Unrevised

Members present

Lord Best (Chairman)

Baroness Bakewell

Lord Clement-Jones

Baroness Deech

Lord Dubs

Baroness Fookes

Baroness Healy of Primrose Hill

Lord Horam

Lord Razzall

Baroness Scotland of Asthal

Lord Sherbourne of Didsbury

________________

Examination of Witnesses

Dr David Wolfe QC, Chairman, the Press Recognition Panel, and Carolyn Regan, Board Member, the Press Recognition Panel

Q1 The Chairman: Can I welcome both of you, Dr David Wolfe and Carolyn Regan? Thank you very much for joining us from the Press Recognition Panel. We are being broadcast and there will be a transcript of what is said. We have the public with us as well for this session, so everything is on the record. Thank you very much for joining us. You have gathered that we are not going to do another Leveson, you will be delighted to hear. This is not an inquiry that will make recommendations. What we are trying to do is bring some clarity to the position to help parliamentarians but also to help the world outside to explain exactly what the current state of play is in relation to press regulation. We are very grateful that you are able to come and start us off. You are our first witnesses and it is extremely helpful that you could join us. Could you possibly tell us a little bit about yourselves just to start with—where you are coming from and where your special interests lie? Then I am going to ask you to explain the events that led up to the creation of the Press Recognition Panel.

Dr Wolfe: Yes, Chairman, thank you. Let me start, if I may. I am David Wolfe. I was appointed earlier in the year—and I will no doubt talk about the process of that in a moment—as the chair of the Press Recognition Panel. With me is Carolyn Regan, another member of the board. The other members of the board sit behind us in the audience listening and supporting us here today.

Carolyn Regan: Hello, I am Carolyn Regan. I am a board member of the Press Recognition Panel and I have worked in the NHS and in legal aid. I am an independent member of City University.

Q2 The Chairman: Thank you both very much. Could you, between the two of you, explain briefly the events that led up to the creation of the Press Recognition Panel, what its role is and how you feel that it will improve press regulation in the future?

Dr Wolfe: Let me have a go at that. Let me start, if I may, with the Leveson inquiry process. The Leveson report obviously made a range of recommendations. We are concerned with part 1 of that report around press regulation issues. That in turn led to the royal charter process, and obviously I can talk in more detail about any of these elements if you want me to. The royal charter process then put in place the process that has led to us being appointed and the panel coming into existence.

The specific mechanism that the royal charter put in place for us to come into existence was that it required the Commissioner for Public Appointments—that is, Sir David Normington—to appoint an appointments panel of independent people, which he did, the components of which were specified. There were various categories of people who could not serve on that panel, such as members of the press, editors and so on. That panel then embarked on the process of appointing first me and then the rest of the board. They advertised in the back end of 2013 across the whole of the UK, very widely, and received applications for the chair’s job that I applied for. I was then, through a competitive process, interviewed by them in June of this year and appointed directly by them. There was no external involvement in that appointment. I was simply appointed directly by the appointments process that in turn had come from the royal charter.

I then worked with the four of them, so we became a panel of five, to do the second phase of the recruitment, which was to recruit a board. Again, we advertised very widely, received a very large number of applications from people who wished to be on the board, and that process took us from the middle of June through to October. In October, the appointments for the rest of the board were announced with effect from 3 November. By operation of the royal charter, it then provides that the panel came into existence as a legal entity with the appointment of its board on 3 November. We have existed as a legal entity from that point and we then have the powers that come to us under the royal charter, so that is what we are now operating to.

The Chairman: Just as a broad overview, what difference do you hope that the creation of the Press Recognition Panel will lead to? What change for the world around us will this mean?

Dr Wolfe: We have two specific roles, one of which is to do with what is called recognition—that is the term used under the charter—of regulators. The other is a reporting role. Let me talk about them separately.

The recognition role is that it is our job to put ourselves in a position where we can receive applications from press self-regulators for them to be recognised by us. What that means is that we then will hold them up to scrutiny against the criteria that are in the royal charter. There is a series of criteria around the independence of their board and various other facets of their organisation, against which we scrutinise them. If they meet those criteria, we will say so and they will then be what is called approved regulators. They do not have to apply to us, but if they do we have to process their applications and that is what we do. There is then a set of legislative provisions around the court process, the effect of which depends upon whether a press body is under an approved regulator or not. The framework is fairly typical of, but by no means the same as, every other oversight regulator framework—something of an oversight regulator that sits above a series of front-line self-regulators. We have no role in making decisions about the actual operation of the press. Our role is simply to sit above the self-regulators and to assess their structures and frameworks against the criteria in the royal charter.

The other aspect that I mentioned is our reporting role, where the charter requires us to do several bits of reporting, one of which is to report on what is called the success or failure of the recognition system. The second is to report on an annual basis whether we have received applications and how we have dealt with them. We will obviously take those very seriously and be reporting, and our reports are laid before Parliament on how the system is working or not in our view. Those are the twin tracks of what we are here to do.

The Chairman: Feel free to add anything you like at any point, Carolyn.

Carolyn Regan: I will.

Q3 Lord Razzall: You have explained the first bit of my question, which is how the membership was selected and who did it. I think the Committee would be interested in term—how long people are selected for—and, indeed, the term of the organisation. Is this an organisation that has an indefinite life or does it have to be reappointed? How does that work?

Dr Wolfe: The narrow answer to your question is that the organisation once set up by the royal charter exists in perpetuity until it is wound up by another royal charter. There are various mechanisms such as the possibility of our surrendering the charter. That is not in contemplation but there is a mechanism for it. The Panel effectively exists for ever. We have personally been appointed for a five-year term, which can be extendable to eight years, but there is then a regime of perpetual successions - we are required in that five to eight-year period to introduce a regime of new appointments so that there is phasing into the future. Certainly, you will have the same group of us for the next five years, but after that—

Lord Razzall: So five, but it could be eight?

Dr Wolfe: It could be eight, exactly.

Q4 Baroness Healy of Primrose Hill: You said in your submission, “We envisage inviting press organisations, including press regulators, at a point where we have better developed our thinking on the mechanics of the recognition process—likely to be from Spring 2015—but we would be happy to meet them sooner, as they wish”. Could you explain the reasons for this to the Committee, because there are some fears that there is unnecessary delay or that you are taking rather longer than people had hoped?

Carolyn Regan: Yes. Can I assure the Committee that we are working as fast as we can? This morning we agreed a schedule of meetings with interested parties, which we will publish. It is open for other people; in fact, we will be seeking views from a wide range of organisations and individuals, all of which will be a matter for public record. We have agreed that we would like to invite people in groups to help us with our thinking and our thoughts on how we should proceed next. We are looking to members of the Leveson inquiry as a starter, academics and commentators, also interest groups, representative bodies of journalists and representative bodies of the press. In fact, given that we had our board meeting only this morning, we will be publishing that draft schedule for comment probably tomorrow morning.

Dr Wolfe: In terms of the background to that, we take the view that we need to be a properly functioning public body, which is what the charter provides us to be. Our initial activities over the last two months have been to get going on the basic mechanics of an organisation, and that is ongoing. Now we are going into a phase where we are looking more at the detail of the regulatory framework, which is the process that Carolyn has described. You can be reassured that we are not in any sense slow-pedalling, but one of the things that is fundamental to the way we have decided to behave is that we intend to behave in a very open, transparent and—perhaps most particularly—consultative way. Rather than simply rushing in and saying, “This is what we are going to do”, we want to make sure that all the interested people and organisations can feed into how we go about what we see as a very important task. That inevitably takes a bit of time.

Q5 Lord Sherbourne of Didsbury: Can I ask you how you are going to operate and about the costs of the administration of the panel? Presumably, the workload will depend on the extent to which you have a body that is registered with you. If there is no such body, the workload will be different. First of all, how many full-time people do you employ and is that likely to change if there is one, or possibly more than one, body that seeks and gets recognition from you? Secondly, in terms of budgeting, presumably your money is coming from the Treasury, from public funds. How much do you need going forward, depending on your workload?

Carolyn Regan: Shall I start and then David can come in? We are employing at the moment three interim members of staff and we are out to advert for an executive director, who we hope to interview later this week. We have sufficient funds for our work at the moment but, as you said, this will ebb and flow depending on the volumes. We are setting a budget for the financial year, bearing in mind what we have said about keeping the members of staff and the organisation lean and mean, if I can use that well-hackneyed phrase. We feel that we have enough funds to undertake the role that we have been set up to do, but it is still very early days in terms of establishing the size of the team we need. We envisage it to be a very small team of staff, but to a certain extent that will depend on the workload as we move forward.

