The Advocate-General for Scotland (Lord Keen of Elie) (Con)
My Lords, I see that the noble Lord, Lord Foulkes of Cumnock, has decided to take flight. With the leave of the House, I will repeat a Statement made in the other place by my right honourable friend Jeremy Wright, the Secretary of State for DCMS:
“With your permission, I would like to make a Statement about the publication of the Cairncross review. I would like to thank Dame Frances Cairncross for leading the review, along with the expert panel and officials who have worked with her to develop it.
This review comes at an important time. In her report, Dame Frances paints a vivid picture of the threat to high quality journalism in this country. There are now around 6,000 fewer journalists than there were in 2007. Print circulation of daily national papers fell from 11.5 million in 2008 to 5.8 million in 2018.
In this same time period, circulation for local newspapers has halved. As the review makes clear, there are many reasons for this, but the main driver is a rapid change in how we consume content. The majority of people now read news online, including 91% of 18 to 24 year-olds. As this shift takes place, publishers have struggled to find ways to create sustainable business models in the digital age. As the review sets out, between them, Google and Facebook capture the largest share of online advertising revenue and are an increasingly important channel for the distribution of news content online. Not only this but they hold an array of data on their users that news publishers cannot possibly hope to replicate, which further strengthens their position in the digital advertising market.
This combination of market conditions threatens to undermine the future financial sustainability of journalism. Even publications that have only ever been online are struggling, and this should concern us all. Dame Frances notes that, while high-quality journalism is desirable, there is one type of journalism that society and democracy cannot do without, and that is public interest journalism. This is the type of journalism that can hold the powerful to account and is an essential component of our democracy. It helps us to shine a light on important issues—in communities, in courtrooms in council chambers and in this Chamber. This type of journalism is under threat, especially at the local level. The review cites numerous examples of what happens to communities when a local paper disappears. So Dame Frances’ report comes at a vital time, and I welcome her focus on public interest journalism.
This is clearly an important issue and I wanted to set out to the House today how the Government intend to respond. There are many substantial recommendations in this review. There are some areas where we can take them forward immediately, and other more long-term recommendations on which we will be consulting with stakeholders about the best way forward.
First, I will deal with the recommendations we are able to progress immediately. Online advertising now represents a growing part of the economy and forms an important revenue stream for many publishers. But this burgeoning market is largely opaque and extremely complex, so it is at present impossible to know whether the revenue shares received by news publishers are fair. The review proposes that the Competition and Markets Authority conduct a market study into the digital advertising market. The purpose of this study would be to examine whether the online marketplace is operating effectively, and whether it enables or prevents fair competition. It is right that policymakers and regulators have an accurate understanding of how the market operates and check that it is enabling fair competition, and I have today written to the CMA in support of this study. I will urge Professor Jason Furman to treat the review as additional evidence as part of his ongoing inquiry into digital competition in the UK, which is due to be published in the spring. I also recognise that online advertising has given rise to a wider set of social and economic challenges. My department will therefore conduct a review of how online advertising is regulated, starting in the coming months.
The Cairncross review also cites concerns from publishers about the potential market impact of the BBC on their sustainability. They argue that the BBC’s free-to-access online content makes it harder for publishers to attract subscribers. The review also questions whether the BBC is straying too far into the provision of softer news content, traditionally the preserve of commercial publishers, and suggests this might benefit from the scrutiny of Ofcom. Let me be clear that the Government recognise the strong and central role of the BBC here. As the review states,
“the BBC offers the very thing that this Review aims to encourage: a source of reliable and high quality news, with a focus on objectivity and impartiality, and independent from government”.
However, it is right that the role of the BBC, as a public service broadcaster, be appropriately transparent and clear. The review recommended that:
“Ofcom should assess whether BBC News Online is striking the right balance, between aiming for the widest reach for its own content, and driving traffic from its online site to commercial publishers, particularly local ones”.
Of course, some of these questions were addressed as part of the charter review process, but I have written today to ask Ofcom to look carefully at the review’s recommendations and identify if there are any new concerns deserving attention. For instance, there may be ways in which the BBC could do more to drive traffic to commercial sites, particularly the local press.
