Johnston Press: Administration

Lord Watson of Wyre Forest Excerpts

Monday 19th November 2018 Commons Chamber

[Tom Watson (West Bromwich East) (Lab)]

(Urgent Question): To ask the Secretary of State for Digital, Culture, Media and Sport if he will make a statement on the impact of Johnston Press going into administration.

[The Secretary of State for Digital, Culture, Media and Sport (Jeremy Wright)]

As the House will know, on Friday Johnston Press confirmed that it was going into administration. Johnston Press has debts of £220 million that were due to be repaid in June next year. It operates, as the House knows, titles at local, regional and national levels. It has explored a range of refinancing options over the past 18 months, including a debt-for-equity swap with bondholders. In October, it entered into a formal sales process, but no suitable buyer was found. On Saturday, it was announced that the newspapers and assets owned by Johnston Press would be acquired by JPI Media, a new consortium established of Johnston Press creditors. JPI Media has said that the operation of the newspapers and websites will continue. It has also said that the debt will be reduced to £85 million, repayable by the end of 2023, and that it will be injecting £35 million into the company to help it operate, including supporting the transition to digital. It has also released a statement saying that the situation will have an impact on employees and pension holders on the defined pension scheme, and that it is working through what this will mean for about 250 current members of staff who are impacted. The Pension Protection Fund has been notified. As the House knows, this is a fund set up by the Government to provide pension benefits to members of defined-benefit schemes whose sponsoring employers have become insolvent. The PPF, with the assistance of the trustees of the scheme, will assess whether the scheme needs to enter the PPF.

Over the weekend, I spoke to David King, formerly the chief executive of Johnston Press and now the chief executive of JPI Media, and today I spoke to its head director. They set out that they believed this move was the best course of action for the long-term future of their staff and titles and that the only alternative would have been liquidation and redundancies. Like Members from across the House, I am committed to a vibrant and free press. Johnston Press, with more than 200 titles and 2,000 staff serving communities across the UK, plays a significant part in that—three of these titles serve my constituency. Its future sustainability is therefore very important to us all.

My deepest sympathies are with anyone who is facing uncertainty as a result of the changes. However, it is important to note that the takeover may come under the rules as set out in the Enterprise Act 2002. Under that legislation, where it appears that a relevant merger or takeover situation arises, the Secretary of State can consider, in a quasi-judicial capacity, whether it raises media public-interest considerations. As such, I am sure that the House will understand that at this stage I will not set out any views on the impact of this specific transaction.

What is clear is that this is an example of the challenges faced by the newspaper industry more broadly and in particular of the challenges faced by local papers. Such papers help to bring together local voices and shine a light on important local issues, in communities, courtrooms and council chambers. It is clear, though, that such papers have to make difficult decisions to try to adapt to the changing market. At this challenging time for print journalism, we are working hard to ensure its sustainability. In March, we launched an independent review, chaired by Dame Frances Cairncross. It will look into how the production and distribution of high-quality journalism can be sustained in a changing market, with a particular focus on the online space. Dame Frances’s report and recommendations will be published early next year. Next week, the Minister for Digital and the Creative Industries will host an open session with Dame Frances, so that Members of this House and of the other place can share their views on these important issues.

At national and local levels, a press that can hold the powerful to account remains an essential component of our democracy. That is what this Government are working to support.

[Tom Watson]

I, too, spoke to David King this weekend. Like many right hon. and hon. Members from Government and Opposition parties, I was alarmed at the plans for Johnston Press to go into administration. This centuries-old British company has more than 200 newspapers that report vital local, regional and national news and hold the powerful to account. Although, as the Secretary of State says, the buy-out by JPI seems to have averted the imminent closure of those publications, their long-term future, and that of hundreds of jobs, is far from certain.

This is part of a bigger, long-term global strategic question: in this digital age of information abundance, how can local democracy be preserved through quality local journalism? Since 2005, 200 local newspapers have closed and we have lost half all local journalists. For 10 years, we have seen the impact of digital disruption on local journalism. After eight years of the current Administration, all we hear is the Secretary of State referring to a process that they currently articulate as the Cairncross review.

Whilst Ministers prevaricate and hold open sessions, the tech oligopolies have consolidated their media advantage by dominating digital ad revenues. They continue to avoid fair taxes and will pay less once the Government’s corporation tax cuts are introduced under the Finance Bill. Some have even allowed criminal data breaches on their platforms. Worse still, they sneer at Parliaments around the world that try to hold them to account. I remind the House again that even Rupert Murdoch showed greater respect for our democratic institutions than Mark Zuckerberg, who refused to appear before our Digital, Culture, Media and Sport Committee.

