Written evidence submitted by the Public Interest News Foundation

The Sustainability of Local Journalism

A submission to the Select Committee on Digital, Culture, Media and Sport by the Public Interest News Foundation (PINF)

31 March 2022

Introduction

For 150 years, local journalism has played a vital role in British communities, providing the information that helps people take pride in the places where they live and engage in democracy.

In the twenty-first century, local journalism could be playing an even bigger role. Digital technology has given journalists new opportunities to engage with the communities they serve. Devolution has given local authorities greater powers, which journalists could and should be monitoring. And citizens increasingly expect to have a voice in the complex decisions that affect us. This could be a golden age for local journalism. But it is not.

The good news is that media pioneers in the UK are building new forms of local journalism that address these opportunities. Up and down the UK, they are launching local news organisations that speak to, for and with the communities they serve. The bad news is that these independent publishers are under-resourced, fragmented and – so far – unloved by policymakers.

Rather than unlocking the potential of the independent sector, policymakers have been patching over the cracks in the legacy local press. New technology, changing audience behaviours and a loss of advertising revenue have left legacy publishers reeling. Many traditional local newspapers have closed or merged. Since Newsquest’s acquisition of Archant in March 20202, three corporations now control almost 70% of the local newspaper market: Newsquest, with 30.3%; Reach, with 20.7%; and National World (JPI Media), with 17%.[1]

At the same time, a new sector of independent local publishers is emerging. The trade journal Press Gazette has calculated that there are up to 400 independent and community news organisations in the UK.[2] According to the PINF Index of Independent News Publishing, the typical independent local publisher is a social enterprise with turnover of around £42,000.[3] These are small but professional organisations that are committed to the public interest. Research suggests that they are more trusted than corporate publishers.[4] They generate economic value for their communities, creating jobs, boosting local businesses, buying local services and ploughing any profits back into the communities they serve.

However, these truly local news organisations have received barely any support from the government or technology companies, whilst their corporate competitors have received an array of public and private handouts. This distorts the market, and has stifled the potential growth of the independent sector.

We could be telling a positive story about the rebirth of local journalism. Instead, we are fighting to prevent its death. What has gone wrong? More importantly, how can we put it right? How can we develop a sustainable local journalism economy that supports thriving communities, democratic engagement and economic wellbeing?

In this submission, we make three simple recommendations:

●       Make sure that truly local news providers get a priority share of revenue and data from the tech giants through the forthcoming Digital Competition Bill and the newly established Digital Markets Unit.

●       Create a £100m Innovation Fund to kick start and build the capacity of truly local news providers, helping them find sustainable business models.

●       Create tax incentives to help truly local news providers raise donations and investment.

To support these recommendations, we first summarise the value of truly local journalism and the challenges it faces.

The value of local journalism

Local journalism creates social, democratic and economic value for the communities it serves. In the words of Josh Stearns of the US-based Democracy Fund:

‘Numerous studies have explored the impact of local news coverage on core qualities of a healthy democracy such as people’s political knowledge, voting rates and number of people running for office. While there are nuances between them, the studies are fairly unanimous in finding that erosions in local news are tied to drops in civic engagement.’[5]

Community cohesion is jeopardised by the crisis in the local newspaper industry. Local newspapers once provided a shared space for debate, but now audiences exist in separate ‘echo chambers’ or ‘filter bubbles’. As Stearns puts it:

‘Local news, done right, helps build community by reflecting the voices, concerns and stories of local people back to each other in ways that build connection and empathy. Traditionally, local news organizations have also served as a key part of the public square where communities debate the issues and ideas facing them.’[6]

Research in the Journal of Communication suggests that political polarisation increases when newspapers close. The authors claim that ‘a relative reduction of local news in the media marketplace may result in less exposure to local news and more regular exposure to national media, with significant effects on engagement and partisan voting.’[7]

