HL Deb 09 July 1981 vol 422 cc833-9

4.1 p.m.

Lord Trefgarne

My Lords, with your Lordships' permission, I will intervene to repeat a Statement being made by my right honourable friend the Secretary of State for Trade in another place. The Statement is as follows:

"Mr. Speaker, with permission, I will make a Statement. On 29th 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 & Company Limited subject to conditions to safeguard editorial independence against a potential conflict of interest because of the extensive interests of Lonrho, 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 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 The Observer Limited will contain provisions securing the position of the editor in relation to the determination of the content of the neswpaper. 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 The 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 Lonrho Group as a result of a company reorganisation; and provide for consultation with the board of the Observer Limited, if Lonrho proposed to dispose of The Observer outside the group at a future date.

"As I 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 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 particuar 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."

My Lords, that concludes the Statement.

Lord Ponsonby of Shulbrede

My Lords, may I thank the noble Lord for repeating the Statement and informing the House that the Secretary of State has completed the consultations concerning the proposed transfer of The Observer to George Outram's parent company. In making this Statement, the Minister said that the Secretary of State had deferred making a decision until he had determined the formal conditions relating to the transfer.

I think that the Secretary of State was unwise to give premature consent to the Monopolies and Mergers Commission Report before agreeing to the safeguards. Inevitably, this must mean that the safeguards which are obtained are less than could otherwise be obtained. Indeed, one does question as to how effective the safeguards will be. The minority report signed by Mr. R. L. Marshall, attached to the Monopolies and Mergers Commission Report, stated, In particular the crucial relationship between editor and chief officer is too close, subtle and continuous to be subject to control by third parties, or amenable to effective mediation by them in circumstances where the trust and mutual forbearance on which their relationship is ultimately based has broken down under the strain of a legitimate clash of interest". Accordingly, I do not believe that the proposed safeguards will be effective. However, we must be concerned now as to whether the conditions obtained are good enough, and whether, in fact, the traditional independence of The Observer can be retained.

Noble Lords will, I am sure, be concerned as to whether independent directors removed from the day-to-day control of running a newspaper can, in fact, exercise effective control. Noble Lords will also inevitably be concerned about the conflict of interest which potentially exists between a newspaper and its proprietors, and this must particularly be so in the case of The Observer, which has made a speciality of speaking out fearlessly about African affairs, and about a new proprietor with extensive interests in the African continent. This is a potentially dangerous situation, a situation, I fear, which in some ways has been paralleled in recent times by the transfer of other national newspapers into the hands of new owners.

However, I understand, that the Observer staff have agreed to the proposed conditions and I hope that the noble Lord will be able to confirm this, though I am sorry that it was not possible to include former working journalists among the independent directors. I understand that this was one of the requests which was made by the Observer staff. I wonder whether the noble Lord would also be able to confirm that Mr. Donald Trelford has agreed to stay on as the Editor of The Observer. I think that noble Lords will also be concerned to know how the Government intend to enforce any breach in the conditions which the Secretary of State has laid down.

Finally I should like to pay tribute to the fearless fight put up by Mr. Donald Trelford to maintain the independence of the paper he edits, and to quote from the last paragraph of his leader in last Sunday's Observer, in which he rightly stated that The Observer's future depended on its readers, and added that they needed to be reassured that the paper's integrity would be respected and maintained and that they would continue to read the honest opinions of free men and women. I hope we can have that assurance, my Lords.

4.10 p.m.

Baroness Seear

My Lords, we on these Benches also feel considerable concern about this transfer to Lonrho and about the conditions which have been given to us this afternoon. It goes without saying that the freedom of the press, and particularly of a great newspaper like The Observer, must be a matter of the very greatest concern to all of us. The concern that we have felt has not been alleviated by the letter in The Times today from Lord Goodman, who is in a very strong position to be able to judge how good this settlement really is.

In relation to the Statement which has been repeated to us, there are one or two points on which I should like to ask the Minister to comment. It says that in the event of Lonrho proposing to dispose of The Observer outside the group at a future date, there is provision for consultation. That seems a very inadequate provision for what must be a radical change if any such move is contemplated. It seems to imply that such a move could take place unilaterally, after consultation, without any degree of agreement that such a transfer should be made.

