Skip to main content

Reuters: Proposed Flotation

Volume 447: debated on Friday 10 February 1984

The text on this page has been created from Hansard archive content, it may contain typographical errors.

4.6 p.m.

rose to ask Her Majesty's Government whether they are satisfied that the interests of the public will be properly safeguarded by the proposed flotation of Reuters.

The noble Lord said: My Lords, I understand that it is unusual for your Lordships to sit so late in the afternoon. I shall do my best to curtail my remarks. They will be delivered in more telegraphic style instead of in my usual rotund oratory. But there is a very important matter before us which is no less than the future of Reuters. No one doubts that Reuters is a most important institution. It is one of only four international news agencies in the world and is one of only two genuinely independent news agencies. Further, it has always been so regarded, and its impartiality, freedom and wide coverage have been something of which Britain has been very proud.

A week ago in another place it was said again and again both by the Minister, by a very distinguished ex-Labour Prime Minister and by others that this was a matter of great public importance. I particularly want to draw your Lordships' attention to the debate in 1941 which was raised by my late friend and colleague Clement Davies, in which the then chairman of Reuters, Samuel Storey, as he then was—somebody who was known to us—explicitly said that Reuters was not to be treated simply as a commercial asset and that its future was of great public importance. He insisted that, if possible, its control should rest with independent trustees.

At the moment the theory is that Reuters has suddenly become a very valuable property, not owing to its news gathering but to its excellent exploitation of Monitor, and the proposal is to sell off the shares in the market. I do not suffer from the general paranoia about press barons. There are no doubt good and bad press barons. Nevertheless, there is considerable anxiety in this country about the treatment of the press as simply a commercial property.

Some people feel that the assurances of some press barons have not always been carried out and, candidly, there is some suspicion of them. But equally I do not understand how they suffer from agoraphobia. They are Members of this House, and I should have thought that their Lordships could have come here to explain to the public through this House what they stand for. They are an important element in our affairs. They believe in investigative journalism. They are keen to examine other people's affairs but they show less enthusiasm in coming into the open about their own. However, they are engaged in deciding what future set-up will be instituted in Reuters, and we can only hope that they take note of the public anxiety and of the general view that Reuters cannot be dealt with purely on commercial grounds.

It is absoluely right that the Government and your Lordships should express their view about this. Again and again the Government have said that they would agree with that, though they do not want to interfere. It is one thing for a government to interfere and try to control Reuters. It is a far different thing for a government to interfere with a view to guaranteeing the freedom of Reuters. After all, the Government

interfered, or promoted interference, with the Royal Bank of Scotland when it was threatened with takeover and also, for instance, with Sotheby's; and in my view, important as those institutions are, they are much less important than Reuters.

Of course, the danger is that once Reuters is put on the market no one knows where it will end. It could, for instance, end in the ownership passing to other people who have not the same interest as the present owners in news gathering, and then sources of information would be closed down because they were troublesome or uneconomic. It could end in the news being slanted, or in Reuters falling into the hands of people who have a definite interest in actually controlling and distorting the news.

Therefore, to my mind, there must be some safeguards if Reuters is to be sold off in the market. I appreciate the reasons for doing so; the press needs money and some newspapers do not want to have so many of their assets locked up in Reuters. As I have said, the press owners at present no doubt have an interest in impartial information, and therefore so long as Reuters remains in their hands, people may argue, we should not be too concerned.

However, I must point out that in 1941 when this kind of matter last arose a document which calls itself a trust agreement was drawn up explicitly to ensure the future of Reuters. Under the document so-called trustees are appointed by the Lord Chief Justice and it is stated in the document that the trustees are not to be dismissed other than by the authority of the Lord Chief Justice. Again I refer to Sir Samuel Storey, who as I have said, insisted that Reuters should be controlled by a proper trust. I refer to his view that the trust was not in fact a proper trust, and that has turned out to be the case. Legally it is merely an agreement between different parties, and the theory is that it can be abolished by them. That was certainly not the spirit in which it was drawn up. Sir Christopher Chancellor, the chairman of Reuters, again and again reassured people all over the world about the independence and impartiality of Reuters by pointing to the trust and saying that Reuters was bound by it.

The first point I want to make is that I believe that this House and the Government should make it absolutely clear that they think it desirable that the spirit, at least, of the trust should still prevail and that the Lord Chief Justice should set up an inquiry into the proposals now before Reuters, but if he is not himself prepared to do that (which one could understand) he should get some other of the numerous authorities to do it—for instance, the Press Council. The Press Council has been strangely muted over Reuters, and I am told that the reason is that it hopes to obtain a very considerable amount of money as a result of the sale. But whoever does it, I think that there should be an inquiry into the present proposals, and I should have thought that the Press Council should show an active interest in the whole matter.