The capacity for meaningful accountability has also declined with the erosion of the newspaper industry. This affects both public and private institutions. In Port Talbot, for example, the decline of the local newspaper correlated closely with a decline in public accountability. When the Welsh Assembly decided to close a motorway junction that served the town, local people – lacking a dedicated newspaper – were unable to engage effectively with policymakers. One man told researchers that he only heard about the motorway closure by reading graffiti on a bridge.[8]

A recent study found that local newspapers also help to hold private sector companies accountable for their environmental impact. So much so that factories based near a newspaper office are less likely to cause pollution than factories that do not have a newspaper office in the neighbourhood.[9]

In Australia, researchers have found a ‘negative feedback loop’ in communities with eroding local news capacity, where government has little incentive to consider or respond to civic input.[10]

Local journalism also builds economic value by creating jobs and boosting local businesses. Independent local news organisations, like other community businesses, maintain a greater proportion of economic value in the community than businesses which are owned elsewhere.[11]  In addition, many independent local news organisations take a positive approach to community wealth-building, only advertising local businesses for example, and buying services from local firms.

Moreover, public interest news can generate other forms of economic benefit, by mitigating the risks of corruption and inefficient public spending. In his book Democracy’s Detectives, James Hamilton studied the benefit of public interest journalism to society. He found that the cost of such journalism was massively outweighed by the net gain to the public – ‘each dollar spent on stories can generate hundreds of dollars in benefits to society’ – but these ‘gains are distributed in ways hard for news organisations to translate into additional reporting resources.’[12]

In other words, local public interest journalism provides a benefit to society that is way out of kilter with existing business models.

At the Public Interest News Foundation (PINF), we have launched an Impact Fund to better understand and support the democratic impact of local journalism.[13] We are funding five independent news providers in London and Birmingham to launch new forms of democratic journalism in the run-up to May’s local elections. We will then monitor the impact of these initiatives on voter turn-out, trust, and the responsiveness of council candidates to local citizens’ concerns. We plan to expand this programme to explore the impact of local journalism in a range of other areas.

PINF is the first charity in the UK that is dedicated to supporting public interest news. We provide a range of news providers with funding, leadership support and networking opportunities, underpinned by original research, as we build our knowledge and understanding of all forms of public interest news.

We know that, as well as driving democratic engagement, independent local news organisations are providing many other forms of public benefit, such as:

• Providing training and employment opportunities for people on low incomes and/or from underrepresented backgrounds. For example, Greater Govanhill magazine in Glasgow featured the work of a young disabled photographer, who gained national exposure and a college place as a result.
• Celebrating the history and culture of a local area. For example, 81% of readers say they feel prouder of their neighbourhood after reading Social Streets in Tower Hamlets.[14]
• Providing public health information. For example, Clear Sky Publishing in Devon distributed two special print titles with information about Covid-19 to over 300,000 homes, including 60,000 homes that do not have an adequate internet connection and so could not be reached effectively online.
• Promoting civic responsibility. For example, West Leeds Dispatch runs the West Leeds ‘Good Eggs Awards’ to highlight the unsung heroes of the community.
• Promoting understanding of the relationship between local politics and geopolitics. For example, the Manchester Mill has published a long read on Greater Manchester’s pursuit of Chinese investment.
• Promoting community cohesion. For example, the Bedford Independent runs a regular ‘Guest Editor’ programme, where members of the local Polish community and a homeless family have taken over the publication.
• Promoting sustainable development. For example, West Leeds Dispatch highlighted the need for flood defences along the Kirkstall Valley, where a £120m scheme is now being built.
• Providing information and entertainment to people in old age and/or living with disabilities. For example, a pensioner wrote to Newham Voices to say, ‘I have spent this morning just reading halfway through still to be excited and informed. What a brilliant paper – balanced, informative and a joy to read.’
• Promoting charities. For example, Clear Sky publishing donates 20% of every newspaper sale to a local community charity and has supported numerous other fundraising campaigns.
• Holding health, education and social care providers accountable. For example, Newham Voices investigated and exposed mistakes in NHS blood testing services affecting hundreds of thousands of people. As a result, a new clinic was opened, changes were made and the danger to elderly and vulnerable people was reduced.