Secondly, I would be very interested if the Minister would explain what is meant when it is said, on the last page, that safeguards are provided while involving the Government in the minimum intervention in the newspaper's day to day affairs". Surely it cannot be intended that the Government should have any intervention in the newspaper's day to day affairs. I even wondered whether that was a typing error. What intervention, minimum or otherwise, is it intended that the Government should have in the day to day affairs?

Also, it is a pity, surely, that in appointing independent directors it has not been found possible to enable the journalists to elect a director as one of the independents. If there ever was a case for worker-directors—and we on these Benches believe that there is a case for that—then, surely, the case of a great newspaper and of journalists working on it would be precisely the case where you might make a beginning with a director elected by the journalists on to the board. Having said that, I should like to say that if we are reassured at all—and we are not reassured very much—we are reassured by the inclusion of the names of the four directors, and in particular, perhaps, of Sir Geoffrey Cox, who has had great experience on a great Liberal newspaper now defunct.

Lord Trefgarne

My Lords, I am obliged to both the noble Lord and the noble Baroness for their measured response to this Statement. I should perhaps explain that, of course, the principal purpose of the procedure laid down in the Fair Trading Act, and indeed in the conditions which my right honourable friend has now attached to this transfer, is to preserve the editorial independence of the newspaper, and that, I think, is what we have achieved by the conditions that have been attached. Some of the other conditions that people have suggested from time to time, though no doubt worthy in themselves, did not really contribute to that particular aspect of the matter, and that is why it was not thought appropriate to add other conditions, some of which have been suggested from very reputable quarters, to the transfer that I have announced this afternoon.

As I have said, the conditions which have been attached are entrenched. To pick up one of the points made by the noble Lord, Lord Ponsonby, it would, I understand, be a criminal offence to vary from the conditions that have been attached by my right honourable friend. There are two aspects of the conditions, which noble Lords will see when they study the papers, which will be in the Printed Paper Office. Some of those conditions are attached to the consent itself and others are requirements to incorporate certain matters into the memorandum and articles of the company. Of course, a breach of those articles is a civil offence, as I understand it, but a specific breach of the conditions is a criminal offence under the Fair Trading Act.

As to the various points made by the noble Baroness, Lady Seear, I take her point but I can assure her that, for example, Mr. Trelford will be remaining as editor. I think it was the noble Lord, Lord Ponsonby, who raised that question. For a moment I have mislaid the note I made of the points put to me by the noble Baroness, but I would be happy to deal with them if she would remind me of them.

The Earl of Longford

My Lords, would the noble Lord be aware that many of us regard it as a quite disgraceful affair—quite disgraceful? Is he aware that according to my information there was a better offer open to the owner of The Observer than the one from Lonrho, who in this particular connection must be regarded as a sinister entity; and would the noble Lord explain why the better offer was not even examined?

Lord Trefgarne

My Lords, as I understand it, that would have been a matter for the owners of The Observer. The transfer which my right honourable friend was considering was the one that had been put to him by the owners.

Lord Boyd-Carpenter

My Lords, is it not the fact, and can my noble friend confirm, that The Observer has been losing money for a number of years, and that had his right honourable friend refused his consent the future of this great and ancient newspaper would have been in serious doubt?

Lord Trefgarne

My Lords, I understand that my noble friend is quite right in that assumption, and that certainly the newspaper had been losing money for some time. On the other hand, my right honourable friend could not have consented to the transfer if it was likely that there would be any serious intervention in the editorial liberty of the editor.

Lord Kennet

My Lords, I do not think anybody can be happy at the way in which the affairs of Fleet Street have been unfolding since the Royal Commission report a few years back. There has been the passage of The Times and now the passage of The Observer. At least The Times passed into the control of a newspaper group; but that The Observer—that particular newspaper—should pass into the control of that particular corporation is something which is truly extraordinary in historical terms.

