 ramifications; is that right?
A. Correct.
Q. So this part of the system would require statutory underpinning on any view, wouldn't it?
A. It would require a change of statute because I think I have no I'm no expert in defamation law but it seems to me if you were trying to force people into some form of compulsory arbitration, you would have to legislate for that.
Q. The philosophical objections you refer to, why don't they refer to this arbitral arm with the same force as everything else? Because this is a statutory system, isn't it?
A. It would stem from libel and defamation law.
Q. But it would deal as well with privacy intrusions. Your statement makes that clear.
A. Well, it could be, although I'm not quite sure what you would need to amend in order to deal with privacy intrusions. I suspect it would
Q. You'd also need a statute, Lord Black, because you'd be interfering with Article 6 rights. So you'd need a statute.
A. Indeed, but it may require an amendment of the Human Rights Act. I don't know exactly what would be necessary to do it.
Q. No, it wouldn't. As long as the arbitral arm was Article 6 compliant itself
A. Indeed.
Q. no amendment to the Human Rights Act would be required, but you would need a statute to create it, wouldn't you?
A. The point I was making on privacy matters is if there was amendment to the defamation bill, I suspect the long title of the defamation bill would not allow for changes to the law which related to privacy. LORD JUSTICE LEVESON Oh, we're not suggesting changing the law in relation to privacy at all. All this does, as I understood it, was to provide swift redress for those who wish to complain, which was cheap, quick and immediate rather than these long drawn-out battles.
A. Indeed, sir. There is significant support for that within the industry, but I'm not yet clear exactly what sort of legislative action would be necessary in order to give force to that. LORD JUSTICE LEVESON But the point that Mr Jay is making is this, isn't it: you can always have a potential for mediation or resolution, arbitration, but if the idea is that this is the way people get their redress, then that redress has to be compliant with the trial provisions, the Article 6 provisions, of the Convention, and therefore not only would the it be desirable but it would be essential that there was a statute that provided that.
A. Indeed, sir. I have no idea exactly how we would manage that, which piece of legislation we could do it in. All I know is it's not immediately on offer. The point of highlighting this here is that the structure of the system would allow it, if at some point Parliament saw fit in order to saw fit to institute it. LORD JUSTICE LEVESON Well, nothing at the moment is necessarily on offer, except for the defamation bill. It's one of the things that I'll think about, whether I encourage somebody to put it on offer, isn't it?
A. I think you'll find, sir, that a number of the members of the House of Lords Lord Lester leading the charge may well be up for looking at these particular issues, but that's probably going a little bit beyond the scope of what I can achieve here today, although I have talked to Lord Lester about it. MR JAY The arbitral arm would have to be statutory. The rest of the system need not be statutory, but it could be, couldn't it? We could see exactly the same elements but within a statute?
A. We come back then, I fear, to the issues that we've discussed earlier. We believe that this can be delivered through contract without any need for statutory intervention.
Q. Well, we're back to the so-called philosophical point, that it's in some way inimical to press freedom to have a statutory system?
A. It may be a so-called philosophical point to some. To those who actually believe in these issues, it is of fundamental importance. LORD JUSTICE LEVESON Are you suggesting that those who might be thinking about the way in which systems might operate don't also consider it of fundamental importance that there's a free press?
A. No, sir, I wouldn't suggest that for one moment. MR JAY That's the outline of what you're proposing.
A. It is indeed.
Q. We'll go through the detail, but the outline needs to be understood. If you don't mind going back to your statement LORD JUSTICE LEVESON If you're moving on to another topic, we'll give the shorthand writer a break. Thank you. (11.26 am) (A short break) (11.35 am) MR JAY Lord Black, I've been asked to clarify this with you. When you referred to "consultation with the industry", by "the industry" you mean editors and proprietors; is that correct?
A. The consultation takes place the root of the consultation was through the newspaper trade associations, which have publisher representatives. Publishers would have received all the documentation and it would have been then for them to consult within their companies as they saw fit. So that wouldn't just include editors but also, obviously, given the nature of the contract, corporate legal representatives, in some cases managing editors and others. But I doubt there's an identikit form of consultation within each individual publisher.
Q. Journalists, numerically perhaps the largest constituency, are not a constituency you understand to be within the consultation, do you?
A. To the extent that editors might have talked to their colleagues about it, then they may well have been, but as I say, that's a matter for how they deal with that. There is no, I think, terribly easy way of consulting all journalists as a conglomerate in a way that you can manage a consultation through publishers.
Q. Well, you could have asked the NUJ for its comments on your proposals, couldn't you?
A. The NUJ is not a representative body for journalists across the industry, and indeed they are of course free to comment now because these documents have been on the website for over a month and I know you'll be hearing from them later this week.
Q. Can I ask you please about our structural aspects of the new scheme. Paragraph 22 of your third statement, page 00073. This is the annual certification process.
A. Forgive me. (Pause) Yes.
Q. Which, in a sense, of course, is new. I've been asked to put to you these issues. What will be done with the annual compliance reports and by whom?
A. The annual compliance report will go, in the first case, to the head of standards and investigation within the regulator, who will be a full-time member of staff. I think it's envisaged that there will be two or three people as a core staff of that. It would be their duty in the first case to analyse it. It's not there just to be received; it's there a document for which I would expect the regulator then to go back to the publisher concerned and say, "Thank you for this, but it highlights X, Y and Z. What happened here? Why weren't training courses on data protection run?" Whatever it might be. And after that discursive process has taken place, I think it would be envisaged that the document would be published, so it would be transparent for all to see, only with redaction for any information in it that is commercially confidential or, I suspect, involved in a disciplinary matter and therefore is an HR issue. But the assumption is the document will be published.
Q. The other question is: what processes will be put in place to ensure that these reports are full and frank?
A. I think that will follow from the extent to which the regulator then goes back in order to ask questions on it. I would be very surprised if the regulator received a report and didn't have any specific questions to ask. I suspect, also, for newspapers this may be an issue you want to deal with Lord Hunt later, but with issues which may be more at the cutting edge of ethical standards, I would expect that process of discussion to be quite a significant one. I think the regulator needs to behave in a proportionate manner because at the other end of the spectrum there may be almost sole trader local publishers for whom a visit from the regulator to talk about aspects of their certificate may be inappropriate. So I think if needs to be judged in relation to the entity concerned.
Q. In many if not most regulatory systems of which I have experience, there is an express obligation of the regulated person to be full and frank with his or her regulator. Is there such an obligation in your system?
A. Indeed. That obligation is in the contract and I think if at any point the regulator believed that the regulated entity was not being full and frank, then it would be open to it to take action. That action could range from a number of things, including the mounting of a full scale standards investigation. So there would be considerable incentive for the publisher to be frank in order to avoid the burden of a much more serious investigation.
Q. Powers and remedies, which is criterion four. Is this the position: that the power to levy a fine only applies in the circumstance of serious or systemic breach; is that correct?
A. Where the standards arm investigates, whether it is investigated because of a serious or systemic breach or a because of a failing of annual certification there may be a number of reasons that an investigation is launched. If the publisher is found not to have complied either with the terms of the contract, regulations, breakdown in observance of the code, whatever it might be, then the regulator will have a power to levy there will be a number of sanctions available to it, but at the top of the tree will be the power to levy a fine.
