Section 40 of the Crime and Courts Act 2013 was intended to incentivise newspapers to join an independent regulator, by protecting regulated publishers from costs while directing costs against unregulated publishers (where the court finds it reasonable and just to do so). In 2018, the previous Government chose not to bring section 40 into force; claiming it would financially ruin publishers.

In front of the Digital, Culture Media and Sport Committee, on 14^th March2018, Secretary of State Matt Hancock said,

“There was significant evidence, not least from local newspapers, into the cost pressures that they face and the additional cost pressures that they would potentially face under Section 40… the evidence for this was clear.”

Yet by the 28^th March 2018, the position appeared to have changed. Mr Hancock, wrote to the Chair of the DCMS Committee, and was apparently less persuaded by the evidence base of this position:

“The Government itself explored what the financial impact of section40 on publishers might be. However, to draw any definitive conclusions about the potential impacts would require making assumptions on a range of metrics.Given any figure produced would be so heavily caveated it was concluded that this would not be a robust evidence base on which to make a decision on section40 alone. While the potential financial impacts of section 40 remained an important consideration, they were just one reason cited in the Government's decision”.

So what was the truth, and what was the ‘financial impact of section 40’ as explored by the Government?

So, not for the first time, on 13^th January 2024 the question was put to the DCMS via the WhatDoTheyKnow website “What tangible evidence has the Secretary of State or the Department got that Section 40 of the Crime and Courts Act 2013, would risk financial ruin for publishers?”

An answer was refused and an appeal to the ICO resulted in the ICO decision notice which clearly stated:

The Commissioner requires DCMS to take the following steps to ensure compliance with the legislation:

• Disclose the information falling within the scope of the request (including the .xlsx attachment to the email chain of 23September 2016), subject to any appropriate redactions for personal data. In your main document sent the attachments to the 23 September 2016 email includes 'Leveson_Section 40 Extrapolation Analysis.xlsx'.

It took until 22^nd November 2024 to get the answer. In an email dated 23 September 2016 Subject: S40 financials from the Director - Media Policy, Creative Industries & Gambling, DCMS for the attention of the then Secretary of State, wrote:

“I promised you some further figures on s40. The team have been working with MoJ overnight and are writing up a formal note for SoS for Monday. I'm aware time is of the essence, though, so below is a readout of where the team has  got to to date.

As you'll note, it is indeed pretty complicated and you will note that some assumptions are made from a clear evidence base than others. So I really would guard against too much reliance being placed on these figures. And they clearly shouldn't be the sole or even primary factor for decision making. But they should at least give JJH some kind of statistical feel for the likely impact of policy.

In essence full commencement could cost the press£12-40m more in legal costs, partial commencement would be a benefit to the press, but on a much smaller scale (in the order of £800k-£1.6m even if one were to assume that 20% ended up in a recognised regulator).[There then follows details] “You should note that some of these assumptions come from official MoJ statistics, e.g. historic volumes of libel and slander are official statistics [the attachment]. Other assumptions do not, and therefore carry a high degree of uncertainty. This is particularly the case for the average legal cost of cases, and for the likely increase in cases brought in a fully s40 commenced world.”.

The basis for these figures is speculative to a breathtaking degree: they assume mass non-compliance with Leveson(circumstances section 40 is intended to incentivise against) and that the discretion built into section 40 will not be used.

This 2016 wording “So I really would guard against too much reliance being placed on these figures. And they clearly shouldn't be the sole or even primary factor for decision making.”contrasts interestingly with the Secretary of States letter of 28^th March 2018: “Given any figure produced would be so heavily caveated it was concluded that this would not be a robust evidence base on which to make a decision on section 40 alone. While the potential financial impacts of section40 remained an important consideration”. As the figures were ‘so heavily caveated’ why were they ‘an important consideration’?

It contrasts even more so with his comments in front of the Committee, at which he stated the “evidence was clear”.