In short, local journalism has the potential to support thriving, powerful, creative and confident communities in many different ways. We are so used to local journalism that we don’t always see quite how important it is to local communities. And we don’t see how that value could be not only protected but enhanced, with the right package of support and incentives.

The challenges facing local journalism

Like postal services, local journalism suffers from a ‘last mile’ problem.[15] With postal services, it is cost-effective to distribute huge volumes of mail from a central hub, but expensive to deliver letters and parcels to individual addresses. Likewise, it is cost-effective to distribute news at a national level, where there is a large audience for general news, but expensive to provide news for individual communities, where there is a small audience for specific pieces of information.

At a national level, with a potential audience of tens of millions, publishers can generate revenue from advertising or subscriptions even if they only reach a fraction of their target population. They can also rely heavily on agency material, press releases and stories that are originated by other news providers.

However, at a local level, with stories that are only relevant for a small potential audience, it is far harder to build a sustainable business model for public interest news.

Research shows that audiences are more likely to trust a local news organisation based in the area it covers than one based outside the area.[16]  However, the economic challenges facing local news have led to a huge amount of industry consolidation, such that most legacy local newspapers are published by large corporations that are based far from the areas they cover.

In 2017, the Media Reform Coalition showed that 57.9% of the UK population live in a Local Authority District (LAD) without a dedicated daily local newspaper.[17] In 2021, Professor Agnes Gulyas at Canterbury Christ Church University found that 30.7% of postcode areas had only one title (most of which were weeklies) and 4.6% had no local newspaper at all. [18]

For this submission, PINF asked Professor Gulyas to compare her database of corporate news titles with data on independent news titles collated by Press Gazette. Professor Gulyas found that:

• Independent news titles are more likely to exist in areas with no corporate titles or a low number (<3) of corporate titles
• Of the 1,601 postcode districts in England for which there is data, there are 74 districts that are not covered by a corporate news title. Of these, 21 have an independent news title.[19]

This data shows that independent news publishers are playing a vital role in filling gaps in the media landscape, addressing the needs of communities that do not generate the profit margins required by corporate publishers.

Can these small, local providers build a sustainable business model? The evidence suggests that this is extremely challenging. Our research found that some audiences would be willing to pay an average of £1.30 per month for quality independent local news.[20] On this basis, it would take 1,000 paying subscribers to generate annual revenue of £15,600.

Let’s say that a sustainable operation requires a minimal staff team of six: an editor; two reporters; a salesperson; and an administrator. According to the latest ONS data, average salaries in the UK are roughly £31,000.[21] So, in order to build a small team of six people on average salaries, plus employers’ contributions and overheads, a news publication would require a budget in the region of £250,000.

In order to generate annual subscriptions revenue of £250,000, a publication covering a typical local authority district would need to convert almost 10% of the population into paying subscribers (and a much higher proportion in smaller areas).[22] This is an ambitious target, even for the most successful independent local publications. The Bristol Cable – which won the 2019 British Journalism Award for local journalism – has 2,800 subscribers paying an average of £3.50 per month. They will need to more than double this number to sustain even a minimal newsroom.

It is even harder in the digital economy to build sustainable advertising revenue. The PINF Index shows that, on average, independent publishers generate £32,000 per year in advertising revenue.[23] This figure would need to go up dramatically in order to build a sustainable news organisation with the resources to cover a local authority district in any kind of meaningful way.

It would be possible for independent local news organisations to generate revenue from their local communities, if they could access capacity-building grants and investment.

In the United States, philanthropists have invested massively in the growth of independent news organisations over the last decade. A total of $534m was spent on journalism philanthropy in the United States in 2020 alone.[24] The American Journalism Project (AJP), for example, has provided $90m for local news organisations, helping them to build sustainable revenue streams.[25] AJP works with its grantees to help them unlock new sources of funding, including reader subscriptions. VTDigger, an independent news organisation in Vermont, was able to raise more than $1m in reader revenue with backing from AJP.[26]  City Side in the Bay Area of California more than tripled its revenue after receiving funding from AJP.[27]  Wisconsin Watch is another success story, using its AJP grant to leverage other sources of funding from the local community.[28]  In total, AJP’s grantees grew by an average of 67% in the first year of their grant, and are expected to double their revenue by year three.

