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Leveson Inquiry

Volume 736: debated on Wednesday 25 April 2012


My Lords, with the leave of the House, I will now repeat a Statement made in another place by my right honourable friend the Secretary of State for Culture, Olympics, Media and Sport. The Statement is as follows:

“With permission, Mr Speaker, I would like to make a Statement following yesterday’s developments in the Leveson inquiry. Although I intend to respond fully to allegations about my conduct and that of my department when I present my evidence to Lord Justice Leveson, I believe it is important to update the House on actions that have been taken as a result of evidence released yesterday.

We are 273 days into a process whose early stages will last until October. This is not the time to jump on a political bandwagon. What the public and all colleagues want to hear is Lord Justice Leveson’s views after he has considered all the evidence. I do, however, think it is right to set the record straight on a number of issues in light of the evidence heard yesterday at the inquiry.

Specifically on the merger of News Corp with BSkyB, I would like to remind the House of the process I followed. Throughout, I have strictly followed due process, seeking the advice of independent regulators and, after careful consideration, acting on their advice. I have published all advice that I have received from Ofcom and the OFT, together with correspondence between myself and News Corporation, including details of all meetings I have held in relation to this process. As part of this process, my officials and I have engaged with News Corporation and its representatives, as well as other interested parties, both supporters and opponents of the merger.

Transcripts of conversations and texts published yesterday between my special adviser, Adam Smith, and a News Corporation representative have been alleged to indicate that there was a back channel through which News Corporation was able to influence my decisions. That is categorically not the case. However, the volume and tone of those communications were clearly not appropriate in a quasi-judicial process, and today Adam Smith has resigned as my special adviser. Although Adam Smith accepts that he overstepped the mark on this occasion, I want to set on record that I believe that he did so unintentionally and did not believe that he was doing anything more than giving advice on process. I believe him to be someone of outstanding integrity and decency and it is a matter of huge regret to me that this has happened.

I only saw the transcripts of these communications yesterday. They did not influence my decisions in any way at all, not least because I insisted on hearing the advice of independent regulators at every stage of the process.

I will give my full record of events when I give evidence to Lord Justice Leveson. However, I would like to resolve this issue as soon as possible, which is why I have written to Lord Justice Leveson asking if my appearance can be brought forward. I am totally confident that when I present my evidence, the public will see that I conducted this process with scrupulous fairness throughout”.

My Lords, I thank the Minister for repeating the Statement.

It has not come as a great surprise to many on this side of the House, and perhaps around the Chamber, that we are debating this issue this afternoon. For those of us who over the past 18 months have been regularly debating the wisdom of allowing one media organisation to own 40 per cent of market share, it has often felt that the Secretary of State has interpreted the rules so as to give maximum advantage to News Corp’s bid. We may be surprised by the source of the new allegations—old friends settling scores, perhaps—but not the substance.

The Secretary of State’s current predicament might have been averted if he had listened to those of us around this Chamber, and many in the wider media world, who urged him to refer the merger of News Corp with BSkyB directly to the Competition Commission in the first instance. Instead, he chose the quasi-judicial role in overseeing the process that his previous support for the Murdochs would always have left open to question. The serious allegations made in yesterday’s e-mails seem to bear out the concerns that he proved unable to carry out this role in a suitably impartial and transparent way.

There are serious questions at the heart of this issue about the operation of the Ministerial Code, to which the Secretary of State must now be held to account—which is why it is important that he give a full and frank explanation to Parliament rather than waiting for Leveson to take its course. As we have seen over the past few months, many other careers have foundered on the evidence presented to Leveson in advance of his findings, and there is no reason for MPs to be immune from facing up to their immediate responsibilities and failings. Ultimately, it is not the job of the Leveson inquiry to oversee the implementation of the Ministerial Code.

First, therefore, in the light of the Statement, perhaps I may ask the Minister whether the Cabinet Secretary has been consulted on the process now being pursued to scrutinise Mr Hunt’s role, and is he happy that the Secretary of State continues to have responsibility for overseeing the BSkyB bid rather than Parliament? Is it the view of the Cabinet Secretary and the Prime Minister that consideration of any breaches of the Ministerial Code should now be put on hold until the end of the Leveson inquiry? If not, what steps have been put in place to pursue this issue further?

Secondly, in the light of the resignation of Adam Smith, Mr Hunt’s special adviser, does the Minister accept that this does not absolve Mr Hunt from responsibility for the actions of his adviser as set out in paragraph 3.3 of the Ministerial Code? Can she clarify what instructions were given to Adam Smith by Mr Hunt throughout the negotiating period, and whether he specifically disobeyed those instructions? Can we also be told the precise reasons for Mr Smith’s resignation?

