Update on Proposed Fox-Sky Merger Process

Lord McNally Excerpts

Tuesday 12th September 2017 Lords Chamber

[Lord Collins of Highbury (Lab)]

My Lords, I welcome the Statement that the Secretary of State is minded to refer the bid to the CMA on broadcasting standards grounds as well as those of media plurality. In its first report, Ofcom said there were no broadcasting standards concerned that may justify a reference. It has now admitted that there are “non-fanciful” concerns. On that basis, the Secretary of State had to refer the bid, she has done so, and we on these Benches certainly welcome that.

The Murdochs have a long history of regulatory non-compliance and corporate governance failure, at both 21st Century Fox and News Corporation. Just last week, News Group settled in 17 cases relating to allegations of criminality at the Sun, ensuring that James Murdoch will not have to appear in court later this year.

The Secretary of State has done her job and now, as the noble and learned Lord, Lord Keen, said, the CMA must do its job. However, we need to be assured that it will be a comprehensive look at the corporate governance issues. The Secretary of State has said—and the noble and learned Lord repeated this—that the issue is a matter of evidence. One way to gather that properly, and to inform the CMA, would be to commence the second part of the Leveson inquiry. I hope the noble and learned Lord will be able to reassure the House on that matter.

When previous Statements have been made to the House on this issue, I have sought reassurance from the noble and learned Lord in relation to data. How data are mined, used and abused in terms of media plurality is particularly an issue in relation to Fox News. I would be grateful if the noble and learned Lord could repeat what he said to us before—that the issues of,

“data-scraping or data accumulation … are matters that the Competition and Markets Authority will take into account in arriving at any decision”.—[Official Report, 20/7/17; col. 1749.]

I hope the noble and learned Lord can reassure us on that.

[Lord McNally (LD)]

My Lords, like the noble Lord, Lord Collins, I welcome this Statement and I am grateful to the Minister and the Secretary of State for the thorough way that she has kept those of us interested briefed as she has come to these decisions. I also welcome the revised advice from Ofcom. I was part of the committee that created Ofcom and have always been proud of the way it has developed as a regulator. I have to say that its first advice on these matters came close to being equivalent to what the Premiership seems to think of as fit and proper to run a football club. The revised advice gives some credibility back to Ofcom in these matters, and it should be grateful to the Secretary of State.

I am a little worried about the sudden appearance of the term, “non-fanciful”. I am not sure that the Minister, with his long and distinguished legal career, would be able to tell me how “non-fanciful” is weighed in matters of judgment. As the noble Lord, Lord Collins, asked, would worries about data mining and abuse of data be dismissed as “fanciful”? When we bandy terms such as non-fanciful about, we should remember that most of the accusations made about News International in the past 10 years were initially dismissed as fanciful—as being made up by enemies of the Murdochs—but then turned out to be true. I am not so sure that “fanciful” and “non-fanciful” should be used in the work ahead.

In taking its decisions, the review should look at the threat to the UK media industry. Our media in all their aspects are among the least protected of national media from predatory attack. As the value of the pound falls, there is good reason for being careful about the message that we send out about our determination to defend the integrity of our media.

I associate myself also with the call made by the noble Lord, Lord Collins, for the second part of Leveson to go ahead.

As a Fox subscriber, I was interested to learn that Sky thought that Fox News was so little to the taste of the British viewer that it has taken it off its platform, whereas it has left on it the Iranian and Russian news channels.

[Lord Keen of Elie]

My Lords, I begin by responding to the point raised by the noble Lord, Lord McNally, on what is “fanciful” or not, because it goes to the heart of the decision-making process addressed by the Secretary of State. It is a term with a legal basis that is linked to the statutory test for a phase 2 referral in public interest cases. I mention in passing the Court of Appeal decision in the case of the Office of Fair Trading v IBA Health. I shall not elaborate on the dicta in that decision, save to mention that there is a legal basis.

The Secretary of State must believe that the merger operates, or may be expected to operate, against the public interest. In her coming to her view that the evidence meets the test of “non-fanciful”, it should be noticed that that is a relatively low threshold. It is not necessary that the Secretary of State should be satisfied on the balance of probabilities or beyond reasonable doubt; the belief must be reasonably and objectively justified by the facts. In other words, there must be an evidential basis for the Secretary of State’s concern, but the concern itself does not need to be proven. That is essentially the approach that underpins the Secretary of State’s decision-making process here.

On broadcasting standards, I emphasise to the noble Lord, Lord Collins, that we are dealing at this stage with the Secretary of State’s “minded to” decision. It is not a final decision. There is now a 10-day process, pursuant to Section 104 of the Act, whereby the parties can respond and make submissions before any final decision is arrived at.

As regards evidence and data in the context of media plurality, it is premature for me to elaborate on what has already been said on these matters because a final decision has not been made on the second ground of broadcasting standards. If and when such a decision is made, there will in any event be a reference to the CMA, and it will be for the CMA to discharge its statutory functions. It would not be appropriate for me at this stage to anticipate how the CMA should go about its own statutory task. That would be to intrude into its territory. With all due respect, I hope the noble Lord accepts that it would not be appropriate for us to tread on that lawn, as it were.