Q. If we go back to paragraph 15, then, of your third statement, the trigger for an investigation by the investigations and compliance panel you've already covered this there are three types of case: significant or systemic breach, serious breach of criminal or civil law, annual certification. But if the facts are found proved in any of those three case there is then the power to impose the sanction of a fine. Have I correctly understood that?
A. Yes. The document includes a number of different sanctions because there may be cases, I guess, where the investigation panel find a breach to have been in inadvertent or mitigating factors. In those circumstances, it could order a publication to carry on statement from the regulator. It could, in effect, put a publisher into I suppose what you might describe as special measures and seek improvements which it then goes back and monitors. So the range of penalties is open depending on the extent of the breach.
Q. The only power which resides in the complaints committee is the power to issue an adverse adjudication; is that correct?
A. Correct.
Q. It follows from that obviously they don't have the power to impose a fine, even in an egregious case; is that correct?
A. Correct.
Q. Why not?
A. Although, as you rightly said to me earlier, a case may be so egregious and the egregiousness comes from the fact that actually, there had been a complete failure of internal governance within the newspaper. In those circumstances, a standards investigation might be triggered. In terms of, say the fining power fits there. In terms of the power to award financial compensation within the complaints arm, I think the view that has been formed across the industry over many years remains that actually it is the issue of conciliation which is much more important, rather than the awarding of monetary compensation.
Q. But many observers have pointed out that the issue of conciliation is one which is almost one of the flaws of the current PCC, because too much emphasis is placed on that and too few cases reach the adjudication stage at all. Do you see that?
A. It will be open to the new regulator to change that.
Q. But isn't conciliation still at the forefront of the new process?
A. Because the bulk of complaints will lend themselves to conciliation. The majority of complaints the PCC deals with, in the same way that I suspect you find in other regulators, are fairly straightforward ones, where a conciliation process can deal with something very quickly. You, sir, have placed great emphasis throughout this Inquiry on the need for speed, and I think the way to get the quickest form of outcome for a complaint is through that process.
Q. That would be the case even if the prima facie evidence, as it were, was of quite serious breach of the code. Have I correctly understood it?
A. If there was a very serious breach of the code, then of course the regulator has the power not just to issue a critical adjudication but to call upon the publisher to take disciplinary action against an editor. It remains inherent in the system that observance of the code of practice is in the contracts of employment of editors and if a publisher, on having a critical adjudication from the regulator, finds that some form of disciplinary action is necessary, then that will be open to them.
Q. But there wouldn't be room, as it were, for such a course if the majority of cases were conciliated. Can you see?
A. I come back to my point. That will be for the new regulator to deal with. The PCC sought to conciliate the majority of complaints and sent relatively few to adjudication. If may well be that an entirely newly constituted body, which now has, I would hope, a more transparent ladder of sanctions from just the placing of a correction through to a full scale adjudication, may decide that it wished to adjudicate more. Again, I don't think it would be right for the industry to lead it on that point. That's an internal process that they will need to sort out. It may be a matter you wish to deal with with Lord Hunt later.
Q. Fair enough. Is it the intention that compensation, which is separate from a fine, can only be awarded by a court rather than by the regulator?
A. Correct.
Q. What's the thinking behind that?
A. I think you can approach this arm of the regulator from two angles. You can approach it from a conciliation angle or a compensation angle. The conciliation angle will deliver speed and effectiveness of remedy. The compensation arm a compensation angle would inevitably much more complicate it. It would, with the best will in the world, produce the entry of lawyers into the system. There will be pressure, I think, then to deal with the whole issue of costs. I think it would kill stone dead the whole conciliation aspect of the regulator. I also believe it runs very much counter to one of the things that we're trying to do with this new system, which is to make sure that publishers and editors take much more responsibility right at the start for trying to deal with complaints long before they get to the regulator, and arguably the PCC has been dealing with far too many complaints that should actually have been dealt with by the editor concerned. If there was a compensation pot in there, you're going to drag almost all complaints slap bang into the realm of the regulator and away from the newsroom, where they should actually be sorted out. So as I say, I think there is that divide, therefore, between whether you go conciliation route or a compensation route. Our general view is that actually the conciliation route is better for members of the public.
Q. You touched on this earlier, to put a marker down. What is the position in relation to contemporaneous civil proceedings? Are those put on ice pending the determination of the regulator or is this the position: that if the complainant choose to sue, that means that the regulator doesn't have jurisdiction?
A. I think this was raised for me when I was giving evidence before in February. I think since then the Inquiry's probably received a submission from Reynolds Porter Chamberlain acting on behalf of the Media Lawyers Association on the issue. My own view, having looked at it and looked at in more detail, is that there are very good reasons which have been set out, I think in a body of caselaw, as to why defamation issues, in particular, are very different from other areas and there is the danger of fishing expeditions through a regulator, which leads to an inherent unfairness in that libel action. I think that's one of the reasons why, when Parliament was putting broadcasting regulation onto the statute book, that it prohibited the broadcast regulators in the 1996 Broadcasting Act I think section 114, if memory serves from looking at a subject which was also subject to an issue that was also subject to proceedings in court. That said, I think that actually the regulator ought to be given some flexibility in this area. It may be that there is an issue which is the subject of libel proceedings where there is a bespoke issue relating to some part of the code or some part of newspaper ethics, which is actually nothing to do with the course of libel proceedings, and I think in those circumstances the regulator ought to have the flexibility to be able to take a complaint or launch an investigation. I think we need to make sure that the terms of the contract allow them that flexibility. They then can look at the totality of the case, where it's got to, the dangers that might be inherent in it, and take a decision accordingly. LORD JUSTICE LEVESON I might be wrong. Do we have a submission from Reynolds Porter Chamberlain? MR SPEKER Sir, may I assist on this? We served joint media law submissions on behalf of the Telegraph, Associated and the Guardian and they were put in by LORD JUSTICE LEVESON Yes. So let me understand: RPC in this regard were acting for you say the Media Lawyers Association?
A. Forgive me, it's the Telegraph, Associated Newspapers and MR SPEKER They've simply co-ordinated. LORD JUSTICE LEVESON I see, because RPC also act for Press Standards Board of Finance, don't they?
A. In our core participant status, sir, yes. MR JAY So if there's a particularly serious breach of the code but the claimant decides to take court action and is successful in obtaining damages for defamation or breach of Article 8 rights, does it follow from that that the regulator will have no interest in the case even after the court judgment?
A. No, I think on the contrary. I think if there has been a successful court action, the regulator should then institute an investigation through the standards arm of the body into how that happened and how to prevent it in the future. So I would have thought actually that a successful one of those sorts of successful actions would almost be unless it was a very technical matter, would almost be an automatic trigger for a full scale investigation.
Q. What it would prevent, the institution of court proceedings, is the complaints committee having a role in the outcome of the court action. Of course, if the court action is unsuccessful, in theory the complainant can go before the complaints committee, although he or she is likely to be out of time.
A. Indeed. And indeed, there's nothing to stop it going to the complaints committee before a libel action or a privacy action is launched. LORD JUSTICE LEVESON So there won't be a requirement that you don't take proceedings?
