Cairncross Review: Government Response

Monday 27th January 2020 Written Statements

[The Minister for Sport, Media and Creative Industries (Nigel Adams)]

My right hon. Friend the Secretary of State for Digital, Culture, Media and Sport, Baroness Morgan of Cotes, has made the following statement.

The Government are today publishing their response to the independent review into the sustainability of high-quality journalism in the UK, which was led by the journalist and academic Dame Frances Cairncross. The Government remain grateful to Dame Frances for her work on this review.

The Cairncross review looked at the overall state of the news media market; the threats to the financial sustainability of publishers; the impact of search engines and social media platforms; and the role of digital advertising. The Review identified a range of challenges facing the sector and made nine recommendations for government, regulators and industry.

Since the publication of the review, DCMS has engaged news publishers, online platforms, the BBC, Ofcom and other regulators to take their views into account in formulating the Government’s response.

This Government are clear that newspapers play an invaluable role in the fabric of our society, and underlines its support for a free and independent press. News publishers remain uniquely placed to undertake the investigative journalism and scrutiny of public institutions, including local councils and our courts, which is vital to helping ensure a healthy democracy both nationally and at a local level. However, as society continues to move online, as the Cairncross review identified, the news publishing sector is facing significant challenges in transitioning to sustainable digital business models. These challenges include newspaper circulation figures and income from advertising falling dramatically, leading to large-scale closure of local papers and the number of full-time, frontline journalists dropping significantly.

The Government are committed to supporting the industry in its transition to a more sustainable footing. The Government therefore accept the majority of the Cairncross review’s recommendations, apart from the proposal to establish an institute for public interest news. The Government will not be taking this recommendation forward as, while it acknowledges the value the proposed institute is intended to achieve, it is not for the Government to lead on this issue.

The Government has already started to take forward some of the interventions proposed in the review. We have worked with Nesta to develop a £2 million pilot innovation fund, which launched in October 2019 and seeks to invest in new technological prototypes, start-ups and innovative business models to explore new ways of sustaining the industry in this changing landscape. The Government will work with Nesta and other partners to evaluate and draw findings from the pilot fund to inform decisions on the full innovation fund ahead of the next spending review. The Government have also announced formally today that it is extending the £1,500 business rates discount for office space occupied by local newspapers in England for an additional five years, until 31 March 2025, as part of its efforts to support local and regional journalism. The Chancellor will consider the case for a range of potential tax incentives to support the news publishing industry this year, including policy options on VAT, notwithstanding recent litigation in this area.

There are many synergies between recommendations made by Dame Frances and this Government’s wider programme of work to address the challenges raised by digital products and services, including in light of the findings of the “Unlocking Digital Competition Report of the Digital Competition Expert Panel”, chaired by Jason Furman, and the online harms White Paper. In taking forward the recommendations from the Cairncross review, the Government will continue to take account of the connections between these areas to ensure a coordinated and coherent approach.

The Cairncross review and its recommendations were not aimed solely at the Government. For example, the review recommended that the Competition and Markets Authority (CMA) investigate the workings of the online advertising market to ensure fair competition. The CMA published their interim report in December 2019 and the Government look forward to considering the findings of the final report, which is due for publication in July 2020.

As announced last year following the publication of the Cairncross review, DCMS is also considering how online advertising is regulated in the UK. This work is looking at how well the current regime is equipped to tackle the challenges posed by developments in online advertising, aiming to foster fair, accountable and ethical online advertising that works for citizens, businesses and society as a whole. This work will complement and supplement other reviews underway in this area, including work by the CMA, the Information Commissioner’s Office and the Centre for Data Ethics and Innovation. In this context, DCMS is today launching a call for evidence. DCMS welcomes views from participants engaged in all stages of the online advertising supply chain, as well as those who work in complementary or competing markets.

The Government also intend to go beyond the recommendations in the Cairncross review, including with a view to supporting the modernisation of court reporting, supporting transparency in the advertising supply chain and continuing to ensure a free and independent press, both in the UK and internationally. The Government will continue to engage with the sector and identify ways to support the news publishing industry as we take forward this work. The Government reiterates its commitment to champion our media and creative industries more widely.

To read the full response, please go to: https://www.gov.uk/government/publications/the-cairncross-review-a-sustainable-future-for-journalism

The call for evidence on online advertising is available at:

https://www.gov.uk/government/publications/online-advertising-call-for-evidence

[HCWS67]