Specifically on the Johnston Press, which is a victim of the long-term strategic changes in the media market that the Secretary of State’s colleagues, including the Parliamentary Private Secretary, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), who is chuntering from a sedentary position, seem to think are funny—

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

indicated dissent.

[Tom Watson]

Or the hon. Member for Mid Worcestershire (Nigel Huddleston), sitting next to him, then.

Will the Secretary of State confirm that no one currently on a pension from Johnston Press will receive a shortfall in payments? Will the Government step in if they are going to? Will the pension regulator assess what obligation the new entity has to those employees set to lose out?

I understand that JPI Media was apparently established back in September. When was the Secretary of State made aware of that, because, clearly, the writing was on the wall for Johnston Press when the new entity was established, and what meetings has he or his ministerial team had since the creation of JPI Media, to protect the interests of Johnston Press workers?

There is a crisis in local newspapers that we have known about for many years and that, whatever our politics, it is all our civic duties to address. The Secretary of State has been in post for only 134 days. In that time, he has overseen the resignation of a respected Minister, made an obvious and humiliating policy climbdown on fixed odds betting terminals, while ignoring what everyone knew would be the inevitable crisis in local news. He should have given a statement to the House today, not been dragged here to give a woeful answer in an urgent question. After 134 days in post, he needs to wake up and stop sleeping on the job.

[Jeremy Wright]

Let me start by agreeing with the hon. Gentleman that this is indeed a long-term problem that requires some long-term solutions. As he rightly says, local papers have been closing since 2005, but, if my memory serves me correctly, it was not my party in government in 2005; it was his. It really will not do for him to bring what is a serious issue—and a long-term one, as he says—to this House and try to make it into a bit of political point scoring against the current Secretary of State. I do not mind, but those who are affected by these changes will want to hear something a little more constructive from him and the Labour party.

Let me answer the pensions question. The hon. Gentleman asks me about current pensioners. As far as I understand it, they will not be affected. Anyone in receipt of their pension now will continue to be paid. The changes will affect those who are currently in employment, and we believe that there are 250 or so in total.

The next point that the hon. Gentleman makes is that this problem was apparent for some time. He is right, of course, and, as I said in my response to him, the problems affecting local media have been apparent for some time. They are structural problems, which is precisely why we believe that the right approach to take is to ask for an independent assessment of those structural problems, which Dame Frances Cairncross is carrying out and which will be completed shortly. When it is, we have asked Dame Frances to give clear indications of what she believes the answers may be so that we can consider what action a Government can properly take. That is the right approach to what is a structural and long-term problem, as he says.

In answer to another of the hon. Gentleman’s questions, I indicated to him in my initial response that I have had a conversation with David King, as he did over the weekend, and I spoke to JPI’s lead director today. Those are the conversations that I have had since this announcement was made on Friday. He seems to suggest that the Government should do more. He will be aware that, in addition to the Cairncross review, we have made concessions on business rates for newspapers, and we have looked at other ways in which we can help. He will be well aware that local papers were very clear that if the Government had brought into force section 40 of the Crime and Courts Act 2013, they would be significantly affected by it. Indeed, Johnston Press itself responded to the consultation on this matter. The hon. Gentleman may have seen what it said, but, in case he missed it, let me remind him. It said that the impact of section 40 could cost its business £6.7 million. It went on to say that it would force many of its papers that operate on the slimmest of margins to become unprofitable and that they would therefore have to be closed.

I respect the hon. Gentleman’s position on section 40. It is long held and, by him, deeply felt. What he cannot do is come to this House and accuse the Government of doing too little to help local papers when he himself would take action that would profoundly damage them.

--- Later in debate ---

[Alex Sobel (Leeds North West) (Lab/Co-op)]

There are three Johnston Press titles in my constituency—

[Tom Watson]

Name them.

[Alex Sobel]

Thanks. One of those papers, The Yorkshire Post, is vital to our campaign for One Yorkshire devolution. Without The Yorkshire Post, we would not have been able to bring forward a diverse set of parties.

On 14 October, in The Observer, Roy Greenslade produced a devastating critique of the way in which what has happened to Johnston Press came to pass. When the banks failed, they were deemed to be too big to fail. Now the same thing has happened. When Johnston Press ceased to be a family firm, huge acquisitions were made based on debt. Will the Secretary of State be looking at future acquisitions, whether they are debt-backed or not, and will he be looking into the media industries?