Thirdly, can the Minister confirm whether the DCMS Permanent Secretary sanctioned the use of Adam Smith as a go-between with News Corp over that period? Did Mr Smith keep notes of his discussions, and, in the interests of transparency, can she assure us that they will be published?

Does the Minister accept, with the benefit of hindsight, that if there was to be any liaison between News Corp and the department during this highly sensitive period, it would have been better carried out by a departmental official? Does she also accept that it would have been improper for the Prime Minister to have any private discussions with Mr Murdoch on the subject of the bid regardless of whether he had direct quasi-judicial responsibility for the decision? Can she now tell us what the nature of that discussion was and whether it was minuted? If it was, should it not also now be published?

Next, can the Minister explain the rationale of giving News Corp private advance notice of Ofcom’s advice and the Secretary of State’s intentions before they were presented to Parliament, and can she state categorically that those opposing the bid were given equal access to the advance information?

Finally, what is the Government’s response to the question raised today by Robert Peston about the potential involvement of the Financial Services Authority in assessing whether there has been a leak of price-sensitive information? Mr Peston suggests that if Fred Michel did indeed receive advance information on 24 January that Mr Hunt intended to make an announcement the following day that he was minded to accept undertakings in lieu in order to prevent a referral to the Competition Commission, then that had price and market sensitivity and the FSA should investigate. Does the Minister agree that the FSA should be asked to check whether any breaches of financial trading rules were involved?

I do not apologise for raising a range of significant questions on this issue today, as there are important issues of propriety and confidence in government processes at stake. I look forward to hearing the Minister’s answers and would ask her to write if she does not have the full details and responses to hand.

The noble Baroness asked some highly pertinent and relevant questions on this rather complex and difficult matter. I will answer as best I can while recognising that most of the evidence will be pulled together for presentation to the Leveson inquiry and may not be readily available at this stage.

My right honourable friend the Secretary of State answered extensive questions this morning in the House of Commons on many of the matters that the noble Baroness raised, including the fact that before he took over the BSkyB bid he was on record as having expressed some sympathy with the Murdoch media. He reported that to the Cabinet Secretary and it was fully discussed. He assured the House of Commons that, from the time he took over responsibility for it, he took steps at every stage to demonstrate his impartiality, to ensure that there was openness and objectivity in the process.

My right honourable friend the Secretary of State cited in particular four decisions, each of which were against News Corporation’s wishes: first, that he was minded to refer the bid to the Competition Commission; secondly, that he would not accept the bid until Ofcom and the OFT had advised on issues of plurality; thirdly, that he would extend the consultation more widely; and finally, after the Milly Dowler evidence, that the coalition Government would set up the Leveson inquiry to try to ensure that all these matters were very fully looked into. Now that BSkyB has withdrawn its bid there are matters that no longer need pursuing in that respect, although obviously the reasons behind that and all the factors leading up to it are still open for debate.

The noble Baroness mentioned Adam’s Smith’s resignation. He stated in his resignation letter that,

“the content and extent of my contact was done without authorisation from the Secretary of State. I do not recognise all of what Fred Michel said, but nonetheless I appreciate that my activities at times went too far and have, taken together, created the perception that News Corporation had too close a relationship with the department, contrary to the clear requirements set out by Jeremy Hunt and the permanent secretary that this needed to be a fair and scrupulous process”.

It is certainly a matter of regret that Adam Smith has resigned, but he has obviously taken that decision in the light of events as they have unfolded. The noble Baroness asked whether his role had been agreed by the Permanent Secretary. As I understand it from my right honourable friend, the Permanent Secretary was indeed in discussion regarding the roles at every stage. There is a complex set of contacts at many levels for such a bid, but my right honourable friend has given assurances that he operated with transparency throughout.

On the details of meetings and communications, my right honourable friend stated that he published all relevant material and meetings, and that these are still available on the DCMS website. For the sake of clarity, in response to a PQ from Mr John Mann, he stated:

“Records of meetings, telephone calls held between officials and press officers with outside parties and records of telephone calls and email exchanges between officials and Ministers and outside parties are not recorded centrally and would incur a disproportionate cost to collect”.—[Official Report, Commons, 7/9/11; col. 616W.]

In the light of all that has been published today, we are more than ever aware of just how amazingly convenient e-mail can be and just how amazingly dangerous it can be when misused. Undoubtedly, the evidence that is available will be presented in full to the Leveson inquiry. If there are aspects of other matters that the noble Baroness raised that I have not covered but could, I will indeed take her up on her offer and write to her afterwards.

