HC Deb 09 July 1981 vol 8 cc588-93
The Secretary of State for Trade (Mr. John Biffen)

With permission, I will make a statement.

On 29 June I informed the House that I had accepted the view of seven out of eight members of the group of the Monopolies and Mergers Commission and had decided that I should consent to the proposed transfer of The Observer to George Outram and Company Limited, subject to conditions to safeguard editorial independence against a potential conflict of interest because of the extensive interests of Lonhro, Outram's parent company. However, I felt it right to defer reaching a final decision on the conditions to be attached until interested parties had had an opportunity to read the report and make representations. I have now concluded my consultations and have today issued my consent to the transfer, a copy of which I have laid before the House. The formal conditions that I have attached are based on those attached to the transfer of The Times and The Sunday Times to News International Limited.

The general effect of these conditions is that the articles of association of Observer Limited will contain provisions securing the position of the editor in relation to the determination of the content of the newspaper. They will further provide that he should not be subject to restraint in expressing opinion or reporting news that might conflict with the opinion or interests of the proprietors. His control over the journalist staff of the newspaper would be set out. The articles would in addition provide for five independent directors, who would have the special responsibility for resolving any disputes on matters of editorial independence between the editor and the directors of Observer Limited or its parent companies, including Lonrho. The consent of a majority of these directors would also be required for the appointment or dismissal of the editor and of the independent directors themselves.

Other conditions will secure that these arrangements continue if The Observer were to be transferred within the Lonhro group as a result of a company reorganisation, and provide for consultation with the board of Observer Limited, if Lonhro proposed to dispose of The Observer outside the group at a future date.

As I have said, there will be five independent directors. It was represented to me by several parties that the number of appointments recommended by the Monopolies and Mergers Commission—eight or nine—was excessive and would result in an unwieldy board structure for The Observer. I agreed. I am pleased to tell the House that the new owners, the management and the editorial staff have all agreed on four initial independent directors, and that those four shall select a fifth. My consent gives effect to this. The names are Mr. William Donaldson Clark, Sir Geoffrey Cox, Dame Rosemary Murray and Lord Windlesham. These conditions of my consent will help to provide safeguards for the editorial independence of The Observer, while involving the Government in the minimum intervention in the newspaper's day-to-day affairs.

I understand that the new owners, the management and the journalist staff have agreed on a number of other matters to which they attached importance, including, in particular, arrangements for consultation with the journalist staff on the appointment of independent directors and future editors.

I wish The Observer well under its new ownership and hope that whatever uncertainties may have beset it in the past few months will now be dispelled.

Mr. John Smith (Lanarkshire, North)

Is the right hon. Gentleman aware of the widespread and deep-seated concern about the way in which our great newspapers are passing into the hands of rich men who control powerful economic interests and who are not noted for self-effacing political restraint? Is he also aware that it is of the utmost importance that the independence and integrity of The Observer, one of our great newspapers, is maintained?

Does the right hon. Gentleman agree that the stand taken by Mr. Donald Trelford, the present editor, in fighting for the independence of his newspaper is worthy of great praise?

Can the right hon. Gentleman explain why he agreed to the transfer before the safeguards had been worked out? Might he not have secured a more powerful negotiating position if he had made up his mind on the whole question after the safeguards had been worked out rather than giving consent first and leaving the safeguards to be worked out after Lonrho had secured what it basically wanted?

Will the Secretary of State give the House a little more detail about how the position of the editor is to be secured in the articles of association? In his statement the right hon. Gentleman merely asserted that purpose and did not explain how it could be achieved.

In particular, what is to be done if the conditions are breached in any way? What sanctions can be brought to bear on the newspaper's proprietor? Does not the right hon. Gentleman agree that it might have been helpful if one or two journalists on the staff, selected by the staff themselves, could have been appointed to the board?

Does not the Secretary of State agree that the final test in the whole matter will be whether The Observer can maintain its great tradition of reporting the affairs of the African continent, bearing in mind the person who now owns it? Will the Secretary of State give an undertaking that if the safeguards are breached in any way he will consider taking further action?

Mr. Biffen

Of course, we all wish The Observer well. The greatest safeguard that can be conferred on it is that it can be a profitable newspaper, not constantly having to seek outside financial assistance.