Lord Sherbourne of Didsbury: I saw that there was a statement about an advance of £900,000 being given to you. How long a period is that supposed to cover?

Dr Wolfe: Let me talk about the background to that. Back in the process of discussions around the royal charter, as I understand it—obviously we were not involved at that point—it was decided that the royal charter would provide that for the first three years we would receive money from the Treasury. After that, we receive money through applications, so there are two different phases in a sense. The discussions around the royal charter, as I understand it, led to figures being identified. That is the provenance of the figure that we have then been allocated for the financial year up to April, though it is a part financial year. Then, as we have been told, there will be more money in subsequent years up to the three-year point. That is where that comes from.

Lord Sherbourne of Didsbury: Is the £900,000 from November to April?

Dr Wolfe: It is calculated in a slightly different way because the figure that has been allocated for an annual basis is more than that, but it has been front-loaded because of a recognition that we would do more work in the early period, so it is not £900,000 scaled up. But that has not been identified by us as the figure we need to spend; that is simply the sum that has been identified and passed over to us. I do not envisage we will spend that much, but we are not in a position at the moment to tell you how much we will need. That gives us the security to be able to say to you, as Carolyn did, that we have the money and we are not going to be going begging to anybody who might then be able to influence the way we behave. That is part of securing our independence, if you like, as we have guaranteed funds.

Q6 Lord Clement-Jones: You mentioned that after the first three years you are going to make your income through fees for applications.

Dr Wolfe: Yes.

Lord Clement-Jones: How realistic is that?

Dr Wolfe: It obviously depends on the extent to which there are applications.

Lord Clement-Jones: Well, quite. How many applications do you expect to receive?

Dr Wolfe: At the moment we have absolutely no idea, and certainly what the position would be in three years’ time is very difficult to identify. The royal charter says that at that point the guaranteed Treasury funds dry up, but it provides for a mechanism—not of our creation but no doubt this is what was envisaged—to enable us to continue the activity in the event that there are no applications. We need to remain in place for the royal charter to carry on, no doubt at a much lower operational level if that were the position. At the moment, we are pressing on with the current role. There may be issues down the line depending on how things come out in due course.

Lord Clement-Jones: You are going to have to have scores of self-regulators all applying to you in order to be financially viable after three years, by the sound of it.

Dr Wolfe: The mechanism is of application and then review. If I look into my crystal ball, if we were to get applications in the next 12 months or so, by three years down the line they would likely be review applications rather than fresh applications. It is up to us to consult and identify on a charging scheme and I am sure that we would build those things into it. It may well be that the review activity and the annual reporting activity would be a much more modest task, but that is for the future.

Baroness Fookes: Before I turn to my own question, could I have a supplementary, Lord Chairman? Is it envisaged that the board members are paid as well as what one might call staff?

Dr Wolfe: Do you mean in technical terms? They are employees but that is merely the legal mechanism. One of the things that the charter required us to do, for better or for worse, was to decide how much we should be paid. We made an initial decision on that and we are consulting publicly on that initial decision, as a result of which we are paid the salary equivalent of a daily rate. The royal charter required us to set those figures having regard to the rates generally paid to public sector boards, and we went through an exercise of getting data on what that would be to get benchmark figures. As I say, that is all part of a consultation at the moment. If people want to comment on what we think we should be paid, they can certainly do so. I am not sure that answers your question.

Baroness Fookes: I was thinking of your budgets, but at the same time it is important that one knows what your board is going to be paid. It is what I call the usual thing for public boards, the mechanism anyway, the precise amount still to be consulted about.

Dr Wolfe: Still to be finalised, yes.

Q7 Baroness Fookes: Thank you. Perhaps I could turn now to the criticism made by the Leveson inquiry that the old Press Complaints Commission was not sufficiently independent of the press. How would you ensure that you do not suffer the same criticism? In other words, how will you ensure that the press regulators are independent of the press?

Carolyn Regan: Our job, as David said earlier, is to assess the applications against the criteria in the royal charter. That sets out the provision of the membership—the appointment of those boards and their funding and various other things. If the criteria are met, then they will be seen to have independence, which was seen as lacking before.

Baroness Fookes: If you would refresh us, what are those criteria?

Carolyn Regan: The appointment mechanism, the independence of the board membership, and the funding mechanisms. Have I missed anything?

Dr Wolfe: That is the core framework that the schedule in the charter identifies. It identifies lots of other things about how they behave, but in terms of their establishment and their independence, that is the principal framework. Obviously, we will do a certain amount of fleshing out of details but that is the basic structure.

Carolyn Regan: That is the core from the charter, yes.

Lord Sherbourne of Didsbury: May I ask a supplementary on that? Do you envisage that there ever might be an occasion where nobody has come forward to seek recognition but where you may decide that you want to indicate whether any existing self-regulatory body might come within the criteria? Or do you think you are going to be entirely passive in that respect?

Dr Wolfe: Our formal role, as I said at the beginning, is to receive and process applications and they would have to be applications against the criteria. We might, I suppose, say, “You have applied and you meet 22 of the 23 but you do not meet the 23rd”. One of them might be board membership, for example. Equally, I suppose, as part of our role in annually reporting on the success or failure of the system, we might say, “We have had applications from X and Y but not from Z. Z has not applied but might, if they applied, meet in some respects and not others”. I am speculating.

Lord Sherbourne of Didsbury: I was just thinking that if you get no applications and you are getting a bit frustrated that you are sitting there doing nothing, costing the taxpayer money, and the outside world is saying, “What the hell is going on?” might you be tempted to at least put forward your views as to where the existing self-regulatory bodies failed to meet your criteria to encourage people?

Carolyn Regan: My answer would be that it is a bit early to say and we have not had that debate as a board. As David mentioned, the annual report is the opportunity to look more broadly and perhaps make some comments about the current situation and the future.

Baroness Scotland of Asthal: I was just a bit troubled about the timeframe. I absolutely understand that the way in which the Act has framed your creation limits certain aspects of what you were minded to do. But if I understand it correctly, nothing can happen until you are up and running and ready to do business because you have to be the people who recognise these bodies. I am just a little troubled about the time this is all taking because, if there were to be someone ready to go now, in need of scrutiny, in need of regulation, you would not be able to do it. I was just wondering what timeframe you think you will be ready in.

Dr Wolfe: I will try to pick up aspects of that. As Carolyn said, we are working to do things in what we think is the right way to do it and there are various consultation processes we are going through. You can be reassured in overall terms that we are not artificially slowing ourselves down because of some horizon that we do not want to hit too early. There is no sense of that whatever. We have set out, as I said, various processes of consultation and so on and we have set shorter than what some people would think appropriate timescales for consultation and so on, so we are accelerating processes in general terms.

None of that stops self-regulators coming into existence and, indeed, IPSO is obviously in existence and operating. We are consulting, among other things, on the process we are following. But, if we were to receive responses in that that said, “Hang on a minute, we want to bang on your door and make an application much more quickly than you appear to be ready”, then we would no doubt have to respond to that. That is not our sense at the moment. I do not think we are slowing anything down. If we got wind that we were slowing things down in the real world rather than on paper, then we would certainly, I am sure, want to respond to that as vigorously as we could. The legislation has some timescales built into it, because there are some provisions in the Crime and Courts Act 2013 that come into play in November—or a year after our creation, which means November—but we are not slowing down to not meet that timescale. I am sure if we did not meet that timescale we would be subject to criticism, and we have every intention of being ready ahead of then—indeed, possibly well ahead of then.

Lord Clement-Jones: Does it all stem from the fact that nothing could really happen until you were appointed as chair and, in turn, could appoint your panel?

Dr Wolfe: Yes. Obviously, there was a big period of time from the Leveson report to the royal charter. There is then another big period of time. They are more or less a year in each case—a year from the Leveson report, a year to the royal charter—and then the process of appointing me took many months. I was not involved in that, obviously. I was appointed in the middle of June, and then by the time we had gone through a proper recruitment process to recruit the board, and received hundreds of applications to be on the board, that took us to October, with a November appointments date. Each of the sections has gone reasonably quickly, although I can see in overall terms that it looks like a long time.

Baroness Scotland of Asthal: Can I be clear about what I am worried about? There are those who would like this to be like Godot and for it to go on and on and on and never come to any conclusion because, of course, that would be the least challenging opportunity. I am just a bit anxious. I absolutely understand what you say in relation to consultation, but there are those who will argue that there was masses of consultation before you were created and there has been masses of consultation since you were appointed. What specificity do you think would have been lacking if you had gone without as much consultation as you have decided, in your wisdom, to undertake?