My Lords, although I am very touched by the Government’s faith in the independent review—my noble friend might remember that that was not always the view of her department when refusing to set up an independent review—I wonder whether she agrees that not everything should wait for Leveson, particularly in one respect. Is it not a fact that the current way of deciding media bids is, frankly, now bust? Do not politicians need to be taken out of the decision-making process and a demonstrably independent system, with either Ofcom or the Competition Commission deciding, set up, and set up now? If that change requires new legislation and there is no room in the programme, we can all think of a Bill that can be dropped to make way.

There is one aspect of my noble friend’s question to which I shall resist replying at this stage. He is absolutely right. Under the Enterprise Act 2002, the Secretary of State has the power to intervene in the public interest and in a quasi-judicial capacity. My right honourable friend is on record as stating publicly that there are very strong arguments for politicians to be taken out of discussions on these sorts of matters and for them to be undertaken by the regulators. We will certainly look to be taking that forward.

My Lords, I do not envy the noble Baroness having to answer questions on matters which are so obviously a matter of the personal responsibility of the Secretary of State. However, does she agree that the focus on the Leveson inquiry in this instance is a complete smokescreen? The terms of reference of Leveson, which I have just looked up, are entirely general and directed towards the future. It is not the role of the Leveson inquiry to pronounce on the Secretary of State’s handling of the Murdoch bid for BSkyB. Does the noble Baroness not agree that the Secretary of State has to answer to Parliament and not to Lord Justice Leveson?

The noble Lord is quite right that Leveson has a very broad remit. However, it is a vehicle for all manner of evidence to be brought into the open and fully discussed. It appears to be doing an extremely thorough job on that basis. The Secretary of State is very well aware that he needs to answer to Parliament, which is one reason why he gave the Statement today followed by a full set of answers to questions. That will continue to be the position. We are not simply pushing these questions to the back of Leveson, but once you have set up an inquiry of this nature, you might also ask—and indeed Lord Justice Leveson has also asked, having set up the inquiry—that it be allowed to proceed.

I thank my noble friend for repeating the Statement. As so often, I find myself echoing my noble friend Lord Fowler. Does the Minister agree that this affair demonstrates that there should be safeguards to ensure that no one organisation should be in a position to own a disproportionate share of the British media—which, by the way, is possible thanks only to the Communications Act 2003 and despite prescient warnings by my noble friend Lord McNally and the noble Lord, Lord Puttnam—and finally, as my noble friend said, that decisions on media mergers should not be taken by politicians but openly and transparently by an appropriate and independent regulatory body?

I entirely agree with my noble friend. As I mentioned in my reply to my noble friend Lord Fowler, these measures are under way. We are not intending to delay taking this forward. We recognise that in the past the Murdoch empire was an enormously powerful factor for both the Labour Party and the Conservative Party. The coalition Government have now set up a thorough inquiry into those matters, which we hope will come up with some really good answers.

My Lords, while entirely agreeing with the noble Lord, Lord Fowler, that the situation must change, many of us worked in this Chamber for two years on the Enterprise Act 2002 and the Communications Act 2003 to ensure that no Secretary of State was ever placed in the position in which Jeremy Hunt placed himself. We thought that we had achieved that. I agree with the noble Lord, Lord Fowler, that we need to find another way forward.

However, I have a greater concern that I will put to the noble Baroness. On 9 July 2009, David Cameron, who was then the Leader of the Opposition, made a speech that became known as the “bonfire of the quangos” speech. He mentioned only two quangos but picked out Ofcom as one that needed to be trimmed back and to have its powers curtailed. I do not think that there is anyone in this Chamber or in the other place at the moment who would suggest that this is a moment for Ofcom’s powers to be curtailed. Three months later, the Sun came out in support of the Conservative Party. Was this a coincidence, and could politicians of all parties think twice before they start talking about reducing the power of regulators and regulation?

The noble Lord makes a very powerful point. What he said about Ofcom was of course proven to be absolutely valid in the light of the events that unfolded. The sequence of events unfolded fairly rapidly, and the power of the regulator and the respect in which regulators are held have been enhanced by what has happened. We certainly see that Ofcom still has a role to play in matters such as this.

On the matters concerning my honourable friend the Prime Minister, I cannot comment directly.