Also included in the release of information is along document from the News Media Association, the lobbying body for the largest and wealthiest publishers, submitted to the DCMS in 2017 in response to the consultation over section 40. Paragraphs 71-72 set out legal costs implications:

71. An NMA analysis of figures provided by our members indicates that Section 40 would cost the national newspaper sector around £52 million a year in additional legal costs. The cost to the regional and local press would be around £48 million a year, taking into account thecost of an average number of legal actions, the cost of striking out the estimated number of legal claims currently received in a year together with the cost if just 10 per cent of general complaints against local papers were converted to legal claims.

72. NMA national and regional members have informed us that, if Section 40 was in force and they were liable to pay the claimant’s costs as well as their own for any claim without foundation, they would face costs awards of £40,000 (£20,000 for each side) for successfully striking out an action. The cost of winning a ‘straightforward’ libel trial with little satellite litigation could be over £1 million (costs of both sides of £500,000each. This excludes any CFA success fee uplift of 100 per cent or ATE premium).Successful resistance of an interim privacy injunction could result in total costs of over £90,000 payable by a title to enable public interest reporting.Such costs could close a regional title – or even a smaller national – after winning its case.

In p. 71 section 49 would cost the national press,£52 million, and regional and local, £48 million, a grand total of £100million. This contrasts with the DCMS figure of £12-40 million (a speculative figure itself, which assumes very high – arguably irrational - levels of non-compliance with independent regulation). A difference of some £60-£88million.

Paragraph 72 also seems to ignore the fact that the court would have had a discretion in costs in certain circumstances.

The News Media Association submission in 2017included:

56. Commencing Section 40 would have a chilling effect on freedom of expression. It would deter investigation and publication because of the fear of costs. It would encourage complainants to take legal action against the press, irrespective of merits, since they would be freed from any risk of incurring costs, their own or the other side’s, in the event of failure of their case.

In fact s.40 as enacted included:

(3) … the court must award costs against the defendant unless satisfied that—

(a) the issues raised by the claim could not have been resolved by using an arbitration scheme of the approved regulator (had the defendant been a member), or

(b) it is just and equitable in all the circumstances of the case to make a different award of costs or make no award of costs.

So if a claimant brought a case without any merit or justification the court would have had a discretion as to the costs order (a detail the Government consistently ignored or disregarded in its public comments on the matter).

In summary: one of the most consequential decisions on media policy of recent decades was taken without proper evidence base – to the advantage of the national press - and the Government refused to admit it for years.

An interesting further point is that the Government were advised that partial commencement of section 40 would be a costs benefit to the press.  As quoted above,

“partial commencement would be a benefit to the press, but on a much smaller scale (in the order of£800k-£1.6m even if one were to assume that 20% ended up in a recognised regulator)”

Yet the Government chose – with the support of the NMA – to deprive local and independent newspapers of this advantage.

The disclosed information also includes a Readout -SoS meeting with NMA and others re Leveson - 14 September 2016 and a Readout —SoS meeting with Hacked Off — 29 Oct 2015.

On the 14^th September 2017 there is an internal letter to the SoS, Subject: Options for Section 40 of the Crime and Courts Act 2013, listing options and recommendations including the repeal of section 40.

The News Media Association website 23^rdFebruary 2024 included:

We welcome the aims of the Strategic Litigation Against Public Participation Bill, now having had its second reading in the Commons today, and the cross-party commitment it enjoys, to out rule the use of SLAPPs once and for all.  These abhorrent practices must be dismissed promptly and efficiently to safeguard the rights of journalists, activists, campaigners, and whistleblowers from any form of unjustified censorship and intimidation.

One can only sympathise with and support that view.However the boot is on the other foot when a wealthy news media publishes a wrong or damaging item about an ordinary person in the street.  With the demise of section 40 where now is our independent cost effective remedy to access justice if they are not a member of IMPRESS?

By Christopher Whitmey, supporter for truly independent press regulation

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