Dr Wolfe: What we are consulting on at the moment are, if you like, organisational things. For example, we are consulting on whether we should behave as if the Freedom of Information Act applies to us, which it does not as a matter of law. We are proposing to behave as if it did. We think that is a good idea, but we want to hear people’s views on whether they think that is a good idea. Those are examples of the sort of organisational mechanics that we are doing at the moment. In terms of the phase that Carolyn was talking about of talking to groups of interested people and anybody who wants to talk to us—because we want anybody who wants to come and talk to us to come and talk to us—about the actual regulatory mechanics, there are no doubt process questions. In terms of the substance of the criteria—the schedule with its 23 criteria—some of those are actually quite broad-brush. It requires things like a complaints system and it gives you a broad outline of what a complaints system should look like. We think it is a good idea—and no doubt people will tell us whether they agree with us or not—that we should flesh out in advance a bit more detail of what a good complaints system would look like before we hold up would-be regulators to scrutiny. There is a framework but there is, we think, more detail that needs to sit under it. Going back to your concern about people who will try to slow it down, I do not think we are particularly receptive to those voices and we are certainly not doing anything to slow it down from our end.

Lord Horam: Let us be crystal clear about this. If a regulator came to you now, could you recognise them?

Dr Wolfe: Not today, but if they came to us now and said, “We would like to make an application and we would like to make an application next week”, we would have to get our skates on to try to receive that.

Lord Horam: So you are in a position to accept somebody.

Dr Wolfe: Well, not today. We would have to make a decision about whether we cut across what we regard as the good process that we are undertaking in terms of public involvement and so on. I think there would be a balance to be struck between saying we can make a quick decision on an application next month as opposed to what we think the public interest balance might require, which is a greater degree of consultation on the application and so on. We would like, for example, to hear what people think about an application before we decide upon it.

Lord Horam: What is your current view about whether there is likely to be an application? Can you tell the Committee whether you have any information about it?

Dr Wolfe: We have no information that is not in the public domain.

Lord Horam: You do not?

Dr Wolfe: Certainly not, no, partly because we have been very clear that our dialogues are public dialogues. We do not propose to have any covert meetings with anybody or behind-the-scenes discussions.

Q8 Lord Horam: We were talking earlier about the number of fees you might get from various groups of people. In theory, how many bodies could apply? Are we talking about one, two, five, 10 regulators?

Dr Wolfe: The royal charter specifically provides for regulators, plural, so it does not assume that there will only be one front-line self-regulator. It allows for but does not—

Lord Horam: Have you formed a view, in theory, about how many there could be?

Dr Wolfe: I suppose in theory there could be one for every relevant publisher. Every relevant publisher could have one regulator with one regulated—but that would be very surprising. In the public domain, already we know about IPSO and IMPRESS, from whom you are hearing and you can, no doubt, get their first-hand experience on it.

Lord Horam: There may be others as well.

Dr Wolfe: We have no idea. We have no private information. All we can really say is that our role is to receive applications from anybody who comes forward. If somebody comes forward and says, “You need to change your process to cope with more or fewer regulators”, then we would have to look at that.

Lord Horam: Right. What happens if nobody comes forward?

Dr Wolfe: In terms of us?

Lord Horam: Yes.

Dr Wolfe: In terms of us, we have to remain in existence, partly because the royal charter—

Lord Horam: Even though you are doing no work?

Dr Wolfe: We would have to go into a phase of remaining legally in existence—

Lord Horam: To hibernate.

Dr Wolfe: Hibernate, yes, or a holding pattern you might call it, to be in a position to receive applications were they to come forward, partly because that is what the royal charter requires us to do, but also because, with the various court mechanisms around costs and so on, for them to bite when they come into force they are dependent on the ability of somebody to make an application. We could not shut up shop. We would have to be available. Obviously, our costs at that point would drop dramatically because we would be doing very little active. We are not planning for that; we are not expecting that. We are pressing on assuming and hoping that there will be applications.

Carolyn Regan: We would want to review why, if that did happen, so we would go back to some of the previous points, I expect.

Dr Wolfe: Yes.

Lord Horam: Right. Coming back to the point that my colleague raised, what can you do to activate this process if another six months goes by and nothing has happened? People will get very worried and say, “What is all this about?”

Dr Wolfe: We are actively—and this is part of that process—going out telling the message, as it were. In terms of the external processes, there are the legal mechanisms in the Crime and Courts Act, some of which come into force automatically. I think we mentioned this earlier on. Some of these come into force automatically at the one-year point, which is 3 November 2015, and some of them require statutory instruments to get them invoked.

Lord Horam: Do you think that will make a difference?

Dr Wolfe: It is not for us judge. I do not want to duck the question, but quite how the press industry will respond to those is anybody’s guess. They have obviously been framed by the parliamentary process, presumably with the idea of providing, to some extent, an incentive mechanism. They also provide easier access to court if there is not in place a regulator who can give you a low-cost alternative to court. That is the structure of them. They make it easier for you to bring libel proceedings or whatever it may be through the court process if a regulator has not come forward to put in place a workable arbitration mechanism. That is the structure of it.

Baroness Deech: Just a quick preliminary before I get on to exemplary damages: are you satisfied that the members of your board are sufficiently diverse? Surveying the other boards, will diversity be a condition if you ever get around to recognising someone? At the moment, it does not strike me that it is particularly a diverse world.

Dr Wolfe: Yes. I was involved in the recruitment process and I am not sure I am in a position to lift the lid on the range of applications that we received and so on. You could certainly make observations about the profile of the group, but they were selected by the team appointed by the Commissioner for Public Appointments, and that process was subject to his audit and scrutiny. It was also very informed by things like the public sector equality duty, and it was certainly very widely advertised and received a wide trawl of people. It was also working with a set of criteria that come from the royal charter, which themselves, as so many of these processes do, steer the range of the kind of people who can apply and who are likely to succeed in those processes. One of the specific things that we are conscious of is that we have a UK-wide remit, and although the Crime and Courts Act is an England and Wales-only provision—so there is a gap in the system if you look at it that way in Scotland and Northern Ireland—we do not have any members on our board who could seriously say that they had a foot in Scotland and Northern Ireland.

Baroness Deech: It is quite worrying when you realise that you one day will have to consider how the entire population of the UK gets justice from regulators if diversity has not so far entered into it and, it seems, will not enter into it when you consider recognising other panels.

Dr Wolfe: I am not sure I answered that. That is, no doubt, an issue that we need to look at when we come to look at how we flesh out the criteria. Certainly, the royal charter says that our functions are public functions, and that means that things like the Human Rights Act and the public sector equality duty bite on us as they do on other public bodies. Those are certainly elements that we would need to feed into our thinking as to what the fleshing out of the criteria would look like. I can well imagine that being part of it.

Q9 Baroness Deech: Yes, because if I can echo someone at the BBC who said it, I think, it does look very much like white middle-class English capture at the moment. Anyway, leave that on one side. Exemplary damages is a complicated issue.

Dr Wolfe: Yes.

Baroness Deech: Could you explain to us briefly how that will work and whether or not you think that the possibility will have a chilling effect on the industry?

Dr Wolfe: Let me have a go. I will talk for a moment about the exemplary damages, because there is also the costs bit. The provisions of Section 37 and the subsequent provisions of the Crime and Courts Act, which was put in place a couple of years ago, provide for a regime of exemplary damages, which is an unknown to date regime in our system of press litigation. That framework comes into play—this is the exemplary damages bit—automatically at the annual point of our creation, so that is 3 November 2015. That will come into force automatically. It does not depend upon there being a regulator in place for people to apply to.

There is then a slightly complicated mechanism, which is effectively what the judge hearing a case would have to work his or her way through, which is whether or not to award exemplary damages in a particular case. The simple position is that if a relevant publisher is regulated by a self-regulator recognised by us, then none of that applies to them, or only applies to them in exceptional circumstances. If nobody comes forward to be recognised, or nobody succeeds in their recognition, that exemplary damages regime will come into force as a matter of automatic process in November of this year.

There is a contrast between that and the costs regime, which is also in the Crime and Courts Act, which has to be brought into force by statutory instrument and which does depend on the existence of a regulator. It is a slightly subtle position. Part of it is automatic, part of it is not. As for the effect it will have on relevant publishers, I am not sure we are in a position to speculate on that.

Baroness Deech: What is a relevant publisher?