A. No. LORD JUSTICE LEVESON Because there is at the moment, isn't there?
A. There's no formal waiver as such. I think the Press Complaints Commission has taken a fairly sort of robust view that if it's something which might lend itself to legal action, that it will tend to stay dealing with it until after a complainant has made that decision. I would expect that the regulator would probably take a different view. MR JAY That could be written into the contract, couldn't it, and regulations?
A. I imagine it could.
Q. Then the issue of cost. I'm still, I'm afraid, on the introductory section of your evidence. Page 00075. You're ruling out, again on ideological ground, the taxpayer making any contribution through state-imposed funding; is that correct?
A. Indeed.
Q. Is this right, that the successor to PressBoF you're calling it the industry-funding body, IFB will be responsible for setting the overall budget? How will the IFB and the trust ensure that all parts of the body are funded sufficiently to operate an effective system of independent enforcement?
A. Part of the key to this is that there will be a separate set of funding arrangements for the standards and compliance arm. There will be an enforcement fund which will allow it to mount investigations when it needs to. There will be a core budget for the regulator. It's difficult to assess exactly what that's going to be at the moment. I have put a figure in here, I think, based on best estimates of the structure that we are proposing, but I think we've always been very clear that where enforcement action needs to be taken, then the regulator must have access to funds in order to deal with that. So we've put into the structure a separate funding stream for that. I think that means that actually the regulator, in all its activities, will have sufficient funding to be able to carry out its operations as it needs to.
Q. Can I test that? The budget for the current PCC is 1.95 million, okay? The estimated budget, paragraph 94 of your proposal, is 2.25 million.
A. Yes.
Q. Given the scale, some would say, of the failure of the current model of self-regulation, how does this represent the industry investing in putting things right?
A. That is only part of the investment because the enforcement fund will be also significant investment on top of that, and I think there are a number of factors here. First of all, I hope I should predicate this by saying that that was our best estimate at that particular juncture. As I said earlier, we need to do further work on costing, depending on how we structure it out. The complaints arm of the new regulator should, I hope, be dealing with far fewer complaints than the existing Press Complaints Commission is. If we are successful in regenerating and renewing internal governance and compliance standards within newspapers, it should be dealing with a much larger number of complaints internally than currently go to the Press Complaints Commission. In time, therefore, I would hope the costs of the complaints arm of that body should reduce. As always with the industry, if there is a case that is made out that more funding is needed, then the industry has always met it in the past. I think that we would need to sit down with the new regulator when that's in place, when we have further costings, and look at these elements and how much they're going to cost, but I have no doubt that sufficient funding will be made available to the regulator to fulfil its function.
Q. Ultimately, that depends on the sum of money the industry funding body is prepared to pay, isn't it? There's nothing to force it to pay any more.
A. But the funding streams will be enshrined into the contract. The obligation on publishers to provide that funding will be a contractual obligation.
Q. Yes, of course, but there's a ceiling on how much the obligation will be. If the industry funding body says, as a matter of its own decision-making, that more should be paid, that will place a higher obligation on the publishers, but unless and until the industry funding body does that, it's within its power to place a de facto limit on what should be paid.
A. I would expect that the core parts of the system so leave the standards and investigation arm to one side, for which there is a separate funding mechanism. I would expect that the core parts of the system, the cost of those are unlikely much to vary from year to year, so we have a pretty good idea at the start of a five-year period what sort of obligations the publishers are looking at. The bit which is completely unknowable is that standards enforcement side of it, which is why we've ring-fenced that and not put that within the core budget of the new regulator, so that we can ensure that the ability to perform this new and very important function is complete. LORD JUSTICE LEVESON But there's a problem there, isn't there, Lord Black, because if there is more work to do, and the funding body says, "I'm very sorry, the industry is cash-strapped and can't afford any more, therefore we're not going to give you any more, therefore there's nothing more to bite on the contract to require anybody to pay any more", then your body will have to make do with less and therefore will be less able to do that which it needs to be able to do, and there's nothing at all anybody can do about it.
A. But that is likely to be the case, sir, with all regulatory bodies. I actually think that the press, because it will they want to be seen to be making the system work, will be prepared to make those funding commitments on it. Ofcom, as I note in my paper, has had a 28 per cent budget cut over the last few years, but I don't think anyone is seriously saying it is unable to deal with its core duties as a result of that. The Advertising Standards Authority had a million pounds taken out of its budget but it's carried on dealing with its core regulatory functions. The only regulator it's not a regulator but the only complains handling mechanism in this part of the sector which hasn't had its budget cut over the past few years is the Press Complaints Commission. So although in theory it happens and it could happen under any system, I don't think it will. LORD JUSTICE LEVESON But the difference between those two is this, isn't it: that public funds may be such and indeed, we all know are such that there's less available and therefore a decision is made by whoever is funding that: "I'm very sorry, for whatever reason, there isn't the money available and we'll have to do less." It's rather different if the industry itself is responsible for deciding how much money it will be prepared to afford because self-interest which is what, of course, has given rise to all the concerns about the way in which press regulation, if I put that word in inverted commas, has occurred may take too large a part. I'm sure you see the point.
A. Yes indeed, sir. I would make the point that it's not just the taxpayer and so forth. Where we're looking at the funding of the Advertising Standards Authority, that comes through the advertising industry and is intimately linked to the health of the advertising market. So that's an entirely private sector based funding mechanism in the way that this is. I can't give you guarantees over a five-year period. The industry might face a complete economic collapse in that time. What we are doing is making a commit through contracts to provide funding over a five-year period. I think it unlikely that we would be able to actually build exact figure into that contract because of course, the needs of the regulator may change over time. LORD JUSTICE LEVESON I'm sure that's right, but the Advertising Standards Authority is slightly different because, of course, the great power of the Advertising Standards Authority is that it gets its money from all advertisement and then decides whether publishers can publish an advert. So it works slightly differently, doesn't it?
A. But I'm talking here about some of the funding the core funding of the regulator and therefore the impact on staff numbers and so forth, which is what I think we're talking about here. The most important point of this system is actually the standards and compliance arm of it, and that is where we're actually building a great deal of flexibility into the system. Again, I think that's actually a symbol that publishers want to make this commitment to make that part of it work. MR JAY May I look now at the proposal with you. It starts at page 00077. Quite a lot of this, fortunately, we've already covered by looking at your introduction, but we're going to look at other aspects now. We haven't covered as fully as we might have done. The problems, first of all, which starts at paragraph 4 on page 00078. You identify some significant structural problems with the existing system and we can see those itemised on the next page, 00079. First of all, lack of power to uncover and deal with systemic ethical or governance failures. And you've made the point that the new compliance and investigation panel is designed to address that failing.
A. Correct.
Q. Secondly, you say there's a perceived or has been a perceived lack of independence. Your analysis is that's in consequence mainly of the clear and direct relationship between the industry's trade associations, as represented by PressBoF and the PCC, but may I put to you that it may go further than that, that quite a few witnesses have told us that the perceived lack of independence stems from the fact that there are serving editors on relevant panels of the PCC or on the Code Committee, yet in the new system we continue to see serving editors on the Code Committee and serving editors on the complaints committee. Have you been sufficiently sensitive to that intention, that there still remains or will still remain a lack of independence because you are building into the new system power of the personalities, if you like, of serving editors?