We could be learning from this model in the UK. Instead, the vast majority of UK funding for local news has gone to the dominant corporate publishers. The BBC has invested £88m in the Local Democracy Reporting (LDR) service, with 90% of contracts going to Reach, Newsquest and National World.[29] In the second round of contracts, after an outcry, the proportion of contracts going to Reach, Newsquest and National World fell … to 84%. The Google News Initiative has also invested in the corporate industry – even where this has had a direct and negative impact on start-up challengers.[30] The Facebook Community Reporter scheme has likewise benefited the corporate press, with 74 of 100 community reporter contracts going to the big three publishers.[31] Alongside their public support for the news industry, Google and Facebook have also struck private deals said to be worth ‘millions of pounds’ with corporate publishers.[32]

The UK does not have the well-developed culture of journalism philanthropy that we see in the United States. Nor do we have the culture of public subsidy that we find in other European and Commonwealth countries, such as Canada, Denmark, the Netherlands, New Zealand and Norway. Unlike these countries, the UK has so far chosen not to create a subsidy for local journalism, on the stated grounds that this would compromise press freedom.[33] This is odd, because Canada, Denmark, the Netherlands, New Zealand and Norway all rank higher than the UK on the Reporters Without Borders press freedom index.[34]  Clearly, their governments have found ways to fund local journalism without compromising press freedom.

In fact, an independently administered public subsidy for local journalism could enhance press freedom, by removing the need for publishers to lobby government directly for ad hoc forms of support.

The UK Government’s £35m ‘All in, all together’ advertising campaign, which was announced as a package of support for the news industry, went overwhelmingly to corporate publishers, despite urgent calls from Dame Frances Cairncross and others to support the independent sector.[35] Corporate publishers also receive the overwhelming majority of public notice revenue from local authorities, generating an estimated annual subsidy of £46.29m.[36] The Government’s decision to remove VAT on digital subscriptions, whilst welcome, has created an additional £50m in revenue for large publishers, on top of the estimated benefit of £594 in existing VAT relief for print sales.[37]

Taken together, these subsidies and funding initiatives are directing more than £700m of public and private funds every year towards a few corporations.

The only attempt to address this bias towards corporate publishers was the Future News Fund, administered by Nesta with £2m of public funds, but discontinued after complaints that the corporate publishers did not benefit.[38]

There are several troubling aspects to this situation:

• The funding bias is exacerbating the inequality in the sector between corporate publishers, which have consolidated in order to maximise value for their owners and shareholders, and independent publishers, which choose to operate locally in order to create value for their communities. This distorts the market, stifling competition and innovation.
• The selective allocation of public funding by central and local government is compromising the relationship between politicians and publishers. If publishers are forced to lobby government directly for funding, this undermines their primary duty to the public. There is the risk of a real or perceived conflict of interests, where politicians may favour certain publishers in return for preferential treatment, and vice-versa.
• Likewise, the selective allocation of funding by Google and Facebook is creating a conflict of interests for platforms and publishers. News publishers have spent years highlighting the harms caused by technology companies. This has led politicians to threaten tech companies with regulation. At the same time, tech companies have offered publishers large amounts of money. As publishers receive direct tech funding, will they think twice before biting the hand that feeds them? Or will they bite harder, in order to increase the regulatory threat and get more funding? In either case, this relationship is not aligned with the public interest.
• Moreover, there is little guarantee that any of this funding actually enhances the sustainability of local public interest journalism. The BBC LDR scheme and the Facebook community reporter scheme help publishers employ reporters to cover public interest news stories; but if these same publishers cut jobs elsewhere, then it is reasonable to suspect that the BBC and Facebook money is effectively being used to replace existing posts rather than create new ones.[39] Other schemes, such as the Government’s ‘All in, all together’ advertising campaign, do not oblige publishers to invest in journalism whatsoever. As a result, the public is getting a negligible return on its investment.