The right hon. Gentleman said that it was a matter of great import whenever there were newspaper transfers. That is undoubtedly true. I believe that the present arrangements under the fair trading legislation and the potential references to the Monopolies and Mergers Commission provide a degree of reflective judgment that is serving us well and might be the envy of other countries that will also face the difficulties of newspaper economics.

I gladly pay tribute to the skills of Mr. Trelford, who is one of many who have seen me over the past few weeks.

Mr. John Smith

And to Mr. Trelford's courage.

Mr. Biffen

Certainly. I shall not disparage the role of any of those who have been working to try to secure the future of the newspaper.

I acted quickly on receipt of the commission's report because I believed it to be important to remove uncertainty about the newspaper's future. As long as the report was up for general debate and scrabble and scratch, we should have been no further forward. I was determined that there should be a chance for further judgment on what were the most appropriate conditions. I hope that the right hon. Gentleman agrees that what I have announced today will demonstrate that that judgment was reasonably well founded.

Mr. Peter Tapsell (Horncastle)

Will my right hon. Friend speculate about the reasons why anyone should wish to buy a newspaper that has lost £8 million over the past five years if that person genuinely believes that he is to have no control over, or influence on, its future editorial policy?

Mr. Biffen

One may think that there are many factors in newspaper economics, apart from mere editorial quality, which addressed themselves to a turn-round.

Mr. J. Grimond (Orkney and Shetland)

Is it not apparent that the whole procedure is now a farce? If the Minister had any reliance on a new directorate, he would not insist on the appointment of five independent directors. Is he aware that those five will be totally ineffective? The appointment of the great and the good to that sort of job is totally ineffective at any moment of crisis.

What does the right hon. Gentleman mean by the minimum intervention in the newspaper's day-to-day affairs by the Government? Will he tell the five independent directors what they should do at particular times? Why on earth should not owners of newspapers take some responsibility for what appears in those newspapers? They hope to make a profit out of them or obtain some prestige from them. Why should they be insulated from any criticism of what the newspapers do? Will the right hon. Gentleman take steps to abandon the whole procedure?

Mr. Biffen

I acted in the way that I did in response to recommendations of the Monopolies and Mergers Commission. The right hon. Gentleman may have a heroic view of what one does about reports by the commission. I do not accept the right hon. Gentleman's strictures on the independent directors. Perhaps a lifetime of Liberalism, close to the good and the great, makes him a good judge of what is ineffective. What he said was a most discourteous instant judgment on the arrangement that had been suggested.

Several Hon. Members

rose—

Mr. Speaker

If they are succinct, I hope to call all those hon. Members who have been rising.

Mr. Jonathan Aitken (Thanet, East)

I welcome the agreement reached between the owners and the journalists on The Observer, but is my right hon. Friend aware that in all parts of the House there is some anxiety about the apparently deepening confusion over the exercise of a Minister's powers in the whole matter of newspaper takeovers and mergers?

In particular, will my right hon. Friend clarify, first, what was the basis for deciding to refer The Observer to the commission after he had decided not to refer The Times? That is the starting point of this whole matter.

Secondly, might my right hon. Friend, as a Minister who is by temperament a non-interventionist, be a little anxious that if any of the safeguards should be in any way disregarded he will find himself in the most invidious position of being the first Minister to have to intervene directly in matters affecting the freedom of the press?

Mr. Biffen

No Secretary of State for Trade has ever had the slightest wish to edge in that direction. The answer to my hon. Friend's anxiety, which in a sense also answers a point made by the right hon. Member for Orkney and Shetland (Mr. Grimond), is that the conditions have been drawn in such a way as to make them essentially self-enforcing through the articles of association which govern the company. We are keeping away from departmental supervision and sanctions. It is clearly understood that at the time of the dispute at The Times it was deemed that there was a sense of urgency and that The Times was likely to close. Those factors were decisive in guiding me. [Interruption.] The hon. Member for Derby, North (Mr. Whitehead) may laugh dismissively. However, I ask him to accept that that judgment was made in good faith, albeit mistakenly. It could not be argued that The Observer was in imminent danger of closure.

Mr. Philip Whitehead (Derby, North)

Given the Secretary of State's rather muted tribute to Mr. Donald Trelford, should it not be put on record that Mr. Trelford has behaved with great courage throughout and has shown considerably more spirit than was shown on The Times and on The Sunday Times in similar circumstances?