On the question of Leveson 2, we have clearly progressed a long way since the first part of the Leveson inquiry was set up over six years ago. We have witnessed the completion of three detailed police investigations, extensive reforms to practices involving the police and some significant changes to press regulation. We have put this matter out for consultation and are considering the responses to it. We will publish a response in due course.

Fox-Sky Merger

Lord McNally Excerpts

Thursday 20th July 2017 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for repeating the Statement made in the other place. I am grateful to the Government for returning to the Houses of Parliament, both here and the other place, just before Recess to update us on progress.

We have been following the twists and turns of this saga closely. It is obvious, and absolutely right, that the Secretary of State is taking her quasi-judicial responsibilities very seriously. While we regret that she is minded not to refer the bid on grounds of broadcast standards, we support her decision, as I take it to be, to refer the bid to the CMA on the grounds of media plurality.

I have three main points that I hope the Minister will be able to respond to. The first is on the timing. Could I press the Minister on the possibility that the Secretary of State might announce her decision during the Summer Recess? Surely Parliament must have the opportunity to scrutinise any decision that she makes. It is not her job to operate to 21st Century Fox’s corporate timetable; in my view, the company would be better to abide by the rules as they currently are and respect the role of Parliament in this, and it should signal that very clearly. In my view, the Secretary of State should demonstrate to those at Fox that it is she, as an elected representative of the people, who is in charge, not them. I ask that the usual channels in this House also be kept abreast and that we be informed if there is to be a Statement so that we can respond to it.

Secondly, I want to press the Minister on the broadcasting standards investigation. I suggest it needs a bit more work before a decision is finally reached. Recently, compelling arguments for this have been made in the other place by my right honourable friend the Member for Doncaster North and the right honourable Members for Twickenham and for Rushcliffe—noble Lords will be aware that that is a pretty distinguished cross-party alliance. The truth is that the Murdochs have a history of regulatory non-compliance and of corporate governance failure that calls their commitment to broadcasting standards into serious question. Ofcom says that there are,

“significant concerns about Fox’s approach to ensuring Fox News content complies with the Broadcasting Code”.

We saw in the phone hacking scandal that senior employees and executives at News International failed to comply with criminal law or with acceptable standards of journalistic conduct—and, frankly, acted with a flagrant disregard of basic human decency. We see from the ongoing sexual and racial harassment scandal at Fox News in the United States that there is ample evidence of what Ofcom calls “significant corporate failure”.

Does the noble and learned Lord agree that it is time to look again at the fit and proper person test applied in the case of broadcasting standards? I heard it said by a distinguished former member of Ofcom that that test could be satisfied only if the person concerned was caught in the act of murder, had been prosecuted and that the body was exhibited before any such decision could be taken. That is probably a test too far. The noble and learned Lord will recall that, in the Digital Economy Act, several noble Lords from around the House joined together to table an amendment that suggested that there were other models for the fit and proper person test that might be more appropriate—particularly those applying under the Financial Conduct Authority. At that stage, we were persuaded by Ministers that it would be inappropriate to press the amendment to a vote, which I now regret, because they promised an early opportunity in the legislative timetable to bring forward recommendations on it. Can the noble and learned Lord confirm that that is still the plan and share with us which legislative vehicle will be used for it?

Of course, the best way to get at a lot of these corporate failure issues would be to proceed with the inquiry that has already been promised, which is specifically to look into part 2 of the Leveson inquiry. Will the noble and learned Lord confirm that that could still be implemented, because that could be very germane to what we are discussing today?

There is a third issue that we need to look at. On one hand, a lot of the problems that have been caused here are to do with the way in which the corporate veil hides individual actions in a way that would be inappropriate in the broadcasting area. This issue is really about control of media organisations. This is not a battle for the control of a particular broadcasting entity called Sky News; it is really a battle between old media and new media. At the heart of that lies control of personal data, in which there is considerable interest and investment being made. It is about data power—the power to know who is watching what and what their interests are will be more important as competition increases. We are talking about battles between the organisations concerned in this merger and organisations such as Google and Facebook. Does the noble and learned Lord believe that the CMA has the powers to investigate this aspect of media plurality? Without knowing where the data sources and how they are being used, it will be difficult for it properly to assess the impact on media power going forward? I look forward to hearing from him.

[Lord McNally (LD)]

My Lords, like the noble Lord, I welcome the Statement and the courtesy and openness with which the Secretary of State has approached her responsibilities. That is why I find it extraordinary that, having emphasised and carried out her duties to Parliament so assiduously, it could even be suggested that she should make a decision during an eight-week gap between Parliament rising now and returning on an issue that has been before her, regulators and Parliament for years. That would be an absurd assault on parliamentary dignity and responsibility, and I strongly urge her not to follow that road.

Part of the problem is the siloed nature of the decision, when what is needed, as the noble Lord said, is a holistic judgment about the fitness of this takeover. But that is how it has been played. The problem is also the siloed nature of modern business structures. Various parts of the structures can clear part of the siloed questions when we all know, as I have said, what the web is and that the spider is at the centre of that web.