Dr Wolfe: A relevant publisher is, effectively, all the press. It is a slightly complicated definition, but it captures anybody who produces something that has news content produced by different authors and under the control of an editor. That can be online or newsprint, so it catches newspapers and their online editions.

Baroness Deech: And magazines?

Dr Wolfe: Magazines, but magazines very often will not have a news content with separate editors. Then there are some various exemptions, some of which are quite big, like specialist technical publications, local authority newspapers, and several others. There are various exemptions, but certainly the main body of the press that were subject to the Leveson process are relevant publishers.

Baroness Deech: Have you considered whether the issue of exemplary damages might form the object of complaints to the European Court of Human Rights?

Dr Wolfe: We have not because I do not think it is our role to do that. No doubt that might be an issue and we might read about that as a concern in the media. That would no doubt be an issue in any litigation in which exemplary damages were awarded following November 2015. You can have a lawyer’s view on whether a claim to the European Court would succeed, but that is not the role of the panel to provide that sort of thing.

Baroness Deech: You differentiated, quite rightly, between exemplary damages and costs. Can you explain to us the rationale behind the provision that costs can be awarded against a publisher even where the claim against the publisher is unsuccessful?

Dr Wolfe: I can try. But it is not our baby - we just operate the system. But if you step back a step, one of the concerns that the Leveson report identified was the difficulty that people have in getting redress against press organisations. As things stand, they basically have to go through a litigation process that is costly, time-consuming and all the rest of it. Therefore, that is a very big barrier to people getting redress against the press where they feel they have a grievance.

What we now have is a sort of binary system where, if it is put into effect by statutory instrument, there is either a regime that allows for what is called a “one-way cost-shifting mechanism”—in other words, if you bring a claim against a publisher, they will have to pay your legal costs either way; that is the Crime and Courts Act regime—or the regulator has put in place a low-cost alternative arbitration mechanism. In a way, those are the two alternatives, and a publisher that is regulated by a regulator who is recognised by us will only be recognised by us if they have a low-cost alternative to court, but that very fact in turn gets them out of the regime of the Crime and Courts Act. That is the rationale, I think. It is partly, no doubt, to provide incentives to sign up but also, more fundamentally, to ensure that one way or another the public can get access to a resolution mechanism without great cost.

Lord Sherbourne of Didsbury: Can I be clear on the point on exemplary damages? I may have got this confused in my own mind. If by November no body has been recognised by your panel and, therefore, there is no such body that a regulator comes under, a publisher could still be liable to exemplary damages even though there is nothing they can do about it.

Dr Wolfe: Well, except that pretty much by definition the regulators that are being set up are what are called “self-regulators”. They are the initiative of the newspapers themselves or the publishers themselves. It is not that there is nothing they can do about it because it is open to publishers or groups of publishers to establish self-regulators at any time. The question to them would be, “Why have you not set up a self-regulator?” if you were posing it that way. Does that make sense?

Lord Sherbourne of Didsbury: No, I just wanted to be absolutely clear because I was under the misapprehension that there had to be a regulator approved by you before the exemplary damages provisions came into effect. I am obviously wrong on that point.

Dr Wolfe: That is right in relation to the cost-shifting bit but not the other bit. It needs to be possible for them to apply, which is why we need to be up and ready, but as long as on 2 November they could make an application to us, if they choose not to that is not a sufficient answer to get them out of the exemplary damages regime.

Baroness Bakewell: Can I take up that point? What is the time lag here? If there is no recognised regulator and a publisher is up against it and wants to become set up as a regulator, over what period of time would that take for them to come to you, fill in the application and have it considered? What are we talking about?

Dr Wolfe: We have not worked through what we think the process will be to do that. Our initial view is that that process needs to be one that allows for public participation in it, because we would not simply want to receive a piece of paper. We would want to hear the views of interested people on whether they thought the applicant met the criteria, but we are not seeking to string that out. That is what we think is good practice. As I said in answer to an earlier question, we do not have a sense that there is anybody knocking on our door wanting to make an application at the moment, but if we got that sense we could, no doubt, look to accelerate our processes. But we would have to still strike a balance between what we think is a good practice way of doing it and the urgency that they were expressing to us.

Baroness Bakewell: Give me some idea. Are we talking six weeks, six months, six years?

Dr Wolfe: We certainly intend to be in a position well ahead of November for somebody to make an application. As for how long it would take us to process that, we do not have a view but it is going to be weeks and early months rather than any longer than that. I am speaking on the hoof because we have not—

Baroness Scotland of Asthal: Is this not the position? From the moment everyone knew that this process was possible, all the agencies could have, if they wished, started to look at how they were going to implement Leveson.

Dr Wolfe: Absolutely.

Baroness Scotland of Asthal: They should have been forming their regulatory bodies now in a compliant way with the Leveson procedures. Simultaneously, you should be setting up the regulatory framework as quickly as possible and, in any event, not later than November, because if you fail to do that all of the current entities can say, “It is not our fault. There is no regulator. There was nothing we could do”.

Dr Wolfe: Exactly right.

Baroness Scotland of Asthal: But if you were speedy and were ready to roll by, for example, next week, then anyone who was willing and able to put themselves into a Leveson-compliant way could apply to you to be regulated, so that after November all the publishers would be able to say, “We have had all the period from Leveson to now to be compliant if we so choose”.

Dr Wolfe: Yes. Assuming for the moment that we do our job and we are in a position to receive their applications, if after November they choose not to make applications, then that will not be because we have not done our bit of that framework. It will be because they are choosing either to not comply with the criteria or to not make an application.

Q10 Lord Dubs: According to your written submission, you have no power to compel any press regulator to apply for recognition. It has to entirely happen from them. What is the rationale behind that?

Dr Wolfe: That is the position in which we find ourselves. That is the framing of the royal charter and I think it has its roots in Lord Leveson’s recommendations. He recommended, essentially, a framework of a recognition oversight body and then what turned into the Crime and Courts Act provisions, but not with an oversight regulator that had the power to compel.

Lord Dubs: Do you think that if you felt there was a need for such recognition you could say to the regulator, “Why do you not?” Could you encourage them informally if you do not have the powers of compulsion?

Dr Wolfe: As Carolyn said earlier, we are going to meet actively with regulators if they want to meet with us. We will certainly be doing our best to dispel any misunderstandings they have about our role or how we are doing it or any of those things. We hope that will provide them with a degree of encouragement to apply, but obviously they have to be potentially compliant first. We are also—and this is part of it—meeting with you today very much on the front foot in putting the message out so that we begin to get a clearer public understanding of the framework. I think it is fair to say that there is not a lot of public understanding at the moment. We see our role as including an element of that public education.

Lord Dubs: That public education could include saying to them, “Look, the most sensible thing would be if you were to apply. We cannot make you, but do not be silly. If you do not do it, you cannot sit on the sidelines”.

Dr Wolfe: Yes, I suppose we could. We can certainly say to them, “If after November we are in a position to receive your application and you have not made one, then that is very demonstrably your public choice to stand outside the framework that came from the Leveson report”. At that point, on November 4 or whenever, it will only be their decision.

Lord Dubs: Yes, but as I said a minute ago, you have the power to—

Dr Wolfe: Cajole.

Lord Dubs:—be persuasive, to cajole, to encourage, and to say to them, “Do not be bloody silly”.

Dr Wolfe: Yes.

The Chairman: Can I pick you up on one of the key points?

Dr Wolfe: Of course.

The Chairman: You are boxed in; you have to follow certain criteria. Your criteria include that the funding of the regulatory body must be independent, independent funding, yet the reality is that it is almost certain to be paid for by the publishers themselves. Does that square? You are not going to rule anybody out because the money comes from the people who are being regulated, but how do we then get independence in terms of funding if it is for sure the people who are being regulated who are paying for the regulator?

Dr Wolfe: We have not yet—and it is one of our next immediate tasks—begun to work through those criteria to unravel the potential dilemmas that you have identified. We will obviously have to do our best to make them work because the underpinning for us is to try to get in place a regime that is as compliant as it can be to protect the public interest and a free press, which we see as underpinning everything we do. I do not think it is going to help anybody if we turn around and say, “This is internally inconsistent and cannot be made to work”, because the target for us all is an appropriately overseen free press where we have a role to play in that structure.

Baroness Deech: Chairman, I hope I did not miss this. How many full-time staff do you have and how often does your board meet?

Carolyn Regan: The board meets monthly and we have a programme for the next year. We have three interim members of staff at the moment.

Dr Wolfe: But they are all part-time.

Carolyn Regan: Yes.

Q11 The Chairman: You are rightly saying that this is an opportunity to inform the public. Thank you for that. Is there anything that you would like to inform us and the wider world about?