In order to fulfil its civic role, local news should be trusted, dedicated to local communities, and sustainable. However, the existing funding ecosystem is instead supporting a handful of companies that are far removed from local communities, but which have the lobbying muscle to secure funding from government and big tech. At worst, this ecosystem is creating a series of conflicts of interest that may hamper the ability of local news publishers to serve the public interest.

At best, the current funding ecosystem represents a wasted opportunity to build a truly diverse and sustainable local news ecosystem in the UK.

The solutions for local journalism

We urgently need to build a new funding ecosystem, which enhances the social, democratic and economic value of local journalism, and supports truly local publishers to build sustainable business models.

Fortunately, we do not have to look far to find the template for this new ecosystem. The Cairncross Review set out a number of sensible recommendations, three of which can easily be developed in order to ensure the sustainability of local public interest journalism:

●       Make sure that truly local news providers get a priority share of revenue and data from the tech giants through the forthcoming Digital Competition Bill and the newly established Digital Markets Unit.

●       Create a £100m Innovation Fund to kick start and build the capacity of truly local news providers, helping them find sustainable business models.

●       Create tax incentives to help truly local news providers raise donations and investment.

Digital Markets Unit

In July 2021, the Government set out its intention to establish a ‘world-leading pro-competition regime for digital markets.’[40] To oversee this regime, the Government has tasked the Competition and Markets Authority (CMA) with establishing a new Digital Markets Unit (DMU) to enforce a code of conduct for online platforms with Strategic Market Status (SMS).

Introducing its plans for the code, the Government cited the Cairncross Review, which ‘recommended a code of conduct to address the ability of certain firms to impose terms on news publishers that limit the ability of those news publishers to monetise content.’[41]

The Government set out the code’s objectives in relation to news publishers in the following terms (our emphasis):

‘The code will support the sustainability of the news publishing industry, helping to rebalance the relationship between publishers and the online platforms on which they increasingly rely. Fair and competitive digital markets are an important part of the government’s strategy on press sustainability. In 2019, the Cairncross Review concluded that online platforms (particularly Google and Facebook) are able to impose unfair terms on publishers, which limits publishers’ ability to monetise their content and threatens the sustainability of the press. The central recommendation from Cairncross was for new government regulation of digital markets, specifically designed to rebalance the relationship between key platforms and the news publishers that rely on them. This was confirmed by the CMA in their market study into digital advertising, which found that greater competition and transparency in these markets could address the bargaining power of platforms and so make an important contribution to the sustainability of the press. The government accepted the rationale for intervention in our response to the Cairncross report in early 2020. We confirmed in our response to the CMA Market Study that the enforceable code would govern the relationships between online platforms and news publishers. We have asked the non-statutory Digital Markets Unit to work with Ofcom to look specifically at how a code would govern the relationships between platforms and content providers such as news publishers, including to ensure they are as fair and reasonable as possible.’[42]

We see from this statement that the Government’s ‘rationale for intervention’ in the news economy is derived from the Cairncross report. In other words, the code is intended to deliver policy objectives that are set out in the Cairncross report.

In her report, published in February 2019, Dame Frances Cairncross asked why we should care about the future of journalism.[43]  She concluded that:

• Investigative journalism and democracy reporting are the two forms of journalism which are both most worthy and most under threat.
• High-quality journalism is a subjective concept and could apply to endeavours that would not warrant government support.
• Although news can be found on a number of different media, written journalism (whether in print or online) supplies the largest quantity of original journalism and is most at risk.
• The cost of investigative journalism is great and rarely results in significant financial reward.
• The reduction in democracy reporting leads to a fall in community engagement (such as voter turnout) by local residents.[44]

In other words, the ‘rationale for intervention’ cited by the Government, is not simply to ensure the profitability of news publishers; nor is it to ensure the provision of all forms of journalism (even some forms of high-quality journalism such as film reviews).