Secondly, I should have thought that the package which we are told will emerge very soon from the press owners themselves about the future of Reuters should contain an absolutely clear determination to set up a proper trust; that is, a legally enforceable trust, with trustees who will represent no doubt the newspaper

industry and also the public, and who will be independently appointed. I also think it vital that these trustees should have some sanction. For many years I was myself a trustee of the Guardian newspapers and the great asset which we had as trustees was that we owned the paper and therefore, unlike the members of numerous other trusts which have been set up to guide newspapers, we had some power of sanction; and that trustees must have. In the case of Reuters the position could be guaranteed by having a certain class of share which holds the ultimate control, or even one share, as has been done by the Government when they have denationalised or semi-denationalised certain industries. I know that some of the institutions in the City do not like two classes of shares, but this is not a normal commercial undertaking. As I say, it involves the handling of a great national asset, and I believe that in this case two classes of shares would be amply justified. There have been other proposals to split the Monitor and the news gathering. That would no doubt deprive the news gathering side of the finance that it may want.

Reuters may not be unique, it may not be the only source of news by any means, but if it should fall into hands that either polluted it or curtailed it, this would undoubtedly be very serious for all sorts of other institutions. If, for instance, it was proposed to privatise the BBC—perhaps that will happen—then, certainly, some safeguards would be insisted upon. But the BBC depends a great deal upon Reuters. Therefore, if we interfere with the Royal Bank of Scotland and Sotheby's we should not be afraid if necessary, to interfere. I hope that it will not be necessary. I hope that the proposals, when they come out, will be satisfactory. Will safeguard the interests of Reuters, and will ensure that it is free from control or domination by any interest, whether Government or otherwise, that could be to the detriment of the free gathering of news and the independence and impartiality of this great national asset.

I should like the Government once again to reiterate their belief that this is a matter of public interest in which they would be prepared, in the last resort, to intervene to safeguard the public interest and the freedom of Reuters. I hope that your Lordships will express to the newspaper proprietors and those now considering the matter that this Hose will return to it if necessary, that it believes and hopes that the proposals soon to come forward may be satisfactory but that if not it will not scruple to take up the matter again, standing as we do for the public interest, to ensure that a vital part of the running of our affairs and the gathering of news upon which all our deliberations are ultimately dependent will not be put into a position where it might fall into tainted or prejudiced hands.

4.17 p.m.

My Lords, the House will be most grateful to the noble Lord, Lord Grimond, for having provided an opportunity to discuss such an important matter. Unfortunately, owing to the arrangements that have already been made, I understand, for the termination of our proceedings this afternoon, there will not be sufficient time for Her Majesty's Opposition to express any definitive views in so short a period. Four-and three-quarter hours were occupied in another place in debating this most important subject on 27th January. While the importance of a debate is not necessarily measured by the length of speeches, there has to be some minimum time in which an argument can be deployed on behalf of Her Majesty's Opposition. That time is not available to us this afternoon if our debate is to stop at the scheduled time.

I shall therefore content myself with endorsing 99 per cent., or nearly 100 per cent., of the remarks of the noble Lord, Lord Grimond. There is little need for me to underline the various factors that he considers to be important. What is more important in the time available is that the Government spokesman, the noble Lord. Lord Lyell, should give explicit answers to the important and definite questions posed to the Government by the noble Lord, Lord Grimond. In order that the noble Lord, Lord Lyell, may not be able to call in aid lack of time to give definitive answers, I propose to terminate my observations here and now and to give notice to the House that. At the earliest convenient opportunity when it is possible to secure adequate time, I shall seek to give voice to the views of Her Majesty's Opposition on this very important topic.

4.19 p.m.

My Lords, may I put on record, as one of the seven people present, that I hope everyone will read this very important debate tomorrow as they have not had the opportunity, through no fault of their own, of listening to it today. I thought that someone should say that, in view of the fact that the House is so thinly attended.

4.20 p.m.

My Lords, in spite of the late hour I am sure that your Lordships would agree that the House is immensely grateful to the noble Lord, Lord Grimond, for raising this fascinating and extremely important subject in his Unstarred Question this afternoon. The noble Lord has given your Lordships the opportunity to discuss—albeit somewhat briefly—a matter of national and considerable interest. In doing so, as the noble Lord has mentioned, he has followed the Liberal tradition, for it was his late right honourable colleague Mr. Clement Davies, the then Member for Montgomery, who initiated the first debate on Reuters which was held in 1941 and from which the noble Lord quoted.