Dr Wolfe: We have covered everything.

Carolyn Regan: I think we have covered it, yes.

Dr Wolfe: Just to draw your attention back, we have given you a copy of our mission statement, which we are consulting on, that frames what we think our role is. We have hoped to summarise this afternoon how we are going about doing that. We are enthusiastic to receive anybody’s views on that statement, but also behind it, on our website, are a number of other policies - I have identified a couple here today. They are about organisational mechanics, and we are keen to receive views on those things.

Part of that, you will have seen, is that we have taken a conscious decision to position ourselves as a very transparent, open organisation because we think that is the right way to do it. As an example of that, we had our third board meeting this morning. That was open to the public. We were grateful to have members of the public there and we hope to build on that in the future. Although Carolyn has indicated that we have a programme, we are going to invite people proactively. Anybody else who wants to come and speak to us, press regulators, individuals, organisations, academics—

Carolyn Regan: Interest groups.

Dr Wolfe:—commentators, interest groups, we are very happy to meet them. All those meetings will be a matter of public record. They may be held behind closed doors, but they will be a matter of public record. We will not be having under-the-radar conversations with anybody because we do not think that is the right way to do it in this context, if at all. That is the positioning that we have identified, but if anybody wants to comment on that, or anything else, we are actively seeking views.

Carolyn Regan: We would welcome that, yes.

Dr Wolfe: We would welcome that.

The Chairman: You have been very helpful and informative for us. I hope that we have been helpful to your getting your messages out into the world.

Dr Wolfe: You have. Thank you for your questions.

Carolyn Regan: Thank you.

The Chairman: Thank you very much indeed for coming.

Examination of Witnesses

Walter Merricks CBE, Chairman, IMPRESS, and Jonathan Heawood, Director, the IMPRESS Project

Q12 The Chairman: Welcome to both of you, Jonathan Heawood and Walter Merricks. Thank you very much for joining us from IMPRESS and the IMPRESS Project. We are live, being broadcast, and there will be a transcript of what you say, so we are on the public record. I am going to ask my colleagues whether they have any interests to declare for the public record before we launch off.

Baroness Scotland of Asthal: I suppose I should formally declare that I was the shadow Attorney-General up until 2011 and the Attorney-General before that.

The Chairman: Thank you very much. No other interests. Welcome to both of you. We look forward very much to learning what is happening with IMPRESS. We are not going to have a repeat of the Leveson experience. We are trying to put on the public record what exactly is happening in press regulation, and this event and our final report that will follow it are intended to inform parliamentarians, and indeed everybody else, in what is a rather cloudy world at the moment. We hope to bring clarity to it in the future. Thank you very much for joining us. Could you begin by telling us for the record, although we have had a very useful paper from you, who you are and what your special interests that have brought you to us today have been?

Walter Merricks: I am Walter Merricks and I chair IMPRESS, or at least I have been appointed as the chair-designate of IMPRESS—IMPRESS, as a regulator, does not quite exist yet. I have been appointed by an independent process, which we will describe later on. I have a background in both regulation and having been an ombudsman in the financial services world. I have been involved with nearly all the other private sector ombudsman schemes, apart from that which you yourself are involved in, Lord Chairman. I have also been involved in the regulation of a variety of different industries, so I am aware of all those and I can bring that experience to bear in this field.

Jonathan Heawood: Thank you. I am Jonathan Heawood. I am the founding director of the IMPRESS project, which was established about 15 or 16 months ago as the incubator, the development organisation, for what will become in due course a regulator to be called IMPRESS. My background is largely in the media and the non-profit world. I worked at the Observer newspaper, edited the Fabian Review, worked at English PEN for many years campaigning for press freedom and free speech, and worked at a foundation called the Sigrid Rausing Trust. That is my experience.

Q13 The Chairman: Thank you very much. Could both of you tell us why IMPRESS was created and what its aims and objectives are?

Jonathan Heawood: Shall I begin, as I was part of the creation, to talk about the background, and then perhaps Walter can talk about the aims in the future? The IMPRESS project arose out of a moment, which you have already been talking about in the previous session, in the middle of 2013 when it became very clear that the post-Leveson process had become, as you say, cloudy, to say the least. There was a royal charter in existence. There was a rival charter promoted by elements within the newspaper industry. There was large public confusion, and what had seemed like a very sensible and proportionate set of proposals that had come out of the Leveson inquiry seemed to be in the process of being lost. My initial thoughts about that were that there was a huge opportunity there in those proposals for the press, for investigative journalists, for those who are determined to root out injustice, corruption and hypocrisy by taking advantage of the benefits which the charter framework and the incentives would give them. I was concerned that publishers should have the opportunity to make the most of those opportunities.

At the same time, I was concerned that if, between them, politicians and the industry managed to mangle that framework, there was a danger that in the next cycle, the next time there is a major scandal or public outcry in this area, something potentially more draconian, more statutory, with more direct political involvement, might be enforced on the press and I was very keen to avoid that risk. I felt, in light of experience and the fact that self-regulation has been shown demonstrably over 70 years to have failed in this particular industry, that it was worth at least exploring the possibility of putting something in place that did meet the Leveson requirements. The aim at that point was to develop a charter-compliant regulator, although not necessarily to seek recognition under the charter, which we can discuss later. Perhaps I should hand over.

Walter Merricks: On the aims and objectives for the future, our aim is to become a regulator, a proper regulator, of newspapers or other publishers. We do see a gap in the market. There are a number of national newspapers that are not currently members of a self-regulatory organisation and there are quite a large number of small publishers of local, and indeed online publications, that are not, so there is already a potential gap in the market there. Our aim is to be a regulator, an independent regulator, complying with the principles in the charter, which we think are good principles and we would want to abide by those come what may.

Q14 Baroness Deech: How are you currently funded and how do you plan for your ongoing work to be funded?

Walter Merricks: We are currently funded through a range of donations and grants from well-wishing trusts and individuals, because we are not a regulator that is currently able to charge regulatory fees to anybody. I should emphasise that I did point out that I am the chair-designate of a board that has not yet come into existence in a sense, because the first thing that my board is going to have to do is adopt a constitution and articles of association. We have a draft going, but the board wants to look at a number of details of those. We held our first meeting as a board yesterday, so we are on the case, but there is quite a way to go. In the meantime we are funded, as I say, not through regulatory fees, which in due course will be our source of funds, but through a source of grants and donations that have been largely the work of Jonathan finding people who are well disposed and supportive of the ideas that he set out.

Baroness Deech: It is rather precarious, is it not? Perhaps you approach people who say, “Once you are set up and running I might fund you”, but of course you need the money right now.

Walter Merricks: You are right.

Baroness Deech: You must be spending a lot of time trying to raise it.

Walter Merricks: We will need to depend on the good will of those who have been involved to date and, hopefully, others. You are right: we do not have a guaranteed source of funding at the moment, but I hope that we will have enough to keep us going and to do the work that we need to in order to get ourselves, first of all, into a state where we can be open for business to regulate publishers who want to be regulated by us. I think there is likely to be a market for those, and as we grow we will be able to charge regulatory fees and we will not need—

Baroness Deech: Who will you charge fees to?

Walter Merricks: We will charge regulatory fees to publishers who join us as bodies who are going to be regulated.

Baroness Deech: So you are expecting to be funded by the publishers?

Walter Merricks: In due course, we will be funded by the publishers in the same way in which other self-regulatory bodies are funded.

Baroness Deech: Is that compatible with the much needed independence?

Walter Merricks: It certainly is. It is an accusation that is thrown at many self-regulatory bodies or, indeed, statutory regulatory bodies. They are funded by those who are under their jurisdiction, but provided the framework of independence is built in, the funders should not have control over the activities of the regulator. That is, as others will know, the framework for ombudsmen and for most other regulators of industries in this country that are not going to be funded from the public purse.

Baroness Deech: It occurs to me that there is no limit on the number of regulators who might be recognised in the end under our current scheme, and I suppose they are all going to be funded by the publishers who sign up to them. There is going to be a bit of a competition because you will not be able to afford to run unless you get a significant number of publishers signing up to you.

Walter Merricks: In the situation that has already been described to you, where there is no compulsion on anybody either to belong to a self-regulatory organisation or for a self-regulatory organisation to apply for recognition, all those are voluntary, with some incentives on people to take certain steps but they do not have to. That is the model that has been laid down. That is the framework under which we are operating, so there is no compulsion. In a world where there is no compulsion, people can do anything they like. You are right to say that the world may develop in a variety of possible ways. There could be many self-regulators or there could be a few. I am not in a position to say how the world will look other than how we will look.