A. I used the phrase earlier "independently led self-regulation". If the "self" in that phrase is to mean anything, then it has to mean the presence of editors on the Code Committee, albeit buttressed by a minority of lay members, and it has to mean the expertise of senior serving newspaper figures on the complaints committee, again, though, in a substantial minority. What we've tried to do here is to make sure that actually the complaints arm and the standards investigation arm are structurally shielded from the industry funding body, whose powers are significantly diminished from the existing Press Standards Board of Finance, which is why the key in this body is the presence of this new trust board.
Q. As a matter of definition, you could still have self-regulation even if there were not serving editors on your Code Committee and your complaints committee; would you agree?
A. In theory, that would be the case. As I say, the strong consensus that I've had back from across consultation within the industry is that it is right to have serving editors there. This document reflects that. LORD JUSTICE LEVESON Well, one can't be terribly surprised about that.
A. That is probably right. MR JAY The other point on the same theme, which a number of witnesses have made, is that the current system has suffered from the flaw in previous years, perhaps still to some extent, that powerful individuals tend to pre-dominate. The two individuals who have been named consistently are Mr Hinton of course, he's no longer there and Mr Dacre, who of course is still there, and that structure remains to some extent because we have editors in our continuing system, don't we?
A. There are, as we've discussed, editors in the continuing system, but I'm not making any commitments or predictions about which editors they might be.
Q. There's nothing to step then these powerful individuals some personalities may be larger than others featuring in the new system; is that right?
A. There's nothing to stop them, no.
Q. The third flaw you identify is the Desmond problem. You say that's addressed because it's not possible in this system for publishers to withdraw with impunity, although we've already covered this point they can leave after five years and they still need inducements to join in the first place, don't they?
A. Correct.
Q. Then the fourth point, you say: "It became clear from a number of the high-profile cases that internal governance and compliance controls within some newspapers were not as strong or as comprehensive as they should be." In view of all the evidence that the Inquiry has received over the last six or seven months, is that a fair characterisation of the problems thrown up in relation to the culture, practices and ethics of the press, Lord Black?
A. Forgive me by that, do you mean the phrase in there
Q. Put more bluntly
A. "within some newspapers"?
Q. aren't you guilty of a degree of understatement?
A. I think actually the evidence that you received in Module 1 highlighted a significant range of internal compliance mechanisms within newspapers. Some parts of the industry, specifically the local and regional press, are highly attuned to issues to do with the code and to do with their relationships with their readers. Other parts of the national newspaper industry my own newspaper, the Guardian with a readers' editor and so forth have very sophisticated compliance mechanisms in place. There is a patchwork. The aim of this system will be to bring everything up to the standard of the best.
Q. In terms of the culture, practices and ethics of a section of the press, without being explicit as to what that section might comprise, there has been clear evidence of serious failings, serious departures from ethical standards which this Inquiry has revealed. Would you agree with that?
A. And this new structure is designed to address that.
Q. We have to be clear what the diagnosis is before we look at the prognosis because the solution has to be proportionate to the problem. But there is a serious problem, is there not, in relation to the culture, practices and ethics of some sections of the press over the years, stretching back to Calcutt and if necessary we can look at before Calcutt. Are we agreed?
A. I think every section of the press has had lessons to learn from this Inquiry and the events that pre-dated it, and as they've looked at that, all of them have been able to do something to improve. I think, going forward, the issue is how we institute a system which is going to turbo charge that process, make it transparent and, sir, this Inquiry has actually produced a huge amount of transparency that has never existed before into the internal workings of newspapers, and I think we need to hold onto that and, through the process of certification and publication of investigations and so forth, make sure that that is maintained. I think probably that transparency will be the biggest boon to ensuring higher standards within newspapers of anything. LORD JUSTICE LEVESON I hope that answer is accurate, Lord Black. I'm not talking about you're not giving me what you believe, but I hope it's accurate and shared by the press. I fear that when the report comes out, there may be all sorts of suggestions as there already have been, because people are entitled to say what they think that it's been a complete waste of time.
A. I don't believe that for one moment, sir. LORD JUSTICE LEVESON I'm just going to keep that answer, thank you. MR JAY Then the remedies, Lord Black, which start at paragraph 9. We've covered these, but can we just deal with one separate issue: that if, for example, a publisher were to refuse to pay a fine which has been imposed and the publisher's run out of appeals and of course, there's a right to appeal to the independent assessor
A. To the trust board.
Q. To the trust board. Well, that's in relation to the what the compliance and investigation panel does, but in relation to what the complaints committee does, it's true that that can't impose fines, but writes to the independent assessor?
A. Yes.
Q. In order to recover the fine, the trust board would have to bring legal proceedings; is that correct?
A. Yes. A debt action.
Q. And although the better view may be that that debt action would be successful because the point that the fine is a penalty and not a genuine pre-estimate of loss is probably a bad point but not necessarily a bad point, at the very least, there's an area of doubt and complexity. You have to bring proceedings, whereas a statutory regulator you would not have to. Are we agreed?
A. I don't know the answer to that. I don't know how a statutory how that would operate in a statutory system.
Q. I suppose a statutory regulator would have to take some steps. It may require legal action to recover the penalty it's imposed, but there can be no defence to what it imposes and what it decides to do, because if the appeal mechanism had been exhausted then it would be a simple debt. But under your scheme, there could be arguments which might be raised in defence to the debt enforcement claim. Are we agreed?
A. There could be.
Q. Now, in relation to the work of the compliance investigation panel, you say that that panel should have powers to view documents and call for witnesses during the course of investigation. I think that the legal advice you've received and it would certainly accord with my own view is that the power to view documents would be specifically enforceable in other words, you could get an order to that effect from the Chancery Division but the ability to call for witnesses during the course of an investigation would not be. Is that your understanding?
A. I think I think that is the case.
Q. Would it be the position that if a regulated person refused a request to you put up a witness for questioning during the course of the investigation, that itself would be a further breach of obligation by the regulated person?
A. I think that's right. I think if the regulator wished to interview somebody then the publisher should use their best efforts to make sure that happens. And after all, there is contained obviously in the contracts of employment observance of the code and so the disciplinary tool should be there in order to make sure that that happens. So I would look to the publishers in those circumstances to fulfil their obligations, and if not, then there may be subsequent action to that.
Q. Do you see arguments, though, within the trust board? Suppose you have a recalcitrant publisher who is refusing to comply in some way. Either it says, "I'm not putting up a witness so that you can ask him difficult questions", or the publisher is saying, "I'm not paying the ?1 million you've just imposed on me." Given the constitution of the trust board, do you see problems arising as to whether the trust board would have the will to commence legal proceedings for the recovery of the fine in the one case or to compel the witness to attend in another case?
A. I doubt it because the reputation of the regulator would be at stake. I would expect the trust board to be muscular in its approach to these matters and I expect you would need people on it who were prepared to take such action.
Q. It would ultimately depend, though, on that assessment of reputation being made by the trust board and on nothing else; would you agree?