The rationale for regulatory intervention in digital markets is to enhance the sustainability of the forms of journalism that Cairncross describes as ‘public interest news’ because these are ‘central to a properly functioning society and democracy.’

The most commonly cited model for the proposed new code is the Australian News Media Bargaining Code (NMBC).[45]  However, the NMBC, in its Australian form, will not enhance the sustainability of local journalism in the public interest. The Australian code excludes publishers with turnover below AUS$150k (c.£80k), and it is currently non-binding on platforms. This has enabled the dominant platforms to strike individual deals with the dominant publishers that do not guarantee the sustainability of local journalism in the public interest, whilst numerous small and independent publishers complain that they have been excluded from the process.[46]

The NMBC is an attempt to solve a flaw at the heart of the digital media economy: the asymmetrical relationship between publishers and platforms. Publishers need platforms more than platforms need publishers.

Publishers need platforms in order to reach audiences, not simply to generate revenue, but also to generate news stories and drive impact. It is only by engaging audiences that journalists can hold elected officials, businesses and others to account. Otherwise, news publishers would be shouting into an empty room. So, publishers need platforms for economic, democratic and social reasons. However, publishers do not get the full value out of their dealings with platforms.

Every time someone engages with a piece of news content on a social media platform or search engine, their engagement generates data for the technology company. This tiny piece of data is then aggregated with a huge number of other tiny pieces of data about the same user, and other users with similar behaviour. En masse, this data becomes steadily more valuable. Every time a publisher places an additional piece of content on the platform, it drives more user engagement, generating more data, and so on. Data on a few thousand people is of limited value. However, data on a few billion people is of exponentially greater value.

Technology companies can use this data to sell microtargeted advertising that is cheaper and more effective than anything publishers can offer, because the tech companies own and control all the data, not just little pieces of the data. In this way, publishers are contributing to the overall wealth of platforms, whilst platforms are contributing to the overall impoverishment of publishers.

The News Media Bargaining Code (NMBC) is designed to level the playing field. By allowing publishers to bargain collectively with platforms, the code goes some way towards addressing the imbalance of power between publishers and platforms. However, even if the code were successful in allowing publishers to negotiate for the full economic value of their content to platforms, this would not recognise the democratic and social value of news. For large publishers, this may be acceptable. They are able to extract sufficient economic value from platforms. However, for small, local publishers, the NMBC could actually exacerbate the problems they face.

Small local publishers will only ever reach a small, local audience. They will never generate data on more than a few thousand individuals. The economic value of this data, even in aggregate, will be limited. And small local publishers do not benefit from the same economies of scale as corporate publishers such as Reach, Newsquest, and National World. Each organisation has to invest separately in its technological, legal, financial and HR resources, whereas a large corporate publisher can negotiate bulk rates and spread these costs over several hundred titles.

Thus, small, local publishers are doubly disadvantaged. Their revenues per user are lower, and their costs per user are higher than large news publishers. The PINF Index shows the mismatch between the large total audience of the independent sector (more than 10.1m in our sample of 56 publishers) and the low total revenue of the sector (less than £5.4m in our sample), with average revenue per user of £0.53. This compares badly with the ratio at Reach, for example, where an audience of 48m translates into annual revenue of £615.8m – or £12.83 per user.[47]

A UK version of the NMBC that simply rewards large publishers will not drive a diverse and sustainable local news economy; it will simply further exacerbate the news industry’s bias towards large publishers that operate at scale, and is likely to drive further consolidation and monopolisation of the local news industry.

We need to learn from the Australian experience, and develop a regulatory framework that is geared towards enhancing the sustainability of public interest news – which is the Government’s stated rationale for intervention.

The DMU should have a statutory duty to ensure that its interventions support the sustainability of local journalism in the public interest. It should be responsible for ensuring that small and start-up publishers are able to benefit on fair and equal terms from the provisions of the code. And it should ensure that deals between publishers and platforms are fair and transparent, and that bigger publishers cannot strike more favourable deals than smaller publishers.

