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Financing the British press – two paths

March 26, 2010 Leave a comment

The financial difficulties faced by the press have been well documented in recent years – but in the headlines today we see two different responses to the crisis.

The first answer to the financial difficulties is the more old-fashioned – get a very wealthy person to support you in hard times. The example is Alexander Lebedev’s purchase of the Independent, a loss making title. Lebedev is a Russian billionaire who already owns the London Evening Standard.  Many will breathe a sigh of relief as the Indy is being saved. In tough times, at least Lebedev is committed enough to prop up a title which the market is not supporting. On the other hand, it is a considerable amount of power and potential influence being handed to one person simply because he can pay for it. There is already talk of whether this will lead to a change in editor and we will wait to see how, if at all, it affects the content of the paper. So while the deal means the Indy survives, there are still concerns about its future. Along these lines, an article in Tribune sees Lebedev as a new Murdoch or Maxwell, while Peter Wilby worries that the paper may be steered away from hard-hitting journalism. Who says the press baron belonged to a bygone era?

The second answer to the press’ financial difficulties is the announcement that the Times will be charging for online access – at £1 a day or £2 a week. While, like Lebedev, Rupert Murdoch has been willing to support loss-making titles in hard times, it is still necessary to find a long-term source of income from the Times’ journalism. Murdoch has not gone for the much discussed micro-payments model, in which readers pay a very small sum to read specific articles. Instead, the £1 a day charge will give the reader access to all the articles in the Times. It therefore requires the reader to commit to that particular newspaper. By contrast, a micro-payment model would have allowed people to read articles across a range of titles at a small cost. The problem is that a micro-payments scheme is likely to work only if a number of papers all commit to the scheme (and if payments are collected in the same way).

The Times is not the first to adopt the subscription model, others such as the FT have already done so. If it is a success, Murdoch’s strategy is likely to be followed by other newspaper sites. Yet it comes with risks for a national newspaper seeking a mass audience. The first risk being that people won’t go for it and will get their news from other free websites. This could reduce the paper’s direct audience. Secondly, the paywall reduces the scope for articles to be linked to by other sites and subject to online  discussion – this reduces the indirect audience (of those who encounter the Times’ content without being a regular visitor to the site). These trends could reduce the number of eyeballs, which in turn makes the site of less value to some advertisers and may curtail the paper’s political influence.

These are just risks and I’m not sure they will eventuate. The Times has a long history and committed readership, so I find it hard to imagine the paper’s influence seriously diminishing. But it is an important experiment which may point the way for future financing of the British press.

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Categories: Media Tags: , ,

Departments disclose lists of ministerial meetings

March 24, 2010 Leave a comment

In October last year, the government committed itself to publishing a list of ministerial meetings with outside interest groups on a quarterly basis. A number of departments have now posted the lists for meetings taking place between October-December 2009. Some are not that easy to find on the websites, so I have collated a number of them here:

Business Innovation and Skills

Department of Health

Ministry of Justice

Home Office

Foreign Office

Department of Transport

Department for Schools, Children and Families

Department for Communities and Local Government

The Treasury

Northern Ireland Office

While I can’t find the quarterly reports for the Department of Culture, Media and Sport, details of ministerial meetings are often listed under FoI requests, here.

If you take a look at the links, then you will be surprised that some ministers had remarkably few meetings with outside groups over 3 months. This begs the question of what constitutes a ‘meeting’ for the purpose of the register and how ‘outside interest groups’ are defined. Don’t get me wrong, the publication of this information is important, but it does show the limits of transparency schemes. A lobbying register is being put forward as a remedy for the current MPs for hire controversy (see the Alliance for Lobbying Transparency for the some of the arguments) – but the information provided under such schemes is often limited. If a statutory register is going to help, then it will have to be clear on the level of detail required to be disclosed .

There are a number of departments where I cannot find the quarterly report (or where it has not been posted). If anyone has more success, let me know. The departments are:

Department for Environment, Food & Rural Affairs

Department for International Development

Ministry of Defence

Department of Work and Pensions

Department of Energy and Climate Change


Categories: Lobbying

Labour now calls for a statutory register of lobbyists

March 22, 2010 Leave a comment

Following the ‘MPs for Hire’ controversy, the Labour Party has announced that it will include a commitment to a statutory register of lobbyists in its manifesto. The proposal is welcome, but it leaves open a number of questions.