I want to make just one point and to solicit the Government's opinion on it. There is an intrinsic absurdity in The Observer belonging to Lonrho, and it is probably harmful to the health of the nation that it should. Is it not the case that each harmful absurdity of this nature which may arise in the future can only serve to strengthen the attractions of plans which have been worked out elsewhere in the political spectrum for state ownership, state aid or partial state control of the British press?

Lord Trefgarne

My Lords, I must say that I fail to see the connection between this decision and what the noble Lord refers to as, I think, the policy of the present Labour Party. But I should say that the company to which the transfer is now to take place, George Outram and Company, already own various newspapers, including The Times of Zambia and the Glasgow Evening Times. If I could now pick up one or two of the points made by the noble Baroness, Lady Seear— and I apologise for not dealing with them when I should have done—she referred to the question of Government intervention. Of course, the Government have been obliged to intervene at this point in pursuance of their duties under the Fair Trading Act. We certainly see no reason for any further intervention unless there were some breach of the conditions, or some difficulty of that nature.

On the question of elected directors, to which the noble Baroness referred, as I said earlier the point of the provisions of the Fair Trading Act is, of course, to maintain the editorial freedom of the newspaper, and I do not think it would have been appropriate in this context to have insisted on the sort of conditions, admirable in themselves, to which the noble Baroness referred, when we were particularly concerned with those provisions of the Fair Trading Act to which I have made reference.

Baroness Llewelyn-Davies of Hastoe

My Lords, I hope the noble Lord will forgive me for interrupting, but, for clarification, did I understand him to say that he thought it was the policy of the Labour Party that the state should own the newspapers?

Lord Trefgarne

My Lords, I was only quoting what I thought the noble Lord, Lord Kennet, had said. I am afraid I am not an expert on the policies of the party opposite.

Baroness Llewelyn-Davies of Hastoe

My Lords, may I assure the noble Lord that the noble Lord, Lord Kennet, is not an expert on the policies of the Labour Party, and that that is decidedly not our policy.

Lord Kennet

My Lords, may in turn, assure the House that I did not think it was Labour Party policy. I referred to there being plans hatched elsewhere in the political spectrum, and there are many "elsewheres" in the political spectrum, including parts of the Labour Party.

Lord Trefgarne

My Lords, I am certain that the House is delighted, as I am, to have that clarification.

Lord Ardwick

My Lords, is the noble Lord aware that no journalist and very few readers of The Observer will be happy about the arrangements to which the Government have consented and there is a general feeling that a newspaper, although it is a business, is unlike other businesses? It is not like disposing of a supermarket. When a newspaper is to be sold it should be up for sale for offers, and the offer that should be accepted is the one which is most socially desirable and commercially viable. That has not happened in this case and there will be profound dissatisfaction with the Government arrangements, through the Monopolies Commission, for the disposal of newspapers.

Lord Trefgarne

My Lords, we have to operate the legislative provisions as we find them. I know that there is some thought among the journalists of The Observer that, for example, they might have had direct access to the independent directors on matters of editorial freedom; but there were some serious difficulties about this and we are very satisfied that the arrangement that has been agreed to, which is that the journalists of the newspaper should have access to the independent directors through the editor, is the right one.

Baroness Jeger

My Lords, may I say, as a life member of the NUJ, that I share the anxieties of many of my ex-colleagues about these arrangements. I should like to ask this question. I think I heard the noble Lord say that agreement had been reached with the editorial staff; but there are many unions involved in the production of a newspaper and I should like to know whether the other unions concerned with the production have been consulted or involved and are agreeing—because some of them are at least as powerful as those who write.

Lord Trefgarne

My Lords, as I said in the penultimate paragraph of the Statement (and I was quoting my right honourable friend) I understand that the new owners, the management and the journalistic staff, have agreed on a number of other matters to which they attached importance, including, in particular, arrangements for consultation with the journalistic staff on the appointment of independent directors and future editor, but not excluding other matters as well.

Baroness Jeger

My Lords, I am sorry that I did not make myself clear. I am sorry that I have to spell it out, but I was thinking of people like printers.

Lord Trefgarne

My Lords, as I have said twice now, our purpose was to secure the editorial freedom of the newspaper. Relations with the printers are of crucial importance to the future of a newspaper; but they did not fall within the ambit of the matters we were considering.