Baroness Deech: It just occurs to me that it might be financially driven in the end. A final quick question: how many staff do you have, apart from Mr Heawood?

Walter Merricks: We have two other staff.

Baroness Deech: Full time? Part time?

Walter Merricks: They are full time, or virtually full time.

Jonathan Heawood: Virtually full time.

Walter Merricks: They are sitting behind me.

The Chairman: Do you feel able to name the well-wishing trusts and organisations, with a rough idea of the percentages that they account for?

Jonathan Heawood: Yes, they are all named on the website. I would say that about 65% of the income to date has come from charitable trusts or foundations; another proportion has come from a significant non-charitable trust, the Joseph Rowntree Reform Trust; and a proportion has come from private individuals, namely JK Rowling and David Sainsbury, who made personal donations. The balance has come from members of the public, who contributed via a crowd-funding campaign that raised in total about £21,000. About 60 individuals contributed to that campaign.

Q15 Lord Razzall: Could I come back to this issue of independence? You are entirely right that a lot of self-funded regulatory bodies are funded by the people who they regulate. Of course, they do not have the history that the press has in this area, where for many years it has been perceived that because the press are paying for the regulator, the regulator is not quite as objective as the regulator might otherwise be. Trying to press you a bit, assuming a world under which you do start regulating people and are funded by those you regulate, by what mechanisms and systems of governance are you confident that you are and can remain independent and answer the fears that people have, on the record, on the IPSO proposal?

Walter Merricks: I would say that the process that has been followed to date to ensure that we are a body that is compliant with the royal charter requirements has given us a demonstrably independent board. I hope people feel that it has given it a demonstrably independent chair in me. The other members of the board have been recruited following a very independent process and having set up an independent appointments panel, and that has been following very much the requirements. The charter sets out a lot of requirements for an organisation to be independent in the way it behaves and the will has to be there, but there are also fundamental requirements in the charter to make us do that should those fall upon us.

Lord Razzall: Yes, of course, but as we know by and large the publishers are not happy with the proposals that came out of Leveson: the establishment of the royal charter.

Walter Merricks: Some publishers are not.

Lord Razzall: Some publishers. Most publishers are not. If you get to the stage where you are running out of money and a publisher comes to you and says, “We are perfectly happy for you to regulate us and we will obviously fund it but, on the other hand, we do want our editor sitting on your board”, and so on, what would your reaction be?

Walter Merricks: It would be that that is not the way we behave and that is not part of the rules under which we are going to operate. We are going to set out what our rules are going to be, what it is going to cost to join us, and what requirements there will be on those under our jurisdiction to comply with, as any other regulator would.

Lord Razzall: Basically, you are saying that anybody who agrees to be regulated by you has to sign up to the terms—

Walter Merricks: To the terms, yes.

Lord Razzall: —or you will not regulate them?

Walter Merricks: Absolutely.

Jonathan Heawood: Yes, because part of the benefit that they are receiving in return for that is the credibility of genuinely independent, impartial regulation after a period of complete crisis of confidence in the press, certainly in parts of the national press. I think there is a clear quid pro quo that in return for giving up a little control, they gain a huge amount of public trust.

Lord Razzall: Good luck.

Jonathan Heawood: Thank you.

Q16 Lord Sherbourne of Didsbury: Can I ask a question about the potential recognition of IMPRESS by the press recognition panel? I got the impression from what Mr Heawood was saying that that was not necessarily an objective. You said that you may or may not seek recognition. My questions are: first, are you setting yourself up to meet the criteria that would achieve recognition if you were to apply for it? If you are doing that, why would you not seek recognition?

Jonathan Heawood: Just to give a very straight, factual answer to part of the question, we have not yet sought recognition because, as Walter has made very clear, there has not been an entity that was in a position to seek recognition. There has been an incubator but not a regulator. In the longer term, I do not see any barriers to IMPRESS seeking recognition should its board in due course decide to do so. In our view, certainly in my view and those of the board members who have discussed this, there is an acceptance of the principles behind the charter framework. There is recognition that what came out of the Leveson process was a sound, proportionate response to the challenge. But, as you well know, as other members of the Committee well know, there is strong opposition to that framework within the industry, some of that opposition on I think quite principled grounds, some of it on very commercially motivated grounds, but nonetheless very real.

I think it would be perverse of us to go out there saying, “Here we are signing up to the charter come what may, take it or leave it”. There is much more benefit in going out in a consultative way, having conversations, seeking to understand people’s objections and concerns and, to the extent that we can, addressing those concerns and objections. If, at the end of that, there is some way of achieving the objectives of the charter framework in terms of the principles but without signing up to the charter, that is an option the board might consider.

Lord Sherbourne of Didsbury: Do I infer from that that although you might want to satisfy the criteria of the panel, the commercial considerations of those whom you want to sign up to you may influence you deciding not to satisfy those criteria? Given that that is because you want the people, bodies, members of the press who will be funding you to sign up, your structure and the criteria under which you operate will indeed be influenced by those you are seeking to sign up to you and, therefore, you are not independent.

Jonathan Heawood: I think it would be right to say that this particular decision about seeking recognition would be taken after serious conversations with prospective members, based not on their commercial concerns—I am simply saying that they have commercial concerns—but on any principled reasons that they can give as to why it is the worst option to go down the charter route. I do not think that we think it is the worst option, but I know there are people out there who are concerned. It is about listening to their concerns and, where possible, addressing those concerns before forming a final decision.

Lord Sherbourne of Didsbury: In an ideal world, would you like to be able to satisfy the criteria of the panel?

Jonathan Heawood: Absolutely. We have always been absolutely 100% clear about that, and that is the intention behind the project. The appointments process, certainly, which is the one thing that we cannot go back and do again, was taken incredibly slowly and incredibly carefully to make sure that we did satisfy the criteria, as far as we could understand them, without at that point the panel having gone through its consultation process to tell us how it understood those criteria.

Lord Horam: I understand you have not signed up any members yet. That is correct, is it?

Walter Merricks: That is correct because we are not capable of signing up members. We are not in business yet.

Lord Horam: When will you be in business?

Walter Merricks: A bit like the Press Recognition Panel that you have already spoken to, we have some work to do in order to constitute ourselves, to adopt articles of association of the company—

Lord Horam: Are we talking a couple of months?

Walter Merricks: I suspect it will take probably three months for us to—

Lord Horam: You have not actively looked for members yet, or have you?

Jonathan Heawood: We have not had a proposition to put to members. We have been able to have conversations about the principles, but we have not been able to say to them, “This is what you would get. These are the costs. These are the terms”.

Lord Horam: It is a vacuum at the moment?

Walter Merricks: Yes. We are a work in progress.

Lord Horam: Have you had any ideas about who might become your members? The FT, the Guardian, who?

Jonathan Heawood: Over the course of the year, I have had conversations with those national, as it were, non-aligned publishers—

Lord Horam: People outside IPSO?

Jonathan Heawood: —who have remained outside IPSO. I have also had conversations with, as Walter suggested, much smaller, local, hyperlocal and—

Lord Horam: Provincial papers or—

Jonathan Heawood: —specialist publications, online or in print.

Lord Horam: You have had conversations with a lot of these people?

Jonathan Heawood: With a lot of these people. What a lot of these people say is that they were not part of the Leveson process particularly and they were not part of the IPSO process, and they felt rather excluded by that. They feel they are in the business of publishing news just as much as anyone else is. They see the benefits. They are very keen on the benefits of access to arbitration. These people receive threats of libel actions if they are covering local business, local government, local sports clubs. They would like to be protected against those threats, so having access to an arbitration scheme, for instance, is very interesting to them.

Lord Horam: That is fine but, presumably, you want a few big fish as well? It would not have much credibility if it was the Farmers Weekly and nothing else.

Jonathan Heawood: It is an open question. If big fish want to join, we would very much like them to swim into the net.

Lord Horam: What happens if they do not?

Jonathan Heawood: I think you still have a regulator that still regulates relevant publishers.

Lord Horam: Some people might say that IPSO is the right wing lot who disagree with Leveson, and you are the left-wing lot, JK Rowling and David Sainsbury and so on. Is that rather sad?

Walter Merricks: I think it would be wrong to characterise us in political terms.

Lord Horam: Some people might. I am just putting it to you.

Walter Merricks: People are free to do what they like and they can comment however they like, but I certainly would not want to associate myself with anything of that description. We are a non-political organisation. If commentators want to describe us they can have a go, but I am a non-politically aligned person.