I understand that four independent directors have been chosen and that they will choose the fifth. Who nominated the five directors? Which of them are staff representatives? How were the staff directors chosen? Will we receive a guarantee that the majority of independent directors, particularly those with close links with the staff, will be chosen independently and not by the Lonrho interest?

Mr. Biffen

No remarks of mine could bear the interpretation that I was in any sense grudging about Mr. Trelford's role in this affair. I am happy to have the chance to place that on record, because I know that the hon. Gentleman would not wish to make an unfair accusation. I have announced the names of four independent directors. Two of those names were suggested by The Observer and two were suggested by Lonrho.

Sir Bernard Braine (Essex, South-East)

Although my right hon. Friend's reference to editorial freedom is encouraging—it was only what hon. Members would expect from him—may I ask him to tell us more about the independent directors? I do not wish to be critical, but, as the new owners have extensive commercial interests in many overseas countries, does not my right hon. Friend agree that it is important that the fifth director should be a person of the highest international eminence, particularly in relation to the media and international relations, and should be known and respected internationally?

Mr. Biffen

I certainly agree. I am sure that my hon. Friend would wish to take account of the fact that chapter 7 of the Monopolies and Mergers Commission report gave detailed consideration to the record of Lonrho's newspaper activities in Africa. I agree with my hon. Friend that, given that the four independent directors will choose a fifth, I hope—I do not wish to appear arrogant—that the fifth director will match the existing four in their experience overseas and in the media.

Mr. Robert Maclennan (Caithness and Sutherland)

As the arrangements for securing editorial independence rest heavily on the appointment of the independent directors, what locus standi does the right hon. Gentleman have in the event of any disagreement following the retirement, or otherwise, of those independent directors? In what sense will the directors be independent?

Mr. Biffen

The independent directors will choose their successors.

Mr. David Winnick (Walsall, North)

Although there has been some improvement as a result of the negotiations, is the right hon. Gentleman aware that there will be considerable concern about the fact that a company such as Lonrho has taken over The Observer? Is not Lonrho the unacceptable face of British press ownership?

Mr. Biffen

I have no reason to suppose that. After all, Lonrho has owned newspapers in Scotland. There is no evidence of the practices that are constantly being alleged in a generalised way. The hon. Gentleman will doubtless have read chapter 7 of the Monopolies and Mergers Commission report on Lonrho's newspaper record in Africa.

Mr. Kenneth Carlisle (Lincoln)

Is my right hon. Friend aware that I welcome his statement, because, as he has said, the most important factor in a newspaper's survival is that it should become profitable as soon as possible? Therefore, a speedy decision was necessary.

Mr. Biffen

I thank my hon. Friend for that point.

Mr. Christopher Price (Lewisham, West)

Journalists on The Observer made a reasonable demand that one or two of the independent directors should be chosen from working journalists on the newspaper. Why did not the right hon. Gentleman feel that that was a proper condition to write into the agreement? What will happen if all the independent directors resign in disgust and decide that their role is useless? Does the right hon. Gentleman have the statutory power to walk in and put five more directors in their place?

Mr. Biffen

The hon. Gentleman has asked a good question, but I do not live my life trying to deal with the most hypothetical and fearsome dangers when I have more tangible ones nearer home. As regards the selection of the initial five directors, I felt it important that the Department should have as passive a role as possible as there is no proper function for politicians in this. That is why I did not seek to make the specifications that the hon. Gentleman referred to.

Mr. Peter Bottomley (Woolwich, West)

Will my right hon. Friend say who had the effective veto over the appointment of Mr. Hugh Stephenson as one of the outside independent directors?

Mr. Biffen

No. I do not know.

Mr. Geoffrey Robinson (Coventry, North-West)

In the remarkably short period in which the right hon. Gentleman has held office, he has seen The Times and The Sunday Times effectively pass to the control of Mr. Rupert Murdoch. The Observer is now going to Mr. Tiny Rowlands. How does the right hon. Gentleman feel about this whole business and its outcome? How does he feel about the seclusion of his distinguished moral and cultural conscience?

Mr. Biffen

My conscience can safely be put to one side as the biggest irrelevance of all this afternoon. It has been brought home to me that a significant area of Fleet Street is decidedly unprofitable and has some difficulty in finding the rescue engine of its choice. It is clear that in today's world many of those who wish to be newspaper owners have other interests. In the procedure of the Monopolies and Mergers Commission, we have a handy device to deal with that difficult situation.