A. There is a contract in place and I would expect the trust board, which is a party of it, to be able to enforce that.
Q. It would certainly have the power to do so, but whether it would have the wish, the will to do so, is rather more debatable; isn't that right?
A. I suppose there's always going to be a scope. You can't tie the hands of an independent trust board that we haven't even established in the first place. So in theory, that must be the case, but I can't see why a body which had contractual obligations and was seeking to fulfil those contractual obligations would not take the requisite action in order to do that.
Q. You're saying then that this objection is more illusory than real because the trust board in the real world would be almost honour bound to bring proceedings because if it didn't, its credibility would be immediately bust?
A. It's almost doing itself out of a job.
Q. May we move forward, please, to section 2, which is proposal for a new model, page 00085.
A. Could you give me the paragraph number?
Q. Paragraph 28. I don't know whether you're working with our
A. I have the exact same paragraphs but not page numbers.
Q. Okay, it's paragraph 28. You've explained the proposal but I'm going to ask you to do it in more detail with one important element of it, which is the role of the industry funding body. I think you deal with this in more detail in your fourth witness statement, which came in on Thursday, I believe.
A. Yes.
Q. Can we understand clearly the differences between the IFB as newly constituted and PressBoF as is? The current system is paragraph 11 of your further statement, which is page 01530.
A. Yes.
Q. You say: "It provides the funding directly to the complaints handling body." By that, you mean it provides funding directly to the PCC; is that right?
A. Yes, indeed.
Q. Because there isn't it a separate complaints arm of the PCC; it's all within one structure?
A. Correct, and therefore the director of the PCC and I think an audit committee of the PCC because the director is, in effect, the accounting officer have to have a direct relationship with the industry.
Q. When we come to it, or indeed we've seen in the appendix under the new system, the relationship is indirect because the direct relationship is with the trust board and then the trust board goes downwards in the schema towards the complaints body. So there isn't a direct relationship between
A. Correct.
Q. the complaints body and the IFB.
A. Or indeed, any other members of the complaints committee. Because at the moment the members of the audit and finance committee of the Press Complaints Commission which get involved in these matters are also commissioners.
Q. The other point you make in relation to PressBoF, which of course we've understood, is that PressBoF has a direct relationship with the PCC director, who is, in effect, the Commission's accounting officer?
A. Yes.
Q. I'm sorry, a point we've missed out is that PressBoF has sole possibility for appointing the chairman. That's the chairman of the PCC. Strictly speaking, that's correct under the memorandum of association of the PCC and of PressBoF, but in practice we've seen a nominations board has grown up and although it doesn't have separate existence under the legal scheme, it has de facto existence in terms of what has happened recently?
A. Indeed. It has changed over time and it has an element of independent assessment and so forth but it is wholly within PressBoF.
Q. Can we look at the new system and what the IFB is doing. This is paragraph 14 of your fourth statement. Continues to fund the regulator on the basis of a fair and proportionate funding formula. No direct relationship with the regulator part of the system. We've seen that from the appendix: "Such coordination as is necessary on fundings and budget will be through the regulator's independent trust board." So that's the direct relationship you're referring to; is that correct?
A. Indeed.
Q. And as for appointing the chairman of the trust board, that's done by the appointment panel, which you deal with in paragraph 76 of your third statement, which we've already discussed. IFB has no role in relation to appointment; is that right?
A. Indeed. Well, it has two members of the appointments panel.
Q. Can I understand paragraph 18. This is dealing with the contractual network. At the end of paragraph 18, you say: "The IFB's only role will be to enforce the contract where a publisher seeks to renege on it in respect of payment of fees." It may be a point of detail, but I thought that was the trust board's role, not the IFB's role?
A. The trust board would sue for a fine or for specific performance but where a membership fee was not paid, it would seem more appropriate for the industry funding body to take that action because it would be the industry funding body which was clearly losing out.
Q. The composition of the IFB, paragraph 21.
A. Yes.
Q. No decisions have been made about how the IFB will be structured, with the caveat it's likely that the membership will continue to be based on the industry's trade associations. So the status quo will be retained to that extent; is that right?
A. As a matter of good practice, the trade associations are the most sensible body on which to base this. There may be ways to improve on it, but I will have to be honest and say that we have simply haven't had time to look at more detailed structures for this.
Q. And you would expect the directors of the IFB to select their own chairman from among their own number. That may well be right but does it mean that you may continue to have a role in the IFB as further constituted?
A. That would be for any new body to do so, to make a choice.
Q. In terms of transparency in other words, so that the public knows how much each entity is paying you say in paragraph 25 that you envisage the IFB will, for the first time, publish a register of the entities which have signed a contract. This contract may allow for the level of funding to be made public. So it's clear that it will not necessarily allow for the level of funding to be made public; is that so?
A. I'm going to have to take you, I fear, into the depth of trade association politics here, but at the moment the levies to PressBoF, particularly for the national press, are based on a formula which allows for a certainly amount of commercially confidential information. The trade bodies, including the Newspaper Publishers Association, are currently reviewing how they are funded across the piece, both for themselves or for the bodies that are responsible to them, which is likely to move away from a formula based on that commercially confidential information which relates to newsprint, into much, much more structured territory and to take account of the digital operations of publishers. That work is undergoing not just with regards to PressBoF or the IFB but across the range. I would envisage that at the end of that process, which I don't think is going to be straightforward, that we will be into much more transparent territory so that the individual contracting parties, there can be a sum attached to them as to how much they are exhibiting. I can't give you that commitment at the moment because it depends on a series of negotiations between publishers. It would be my hope, if I could leave it like that.
Q. Because some have elevated this to a level of criticism in relation to the present system with PressBoF, that you can't see behind the veil, you don't know how much everyone is contributing. But we've reached the point with the IFB that that may continue to be the position but the constituent members, as it were, may buy in to something more transparent; is that a fair summary?
A. Which is what I hope to be the case, yes.
Q. But that aspiration may or may not mature into reality?
A. I can't give you a commitment on that at the moment.
Q. The advantage of such pre-compulsion is that the regulator may require the sort of information to be provided and it doesn't lie in the gift of the IFB or those comprising it; do you see that?
A. I've given you a fair amount of information here and actually, if somebody took a calculator or a slide rule they could probably work out for the figures related to that. I can give you only my aspiration, Mr Jay, that I hope we will move to a much more transparent situation, therefore that that issue won't arise.
Q. Are you saying it may be that that this point is more illusory than real that if we know the percentages, and the percentages will be made public, and we know the total amounts, we're going to be able to work out because we also know the circulation figures more or less what everybody is paying? Is that it?
A. I'm talking now about the current system. The new system, I hope, will be much, much more transparent so that nobody will need to go to that trouble. But I'm talking here on behalf of four independent trade associations who are looking at these matters themselves and it would be completely wrong for me to lead them into that territory, or to lead the Inquiry into that territory.
Q. I've been asked to raise with you a number of points about the IFB, so if you could bear with me on these. The first point relates to the appointment of the trust chair. This is a separate point. I'm going to make this point now and then we'll come back to my points about the IFB. You've explained in paragraph 76 of your statement that there's an appointments panel of two industry members alongside two public or lay members and that unanimity is required, and the trust chair has to be someone who is independent; in other words, with no prior press background. But how is that system independent of press interests, given that (a) unanimity is required, and that (b), there are two industry members on the appointments panel?