In October last year, the government rejected the House of Commons Public Administration Committee’s call for a statutory register of lobbyists. Instead, the government preferred a system of voluntary self-regulation. In October, the government welcomed ‘the constructive start’ that had been made by the industry in establishing a new self-regulatory body, the Public Affairs Council. As far as I know, that body has not even been set up yet. So why did the government change its position (which one PR specialist describes as a ‘screeching’ u-turn)?  It cannot be that the new system of self-regulation failed, as it had not been set up. There has also been no formal investigation to decide whether any wrongdoing took place. Instead, the change of position looks like an attempt to curb the negative headlines.

Personally, I was always sceptical of self-regulation and preferred a statutory register – so the change of position is welcome as far as I am concerned. However, many of the restrictions on lobbying have been introduced as a response to a scandal. The laws and regulations are a series of landmarks marking the controversies of previous years.  Such legislation runs of being rushed and ill-thought out. The danger lies in focusing on the most recent problems, rather than looking for a long-term solution.

While I’m in favour of a statutory register, it is important to be realistic about what it can do. In other jurisdictions it has not stopped lobbying scandals. There are also difficulties in deciding what should be covered in the register and who it applies to.

While a statutory register is a step in the right direction and shows the government to be acting, there are no quick fixes to the problems posed by lobbying.

Categories: Lobbying Tags: ,

MPs for hire

March 21, 2010 Leave a comment

A Sunday Times/Channel 4 investigation claims that several high-profile MPs are for hire and willing to lobby on behalf of paying private interests.

The journalists approached the MPs claiming to represent a fictitious American company, Anderson Perry. Given that the several members of the House of Lords were caught out by a similar Sunday Times sting in January 2009, I’m surprised the MPs aren’t a little more cautious about what they say and who they talk to.

There is nothing against the law or Parliament’s Code of Conduct for MPs to receive payment for providing advice to outside companies, as long as it is disclosed. There are restrictions on lobbyists, such as the ban on paid advocacy by MPs – but it is not always clear what falls foul of this rule. The guidelines to the MPs Code of Conduct provides:

When a Member is taking part in any parliamentary proceeding or making any approach to a Minister or servant of the Crown, advocacy is prohibited which seeks to confer benefit exclusively upon a body (or individual) outside Parliament, from which the Member has received, is receiving, or expects to receive a financial benefit, or upon any registrable client of such a body (or individual). Otherwise a Member may speak freely on matters which relate to the affairs and interests of a body (or individual) from which he or she receives a financial benefit, provided the benefit is properly registered and declared.

The question is then whether the actions of the MPs related to parliamentary proceedings and whether they were exclusively for the benefit of the paying interest. Some of the allegations suggest that a possible breach of the rule should be investigated, but this is not true for all the claims in the report. For example, one of the allegations made by the Sunday Times/Channel 4 is that a former minister, Stephen Byers, used his inside knowledge of legislation he had worked on to advise the paying company on possible loopholes – this would not, however, relate to a parliamentary proceedings.

Iain Dale has written that one of the MPs ‘ought to stand accused of corruption’ – this is more difficult than deciding if there was a breach of Parliament’s Code of Conduct and questions remain as to whether the current criminal bribery laws can be used against MPs (something the current Bribery Bill should clarify).

The Sunday Times article also quotes Patricia Hewitt, explaining the possible avenues for lobbying:

She listed five ways that a company could contact a minister including by funding think tanks and seminars, hospitality, sponsoring events in party conferences, contacting special advisers and finding a connection with the minister’s constituency.

This shows how payments don’t need to be made to MPs directly to buy access. Funding a think tank, for example, may get you access, but it would not show up on the Register of Members’ Interests. A payment to such a third-party also seems more likely to fall outside the ban on paid advocacy (the guidance to the Code of Conduct mentions only MPs or their relatives receiving “reward or consideration”). The latter point is open to debate, but in any event, it would be harder to get evidence showing a connection between a payment to a think tank and the MPs subsequent conduct.