I also press the Minister on whether this could lead to the second stage of Leveson and on the point made right at the end. I remember a few years ago somebody buying a canal and everybody thought what an absurd price he had paid for a canal—the age of canals was over. Then it suddenly dawned on everybody that he had not bought a canal; he had bought miles and miles of land on either side of the canal and made a fortune as a property developer. The same is true now, as the noble Lord has said. I have often pondered what on earth niggles Murdoch that he has tried, year after year, to get 100% control of Sky. What act of vanity is this? He may be vain but he also knows where a quick buck is to be made. It occurs to me that there is ample evidence that what Sky has is a database of some 13 million people, which could become increasingly valuable in the data battles ahead. I wonder whether the Secretary of State has asked the Information Commissioner’s advice on this aspect of the takeover and on how it fits into other legislation that we are considering. This is a foreign bid for a British database, which should give concern about how it is being handled. I go back to the friendliest of warnings: the Secretary of State would be very wrong to consider making this decision while Parliament is in recess.

[Lord Keen of Elie]

I am obliged to the noble Lords, Lord Stevenson and Lord McNally, for their observations on this matter and I appreciate their acknowledgement that the Secretary of State is endeavouring to treat this matter in as open a way as possible. Given the quasi-judicial nature of the task that has been laid on her by statute—one that she cannot alter by her own whim, as it were—and bearing in mind the quasi-judicial process that we are in, it is implicit that the Secretary of State must act promptly, for the benefit of both the public and the parties interested in the proposed merger. It is in those circumstances that she has to consider the matter of timing. I appreciate the point made by the noble Lord, Lord McNally, about the dignity of this House, the other House and Parliament in general, but the Secretary of State is in a position where, because of the timing issues, the announcement is liable to be made during recess. As she has said, however, she is intent on assuring the House by way of intimation to the Speakers of both Houses when the decision is made and the nature of that decision.

The noble Lord, Lord Stevenson, referred to her decision. I reiterate that the Secretary of State has made no final decision on any matter. She has reached a preliminary view on the basis of the information before her at present.

So far as standards are concerned, further work will be done before a final decision is made. In particular, the Secretary of State will look at all the representations that have been submitted to her until Friday, which cover both media plurality and broadcasting standards. She will look at both issues before coming to a final decision. It is possible to reach an informed decision and verdict without a body. The circumstantial evidence may be compelling in itself, and all the circumstantial evidence will be taken into account.

As for the reference to the CMA, it would not be for the Secretary of State to constrain the scope of the CMA’s phase 2 investigation, and I would not suggest that any constraint should be placed on that investigation by the Secretary of State.

I hear what is said about data protection but we have to remember that personal data held by Sky, or indeed by Fox, are protected by the Data Protection Act. That applies not only to personal data but to more extensive caches of data held by Sky, so there is already a degree of protection in place.

Part 2 of Leveson was raised. No final decision has yet been made on that. Indeed, no final decision can be made until the chair of that inquiry has been consulted on the point. A statutory provision under the Inquiries Act dictates that the chair of an inquiry will be consulted before any final decision is made about the second phase of an inquiry programme, so that remains outstanding.

In these circumstances, I again commend the Secretary of State’s Statement to this House and reinforce the point that she has arrived at no final determination but will do so only after she has considered all the representations submitted to her.

--- Later in debate ---

[Lord Keen of Elie]

My Lords, regulators do not have a role in scrutinising what data are held by companies involved in mergers, but if representations are made about the issue of data, such as data-scraping or data accumulation, those are matters that the Competition and Markets Authority will take into account in arriving at any decision that it makes in the context of a phase 2 inquiry.

[Lord McNally]

Has the Information Commissioner been consulted? I did ask that question, and the noble and learned Lord did not answer.

[Lord Keen of Elie]

I am not in a position to answer that question at this time, but I shall endeavour to make inquiries and write to the noble Lord to advise him on the positon on that point. I shall place a copy of any letter in the Library.

Prisoners: Imprisonment for Public Protection Sentences

Lord McNally Excerpts

Thursday 20th July 2017 Lords Chamber

[Lord Keen of Elie]

IPP prisoners have access to the appropriate programmes and matters have improved considerably over the past few years so far as that is concerned, but it is not always necessary that an IPP prisoner should undergo a specific programme to satisfy the Parole Board as to their suitability for release. There are other means by which this can be achieved.

[Lord McNally (LD)]

My Lords, as the noble Lord, Lord Blunkett, acknowledged, both the Ministers who brought in this legislation and the coalition Government who abolished IPPs saw them as a mistake. Section 128 was put into the Bill particularly to deal with the present situation that the Minister faces. It is not true that he is dealing with this problem in a way that will get rid of it quickly. It will be with us well into the next decade. It is also not true, as he implies frequently, that what the noble and learned Lord, Lord Brown, I and others are doing is throwing open the gates for dangerous prisoners. There would still be a very hard, close process before these men were released but it would get rid of an obvious and glaring injustice. The Government should make use of Section 128 for the reason it was put there.

[Lord Keen of Elie]

We are of course conscious of the ability to move under Section 128. That remains under review. However, under the present regime we have seen an acceleration in the number of releases. Be that as it may, let us keep in mind the simple fact that where people achieve the present test, we have a breach of licence conditions rate of about 30%. We are dealing with very difficult and in each case dangerous individuals who must be managed in the community for its safety as a whole.

Sky and 21st Century Fox: Proposed Merger

Lord McNally Excerpts

Thursday 29th June 2017 Lords Chamber

[Lord Collins of Highbury (Lab)]

My Lords, I thank the Minister for repeating the Statement made by the Secretary of State.