A. It is because it's a balance. Neither the public members nor the press members have control of it, so I think it is, in the terms of the draft criteria, sufficiently independent of the industry to be clear that it is not an industry appointment. LORD JUSTICE LEVESON But a strong-willed industry representative could simply veto anybody who they didn't think would serve their interests.
A. And vice versa, sir. LORD JUSTICE LEVESON Well, it's true, but the independent people who are coming into it presumably from a different perspective will not have quite the same command of the subject and will not be quite as aware of all the potential ramifications as the MPA representatives, will they?
A. I think it will be incumbent on the trust board to make sure the individuals it puts on there are authoritative figures who can command that sort of interest and knowledge. LORD JUSTICE LEVESON But one way of doing that, therefore, might be to say: it's a majority. Of course, the MPA representatives will have an extremely influential voice but ultimately they can't determine it, whereas this way either person could determine it, or the whole thing collapses before it has even started.
A. The majority route is one way to look at it, sir. I have been at pains in this to say this is an issue with which we grappled over some months, because there is not a straightforward way of dealing with it, and this is our best current shot. LORD JUSTICE LEVESON Lord Black, I see blood all over this document. I understand that it hasn't been easy. I'm not for a moment suggesting that it has. MR JAY One simpler solution I'm surprised you haven't come up with this already, although I can understand perhaps why you haven't is that you have an employments panel which has three public lay members, two industry lay members, which makes its decisions by majority, not by unanimity, and then feeds into the trust board, which has a central position and is an independent chairman who is going to be truly independent, at least in the estimation of the majority, because that chairman is so important on a board which comprises three lay people and three press representatives, as currently constituted. Do you see all of that?
A. It's another model. I'll give you my commitment to look at it without draining further blood onto the documentation. LORD JUSTICE LEVESON I don't mind, Lord Black. You've done exactly what you said you would do, and what I encouraged the industry to do, and created a model which you believe the industry will sign up to and which I then have to consider.
A. Indeed, sir. MR JAY But at least the simplicity of the contrary model which I've ventured to put to you commends itself only perhaps for its simplicity and for no other reason; is that it?
A. I think this model, which actually was an idea that came from Lord Hunt I think you'll find it in his document which you may be looking at later is equally simple, to the extent that any of these things are simple and straightforward.
Q. It's simple but it has the sting in it which Lord Justice Leveson has pointed out, which
A. Indeed, which is why I've said to you I will look at it.
Q. You also agree how it feeds into the constitution of the trust board. At the moment, there are three press representatives against three lay persons with the independent chairman. We can argue about whether there should be more lay representatives vis-a-vis the press representatives should to ensure a stronger natural majority of independent representation, can't we?
A. Indeed. I mean, I don't wish to sound in any way evasive here, but this is, as I said earlier, a snapshot of where the industry's thinking has got to at the moment. I have been at pains to point out we will look at the suggestions that come out in this module, reflect on them and maybe we'll need to come back to you with further suggestions if we believe that they will have an industry consensus behind them. I'm not going to pretend that this is the last word in it.
Q. But the debate will always be predicated on the premise, as it were, of industry consensus, what the industry would accept. The beauty, if I can put it in those terms without sounding too inflammatory, of a system which has statutory underpinning is that you could see regulations, secondary legislation, which do no more than say: the trust board shall be constituted of X lay persons, Y press representatives, so defined, and an independent chairman, so there can be no arguing about it, and the appointments panel will be comprised of X industry members and Y public or lay members. So it doesn't depend on consensus, what your people will buy into; it depends on what Parliament has said, through the secondary legislation, is appropriate and what the public therefore will accept, the public being a wider constituency than those whom you represent. Don't you see philosophically the greater attraction of what I'm putting to you than what we see here?
A. I fear we're in danger of going around in circles here because we come back to the central objection that I made earlier, that the public when the public's looking at this issue, it has to look at two things. It has to look at the operation of the regulator, which it has to believe is independent and I believe this system does deliver independence but it also has to look at the overall health of a free press and say: do we want the state involved in any way? Maybe the public does think that, but I suspect not.
Q. I think we are going around in circles but I don't, at the moment, see and I therefore put this to you to comment on how a rational member of the public would say that on the model I'm suggesting to you only as a hypothesis of secondary legislation which does no more than define what the comprised board should be comprised of if that's not bad English and the appointment panel likewise, why the public would be saying, "Oh, that's a gross violation of press freedom", because, properly understood, it's not such an infraction at all, is it?
A. But you don't need statute to deliver that. That can be delivered in different ways, and once a statute is there, it is then open to government to change that statute in a way which might be damaging to press freedom. LORD JUSTICE LEVESON I'm sorry, Lord Black, I don't understand that. They can pass a statute at any time, and I don't see that amending a statute is different to passing another one. They have to find a vehicle to do it and they have to get the relevant votes.
A. But LORD JUSTICE LEVESON That's one of the reasons why I have talked about enshrining in statute the constitutional protection which is akin to the constitutional protection that the judges have, and I'm sure that everybody would agree that we want independent judges. Perhaps not this independent judge, but independent judges generally.
A. But where we're looking at this system, if one was maybe I've got this wrong, but if you're looking at a statute for the appointment of chairman, you presumably then have to include in statute the sort of body that you're appointing it to, because if the publishers refuse to set up a system which is going to have a chairman appointed by statute, there is no body to appoint a chairman to. LORD JUSTICE LEVESON Well, I think that it's a wider point that Mr Jay is making, and it just goes back into the same issue as to whether any form of statute actually does impact adversely on the freedom of the press or free speech. That's the issue.
A. I readily agree, sir, that that is the central argument here. MR JAY May I put to you though a slightly different point now about the relationship between the industry funding body and the trust board, and this is the point about direct or indirect possible interference. In order to make good this point, it may be helpful to turn up your structure document again, which is appendix 2 to your third statement at 00113.
A. Yes.
Q. We can see where the arrows are, that the IFB interacts with the trust board and doesn't interact with the lower bodies, as it were, but are we agreed to this extent: that trust board approval is required to establish an investigation? Is that right?
A. Yes.
Q. Trust board approval is also required to take action to enforce the contract in relation to an investigation; is that right?
A. Yes.
Q. The trust board, you've told me this earlier, handles appeals against a finding of the compliance and investigation panel.
A. By setting up a new panel.
Q. By setting up a new bundle. And the trust board must take the decision on raising any fine in relation to an investigation; is that right?
A. Correct.
Q. And the trust board also ratifies changes to the code, doesn't it?
A. Yes.
Q. So how does all of this ensure independence in relation to standards-setting or enforcement, given the importance of the role of the trust board and its direct relationship with the industry funding body?
A. Because in the first, I think, four points that you raised there, the trust board will have available a ring-fenced enforcement fund because the issue they the principle you're talking about there in regards to setting up an investigation, taking court action and so forth, largely relates to the financing of that. So there is going to be no the ring-fenced enforcement fund will not be the responsibility of the IFB, so the trust board doesn't need is not going to be dependent upon funding decisions by the IFB for the conduct of investigation.
