By Brian CathcartThis is the sixth part of a response to the government consultation. We will welcome your comments, and if you wish to register your views with the government, click here.

Answers to Question 3: Evidence of how far full commencement will incentivise publishers to join a recognised self-regulator.

Nothing has changed since section 40 was enacted

No case can be made that the incentive role of Section 40 falls under a heading of ‘much has changed’. It has been clear throughout that, while this measure addresses the related problem of access to justice, it was also intended to provide incentives to encourage news publishers to participate in recognised regulation. Recommendation 73 of the Leveson Report, relating to court costs, stated:

‘The purpose of this recommendation is to provide an important incentive for every publisher to join the new system…’ 

In commending the cross-party agreement to the Commons, David Cameron said:

'We will also change the rules on costs in civil claims against publishers so that there is a strong incentive to come inside the regulator, with its independent arbitration system.’(Col 634). 

Further, no one engaged in the process in 2011-13 felt a need to quantify the potential effectiveness of these incentives. Sir Brian Leveson did not do so, nor did the party leaders who signed the cross-party agreement, nor did Parliament.When Conservative ministers were asked about effectiveness by the CMS select committee on 16 April 2013 they were content to reply that the incentives were ‘strong’ and that they were ‘optimistic’ they would have the desired effect. From this may be deduced two things. First, that politicians were satisfied, in the circumstances, to rely on the judgement of Sir Brian Leveson, an impartial figure who had immersed himself thoroughly in the issues. And second, that they considered speculation on the matter pointless or unwise.

A new test

The implication of Question 3 is that although Parliament decided in 2013 that the measures in Section 40 were appropriate, the Government is now introducing, or considering introducing, a test of likely effectiveness before deciding whether to commence. This is another unacceptable departure from the Leveson recommendations and from the cross-party agreement, as well as a contravention of the will of Parliament.Not clear from the consultation document is how such a test might be applied. Since governments and Parliament, when contemplating measures of any kind, usually wish them to be effective, we should probably assume that in asking Question 3 the Government is seeking reassurance that Section 40 will be effective in terms of encouraging news publishers to participate in recognised regulation.The best measure of the likely effectiveness of Section 40 as an incentive is the response of the corporate press. It is in the nature of an incentive, when it is operating as a ‘stick’ rather than, or – as in this case – as well as, a ‘carrot’, that those towards whom it is directed should find the prospect of the “stick” unwelcome. Section 40 was designed, in part, to operate in this way and news publishers have had ample time to evaluate the likely effects of the penalty element on them should they elect to expose themselves to it. As the consultation document generously records and their recent conduct demonstrates, they find it very unwelcome. This indicates that the incentives are likely to be effective.

Proportionality

Just as governments usually intend their measures to be effective, those seeking to resist such measures are likely to argue that they are excessive. They have little choice. They can hardly argue that the measures are insufficiently effective since that would be to invite something tougher. And if they say the measures are just tough enough it is equivalent to approving them. So their only recourse is to assert that they are disproportionately and damagingly effective. That is precisely the position of the corporate newspapers.In this context the consultation document presents only one argument directly addressing the point of effectiveness, as follows:

‘One of the key issues raised by some members of the press is that the potential financial impact on publishers who are not members of a recognised regulator if section 40 is commenced would be significant and could put publishers, particularly small, local newspapers, out of business unless they join a recognised self-regulator. They believe this goes beyond an incentive to comply voluntarily with the new system.’

This is a proportionality argument, suggesting that the effects of Section 40 will damage the press industry, and with it the ability of the press to provide the public with reliable, necessary information, to a degree that outweighs any benefit sought by those who drafted it and passed it into law. This argument has no merit. The reasons have fully been explained above but are repeated in summary here.

1. The risk of even one small, local newspaper being driven out of business is remote.
2. It could only occur if that paper had decided to deny a claimant access to affordable justice and only then if a judge felt an adverse costs award was fair in all the circumstances.
3. Any such risk must be set against the certainty that ordinary people are currently exposed to serious injustice with little hope of remedy, and that absent Section 40 many more will experience that in future.
4. To avoid any risk of adverse court costs a news publisher need only join a recognised regulator, something to which they can have no reasonable objection and which implies no loss of freedom.
5. The public interest is best served by news publishers joining a recognised regulator, as ministers have stated.

It follows that the costs provisions of Section 40 cannot be said to 'go beyond an incentive to comply voluntarily with the new system’. They are an incentive, but a manifestly just and reasonable one that operates in the interests of everyone, and not just those of the privileged few.

The current picture

The consultation document identifies two incentives already in force. The first is this:

‘…exemplary damages provisions in sections 34-39 of the Crime and Courts Act 2013, that came into force on 3 November 2015, mean that publishers who are members of a recognised regulator will, in principle, be exempt from paying exemplary damages in relevant media-related court cases.’ 