Media plurality is a key finding and irrespective of any final decision of the Secretary of State, the Labour Party over the next 12 months will review media ownership rules in the United Kingdom. However, I warn the Minister that the problem with Murdoch’s undertakings in lieu, even strengthened ones during this process, is that they will became as meaningless as those he has given in the past. Just look at what happened to the guarantees of editorial independence for the Times and the Sunday Times.

If the current rules mean that James Murdoch can pass a fit and proper test, given everything we know about his and his companies’ behaviour over phone hacking and about Fox’s behaviour over the ongoing sexual harassment scandal in the United States, that says much more about the rules than it does about Mr Murdoch. It is clear that the rules need to be reviewed. Even if this Government will not do it, the next Labour Government will.

It has been reported that a spokesperson from Fox has said that the company is “confident” the merger will be approved based on,

“an objective assessment of the facts”.

But does the Minister not recognise that without Leveson 2 we still do not know the facts, and therefore in order to have a proper objective assessment this merger should not be approved without the findings of the second part of the inquiry?

Added to this, later this year another civil case will be heard against News Group relating to phone hacking, for which the judge has requested thousands of invoices for private investigators linked to the Sun, and James Murdoch’s own laptop. Given that phone hacking is very far from resolved, James Murdoch’s own conduct before and after the scandal broke is not clear, and neither is the reason why millions of emails were deleted by the company, how can we possibly allow this takeover to go ahead while this is hanging over them?

Finally, as regards influence on the political process, I would like to ask the Minister a specific question: what provisions does he believe exist in either the Data Protection Act or within the powers of Ofcom under the Communications Act 2003 to prevent the owner of what is at present Sky Broadcasting misusing the data it holds concerning the lives and preferences of 11 million British and Irish households in a manner that furthers its influence over the political process in either the United Kingdom or the Republic of Ireland? If no such protections are available, what assurances would the Secretary of State seek in this regard? The days when citizens of other countries can dominate our media markets while paying their taxes overseas have to end.

[Lord McNally (LD)]

My Lords, one of the advantages of this place is that there is a certain continuity. I have been speaking on, and dealing with, media matters for the last 20 years. I recall that at some point in the mid-1990s the then Press Complaints Commission brought in another charter on good behaviour. I remember talking to a very senior Times executive and asking, “What about this new charter? If you checked a story against the responsibilities under the charter and decided that it would be wrong to publish that story but the next day the Daily Mail led on it, what would happen?”. He said, “That’s easy. Rupert would fire me”. I agree with the noble Lord, Lord Collins: one has to read the book as well as look into the crystal ball in these matters, and the ability of the Murdochs to give assurances and then ignore them is well documented.

One thing that sticks in my mind is Mr Murdoch’s appearance before the Select Committee, at which he said that it was the “most humble” day of his life—a curious choice of words—yet now, a few years later, he and most of the gang who were accused of the most heinous crimes are back in place and moving forward. The reality is that the Murdochs are an ever-incoming tide. I appreciate that the Secretary of State needs to follow a quasi-judicial role and, my goodness, she is going to need the advice of the Minister at the Bench as she now tiptoes through that minefield, because the Murdochs always have some very expensive lawyers at hand. However, I hope she does not get involved in a game of poker in which it is said, “We’ll give you these assurances”, to which the answer is, “No, they won’t do”, and that is followed by, “Well, what about these assurances?”. Let us stick with this referral.

I look forward to reading the Ofcom justification of the “fit and proper” finding. One can assume only that the narrow legal determination of “fit and proper” in the present legislation is far too low, and I hope the Government will now look at the whole question of whether we need to strengthen plurality, public interest and the fit and proper person test in the existing legislation.

I join the noble Lord, Lord Collins, in saying that Leveson 2 is now essential. The Government put it in their manifesto, despite the previous Conservative Government having committed to dropping Section 40. The electorate said no. We should now proceed with Leveson 2 with all speed. There is also now a need to look at the powers of Google and the internet providers.

Finally, I am a little worried about the deadline of 14 July. That is only six days before both Houses rise for the summer. There is an old habit of various decisions being rushed out on the last day before a Summer Recess. Can we be assured that any decisions on this matter will be taken only when Parliament is in session?

[Lord Grade of Yarmouth (Con)]

My Lords—

Sky and 21st Century Fox: Proposed Merger

Lord McNally Excerpts

Thursday 16th March 2017 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am obliged to the noble and learned Lord for repeating the Statement made in the other place. On this side of the House we welcome the decision that has been reached, that having been minded to go ahead with a full referral, the Secretary of State today confirmed that that is what she is doing. That is entirely right and appropriate. It is perhaps worth mentioning in the process, as alluded to in the Statement, that 21st Century Fox also welcomed the referral. That needs no further comment from me.

The two grounds on which the referral is made are broadcasting standards and the question of being a fit and proper person. I will deal with them both and ask a couple of questions around them. The broadcasting standards ground is a relatively new departure in this area because previous referrals have been done on much narrower grounds. Broadcasting standards is a very broad term but I welcome this. It is right that the consideration of this merger, since it involves a global media company, needs to engage with all areas that might affect the plurality of sources of information but also the entertainment and other features of the broadcasting world today. Will Ofcom have the power to investigate all corporate governance issues affecting 21st Century Fox, including anything that may arise from the phone-hacking scandal, any cover-up of illegality at News International, the rehiring of people responsible for corporate governance failures and ongoing sexual harassment claims currently being heard by a grand jury in the United States which, if proved to be the case, might lead to withdrawal of that company’s licence to broadcast there?