Of course the noble Lord is quite right in pointing out that, following the debate in another place two weeks ago, your Lordships' House should have the opportunity to demonstrate that concern about the independence and integrity of our news supplies is of great importance to your Lordships. Naturally enough, there has been comment on the proposed flotation in the media and, indeed, elsewhere recently, but we believe that some of that comment has been rather premature. We also believe that it should be noted that the company has yet to determine all the details of the proposals which it is considering.

The noble Lord, Lord Grimond, referred to the 1941 document, which he is quite right in saying is labeled "an agreement of trust". After the debate in 1941 in another place, a document—the so-called agreement of trust—was concluded between the shareholders of Reuters. This document set out the principles by which Reuters was to operate. In spite of the constraints of time, I shall very briefly recite those principles. They are as follows. First, that Reuters shall at no time pass into the hands of any one interest, group or faction. Secondly, that integrity, independence and freedom from bias shall at all times be fully preserved. Thirdly, that its business shall be so administered that it shall supply an unbiased and reliable news service to British, Dominion, colonial, foreign and other overseas newspapers and agencies with which it has or may hereafter have contracts. Fourthly, that it shall pay due regard to the many interests which it serves in addition to those of the press. Fifthly—and we believe that this is equally important—that no effort shall be spared to expand, develop and adapt the business of Reuters in order to maintain in every event its position as the world's leading news agency.

It is clear that the arrangements were made to ensure that, in the national interest, Reuters' independence and integrity continued—to ensure that the hands into which it fell were not unsuitable ones. So it was written down that its:
"integrity, independence and freedom from bias shall at all times be fully preserved".
That concludes a fairly important declaration.

With the benefit of 43 years of hindsight, we now know that the various anxieties which were expressed at that time were not well-founded. Despite the fears, whatever the legal status of the so-described "agreement of trust"—or "trust agreement"—there have been 43 years of integrity. I should like to pay tribute to the way in which the directors and the trustees of Reuters have run the company in accordance with the principles set out in 1941—principles which naturally remained intact when in 1953 the ownership of Reuters was widened to embrace Commonwealth press interests as well.

The noble Lord, Lord Grimond, has just touched on the position of Reuters today. I should like to stress on behalf of the Government our belief that Reuters is much more than just a news agency. It has a long history of providing financial and, indeed, other information to private subscribers. Of course it is only in the last decade that the company's long-nurtured ambitions to market its intelligence services electronically have been able to come to fruition. Reuters' own accounts are a testimony to its forethought and, above all, to the success that it has achieved. Its turnover rose from £17 million in 1973, to £53 million in 1977, and to £179 million in 1982. In the light of its results in 1981, it felt able to pay its first dividend, a dividend of £1.9 million, and 1982 of course brought better results and a dividend of £5.6 million. That may cover some of the interest in the financial results of Reuters.

I turn now to the people who work for Reuters. The company now employs over 3,200 people, nearly 40 per cent. of whom work in the United Kingdom. Its employment has increased by 70 per cent. over the last 10 years. We wish that other companies could show similarly successful track records.

However, much of Reuters' national importance lies in the fact that it is such a highly successful purveyor of financial information as well as being an international news agency of the highest repute. Given its record and, indeed, its prospects for further expansion, its management has had to consider its future financing needs. The new technologies, although rewarding, are expensive businesses in which to invest. The noble Lord, Lord Grimond, will appreciate that fact, as he has been concerned in the press, as we heard from his excellent comments. No one is supposing that the proceeds of the flotation that is currently under consideration will be wholly for reinvestment in the operations of the company as opposed to helping the businesses associated with its shareholders. However, the Reuters board has indicated that a proportion will be. The board's statement of July 1983 specifically referred to:
"a study of the future financial structure of the company and methods of financing further growth".
That was after the Reuters' management had proposed that Reuters should consider issuing stock to raise cash for future investment.

Both the noble Lord, Lord Grimond, and the noble Lord, Lord Bruce, expressed their worries about the role of the Government. Indeed, they believe that there is great public concern as to the role of the Government. We note the comments of the two noble Lords, and we understand that there have been suggestions from elsewhere that the Government should intervene in some way to preclude the possibility that, after a flotation, Reuters will pass into the control of persons who might discontinue the news agency side or, indeed, operate it in a way other than in accordance with its long-established principles.

Given the statement of objectives of the board and the trustees, we think that that does not seem to be a likely outcome: but we understand that there is public concern that the independence and integrity of Reuters should not be jeopardised. This is so even with the growth in the number of sources of news, including the news-gathering capabilities of television. These have taken place over the years and mean that Reuters is no longer in precisely the same position as it was in 1941.

