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13 Jan 2010 : Column 269WH—continued

Harry Cohen: I do not want to make a long intervention. The hon. Gentleman referred to competition. Is it not a problem if a local authority does its advertising, including statutory notices, in its own paper and takes it away from the independent press? Indeed, the Government
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should ensure that statutory notices are put in the independent press. Is it not unfair competition when that does not happen?

Mr. Burstow: One thing that I want to put on the record is that the Government did consult on removing statutory requirements to place adverts in independent publications and, I believe, decided not to proceed with that. That was on 21 December, and that good news was welcome.

Mr. Alan Reid (Argyll and Bute) (LD): Will my hon. Friend give way?

Mr. Burstow: If I could make a little more progress, I would be happy to give way to my hon. Friend.

I was referring to the drastic reaction-cutting jobs and closing offices-that a commercial entity would need to have to falling revenues. Another example that I wish to give is Greenwich Time, which is delivered 44 weeks a year to every home in the borough. Again, it mimics the format and content of a local paper. Its cost is £708,000 a year, of which at least £532,000 is borne by local taxpayers. Before it goes to print, every page is checked and approved by the council leader. The council claims that it is not trying to put the local independent paper out of business, but it has adopted the practice of holding back stories for exclusives for its own paper.

If we head west, we find that a similar story applies to Hammersmith and Fulham. The council's h&f news, which is distributed to 75,000 homes, is a perfect example of what I wanted this debate to be about: pseudo-newspapers. It has lots of news, a 12-page property section pull-out, crosswords and a sudoku, a what's-on section, advertising from local businesses and even a gardening section. Its counterparts in Tower Hamlets and Greenwich and all such publications are written to look at the world through the tinted glasses of the ruling party of the council.

Mr. Andy Slaughter (Ealing, Acton and Shepherd's Bush) (Lab): I was looking through my copy of h&f news to find out what is not happening in the borough as the hon. Gentleman spoke. If I get a chance to speak, I have some rather good news, which he may know about, on the local press in my area. He will be pleased to hear that universally-perhaps not originally, but universally-h&f news is known as Pravda throughout the borough, so perhaps it is not quite as effective as some might think.

Mr. Burstow: I hope that the hon. Gentleman gets an opportunity to contribute to the debate.

The consequence of this unfair competition is that Hammersmith and Fulham had been on the verge of becoming the first borough in Britain where the only source of local news was the council newspaper. As the hon. Gentleman intimated, Trinity Mirror Southern, which owns the local titles in Hammersmith and Fulham, yesterday announced a fight back, and I understand that the Fulham and Hammersmith Chroniclewill be relaunched as a free weekly paper, to be delivered to 72,000 homes in the area, from this Friday. That has to be good news for the people of Hammersmith and Fulham.

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Tom Brake (Carshalton and Wallington) (LD): My hon. Friend will know that local newspapers such as our own, the Sutton Guardian, play a crucial role in keeping our local community informed about local matters that affect it. Is he as worried as I am that local newspapers across the whole country are finding it difficult to ensure comprehensive distribution of commercial free sheets, and does he put that down to the competition that they are facing from local councils' free newspapers?

Mr. Burstow: I am sure that that is one contributory factor that makes it harder for the commercial business model for a local newspaper to be viable and to continue.

Going back to Hammersmith and Fulham, its justification for having a fortnightly council-funded newspaper was interesting: there was not an independent local paper that had a circulation sufficiently robust to be able to communicate with local residents and get messages into the community. Now that Trinity Mirror is planning a free newspaper, which will hit 99 per cent. of households, surely the council should be announcing a timetable for getting out of the state-run newspaper business. Of course, not every area has a newspaper group such as Trinity Mirror, with the resources to change its business model and move to a free sheet. In many cases, local papers are wilting under the pressure of council competition.

My final example is from Waltham Forest. The council relaunched its in-house magazine in 2008 as a local newspaper, the Waltham Forest News, which is distributed free to 110,000 households. The council withdrew its advertising from the local independent press and now places all its ads in its own paper-that goes back to the point that the hon. Member for Leyton and Wanstead (Harry Cohen) made. As well as turning off the tap on advertising revenue, the council is actively marketing its paper for advertising.

Not only has the funding tap been turned off but news stories are being held back to be given to the council's paper on an exclusive basis. I am told that, as a result, on a number of occasions the Waltham Forest Guardian received complaints from its readers for not reporting events that had a council connection. In fact, the council had kept it in the dark about what was happening. In 2006, Waltham Forest spent £464,000 with the Guardian series. That fell to £177,946 in 2007 and just £9,749 by 2008. That was a crippling drop in revenue for a significant employer in Waltham Forest. The council's decision to withdraw its advertising damaged the paper and contributed to job losses and the closure of the paper's local office.

Getting a handle on the true cost of council-controlled newspapers is hard because often it is not clearly set out in a codified set of accounts. The costs are buried in other budgets, making it difficult to pull together a complete picture. Nevertheless, a combination of freedom of information requests, investigative journalism and so on has allowed us to put a figure on what the pseudo-newspapers are costing. In London, some £10 million a year is being spent on them. I understand that in a couple of weeks, under the auspices of the Tower Hamlets business manager, all the business managers of those effectively commercial council-run newspapers will meet to compare notes on how to be even better at selling advertising in their areas in competition with their local papers.