Secondly, plurality is a term that probably needs to be reinterpreted as technology has moved on considerably since the first time this issue was raised in the events of 2010-11. The work done at that time by Ofcom, which involved a 40-day period of investigating similar but not necessarily the same issues, resulted in a report provided to the Secretary of State. The Secretary of State has the power to publish that report but, as far as I can understand, that has not yet been published. Can the report now be made available, since it clearly bears on the issues before us? Whether or not it is published, can and will the issues raised in that report by Ofcom with the then Secretary of State be considered in the work going forward at this point?

I welcome Ofcom’s announcement that it will conduct the assessment under the fit and proper regulations at the same time as the other work it has been commissioned to do, so that we have a timetable of 40 days. That may prove a bit challenging given the amount of material that must be covered but it is important that we do so. The question of the “fit and proper” assessment is undefined in the legislation and it may be that there are, as we discussed in the Digital Economy Bill before your Lordships’ House, questions raised about exactly what tests are required for this. In some ways, it may be appropriate to reconsider those, and we may be able to find time in the remaining stages of that Bill to do so. Today, could the noble and learned Lord confirm that while the report issued after the fit and proper assessment at the time of the last merger investigation was largely couched in terms of directorial duties, this report will deal with not only individuals but the corporate structures within which they operate and that the level at which “fit and proper” persons are concerned will be adjusted to make sure that it covers the responsibilities inherent in a corporate as opposed to an individual structure?

Many of the questions I raise today and which are raised more generally by the approach that the Government are taking—which, as I said, we welcome—would have been considerably aided had they been informed by the work that could have been done under part 2 of the Leveson inquiry. That has been delayed and, for reasons that the Secretary of State gave at a recent meeting in this House, cannot be reopened until such time as judicial processes going forward are complete. I understand that and do not seek to raise any questions about it. But I put it to the noble and learned Lord that the issues that are likely to be part of that review will be germane to what we are discussing today, and I wonder if he has any comments on that.

Finally, on the question of powers, the founding document for the investigations being announced today is the Enterprise Act 2002. The current thinking is that sufficient powers to carry these out are available to Ofcom and the CMA under the different regulations that affect them. But will the Minister confirm that the Ofcom investigation has the power to obtain documents and compel witnesses to appear before it? That power is available to the CMA but may not be explicit in the regulations that are operating this investigation.

[Lord McNally]

My Lords, I, too, welcome the Statement and the way that the Secretary of State is approaching her responsibilities in this regard. The big problem is that we have been here before. In many ways, we are dealing with an issue that we have faced many times—since the end of the war there have been five royal commissions on the press, and Leveson—and yet we still have these concerns about power and influence.

I am still haunted by the word that Mr Murdoch used at the height of the hacking scandal when he appeared before the Select Committee and said it was the humblest day of his life. I always thought that that was an odd word to use. It is not humbling, it is not regretting, it is not “I am going to mend my ways”. In fact, everything that has happened since has warned us that there has been no change in the approach.

Can the Minister tell us what were the points that Fox contested? It would be interesting to know how it contested what we thought a week ago was a very good Statement. As the noble Lord, Lord Stevenson, said, where does this sit in the timetable of other decisions to be made about Leveson 2 and about setting up one of the great prizes of Leveson—a genuine, low-cost arbitration system under Section 40? It is important that we look at this in a holistic way, not a siloed way. I also worry about the 40-day time limit. We should not put false timetables on these decisions because we will be stuck with them for a very long time.

I welcome the Secretary of State’s emphasis on her assurances about respecting her quasi-judicial authority. Will the Government also guarantee that any meeting or communication between Mr Murdoch and the Prime Minister, or their emissaries, is made immediately public, as well as the record of any meetings that do take place? There is a long record of Mr Murdoch having access outside the direct ministerial responsibilities, in all the jurisdictions in which he operates.

The wording of the Statement gives us confidence but will the Minister assure us that we are in a process which is going to satisfy somebody he will be well aware of—the man or woman on the Clapham omnibus? When we get to the end of this process, will it feel right? Will it smell right? Will it look right? If it does not, we will have created another problem that we will have to face further down the road.

[Lord Keen of Elie]

I am obliged to noble Lords for their observations on this matter. I will begin with a number of points raised by the noble Lord, Lord Stevenson; first, the question of commitment to broadcasting standards. When one is looking at broadcasting standards, one can have regard to broadcasting by way of television and radio within the statutory context but of course when actually applying a test of commitment, one is looking much more broadly at the behaviour of a particular party. That would include their behaviour in the context of news media, newspapers and other related conduct. This is not a narrowly defined issue. Commitment to broadcasting standards will embrace the conduct of a party. A party includes corporate parties and their relevant behaviour but also of course the behaviour of a controlling shareholder of a corporate party, or even a shareholder with less than a majority interest but a material controlling interest in a corporate entity. I seek to reassure the noble Lord that the question of commitment to broadcasting standards is approached on what, I suggest, is a broad basis.