However, even with these adaptations, the NMBC can only do so much to support local journalism in the public interest. It is a framework for regulating competition, not a vehicle for investment. Therefore, it must be complemented, as Cairncross recognised, by a related initiative – an innovation fund.

Innovation funding

In 2019, the Government awarded £2m to Nesta to run the Future News Pilot Fund. This Fund was wound down in September 2020, and the Government has not provided any further funding. The Government meanwhile rejected Frances Cairncross’s recommendation that it should establish an Institute for Public Interest News, claiming (without evidence) that this would compromise press freedom. This was a missed opportunity, and puts the UK out of step with other countries, including Canada, Denmark, the Netherlands, New Zealand and Norway, in which government funding for the press is managed by independent arms’ length bodies.

In future, innovation funding should be geared towards ensuring the sustainability of public interest news, as Cairncross originally intended. A fund should be big enough to have a meaningful impact, and long-term enough to avoid the risk of ‘drip feeding’ and political interference. It should prioritise support to small and start-up publishers who do not benefit from the news media bargaining code.

We believe that the Government should now provide funding to an independent body or bodies to build the capacity of local news publishers, with priority to small and start-up publishers that are based in the local community.

To avoid the risk of political interference, the Government should provide sufficient capital (at least £100m) to allow an independent funding body to build the capacity of local news publishers by providing grants that run for five to ten years, drawing on the experience of similar bodies around the world such as the American Journalism Project and the Dutch Journalism Fund.[48]  This capital should be built up over time through further public, private and philanthropic support.

Tax reliefs

To encourage investment in journalism, there is an urgent need for new tax incentives for news organisations, investors and philanthropic funders.

Since the Cairncross Review, the Government has removed VAT on digital subscriptions, which has generated extra revenue for publishers with large national and international audiences, but has made little or no difference to publishers who serve audiences in small local communities.

Cairncross also called on the Government and the Charity Commission to develop charity law to allow more news organisations to register as charities. The Government did not act on this recommendation, but the Charity Commission has since recognised the charitable nature of the Charitable Journalism Project (CJP) and the Public Interest News Foundation (PINF). Both organisations can support public interest news, but they are not news providers, and more work needs to be done to ensure that news providers themselves can benefit from tax reliefs that enable them to attract investment and donations.

Many news organisations do not want to become charities, because they are concerned about limiting their freedom of expression. So, the Government should explore the potential for a new tax status, with some of the benefits of charitable status – such as claiming Gift Aid on donations, or ‘News Aid’ – for news organisations which are accountable to an independent regulator such as IMPRESS.

The Government should also encourage philanthropic and corporate donors to support local journalism by using the Digital Competition Bill to create statutory incentives to contribute to the proposed innovation fund.

Conclusion

We could continue to provide large companies with public subsidies, and funding from tech platforms. This would enable those companies to continue to deliver profit margins to their owners and investors. However, there is no guarantee that they would invest this in public interest news, or that they would place social and democratic value or community prosperity ahead of their own economic interests.

Alternatively, we could boost the organisations that driving the rebirth of local news up and down the UK. With comparatively modest funding, these organisations could grow into important parts of a sustainable news economy. They already have two of the most important ingredients: local roots and local trust. They speak to, for and with the communities they serve. Investment in these organisations will not be siphoned off into the pockets of shareholders or directors. It can only enhance the well-being of the communities in which these organisations operate.

If we were concerned about the death of the high street, we would not provide public funding to chain stores with failed business models. We would instead fund start-ups and independent businesses to grow and become sustainable. If we were concerned about the depletion of fishing stocks, we would not provide funding for massive commercial fishing businesses; we would support the small family owned fleets that sail out of the fishing towns and villages of the UK. In both cases there is a win-win for public policy: a win for communities is also a win for the economy. In the case of news, supporting independent providers is also a win for democracy.

Jonathan Heawood
Executive Director