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I said that my purpose today is to urge action. In June last year "Digital Britain" reported on and acknowledged the negative impact on independent local newspapers of local authority newspapers:

It went on to say that there was a need for the Audit Commission to be invited to undertake an inquiry into the impact of council newspapers and to

That is what happened. That request was made and the Audit Commission is undertaking a study and a report is on its way. However, the scope of the Audit Commission's study has been narrowed and will not cover all that "Digital Britain" sought: it will not look at the impact of council papers on independent local newspapers. The wider public interest in a free press is not being considered by the Audit Commission because it is outside its remit. If that is so-I believe it is-it is not good enough. Surely the competition issues must be addressed. I have presented some evidence about why that is so.

Last month, the Secretary of State for Business, Innovation and Skills said:

How will the Secretary of State's good intention be translated into action? If the Audit Commission does not do a comprehensive job and does just a half job, surely the Office of Fair Trading must be asked to finish it off and do the job that "Digital Britain" asked to be done. Without such action there is a risk of the creation of 21st century rotten boroughs, where the only news freely available to everyone is provided by the council.

Chris Payne from Tower Hamlets described council-run newspapers as "place shaping". Orwell would be proud. I hope that we can do something to ensure that Orwell is not proud and that we do not allow state-run newspapers.

2.52 pm

Derek Wyatt (Sittingbourne and Sheppey) (Lab): May I congratulate the hon. Member for Sutton and Cheam (Mr. Burstow) on prompting the stimulating discussion that we will have in the next 90 minutes?

I should like to mention a little bit of history. In 1995, Netscape created a web presence that enabled people not only to read straight e-mails, as we had in those days, but to carry pictures and, inevitably, video. In the first internet bubble of 1999-2000, the only national newspaper that understood what had happened was The Guardian, which then started to run a virulent, clever website called Guardian Unlimited. Of course, The Guardian could do that because it is a trust-a charity, a not-for-profit company-and was able to invest huge amounts of money to become the first national newspaper to measure, understand and put news on the internet. But it did not have to worry about the advertising moving from its paper to its own site, because it was the same business, although, as we know, it is not a business but a not-for-profit company.

Only in the past two years have The Sun, the Daily Mirror, the Daily Mail and The Daily Telegraph fully understood what the net is doing. Why have they done that? They have done it because they have lost their
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advertising. Since the new year, regular Guardian readers will have noticed that one section is missing-on Thursdays, for example, the information technology has gone-and all the other sections are being rolled into the main newspaper, because the classified ads have gone. Where have they gone? The Government's classified ads, for example, have gone online, to The process has changed. Why have The Daily Telegraph, The Sun and the Daily Mirror done that? The Sun gets nearly 3 million hits a day on its website, most of which are from America. Most of the hits on The Guardian are from America, too: two thirds of the traffic on Guardian Unlimited is from America. That is all very well, but advertising cannot be sold to Americans unless there is an American presence and it is being sold from there.

This is a more complex issue than it might seem, because, by and large, Trinity Mirror and Northcliffe are the largest owners of regional newspapers. Over the past 20 years, regional newspapers have been seriously starved of money: perhaps hon. Members visited over that time and saw the antiquatedness of what they had. Some did not have access to the internet in the past 10 years, others have only just got it, and some journalists did not have personal e-mail addresses. On going to the archives to try to find out what was said in the past, all people would have found would have been a cupboard full of 10,000 newspapers. It was impossible. It is all very well for us to say, "This is happening", but local newspapers have been bled by their parent companies. That is a consideration.

There has been a freefall of advertising-that is the key for all newspapers-because of the power of the net. For example, there is now a website that is supported by the lottery for people who want to work for a Member of Parliament. I wanted a researcher and put an advert on that site, which did not cost me any money; 450 people applied, I had the most amazing shortlist and I got somebody I am thrilled with. In the old days, I would have had to pay for an advert. If I am doing that-if we are doing it as MPs-imagine the implications for the classified advertising market: it has collapsed. The hon. Member for Sutton and Cheam has made a robust case about local authorities paying, but I am talking about the market. The market has collapsed for weekly newspapers, and that is the difficult bit.

What can we do? The problem has been compounded by the development of local radio, which takes local news. If people can hear their transport, weather and local news every day, why buy a weekly newspaper? There are other reasons why the local market is where it is. In Kent, for instance, which has the largest local authority, Trinity Mirror has just sold out to Northcliffe and there is a private family business called Kent Messenger. However, to keep people out of the classified market, Kent Messenger bought six local radio stations, although I am not sure that that should have been allowed. That course of action has been compounded, since we are in a recession, because now Kent Messenger cannot afford to run both the radio stations and the local newspapers and has made the mistake of shutting front-line newspaper offices in the high street.