With regard to plurality and the publication of reports, I understand that the last report was published in December 2010. We will publish reports arising out of this intervention, albeit I understand that they may have to be redacted to some extent on the grounds of commercial sensitivity.

On the question of a fit and proper person being undefined, clearly there is a crossover between “fit and proper” and the question of the commitment to broadcasting standards. As I understand it, that is why Ofcom has expressed confidence in being able to respond to the Secretary of State by reference to not only commitment but the fit and proper test that applies under the Broadcasting Acts of 1990 and 1996.

With regard to Leveson part 2 there is little I can say, as the noble Lord, Lord Stevenson, anticipated, in view of the undertakings given to the court pending the final disposal of the application for judicial review—an application, I would add, which was made not by this Government but against them. As regards the powers of Ofcom under the 2002 Act, it has expressed the view that it has sufficient powers. But I note that it does not, in the context of discharging its duty with regard to fit and proper under the Broadcasting Act, have the power to compel the attendance of witnesses. Nevertheless, where it requests their attendance or the provision of documents and witnesses and documents are not provided, that has a material bearing upon its assessment of commitment to broadcasting standards. Somebody who is not prepared to answer simple questions about how they would discharge their obligations as a licensee would throw into doubt whether they have a true commitment to those standards. That may appear a little circular to the noble Lord but it is essentially an effective mechanism by which Ofcom can control this process.

Coming to the observations of the noble Lord, Lord McNally, I am not going to enter into a debate about the definition of “humbling”. Nevertheless, it appears on the face of it that what occurred had hit home not only with the corporate structure—the shareholders—but with individuals who held those shares. It simply would not be appropriate for me to identify the contested points made to the Minister at this stage. The Secretary of State is going to carry out a quasi-judicial process, on the advice of Ofcom and the CMA. We have to await the outcome of that process. The noble Lord mentioned the 40-day time limit. Again, that is a statutory provision and Ofcom is confident that it can adhere to that time limit. We therefore feel that it is appropriate.

As regards guarantees with regard to meetings, I am not aware of any meetings being planned or proposed by Mr Murdoch. A quasi-judicial decision will be made by the Secretary of State and the noble Lord, Lord McNally, may accept my reassurance that there is no question of inappropriate contact from any party with the Secretary of State pending the determination of that decision. With regard to the gentleman and lady on the Clapham omnibus—as originally invented, I believe, by Lord Denning—we will have to await their response to this process. But we have confidence in Ofcom and in the CMA, and we will see in due course whether it is necessary to take this on to a phase 2 inquiry at the instance of the CMA. I am obliged to noble Lords.

Sky and 21st Century Fox: Proposed Merger

Lord McNally Excerpts

Monday 6th March 2017 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am obliged to the noble and learned Lord for repeating the Secretary of State’s Statement in another place. I am also very grateful to the Secretary of State for coming at what I think must be the earliest possible moment, because she said that she received notification of this only on Friday 3 March. It is very good that she was able to come so quickly. I also put on record our thanks to her for attending a meeting convened by the noble and learned Lord last week where a number of Peers from all sides of the House were able to ask her questions and examine a bit more closely some of the issues that relate primarily to the Digital Economy Bill but also to this subject.

My first question is about who is caught by the quasi-judicial mode, which was mentioned several times by the noble and learned Lord. The Statement refers to the Secretary of State and the Government. Will the noble and learned Lord confirm or deny whether that is departmental Ministers in DCMS or whether there are any other Ministers involved? I will be interested to know to what extent we are able to ask questions and gain answers over this period, which may last a number of weeks.

An important point is that the Statement does not cover the corporate structure which we are now facing with this proposed merger. We know that 21st Century Fox indicated on 9 December that it was making a takeover approach for Sky. It already owns just over 39% of Sky shares, so it is the balance of the shareholding. We know that, after a period of pre-discussion and debate, the European Commission was formally notified of the bid on Friday 3 March. It is important to get it right because there have been changes since we were in this process six years ago. 21st Century Fox is one of two successor companies of News Corporation, which was split up in 2013. It is important that we recognise that Fox is the legal successor of News Corporation and deals primarily with the film and television industries and another company, new News Corp, is a new company focused on newspapers and publishing that was spun out of News Corporation. In the UK, new News Corp owns the Sun, the Times and the Sunday Times. The point is that, although the corporate vehicle under which the acquisition is being made is 21st Century Fox, it is common understanding that the same principles are involved on both sides of that split and therefore the inquiry needs to take account of that. From what the Secretary of State has said, I think there is a willingness to go a little bit further than the straightforward 21st Century Fox approaching Sky. I will be grateful if the noble and learned Lord can respond to that at this stage.

The Secretary of State made the point that there are two dimensions to the inquiry that she is minded to look at. One is plurality. The point was made that, if this bid is successful, it will put an even greater amount of media power in the hands of the Murdoch family in particular and the people involved. Ofcom therefore needs to look at the whole of the group of Murdoch companies in assessing whether the Sky takeover would threaten media plurality. That is a very important aspect in relation to what I have just said about the ownership and control of the family companies that are involved.

The world has changed since 2010-11 when we last looked at this, and Ofcom will need to range much more widely across the media and look at not just newspapers and traditional news delivery through broadcasting but at social media, news aggregators and others from which news is taken. This is quite a substantial change in operation, and I will be grateful if the noble and learned Lord has any observations on whether the resources that are available to Ofcom will be sufficient to cope with that new approach and challenge.