It is worth noting that in his discussion of this exemption in his report, Sir Brian Leveson did not refer to it as an incentive to membership. Instead he saw it as a matter of justice. Since the commercial benefit of publishing material in breach of someone’s rights was likely to outweigh basic damages, he said, it was appropriate that a court should have exemplary damages at its disposal in cases of outrageous wrongdoing, but ‘the court should be entitled to consider membership of a regulatory body as being relevant to the willingness to comply with standards…’ (Part J, Chap 3. 5.11).As explained above, the courts have very rarely awarded exemplary damages in libel cases, and since the bar is set exceptionally high in Section 34 there is every reason to believe that position will continue. This means that, in practice, news publishers have no reason to fear exemplary damages and therefore no reason to seek shelter from it. The exemption now in operation therefore can have only the most marginal effectiveness as an incentive to join a recognised regulator.The other incentive mentioned in the consultation document as already active is this:

‘…current IMPRESS members have cited the reputational benefits of being regulated by a recognised self-regulator rather than IPSO…’ 

We endorse the view that such benefits exist, but in the current climate they cannot at present be described as a meaningful incentive. The campaign waged against Impress in the national press [examples here] – a campaign founded on distortion and falsehood – has been so fierce, and the Government’s support for the principle and practice of recognised regulation has been so feeble, that joining Impress requires an act of bravery from news publishers.One example (among many) of bigotry and abuse of power by the corporate press and its supporters was the forced removal of Impress as sponsor of the ‘local hero’ category in the 2016 Press Gazette awards. Another is the experience of Byline, a journalism website, which has been subjected to sustained abuse online and in print for its decision to become an Impress member. Therefore, while in principle adherence to a recognised regulator enhances a publication’s reputation in the eyes of informed members of the public, in practice the benefit is currently outweighed by the damage resulting from improper use of press power.In summary, no incentive mechanism can be said to exist at present that is likely to bring pressure to bear on news publishers to join a recognised regulator.

Conclusion

Section 40 is a fair and appropriate incentive and as such should be given the opportunity to operate. Its legitimacy and authority are beyond question and no grounds exist for introducing a new test of effectiveness before commencement.In practice we believe, as the above demonstrates, that the impact of Section 40 will be neither sudden nor dramatic, as the press industry suggests. The evidence shows that news publishers are unlikely to be driven out of business by adverse costs orders when they have won cases (and if that were to happen it could only be because they had denied a member of the public access to affordable justice). Our view, and we assume it to have been the view of Parliament when it endorsed Section 40, is that the ‘stick’ of the costs provisions is a modest incentive, intended to apply over time in combination with the ‘carrots’ of lower legal costs in arbitration and of freedom from chilling. If the press industry is rational, it will recognise over time the benefits of the carrots and it will see that there are no reasonable grounds for risking the stick.Parliament clearly felt in 2013 that this proposition should be put to the test and it charged the PRP with the task of monitoring the results and reporting to Parliament. The PRP has now called for Section 40 to be commenced as a matter of urgency.It is worth recalling here why Parliament adopted this course. It was not, as has been suggested, a knee-jerk response to the public outrage over phone hacking. Nor was it a cynical political manoeuvre to gag public interest journalism. It was a very cautious and measured response to a public crisis that was demonstrably long in the building and highly damaging to citizens whose wellbeing is Parliament’s concern. As the Leveson Report found, there had been years of lawbreaking (and it has not ceased). There had been decades of wilful regulatory failure, compounded by the deceit of that ‘pattern of cosmetic reform’. All of this had been covered up and denied – by an industry upon which society relies for the exposure of failure and wrongdoing, and for the penetration of cover-ups. Further, as senior politicians admitted before the Inquiry, it had been made easier by the willingness of politicians to overlook it.In this context, many thought he Leveson Report and the cross-party agreement restrained in their response. There is no statutory compulsion on news publishers to conform to the standards of self-regulation found necessary to offer sufficient protection to the public. Instead there are modest incentives, as set out in Section 40. There is no restriction on freedom of expression, nor were any restrictions ever contemplated. But there is a hope that news publishers will behave rationally and responsibly, not only in the interests of the general public but also in their own interests, and that, seeing the advantages of participation in recognised regulation, they will embrace it.Parliament’s view in 2013, and the view of the PRP today, is that the incentives in Section 40 must be tried. Hacked off, and the victims and others for whom its speaks, share that view. If, over time, the PRP judges that they have failed, that will be the moment for Parliament to take the matter up again. We hope that, in the interests of democracy and of freedom of expression, if that moment comes politicians will act, as they acted in 2011-13, on the basis of cross-party consensus.END OF SECTION 40 RESPONSE. A RESPONSE IN RELATION TO LEVESON PART 2 FOLLOWS.Click here for a guide on responding to the consultation.