Jonathan Heawood: I have not asked the board for their political views.

Lord Horam: No, I was just thinking about your funding and your backgrounds.

Jonathan Heawood: My sense is that they are quite broad and, unlike IPSO, we were very clear in the appointments process that we were closed to even esteemed Members of the House of Lords, even politically non-aligned Members of the House of Lords, in order to avoid any risk of political interference or bias on the part of the regulator.

Lord Horam: Would you have powers to expel people? This is going ahead a long way, I appreciate that. You do not have anybody yet.

Jonathan Heawood: It would be presumptive to expel them first.

Lord Horam: Would you expect to have powers to expel people who did not do what you wanted?

Walter Merricks: We would certainly have powers to regulate them and to require them to comply with our requirements. I suppose, eventually, if they continued not to comply with our requirements, we would have to say, “You are clearly not in the right place”.

Lord Horam: You have not got around to that yet.

The Chairman: Could you explain those financial incentives to joining you? They will not exist, probably, until you become and if you become recognised, but can you explain to us what difference that recognition will then make in incentivising people to then come to you? Do you want to have a go?

Jonathan Heawood: Yes. As David Wolfe explained, it would largely come down to mitigating the risk of costs awards in libel or privacy actions. If a relevant publisher was regulated by IMPRESS, and IMPRESS was recognised and therefore became an approved regulator, and one of those publishers was sued for defamation or breach of confidence or a related tort and they found themselves in court, having offered the litigant the opportunity to go to arbitration and the litigant having refused that opportunity nonetheless found themselves in court, the court would be expected to rule against the claimant on costs. In other words, the defendant, the publisher or the newspaper would be protected. They would be immune from paying the other side’s costs even if they lost a libel or privacy action, which is clearly a considerable financial incentive and should remove a huge part of the chilling effect of the current costs regime in libel. I think research has shown that it is 140 times more expensive than the European average to defend a libel action in England and Wales.

The Chairman: They could be really significant?

Jonathan Heawood: They could be very significant, not only in those costs but in the costs of libel insurance, which is a prerequisite for any news publisher.

Q17 Baroness Healy of Primrose Hill: The Committee understands that you plan to offer an arbitration service to resolve complaints against journalists, with the aim of avoiding the need for complainants to launch potentially expensive legal actions. This is one of the distinguishing features between you and IPSO, we believe. Could you expand on this and what else distinguishes your organisation from IPSO?

Walter Merricks: Perhaps I will take that on, because Jonathan has already just described to you the financial benefits that arise from having an arbitration scheme in place. Our plan is to put this arbitration scheme in place through working with the Chartered Institute of Arbitrators, one of the most respected organisations in this field, so that this scheme would be available to publishers of whatever size. It has these benefits, both from the point of view of members of the public who find themselves with a claim, having been, as they feel, with a grievance against a newspaper, or from the point of view of a small publisher facing a claim from a large and powerful organisation. This arbitration regime is intended to produce the effect that the costs, for those who do not use it and refuse to use it, will fall on the big, large, powerful party, be it a newspaper, an oligarch or some other individual who might seek to bring pressure on a publisher.

That is the framework that is put in place and I hope I have described it in a simple way. It turns into rather more complex sets of legislative language, but that is what it is intended to achieve. We think that is a very well worthwhile arrangement to put in place and has significant benefits. I cannot speak for IPSO as to why they are cautious about that.

Jonathan Heawood: Leveson talked about what he called an inquisitorial arbitration scheme and nobody quite knew, to be fair, what an inquisitorial arbitration scheme was because it is not something that is part of the legal tradition in this country. But it was clear what he was getting at, which was something that should be straightforward and robust, with an arbitrator who was empowered to, if necessary, knock heads together and get to the heart of an issue without the need for extensive legal argument, extensive use of precedent, in a way that militates against the individual man or woman on the street.

Walter Merricks: I think he had in mind something like an ombudsman, but an ombudsman, an arbitrator or an adjudicator who would be appointed for each particular case rather than being an ombudsman in permanent existence.

Jonathan Heawood: We have taken steps with the Chartered Institute of Arbitrators to draft a scheme that we think meets the criteria that Leveson set out, which are represented in the charter. Again, there are many balancing acts here to be got right.

It is worth remembering at this point that many newspaper editors and publishers went in front of the inquiry and talked about the advantages of arbitration and access to alternative dispute resolution, not least Paul Dacre of the Mail, but also Lionel Barber at the FT and Alan Rusbridger at the Guardian and many, many others. I know from the libel reform campaign that I ran at English PEN that the biggest chilling effect around libel and privacy actions for newspapers is not the substantive law but the costs and the fear of going to court. Our attempt to put in place a forum that would allow people to resolve those kinds of disputes quickly, affordably, straightforwardly, ideally without the need for legal representation, is certainly intended as a step forwards.

Q18 Baroness Bakewell: What is going to be the impact on the industry, on the consumer, indeed on the public, of all these regulators? How many regulators does a country need? We do not have multiple regulators in broadcasting. We do not have multiple regulators of Ofcom, Ofgem, and so on. What will happen when we have multiple regulators? Will it be confusing?

Jonathan Heawood: There are industries with multiple regulators and there are countries with multiple press regulators, so it is not an entirely unheard of situation. The main point is that under both the IMPRESS and the IPSO proposals, publishers will in the first instance be expected to resolve complaints themselves. As a member of the public with a problem with a newspaper or website, the first thing you would be doing would be going to that publisher, and they should have in place a system. You should not at that point be worrying too much about who is the next stop regulator. It is only if the publisher fails to resolve the complaint satisfactorily, which they may do, but they may increasingly not. They may increasingly resolve complaints satisfactorily if there is a more independent regulator sitting behind them. That is certainly the intention of the framework.

Baroness Bakewell: We know that we have IPSO in the frame and we have IMPRESS in the frame. Are you envisaging—just as a matter of professional gossip—that there will be other regulators arriving beside you to seek recognition?

Jonathan Heawood: You asked or someone asked at the last session how long it might take to set up a regulator. It has taken us 18 months to get to the point of having the board’s first meeting yesterday and, as Walter has indicated, it will be several more months for that board to work through the processes and paperwork. I would not recommend it to anyone as a way of passing the time.

Baroness Bakewell: No, but do you envisage others arriving, perhaps another? Would it worry you? Would you think, “Oh, dear, that means we have lost part of the market.”?

Jonathan Heawood: I think it is very unlikely. I certainly have not heard any gossip to that effect.

Baroness Bakewell: No, so it is going to be two we are looking at?

Jonathan Heawood: For the foreseeable future.

Baroness Bakewell: For the foreseeable future it is two, right. A person complains to the newspaper and says, “I have been libelled”, and everything. They do not resolve it. The resolution will depend on the particular regulator that that newspaper comes under.

Jonathan Heawood: Correct.

Baroness Bakewell: The complainant will not have a choice of your criteria or IPSO criteria; that will be dependent on the public?

Walter Merricks: You are right: where they wind up—if they are dissatisfied with the newspaper’s response—will depend whether they are a member of IPSO or a member of IMPRESS or potentially some other regulator who, as we have said, we do not know anything about or do not envisage at the moment because we have not heard of anybody who is intending to set one up. That is right: there will be two possible routes, but that is not unknown, as Jonathan has pointed out, in other dispute resolution contexts.

Baroness Bakewell: How does it work?

Walter Merricks: It depends.

Baroness Bakewell: I meant how well does it work.

Walter Merricks: How well does it work? It can work quite well if there is good will among everybody to understand, as a company, you are regulated by this ombudsman or this regulator and this is where you go, and if you are regulated by that one you go there. My Lord Chairman is involved in the Property Ombudsman, which has a remit over estate agents and a number of other property professionals. There is another organisation that also offers that kind of dispute resolution for some other property professionals and it works, as I am sure he would say, tolerably well.

The Chairman: Very well, yes.

Baroness Bakewell: I take your point and thank you. I would just say that the phrase, “If there is good will around”, is not one I associate with the Leveson report.

Walter Merricks: I would not want to think that that would be the case.

Q19 Baroness Deech: If you and IPSO and maybe others are all in contention for a limited number of relevant publishers to sign up, will there not be a temptation to set your rules and so on in a way that favours the publishers? Supposing there were three, four, five regulators, none of you would be financially able to go ahead. You would not have a sufficient financial base, so there must be a temptation to set the standards in a way that suits the publishers so you can attract them.