All of this goes to show the limits and deficiencies of the lobbying controls (which are discussed in chapter 4). We will see what proposals are advanced in response to this (most laws regulating lobbying have been a reaction to some scandal or another).

Unsurprisingly, the MPs deny wrongdoing. While the Sunday Times reports that Stephen Byers told the undercover reports how he influenced government for clients, the newspaper also mentions that the next day Byers ‘sent an email effectively claiming that he had lied throughout the meeting.’ This raises an old question of whether we should ever believe the boasts of a lobbyist – are such statements really revealing the true workings of government or simply drumming up business with potential clients?

Union donations get their turn in the headlines

March 19, 2010 3 comments

In the last week we’ve seen the Conservatives going on the attack on party funding – this time on Unite’s role in bankrolling Labour. The Conservatives have been lucky that Unite were already in the headlines with the cabin crew strike. The thrust of the criticism is that Unite have donated over £11 million to the Labour Party since 2007 and are influencing Labour’s campaign and policy. Unite’s Political Director, is also being dubbed Labour’s equivalent of Lord Ashcroft, given his role in advising the Party.

Whether or not you object to large trade union donations, there are differences between union contributions and those from wealthy individuals or companies. First, Unite’s spending power does not flow from any person’s unequal wealth. If Charlie Whelan or any other official has influence, it is not because they are super-rich, but by virtue of the position they hold within the union. The union’s spending is the result of the payments made by its members into the political fund. This leads to the second point, that union donations have to come from a political fund (separate from its general revenues) and members can opt-out of paying into that fund. By contrast, companies can make donations out of their general revenues (so once a company gets approval to make a donation, there is little a dissenting shareholder can do). Trade union donations are sometimes presented as an aggregation of lots of small payments made from individual members. If this is the case, then the union donations look less problematic for political equality.

Thirdly, no questions are ever raised about who is paying into a political fund (namely who is behind the donations) – it is the union members. By contrast, with company donations there are questions about where some companies get their money from. For example, a company making a donation may have received its funds through a transfer from another company (or a payment from an individual). This would only have to be disclosed to the Electoral Commission if there is an agency agreement. So there is greater scope for company donations to lack transparency, in knowing the true source of funds – I don’t know of such a problem for union donations.

If you want to criticise union donations, then the line of argument should be that members only get to choose whether to pay into the political fund and they have no legal right to specify which parties or causes the money should go to (though I guess that might be obvious). You might also question whether members really have the power to hold the leaders to account for the ways political fund is used. The members also have a right only to opt-out of paying into the fund, so critics may also argue that the payments do not reflect the members’ deliberate choice. If you follow this line of argument though, you would have to accept stronger controls on company donations first. Union donations are currently the most heavily regulated.

That Unite is such a large donor may also look like a sign of union strength. In some ways it shows the reverse. Unite is the product of a merger between two unions Amicus and the TGWU. Amicus itself is the product an earlier merger of several unions including the AEEU and MSF. This means that several years ago, Labour would have been funded through a wider range of unions. Labour would not have depended so heavily on a single source. As unions merge, it seems inevitable that the sums given by that one source (now the aggregate of the other unions) will get larger.

Much has focused on the influence of Charlie Whelan. However, the proximity of Charlie Whelan to the Prime Minister is not simply because of Unite’s donations to the Labour Party. Whelan had the Prime Minister’s ear long before he worked for the union. I guess that is why Unite hired him in the first place – so if anything, it is the funds that allowed Unite to buy Whelan’s services (as opposed to the political donations) which have secured that connection.

There are, of course, debates to be had about the role of union donations and there are also questions you may ask about the union’s influence over candidate selection. Personally, I am less troubled by union contributions than other sources of party funding. But if you don’t share this view, it is important to move beyond basic assertions (ie large sum given to a party by a striking union) or the comparisons with wealthy individuals and their companies.

Getting candidates to disclose their interests

March 15, 2010 Leave a comment

A campaign asking prospective parliamentary candidates to disclose their lobbying links has been launched by 38 Degrees and the Alliance for Lobbying Transparency. The 38 Degrees website calls on its supporters:

Together let’s ask our parliamentary candidates to commit to coming clean over any links they have to lobbying and to support the introduction of a compulsory register of all lobbying activity – so we can find out easily who is trying to influence our politicians.