Journalists who work in a high street know that people pop in. For example, Flo might pop in and say that she not only wants to buy an ad, but wants to tell the newspaper about a fire yesterday in the village that it did not know about; it gets the story. Without journalists
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in the high street, and with the newspaper office in a car park or a business centre, no one pops in and the news is worse. That is compounded again if companies say, as Trinity Mirror and Northcliffe have latterly, "We're going to invest in the websites of regional weekly newspapers." Why bother to buy the weekly newspaper when you can get Monday's, Tuesday's and Wednesday's news free online?

The strategy of the owners of the local newspapers is confused. They do not know what to do. There are only two solutions. First-I have said this before, but I will say it again, because somebody might listen eventually-we set up a licence fee for radio for the cultural good of Britain, which eventually became a television licence. Why is it restricted just to radio and television? It is a cultural fee. What might happen if someone said today, "I'm going to set up a radio and TV licence and by the way we also run six orchestras. I hope you don't mind, but we'd quite like the BBC to have an orchestra."

Following my drift, why is only one organisation allowed access to that cultural fee? If it were taken away from the BBC and Ofcom invited bids, and as a result the BBC had access to only 90 per cent. of that fee in the first three years, we would have a fund of £300 million that we could spend on community radio and television, academic publishing-you name it. People would be able to apply for money from that cultural fund, even for music lessons in schools, if it were for the cultural good. If we do not do that, there is no solution to help the local newspaper.

I am not suggesting that we should subsidise Trinity Mirror's or Northcliffe's local newspapers, but there will be a Guardian alternative locally and groups of people will want to set up not-for-profit newspapers, often online, that need funding. People cannot make it work. But what if they tried? How much does The Huffington Post lose? God only knows. The person who runs it is amazingly fortunate because she has backers in Los Angeles that allow that to happen. But look at the news she collects and at the cost of it. Tina Brown in New York has 5.5 million readers, but there is no money.

Making news work online and offline is complex and it is harder for local newspapers, because they lack the drive, ambition, aspiration and understanding of the market.

Simon Hughes (North Southwark and Bermondsey) (LD): The hon. Gentleman makes a strong case. Let me remind him that some local newspapers are truly independent-I am sure he knows that, but I want everybody to register the point. They do not have a group such as Trinity Mirror behind them, or a big backer who can cross-subsidise. There is a paper called the Southwark News that is entirely independent. It is even more at risk if councils behave as my hon. Friend the Member for Sutton and Cheam (Mr. Burstow) suggests they increasingly want to do.

Derek Wyatt: As I have said, that case is a matter for the Audit Commission, and I am amazed that it has been allowed. Perhaps questions should be asked about that in another place in due course. My instincts are that newspapers have forgotten why they are there. My sense is that they should have a lesser presence on the weekly pages, but go to the net as fast as possible. They
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should be local social network sites. On my social network site I want to find the Yellow Pages, Facebook, YouTube and Time Out. If such a site can be produced for Sittingbourne and Sheppey, it will get as many readers as the local paper does currently. How do I know that? I set up my website 10 years ago. The circulation of my two local weekly newspapers is between 8,000 and 11,000 people, but my website gets more than 15,000 readers. Who would want to read it? It is read because it contains local news and is produced daily.

My point is that the newspapers were wrong because they should have come to the net earlier. If they are planning to come to the net now, they will need to invest huge amounts of money, which their owners do not have. Therefore, they will need a fund or we will go backwards-hon. Members know where I am coming from. We wait to see how Rupert Murdoch will deal with this issue. Perhaps the iPhone application-or whatever-will cost 5p for the front page, 20p for the op-ed, 50p for the best journalists and more for other things. However, I counsel caution, because The Guardian tried to do that, and less than 12,000 people bothered to pay for an application for their iPhone, which would be updated twice a day. Will such measures work? I do not know, but somehow we must find a fund to help local newspapers.

Mrs. Janet Dean (in the Chair): Order. Before I call the next speaker, I remind hon. Members that the Front-Bench speakers normally start at 3.30 pm. Therefore, I ask all hon. Members who wish to speak to be brief so that everyone can get in.

3.1 pm

Mr. Andrew Pelling (Croydon, Central) (Ind): I congratulate the hon. Member for Sutton and Cheam (Mr. Burstow) on securing the debate. In south-west London we benefit from the excellent "Guardian"series. The hon. Gentleman receives extremely positive coverage from the local newspaper, which is down to the excellence of his performance, not necessarily to how well he manages that medium.

The national media are very powerful and can crush people at will. As many hon. Members know, I have successfully sued such media. As mentioned previously, local media are, in the main, owned by big international conglomerates. My local newspaper is part of the "Guardian" series owned by Gannett. The "Advertiser" series in Croydon was part of Trinity Mirror, and is now part of Northcliffe Media, which reflects some of the trends in local media.

It is important that we expect organisations to invest properly in the capital and in the staff of their newspapers. Many people work in the business out of love, care and perhaps a desire to move on to bigger and better things. They are significantly underpaid, particularly when compared with the local government sector, where someone who works in public affairs or producing local newspapers can often earn double.

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