However, Reuters remains the only British and Commonwealth international news agency—a news agency with a reputation second to none in the world. The safeguard for this reputation does not lie in Government intervention, because that would jeopardise the very reputation for integrity and independence which it was sought to protect. Rather, the safeguards lie in the professionalism of Reuters itself and in the professionalism of its staff and their concern for Reuters' reputation and reliability. These are matters which no Government can guarantee. Naturally, the Government acknowledge the significance of Reuters' past standards of integrity and independence being maintained. But the Reuters board is proposing neither a merger nor a take-over. In this light there are no Government powers to intervene; nor, indeed, would it be in the interest of press freedom for the Government to seek to intervene.

Your Lordships will be aware that Reuters operates all over the world. It operates from countries governed by very different political regimes and standards of behaviour from our own. We believe that it is vital for Reuters' reputation for independence that it is not seen to be under the influence of anyone. Reuters' independence is the main and, indeed, the entire source of its strength. That is true for independence from the British Government along with others, and it is very important that Reuters is independent of the British Government, for its position in other parts of the world would be weakened were it to be seen yielding to any sort of pressure from the Government of the United Kingdom.

I accept that the calls for Government intervention have sprung from the very best of motives. But I am sure your Lordships will appreciate that actions from the best of motives would be the self-justifying cloak for outside interference in Reuters, which we would certainly be loath to see. We believe it is better not to start down that path.

A good many Governments have the capacity to convince themselves that the interventions they might contemplate would truly be with the best of motives. Some of them might even believe this, and that is one of the dangers. The noble Lord, Lord Grimond, gave two examples of Government interference, Sotheby's and the Royal Bank of Scotland. I think he will accept, and I am sure the noble Lord, Lord Bruce, would accept that these were situations of mergers. There might have been other factors, but primarily the reason the Government became in any way involved was that they were merger situations.

There is no indication that the Government are concerned with a merger situation here. We do not believe that this is the situation at all. I would stress to the noble Lord, Lord Grimond, that the company's own declared intentions make this particular issue hypothetical. If particular changes of control were in contemplation, the position would need to be considered in the light of any circumstances that arose then. There are powers in relation to changes in control of companies which are set out in, among other places, the Fair Trading Act 1973. Were such a situation to arise my right honourable friend in another place would need to consider the position in the usual way, including taking into account the advice of the Director General of Fair Trading.

The noble Lord, Lord Grimond, also raised the functions of the Lord Chief Justice. I am given to understand that the Lord Chief Justice was unaware of any functions ascribed to him according to any of these documents until November 1983 when the matter appeared in the national press. The Government and the office of the Lord Chief Justice have no record at all whether the Lord Chief Justice of the day in 1941 agreed to be empowered to appoint the chairman of the Reuters' trustees. There is no record whether he was consulted at all about this. These records do not show that any Lord Chief Justice has been consulted at all on these matters since 1953. Some minor reference may be implied at about that date, but that is the only expressed or implied reference known since 1941. Whether the Lord Chief Justice has any function is not, and has never been, a matter for the Government. The incumbent for the time being of the office of Lord Chief Justice has no function in this matter in terms of duties of that office.

As a completely separate point, I am advised that the arrangements entered into appear to be a matter between private individuals contained in a private deed. Such an agreement could not ordinarily impose any obligation in law on any third party, whether holding public office or otherwise. They certainly appear to impose none on the Lord Chief Justice. What the Lord Chief Justice might intend to do is entirely a matter for him, but any request for him to act in his capacity as Lord Chief Justice would fall entirely outside his duties as such.

The Question asks if the Government are satisfied that the interests of the public will be properly safeguarded by the proposed flotation of Reuters. I have reminded your Lordships that the board and trustees of Reuters have had some things to say on this—the board and the trustees of Reuters who are all responsible people. With the record of Reuters behind them they are entitled to be believed when they say that their purpose is to conserve the objectives which were set down in 1941.

Of course, the future can never be certain, but the history of Reuters endorses the view that the company does best when its independence from Government is not compromised. Government interference is not the way to preserve the integrity of Reuters, and at best this would be liable to embalm the company rather than preserve it. But the dangers, we believe, are greater than that. All too easily, albeit unwittingly, Government interference could endanger the very independence and integrity it is sought to preserve. It is better by far that the board and the trustees of the company should, as they have said they will, safeguard the continuing integrity and independence of Reuters.

House adjourned at twenty-six minutes before five o'clock.