It is an important issue. Another key question, however, is what the candidate intends to do once elected – whether they will continue working with the lobbying company or resign. The same goes for second jobs in general – that the public should know whether the candidate will give up their current job or not (and whether they intend to have any other sources of income). Like lobbying, in some circumstances, employing MPs provides a way for outside interests to get a foot in the door and influence political decisions. While all of these details will be revealed in the Register of MPs’ Interests if the person is elected, it would be good for voters to know this before casting their vote.

The importance of candidate transparency was stressed in the Kelly report in November last year, which made the following proposal:

All candidates at parliamentary elections should publish, at nomination, a register of interests including the existence of other paid jobs and whether they intend to continue to hold them, if elected. The Ministry of Justice should issue guidance on this in time for the next general election. Following the election, consideration should be given as to whether the process should become a statutory part of the nominations process.

In December, the government made the following response in the House of Commons:

The Ministry of Justice will discuss the approach with the Electoral Commission and others as appropriate before guidance is issued, in time for the next general election. A decision about whether to implement this on a statutory basis will, as the Committee suggests, be taken in the next Parliament.

As far as I know , the guidance requiring the disclosure of interests has yet to be published  (though I would be interested to know if there has been any movement on this) – and time is running out. In the meantime, the 38 Degrees and Alliance for Lobbying Transparency campaign provides some political pressure.

UPDATE – on 22 March, the Ministry of Justice published guidance for candidates’ declarations of interests, though such a declarations are made only a voluntary basis.

Inequalities in wealth and citizenship

March 10, 2010 Leave a comment

The National Equality Report, published in January, gave a comprehensive survey on inequalities in income and wealth in the UK. Among other stats, the Report revealed that the top 1% of earners took 10% of the share of net income, and the top 10% of earners took over 34%.

There are many reasons why we might be concerned about the findings of the report – it may indicate that  Britain falls short of equality of opportunity or raise questions about the just distribution of wealth. But the stats are also important for issues of citizenship. The report makes this point about why inequalities in wealth might be bad for a democracy:

Whether or not people’s positions reflect some form of ‘merit’ or ‘desert’, the sheer degree of difference in wealth, for instance, may imply that it is impossible to create as cohesive a society as they would like. Wide inequalities erode the bonds of common citizenship and recognition of human dignity across economic divides.

This line of argument has a long history. Yet there is another reason why these stats should be of concern for a democracy – economic resources can be used as political resources.

Take the trend of participating in politics through a chequebook, such as giving money to a political party or interest group. The headlines tend to focus on those giving seriously large sums of money to parties – those who give hundreds of thousands of pounds. Yet the capacity to give comparatively small donations to a party is still limited to relatively few people.

Under the current rules, only those giving a central political party over £7,500 or a local party £1,500 in a year have to be disclosed to the Electoral Commission. A donation of a few thousand pounds is often regarded as small (and compared to many of the donations from the super-rich, it is) and therefore attracts little attention. But just how many people have even that much money to spare?

According to the National Equality Report, the top 10% of households have a net income of £806 per week (£42k). So let’s say that a household decided to give £1,500 to a political party, that would represent approximately 3.5% of their annual net income. Individuals (as opposed to households) in the top 10% have a net weekly income of £542 (£28k per year), so the same donation would represent  5% of their annual net income. I use the figure of £1,500 because it represents the lowest amount possible to fall within the Electoral Commission disclosure requirements.

How many people would wish to give that proportion of their income to a political party? Such people may exist, but the point is that this would be a stretch for some of those in the top 10% – so it would be even less likely for the vast majority. Obviously, I refer to just one set of stats, and this focuses on earnings – people may have other sources of wealth which allow them to contribute to political causes. The point is, however, that the opportunity to give what is thought of as a relatively small sum to a political party is open to a small proportion of the population. Capping donations at £50k or even £10k may cut out the super-rich donors, but there would still be a long way to go to establish a fair and equal system of party funding.