The second ground on which the Secretary of State says she is minded to intervene is on commitment to broadcasting standards. I notice that this section of the Statement is quite carefully phrased. The convention is to refer to the fit and proper test required under the Broadcasting Acts for those who hold a broadcasting licence. Sky holds a broadcasting licence and therefore the controllers of Sky have to be fit and proper persons. The narrow point here is the extent to which that is focused as a process on individuals who may or may not be the named licence holders or on the corporate structure within which they operate. I would be grateful if the noble and learned Lord can confirm that the intention, even though it is not explicit in the Statement, is to look at not only at the individuals but at the corporate structure within which they operate because clearly there are issues on both sides of that.

This is a very important issue, which we will return to in a few days when we understand more about the European intervention notice and whether or not that has been called, and also the extent to which Ofcom will report and whether or not that Ofcom report will lead to further work by the CMA. It is important we get some of the facts on the table now, and I look forward to hearing further from the noble and learned Lord.

[Lord McNally (LD)]

My Lords, from these Benches, I welcome both the speed and tone of the Statement from the Secretary of State. She has been careful to keep to the legal niceties, although any reading of this would welcome what she considers the merits of the case, particularly, as has been said, her emphasis on media plurality and the commitment to broadcasting standards. These were at the heart of the debate we had over a decade ago—putting into legislation the right to intervene on public interest grounds—led by my noble friend Lord Puttnam, with the support of the noble Lord, Lord Lansley.

It is important to remember that, if anything, the arguments we had then which finally persuaded the then Government to accept the public interest test have got stronger over the last decade, in no small measure because of the behaviour of companies and organisations in which Rupert Murdoch has had an influence. We now face that problem again. Does the noble and learned Lord agree that this is still a major issue with the Murdoch empire in particular, and given the need to take on board how these companies change their structures without really ever changing the spider at the heart of the web?

The other, equally important point, as has been said, is the changes in broadcasting and media over the last decade. Mr Murdoch may play a big part in many ways, but he will soon be a small player compared to some of the giants wandering the media jungle. Does the Minister agree that the danger is that, if we get this wrong, we will set precedents which, when those big boys come along, will leave us in a very weak position in defending the very principles the Secretary of State so eloquently expressed in the Statement?

[Lord Keen of Elie]

I am obliged to the noble Lords, Lord Stevenson and Lord McNally, for their observations, and will seek to respond to some of the points they have raised. The noble Lord, Lord Stevenson, asked “whose court”, as he put it, deals with this quasi-judicial decision-making process. It will be for the Secretary of State to carry out that process, with the appropriate officials advising her. It will not involve other government departments or Ministers; it will be her decision and her decision alone that instructs this matter. I hope that reassures the noble Lord as to how the process will be carried on.

As for the corporate structures and the past involvement of News Corporation, as the Secretary of State indicated in the Statement, when we address the question of commitment to broadcasting standards, account will be taken of past breaches of those and of behaviour and corporate governance failures, including those relating to News Corporation.

Ofcom, of course, has a fit and proper person test, but that applies in respect of broadcasting licences rather than this issue. It is a different test to the one that will be considered with regard to the merger, but it is important to bear in mind that the same evidence may of course be relevant to both tests. As the Secretary of State set out in her letter, she considered that a number of relevant matters warranted further investigation, including facts that led to the Leveson inquiry, for example, and the question of corporate governance at the News of the World. It will be open to Ofcom to look at all relevant areas—none are being ruled out in this context. The ultimate question will be whether the bidder shows a genuine commitment to broadcasting standards, which will raise very real and relevant questions with regard to past behaviour.

The noble Lord, Lord McNally, asked whether we might be in danger of setting an unhealthy precedent, given the other tests that may be put before us in due course by other media outlets. With respect, I do not consider that this decision-making process involves the setting of precedents. Each of these proposals will be considered on its individual, stand-alone merits. I hope that provides some reassurance to noble Lords.

Rehabilitation of Offenders (Amendment) Bill [HL]

Lord McNally Excerpts

2nd reading (Hansard): House of Lords
Friday 27th January 2017 Lords Chamber

[Lord McNally (LD)]

My Lords, the noble Lord, Lord Ramsbotham, has explained the Bill in his usual thorough and clear way. It is my great pleasure to support the Bill and the noble Lord’s suggestion that the Government could envelop it in their wider programme of reform.

On 17 March I will stand down at the end of my term as chairman of the Youth Justice Board. That will bring to an end seven years of association with the Ministry of Justice, half of it with the MoJ as Minister here in the Lords and half as chairman of the Youth Justice Board. I say that because the two points I want to make are relevant to each of the jobs I have done.

Looking at the speakers list today, I see I am flanked by four speakers who have been extremely influential as mentors during my time at the MoJ: the noble Lord, Lord Ramsbotham, himself; the noble Lord, Lord Carlile of Berriew; the noble Earl, Lord Listowel; and the noble Lord, Lord Dholakia. I suppose I should add a fifth, the noble Baroness, Lady Chakrabarti, who is now on the Labour Front Bench, although I am not sure she was a mentor during that period; she was more of a menace—in the most constructive way.