Another recommendation from the review was a proposal for two separate forms of tax relief for news publications, one of which is intended to bolster the supply of local and investigative journalism by enabling it to benefit from charitable status. The review noted that in the USA, philanthropic donations provide, on average, 90% of the total revenues of non-profit news publishers. Although we have a different media landscape, as the review sets out, charitable status could reduce the costs for those producing this essential public interest reporting, and pave the way for a new revenue stream through philanthropic donations. I recognise that this avenue has been explored previously and that some hurdles will have to be cleared, but I believe we should pursue it, so I have written to the Charity Commission and look forward to hearing how it can help move this forward.
As I set out earlier, there are also areas where we will need to consult further and respond in further detail. First, Dame Frances recommended the establishment of an institute for public interest news to promote investigative and local journalism. The review proposes that this institute would act as a convener for those organisations with the means to support public interest news, including the BBC and online platforms. It would also be tasked with generating additional finance for the sector, driving innovation through a proposed new fund, and supporting an expansion of the BBC’s Local Democracy Reporting Service. This BBC-funded scheme is a shining example of what can be done. The first of its kind in the industry, it has embedded 150 journalists within local publishers to produce local democracy reporting, particularly relating to local councils. I met some of these reporters last week and they have produced 50,000 stories so far between them—all stories that may not otherwise have been heard. The Government will explore, with others, what more can be done here.
The review also calls upon the Government to do more to incentivise the publishing industry’s transition to digital. It proposes extending the current scope of VAT exemptions so that they apply to online payments for all news content and not simply print news content, and new tax relief for public interest news providers. I am aware that there is passionate support for this within the publishing sector, and we share its ambition for a healthy and sustainable industry. As this House knows, the Government always keep taxes under review, and any decision to amend the UK tax regime is, of course, a matter for the Chancellor of the Exchequer as part of the annual fiscal cycle. I will be discussing this matter further with industry and my colleagues at the Treasury.
I want to highlight two recommendations in the review that cover similar ground to work already taking place within government. One is the review’s sensible proposal that the Government develop a media literacy strategy, working with the range of organisations already active in this space. Evidence suggests that there is also a correlation between media literacy and greater propensity to pay for news, so improving media literacy will also have an impact on the sustainability of the press. Making sure people have the skills they need to separate fact from fiction is the key to long-term success in tackling this issue, and I welcome the focus that Dame Frances has placed on it. We welcome this recommendation, which relates closely to the Government’s ongoing work to combat disinformation. Last month, my honourable friend the Minister for Digital and the Creative Industries hosted a round table on media literacy, and the Government are actively looking at what more we can do to support industry efforts in this area.
The other recommendation is the review’s call for the creation of new codes of conduct between publishers and the online platforms which distribute their content. These would cover issues relating to the indexing of content on platforms and its presentation, as well as the need for advanced warning about algorithm changes likely to affect a publisher. The development of these codes would be overseen by a regulator.
The review also proposes that regulatory oversight be introduced as part of a ‘news quality obligation’ upon platforms. This would require that platforms improve how their users understand the origin of an article of news and the trustworthiness of its source. Dame Frances recognises that platforms are already starting to accept responsibility in this regard. These two proposals deserve the Government’s full consideration and we will examine how they can inform our approach. This includes our work as part of the online harms White Paper, due to be published shortly.
This report sets out a path to help us put our media on a stronger and more sustainable footing. However, Dame Frances is clear that her review is just one contribution to the debate. We cannot turn back the clock and there is no magic formula to address the systemic changes the industry faces, but it is the role of any responsible Government to play an active part in supporting public interest journalism. We will consider this review’s contents carefully and engage with press publishers, online platforms, regulators, academics, the public and Members of this House as we consider the way forward. I remain open to further proposals that may go beyond the recommendations or scope of this review.
I know that this issue is of great concern to Members across the House, and today’s review is an important milestone. At the heart of any thriving civil society is a free and vibrant press. The Government—and, I have no doubt, the House—are committed to supporting it through changing times and ensuring that it can continue to do its job. I commend this Statement to the House”.