Walter Merricks: We are not going to be operating without being under scrutiny, not only, potentially, of the Press Recognition Panel—who would be looking at us to make sure we were not doing that sort of thing—but I suspect from you, from Members of Parliament, other commentators who will be looking at how all this is working. If they were seeing that we were behaving in the way you described, that we were scrabbling at the bottom of the heap to try to please people rather than regulating them properly and conscientiously, then we would begin to feel that we were not doing our job. I do not think we would allow ourselves to get into that situation, having set out to do an ethical, high-standard regulatory performance.

Baroness Deech: That is the principled approach, of course, but if only one publisher ever signed up to you, you would be in real financial difficulty.

Walter Merricks: If we reach the situation where we are not financially viable, we would have to close. We are a business, or we will be a business, a self-contained business that has to have income and has to make itself financially viable. There is no question about that.

Jonathan Heawood: It is worth stressing that it is a non-profit business. It is a community interest company. Its aims are, essentially, charitable and the long-term vision is of a framework that works, which meets Leveson’s tests of independence and effectiveness. If that is delivered by IMPRESS or it is delivered by IPSO—or potentially by a small number of regulators—that is secondary to that vision being realised. It is not about launching a new supermarket and competing for customers, and if we do not get the customers we have failed in our enterprise. If we have achieved that framework, we have succeeded in our enterprise.

Baroness Deech: Could I ask what your annual budget and expenditure are at the moment?

Jonathan Heawood: Expenditure in the year so far has been £240,000. That will necessarily go up now once we move into the next gear to something in the region of £400,000 to £500,000. The forecast for the longer term, I have to say, is a matter of debate for the time being. I could give you many budgets, but there are, as you can very well see, many variables as to how those fit together.

Baroness Fookes: You have indicated pretty clearly that it is quite a lengthy process building this up and we have effectively heard the same. You will have, as you were present, heard the same from the Press Recognition Panel. Obviously, you are not ready to go to them and they are not quite ready to receive you. Would informal contacts not be very useful given that they say they want to consult as much as possible? Would one of the possible regulators not be a very good place in which to have such discussions?

Walter Merricks: I am sure we will want to communicate with the panel and they will want to communicate with us, but they have put it on record here today, rightly, that such discussions should be open and transparent and that is as it should be. Of course, we should do that and we should communicate with others as well.

Baroness Fookes: Yes. I was thinking, as I say, in an informal basis given that neither of you are ready to proceed in a more formal way.

Walter Merricks: Of course, we should keep in touch with each other so that they know how fast we would be capable of proceeding and we would know how fast they were capable of proceeding as well.

Q20 Baroness Fookes: Yes. Could I turn now to the question of the Editors’ Code of Practice? We understand—I do not know whether this is correct; perhaps you can tell us—that IPSO has been reluctant to let you have the Editors’ Code of Practice, which I gather they inherited from the PCC.

Walter Merricks: Yes, that code has been around for quite a long time. It has been developed by editors working with the PCC. We have not asked anybody for the right to use that. What we understand is that that has been copyrighted by the Regulatory Funding Company, which is the body that stands behind IPSO. It does not belong to IPSO; apparently it belongs to the Regulatory Funding Company. Our view is that it would be very sensible for us to use the editors’ code as the code of practice that most professional journalists who have been trained in the training schools have been used to. Most professional journalists know about it and are aware of it. We think it is in the public interest and sensible for us to use it as well.

Baroness Fookes: Yes. I pause because I find it astonishing that anyone should copyright such a matter.

Walter Merricks: I was rather surprised.

Baroness Fookes: That is perhaps another story, not for you to be able to explain, unless you think you can.

Walter Merricks: No, I certainly cannot.

Baroness Fookes: No. If that were to be the case and it is not possible to copy it directly, are you in a position to construct one for yourselves?

Walter Merricks: Of course we could, but the main principles in that code Lord Leveson thought, on the whole, were good principles and the right sort of principles. I suppose one could write them out in different words possibly—I am not a copyright lawyer—but it does seem a strange thing for us to have to do.

Baroness Fookes: It seems quite extraordinary to me.

Jonathan Heawood: I do hope the Committee will put these questions to IPSO or even to the Regulatory Funding Company, if you were in a position to invite representatives to this inquiry.

Baroness Fookes: Indeed.

The Chairman: You mentioned the plurality of ombudsman services in the property world, but there is only one code of practice that is shared, as a parallel.

Jonathan Heawood: Indeed.

Q21 Baroness Scotland of Asthal: In relation to best practice, I think there is an understanding of what that best practice looks like and the fundamental principles that are needed in order to operate appropriately within what was previously described as the editors’ code. Have you thought about producing a toolkit for publishers in order to help them to implement that in a way that would be more active than perhaps the editors’ code has hitherto operated? That is question number one.

My second question is: if you have, have you thought about who you would consult with in order to get that interactive toolkit accepted and operational? It seems to me that if you are looking at the complaint structure for the publishers and making that complaint structure sufficiently robust so that the regulatory work undertaken by yourselves and others would be limited, that might be a very good starting point in terms of helping publishers see the value of something like IMPRESS because there is a commercial value in such toolkits and operational capacity building within the publishers’ own structures.

Jonathan Heawood: That is right. There are two parts to that. One is the interpretation of the code and how one works with it in practice and one is the management of the complaints-handling procedures. On the first part, we have already made steps in that direction. It is, in fact, what we did with the funding we had from the Joseph Rowntree Reform Trust was to bring campaigners, members of the public, academics, journalists and regulators with experience of other industries together to look at the code and particularly to look at the public interest exemption. What became very clear out of the Leveson inquiry was that there is broad support for the code. There are some areas where people have some concerns, but the area that causes most concern and most confusion is the public interest. Many people have argued that it is impossible to define the public interest. It is a magical thing that you know it when you feel it but you could not possibly put it into words, which adds to the confusion. I think it is possible to articulate something about what underpins the public interest. The Director of Public Prosecutions has done it quite successfully in his guidance for the CPS. There are other media regulators that also put it into slightly more articulated terms than the current editors’ code.

We had that workshop. Professor Paul Wragg at Leeds University, who is an expert in this area, is drafting guidance, addressing the issues and the concerns and the confusions that came out of that practical workshop. We put journalists and campaigners together and looked at realistic examples of a piece of journalism that may have involved an act of subterfuge or an act of surveillance or a breach of privacy but which may or may not have been in the public interest. We said to these people, “Do you buy this? What would it take to prove to you satisfactorily that this was a public interest piece of journalism or conduct by a journalist?” People had a range of opinions but some principles began to crystallise, began to take shape, which we are now putting into writing.

Again, we want to put that back to the journalists and say, “Does this make sense to you? Does this resonate?”, and take that as a step towards having, exactly as you say, a practical toolkit. Journalism is all about those difficult cases. No one can pretend that decent journalism is done by cutting and pasting press releases or putting out uncontroversial, already known information into the public domain. That is not the point of journalism. The point is to ruffle feathers, to put people’s backs up, to do difficult things, to shake up things, and that always gets to this nitty-gritty area of what is and what is not the public interest. Journalists have very strong and sophisticated views about that that are not always well reflected. The aim is to put that toolkit together in a way that journalists feel, yes, that broadly reflects how we approach this and that the public can then also understand that. When you have a dispute—to come to the second part of your question about complaints handling—when a publisher wants to go back to a complainant and say, “Yes, we did breach the code in that area, you are dead right, but we did it in the public interest. This is how we justified that. This is what we mean by that”, there is a slightly greater chance the member of the public might say, “Okay, I understand what you are talking about”.

The Chairman: Okay. Thank you both very much indeed for that. Is there anything that you feel that you or we have missed in this great debate where clarity would help us all?

Jonathan Heawood: One thing to add is that we are very keen to look to the future. A lot of this debate has been quite backward looking and looking at a particular industry at a particular point in time, operating through a particular medium of print. We all know that is changing and the industry is fragmenting and converging in all sorts of unpredictable ways. We are very keen to be part of that future process and part of the advantage of independent regulation of this voluntary kind with the legal incentives is that it provides means to protect investigative journalism but it does not set out to regulate the entirety of the news media because information and ideas will continue to fly at us from all directions.

If we can do it in such a way that part of that ecosystem is well protected and safeguarded and that the public can discriminate between what is being regulated and what is not, it gives the public a little bit more clarity and certainty about who to trust. That is part of the long-term vision that we have not had a chance to talk about. Speaking for both of us, we welcome the Committee taking an interest and, as you say, trying to bring clarity for the public. We would be very keen to continue the conversation, although, of course, we are totally politically uninfluenced by anything that you may say.

The Chairman: Thank you both very much indeed. It was an extremely helpful session. Thank you.