Q. But it is going to be dependent on the IFB in relation to matters such as having to fund legal proceedings against a recalcitrant publisher, wouldn't it?
A. It will do that through the enforcement fund, which will be at its disposal. LORD JUSTICE LEVESON Is there a risk that a newspaper might take the view that it's got rather more power than the enforcement fund and so can adopt an attitude which is not unknown in litigation, that you fight every single decision, you appeal every decision that you possibly can until everybody gets exhausted by the process or runs out of money?
A. I would hope that in a system into which publishers voluntarily entered into a contract that they wouldn't do that. To go back to the point that was made earlier, I think that is much more likely in a system which has some form of statute to it than in a system where they are seeking to make the contract work. Of course, in theory that's right, but I think it's at the far end of hypothesis. LORD JUSTICE LEVESON I'm not so sure, because although I agree voluntarily, you then go back to your first Damoclean sword. What's happening here is: if you don't sign up to this, then something worse is going to happen. So it's true that they are volunteers in the sense that they're signing, but not perhaps with the enthusiasm that one might sign another sort of commitment that one undertook.
A. That may well be the case. I think we've tried in the best way we can to make sure that the trust board has the powers and the money available to enforce the contract. I think it's always going to be an issue to do with the nature of contract. If one party wants to grind everybody down with legal action, that is going to happen, but in any structure of law that's going to be the case. MR JAY The enforcement fund, while we're on this point, is paragraph 93 of your third statement, our page 00109.
A. Yes.
Q. That fund starts off with ?100,000 provided through the NPA
A. And possibly other publishers but principally the NPA.
Q. Possibly other publishers. Part of this, I suppose, is the hope, if not expectation, that fines and cost contributions over the initial years will be placed in the enforcement fund. Once it reaches ?500,000, money can start to be returned to the contributors; is that right?
A. Just that initial sum, yes.
Q. And the enforcement fund have I correctly understood it? is dealing not merely with the cost of taking court action, which may or may not mature in the read real world, but also the workings of the compliance investigation panel; is that correct?
A. Correct. It may be that in a specific investigation the investigation panel believes it needs outside expertise a QC, a forensic accountant, whatever it might be and it will need to pay for that and the money must be available there for that to happen.
Q. The resources of this enforcement fund, as it were, are quite limited. Some would say that that's not enough, that it may be that the compliance investigation panel is doing rather more work than pre-figured in the early years to catch up on past deficiencies, as it were. It may be that recalcitrant publishers take every point they wish to in the High Court. You're going to exhaust that money fairly quickly, aren't you, which will then operate as a constraint on its workings?
A. We will have to cross that bridge when we come to it. That is the best estimate at the moment. It may be that that does need further money involved in it or
Q. I think your point, to be fair to you, is that that's a separate issue from control by the IFB. The IFB doesn't have control over the enforcement fund because it's ringfenced.
A. It's completely ringfenced at the discretion of the trust board.
Q. I see that. If I raise with you some points now on the proposed contractual framework. Some of those relate to the IFB, some of them wider. The post-contractual framework in its current iteration is under tab 4 of the bundle Lord Justice Leveson has but it's our page 00028. LORD JUSTICE LEVESON Thank you. MR JAY This is a miscellany of points now, Lord Black. The first point is that we can see in the middle of the first page of the overview, 00028: "The IFB shall have ultimate discretion to refuse membership to any publishers wishing to join the scheme, even if such publisher falls within the definition of a regulated entity." Why is there such discretion in the IFB to refuse membership?
A. I think it's merely a future-proofing point, that somebody may come along at some point who it would be wholly inappropriate for them to be part of the system, maybe because the only complaints that they would receive would be about matters of taste and decency, that the IFB should have power under those circumstances to not take up a membership contract. I don't see that as being a particularly significant point. It just gives some discretion to the body over who the members of it are.
Q. A "just in case" provision then?
A. It's a "just in case" LORD JUSTICE LEVESON I don't understand how it could ever arise, because you could never know whether somebody in the future would only have taste and decency problems.
A. It is an issue that arose with the Press Complaints Commission when the publishers of certain what might be described as top shelf publications LORD JUSTICE LEVESON Yes
A. wished to join the system. LORD JUSTICE LEVESON Why not?
A. It was decided at that point that the content was unlikely to be susceptible to the enforcement to the application of the code, that it wasn't appropriate that they were members. LORD JUSTICE LEVESON But I don't see why not. I'm not suggesting that the new regulator would be looking at taste and decency in the same way that it doesn't at the moment, in which case those complaints would be very simple to deal with, but anything that improves standards is to be encouraged, isn't it? And by saying, "Well, you can't join our club
A. It depends on what sort of medium it is, sir. I think this is literally a "just in case" scenario and probably takes accounts of the fact that those who sign may well benefit from certain incentives to membership of the scheme. I think we have to take that into account as well. LORD JUSTICE LEVESON But if it improves standards of whatever the type of publication the risk is that this is read as saying, "We don't want you in our club, therefore we're not going to let you in."
A. In which case I think we would need to look at the particular wording of this to make sure that it was clarified exactly what this power was there to do. MR JAY Contractual framework now, having passed over the overview. Section 3: obligations of the regulated entity. We see various obligations there, some of which we've covered. I'm interested in the transfer of the title obligation, which is clause 3.1.8 at page 00030: "If the regulated entity transfers control of the newspaper or magazine or website over which it has control, it should use all reasonable endeavours to ensure that the new owner is a member of the regulatory scheme and has entered into a contract with the regulator." Why not make that an express term, as it were, of the contract, that there cannot be a transfer unless the new owner has entered into a contract with the regulator?
A. This is one of the issues which I think is of considerable importance to the local newspaper industry, where, as you are aware, there are 87 publishers, a lot of whom are quite small, and there is clearly going to be consolidation in the lower end of the market. They're often talking about the transfer of single titles from one entity to another. It has been a concern of those you smaller local publishers that this would make such moves much, much more difficult for them when they're already facing serious economic and commercial conditions, and that has been put in there to reflect the reality of the marketplace.
Q. Then the reality is that the purchaser will, by definition, not necessarily be prepared to enter into the contract with the regulator. Is that
A. I think, if again if you look at the local newspaper market as an example, it's more likely than not that these smaller publication are being sold to a member who is already somebody who is already a member of the contract, in which case the issue won't arise.
Q. Then in the real world, why not have the clause as I would respectfully suggest it should be worded rather than this wording?
A. I will then come back to the point that I made earlier. This is where I believe the broad consensus of the industry is at the moment. If there is a sort of contractual term that the Inquiry would like us to look at again, then we will.
Q. At each stage at which there's a debate about the clause, it is always "this is where the broad consensus of the industry is at the moment", rather than someone saying it could be the regulator or Parliament saying, through secondary legislation: "This is what's required in the public interest. Although I'll listen to you as a matter of my consultation obligation before I promulgate my statutory instrument, in the end it's going to be my decision and not what the industry will live with." That's the truth, isn't it?
A. Well, it comes back to the point that Lord Justice Leveson made earlier about the timing of when the contract is actually available.