One of the things I am most proud of is Section 139 of the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Unlock described it as positive but not perfect, and of course that is perfectly true. The fact is, though, that the reforms were as much as we could get our coalition partners to agree to. I was deeply influenced in my attempts by the noble Lord, Lord Dholakia, who had been pressing for more radical reforms. The truth is that my reforms were an exercise in the art of the possible. As the noble Lord, Lord Ramsbotham, explained in his introduction, the truth is that over the period both major parties lost enthusiasm for any more radical reform.

However, today gives us an opportunity to test the water to see if there is an appetite in government for further reform. We know the matter is in front of a number of bodies. At present, for instance, the Justice Committee is completing an inquiry into youth criminal records, and it is that particular area that I want to address in my remarks. Its activities follow the recommendation of the Carlile committee on court reform. I hope that my noble friend—I think I can still refer to him as that, although we now seem to be separated by quite a gulf; but not, I hope, in attitudes—will refer to that in his speech, because the Carlile report was an important help to government in charting their way for reform.

It was also a key recommendation in the review conducted by Charlie Taylor into the youth justice system. The Secretary of State is at present considering next steps for youth justice reform. I urge her to keep in mind that the youth justice system is not simply the junior branch of the adult criminal justice system. The Taylor review is clear that we should develop a distinct approach to treating childhood offending. “Children first, offenders second”, is the mantra that Charlie Taylor advocated. It has been the guiding light of the Youth Justice Board both in the community and in the secure estate over the board’s 17 years of existence.

There is a strong case for following the logic of the Taylor report and the Government accepting the Carlile recommendation for the expungement of criminal records at attaining the age of 18, excluding homicide, serial sexual offences and other violent crime. As the noble Lord, Lord Ramsbotham, explained, this is not woolly liberalism, but sound common sense, as is the continuation of anonymity for young offenders who come before the courts. All the evidence shows that resettlement into a job is the best way to avoid reoffending. I pay tribute to companies such as Timpson, National Grid and many others in the private sector who are willing to take on ex-offenders. The existence of a criminal conviction can undo years of successful rehabilitation work.

The Government are bound to say today that they are awaiting the outcome of a number of cases before the court regarding disclosure, and the findings of the Justice Committee inquiry, but I hope that the noble and learned Lord will acknowledge that the impact of the 1974 Act has been beneficial, but that it now suffers the problems of age and that we need the kind of widespread reform of criminal records advocated by Nacro, Unlock and the Standing Committee for Youth Justice.

About two years ago, I went to Bucharest for a conference on treatment of youth justice, and I was genuinely surprised and shocked—perhaps I should not have been—by the number of colleagues from other parts of Europe who said to me, not in a hostile but in an understanding way, “Of course, we know that yours is a punitive and penal policy towards young offenders, whereas ours is welfare based”.

I hope that we are moving in the direction of a welfare-based approach to young offending. Charlie Taylor is right: they are children first, offenders second. Of course victims have to be protected, but I remind colleagues of the key findings of the report to which the noble Lord, Lord Ramsbotham, referred. It stated:

“This report examines how childhood criminal records”—


those acquired under the age of 18—

“are treated in 16 jurisdictions. Of all the areas we looked at, the system in England and Wales is one of the most punitive. A criminal record acquired by a child in England and Wales can affect that person for longer, and more profoundly, than in any other jurisdiction under consideration … The overall environment is such that a childhood criminal record, even for a relatively minor offence or misdemeanour, can have severe implications during childhood and beyond into adulthood; this can affect an individual’s education, employment and other prospects for years to come”.

That is the wrong that I hope that the Bill moved by the noble Lord, Lord Ramsbotham, begins to right, and I look forward to a positive response from the Minister.

Imprisonment for Public Protection Sentences

Lord McNally Excerpts

Tuesday 11th October 2016 Lords Chamber

[Lord Keen of Elie]

In the past year, 512 have been released into open conditions.

[Lord McNally (LD)]

My Lords, as the Minister who saw the abolition of IPPs through this House, can I assure the Minister that it was the wish of Parliament at that time to see an end to IPPs? His replies today show the same immobility which so frustrated me as a Minister. There will be IPP prisoners well into the next decade unless Ministers and the Parole Board take advice from those informed with a welter of information. With his reputation, I ask the Minister to take a close look at some of the facts he has given to the House today, because he will find that they mask the fact that many thousands of prisoners will remain under these schemes long after Parliament intended them to end. The reason why so many distinguished lawyers now call for this to end is that it is not only an injustice to the individual but is now doing real, serious damage to our criminal justice system.

[Lord Keen of Elie]

The facts are the facts. There is mobility and we are moving in the right direction. There is an increasing reduction in the number of IPP prisoners who are held. Let us remember that the test is whether these prisoners will represent a high or very high risk of serious harm to others when they leave prison. There is a necessary balancing act between the interests of society as a whole and the very great problem which these dangerous prisoners present. We are conscious of that and have provided further resources to the Parole Board. In light of the Osborn decision in the Supreme Court, we have taken forward the requirement for oral hearings, and we are doing everything in our power to ensure that this prison population is reduced. Let me add one further point. In 2012, when the IPP sentence was abolished, there were put in its place some seriously increased sentences for dangerous offenders, including the extended determinate sentence. If those sentences had been applied to this present cohort, it is not easy to say that they would be released in the foreseeable future.