Q. Other issues then on the contract. Clause 5.1.4, this is the ability to impose fines and sanctions.
A. Yes.
Q. You do that in accordance with the regulations and the sanctions guidance issued by the IFB. So this is another area I missed it out in my earlier list where the IFB has considerable leverage, as it were, over the important issue of practice and principle, namely fines and sanctions; are we agreed?
A. But that document, that sanctions guidance, will be agreed with the regulator and then placed into the contract and regulations. So the regulator will have input into that.
Q. Why is the industry funding body having any input into this at all?
A. I think
Q. Why not just cut them out of the loop?
A. In effect, once they're part of the contract and the regulations, the industry funding body will be cut out of the loop because the contract terms will then be fixed.
Q. The regulations this is clause 6.1 shall be the responsibility of the regulator but they shall only be amended with the approval of the IFB.
A. Sorry, forgive me.
Q. 6.1 of
A. Of the contract framework. Yes. I've got it.
Q. Again, if you wanted a truly independent system, the IFB would have no role in the regulations. Why do we see them having a role in relation to amendments?
A. I think this is to reflect that this sort of contract needs to have a degree of checks and balances in this. I suppose in theory a regulator could come along and produce something which was going to absolutely destroy the it could increase the maximum level of fine to ?20 million. It could produce a whole new set of obligations on publishers which they haven't signed up to in the first place, and this is simply to introduce a system of checks and balances to the system that wouldn't allow that to happen. LORD JUSTICE LEVESON It's called a trump.
A. What I would expect is that we may well put a stipulation in there that no changes to the contract or to the regulations could ever dilute the power of the regulator. That would be one of the changes that I referenced earlier. MR JAY There may be a strong public interest in increasing the powers of the regulator but that would never happen in practice, would it, if the approval of the IFB is required?
A. I think if the regulator made out a good case as to why this was necessary in the public interest, then that would happen.
Q. Not necessarily, because this is a trump card in the IFB, isn't it?
A. I can't think of a better way in order to ensure that there are checks and balances in the system which doesn't come up against that problem, other than by setting out very clearly what the powers of the regulator are to begin with and then making clear that no changes to that can possibly dilute those powers in any way, shape or form. I think that's actually given that there are very significant powers in here in the first place, I think that's a very important guarantee for the public.
Q. Okay. The same applies to the Editors' Code at 6.2. It's exactly the same point. LORD JUSTICE LEVESON It's the other way around. There you're seeing it's the industry funding body that's responsible for the code, which, of course, is created by a committee, the vast majority of which are serving editors. The funding body is the proprietors and/or editors and they're responsible for everything, but then the regulator has to say yes, otherwise it just stays the same.
A. Indeed, sir, it's the flipside of the coin. The trust board must ratify any changes that are made to the code, which is the I think the most important protection for the public to ensure that there is no dilution of the obligations in the code. That is the most obvious example of the checks and balances within the system. LORD JUSTICE LEVESON But it does mean this, doesn't it: that one can't start to reconsider whether the code should be drawn differently unless the industry itself agrees? I mean, one of the suggestions that has been made, that the negative code obligations should be converted into positive code obligations, but that wouldn't be possible even to consider unless the industry was entirely, effectively 100 per cent behind it.
A. But the public members on the Code Committee could put those suggestions forward and then the Code Committee would have to look at that, or indeed the regulator the trust board could put forward those suggestions to the Code Committee. LORD JUSTICE LEVESON Well, they could, but then if it came to a vote, there's no doubt which way that vote would go.
A. Because the editors have a majority. Indeed, sir. MR JAY Can I just understand how it might work in practice? You probably would never reach this point. An amendment is proposed. It's considered first of all by the Code Committee; correct?
A. Correct.
Q. There's a natural majority of editors on the Code Committee, so it's probable that something more stringent might not guesses passed first base, but imagine it does. Does the recommendation then go to the trust board for an amendment or does it go to the IFB, who have the responsibility for the code under clause 6.2, who then have to make a decision, and if they make a decision which is in favour of the amendment, it then goes to the trust board? Is that it?
A. Well, the way that the role of the IFB here I think would simply be for a consultation on any changes across the industry, so if the Code Committee produces a change, then actually I would disagree with you when you say it's unlikely to be more stringent. The whole history of changes to the code is of the tightening of the code, not the relaxation of the code, so it would natural, I think, that if the Code Committee reached a decision that there should be a consultation across the industry and indeed, a consultation among members of the public about whether this was a suitable change at that point it would go to the trust board and the trust board would have to approve it. So the ultimate responsibility for a change lies with the trust board.
Q. The IFB in this framework is really there only as consultation?
A. Consultative, yeah. Consultative mechanism. LORD JUSTICE LEVESON That's not what it says, is it? MR JAY No, it's not. It's not really what it means, because the structure document gives only an arrow from the Code Committee to the trust board, doesn't it?
A. I'm not sure whether the wording accurately reflects exactly what I've said but that is the intention.
Q. It would have to be redrafted, I think, to meet that intention.
A. Yes.
Q. You've mentioned the provision which deals with variations but we can see it in black and white at clause 7. It doesn't require unanimous approval from all regulated entities but a variation shall be considered incorporated where a majority agree to the variation. Does each regulated entity have an equal vote, as it were, or does it, as I think my understanding is is it a system of weighted votes according to the level of your contribution or your circulation?
A. I think it will have to be a system of weighted votes. We are working on a way that that might work. If it wasn't weighted votes, you could have a situation in which, because they are much greater in number, the magazine publishers could change the contract by outvoting everybody else. So we need to have find some way of doing that which gives no group of regulated entities a power of veto over changes, but that the voting procedure reflects the nature and diversity of the market. I can't pretend we've cracked that one.
Q. Mm.
A. And any suggestions would be welcome.
Q. A variation to the contract on this basis would not necessarily carry with it an amendment to the regulations, but that wouldn't be too difficult because the approval of the industry funding body would surely be forthcoming?
A. Yes.
Q. Clause 9.1. This is only to touch on the point you've made, that it's the IFB who can sue for non-payment of the fee, not the regulator. We see that in the contract.
A. Correct.
Q. You said we'd see it in the contract. Indeed, we're seeing it now at 9.1. .2 deals with the enforcement fund, which we picked up in paragraph 94 of the proposal. I think we've covered that. The only other provision we should look at is clause 15, page 00032, third party rights, that no third party will have any rights under the contract, save for the limited right of the IFB, which means that a complainant against a regulated entity has no rights as such. This must depend on the regulator to enforce rights on his or her part. Is that the position?
A. I would anticipate that the rights of third parties in those circumstances will be protected by an action for judicial review.
Q. So there are third-party rights but in public law. Judicial review against the contractually created regulated body, which probably the better view is that such a body is amenable to judicial review.
A. I think, given the nature of this body, that if an action for judicial review was brought, that it would be unlikely that the industry would contest it's amenability. MR JAY That's probably a convenient moment to break. LORD JUSTICE LEVESON Yes. MR JAY I suspect I have about in our hour for you, Lord Black, but if Lord Hunt runs into tomorrow, there's time for that. LORD JUSTICE LEVESON Right, 2 o'clock. Thank you very much indeed. (1.00 pm)


Gave statements at the hearings on 01 February 2012 (AM) and 09 July 2012 (AM) ; and submitted 90 pieces of evidence


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