My Lords, as a former Secretary of State I re-emphasise the point made by the noble Lord, Lord Fowler. Matters relating to media ownership, public interest and plurality are surely matters to be determined by Ofcom or by the Competition Commission, not by any Secretary of State, however honourable.

My Lords, we are hearing consensus from all sides of the Chamber on that, and I entirely agree with the noble Lord.

My Lords, is there not another issue we should be considering: the exact role of special advisers? I cast absolutely no aspersions on Mr Jeremy Hunt, for whom I have a very high regard, but it seems to me that while special advisers have an understandable role in liaising with party politicians and so on, they should not usurp the role of the career civil servant. I believe—I raised this as long ago as the early 1970s in another place—that Governments of all parties have tended to be careless in the way in which they have used special advisers. This is not the first example we have had in the past 12 months. Could we have a review of the exact role, position and duties of special advisers within government departments?

My understanding is that in this case the special adviser was one of a number of people, including officials, who had particular roles in respect to the BSkyB bid—but I hear what my noble friend says and if there are matters I can write to him on, I will do so.

My Lords, while the House has very many concerns about plurality and media ownership, the issue here is a very narrow and precise one. It is about ministerial accountability and compliance with ministerial regulations and the code. This is not to be left to Leveson, who will take a long time and no doubt do a very good job. This is a Secretary of State whom I hold in high regard—I have been very impressed by the way in which Mr Hunt has conducted his affairs, particularly in support of arts institutions—but the simple fact is that there was a complete breakdown of control within DCMS and for that the Secretary of State, who appointed the special adviser, must take entire responsibility. I cannot believe that there was not daily contact between Mr Adam Smith and the Secretary of State and, as we have seen from the e-mails, decisions to be announced by the Minister were disclosed to News Corporation in advance—textually precisely accurately. This is also a breach of Financial Services Authority regulations, which the Permanent Secretary of DCMS should immediately investigate and report to the FSA. Will the noble Baroness confirm that that will be done, and explain why the Secretary of State is not taking responsibility for the people he appointed and who reported to him?

My right honourable friend in the other place this morning pointed out that he had a number of people in the department working for him to whom he gave responsibility for particular tasks, and he did not then monitor them in precise detail—but I hear what the noble Lord says.

I put it to the noble Lady that the impression I got when I listened to the Secretary of State and the Prime Minister was that they were far keener to allow this matter to go to Leveson than to speak to the House. Perhaps she could convey to the Prime Minister that in my experience, if a Prime Minister or a Minister of the Crown in some way feels that they can hedge the situation over to Leveson, it is highly likely that my successor, the Speaker, will allow an Urgent Question and even, in a very serious case, put aside the business of the House. Only two or three years ago, when Mr David Cameron and the Cabinet were in opposition, they put the case that Ministers must come to the House and be accountable. They cannot have it both ways.

I will ask another question on the point that has already been raised about special advisers. I am deeply concerned at their behaviour. Is it the case that special advisers have a code of conduct? If they do, then the young man, Mr Smith, would have known that he was in breach of that code by breaking a confidence and giving information before it was conveyed to the House. Today the name of Damian McBride was shouted out. It is alleged that Mr McBride, as a special adviser, was keen to blacken the name of the Prime Minister and the Chancellor when they were in opposition, and of the honourable Nadine Dorries. It is sad situation when the taxpayer has to pay for people who are not only incompetent but prepared to blacken the name of decent men and women.

The noble Lord asked a number of questions. I was in the Chamber during Prime Minister’s Questions and while the Secretary of State was making his Statement. On his point about the Secretary of State being accountable to the House, I say that my right honourable friend was doing just that in coming to the House to take questions in great detail for well over an hour from Members of the House. I hope that he proved himself accountable to the House on that front.

The noble Lord asked about the role of spads and whether they have a code of conduct. My understanding is that they do. They perform an incredibly useful function, as successive Governments have discovered—but obviously, if something has gone wrong, that needs to be looked into on an individual basis. He also mentioned some of the evidence that we saw in the media today. We need to be somewhat cautious about taking at face value all the reports that appear in the media. This is the very aspect that we are discussing today, and it might be wiser in some respects to wait until the evidence has been fully investigated so that we know which parts of the reports of the media are true and which are somewhat creative.

For the avoidance of doubt, will the noble Baroness confirm to the House that what the Government are asking us and the country to believe is that a special adviser, whose office was no doubt next door to that of the Secretary of State, who saw him several times a day, who worked in close collaboration with him and had been appointed by him as a person of trust, without any instruction from the Secretary of State, without any encouragement, without any connivance, took it upon himself to become deeply complicit with one particular party to a highly controversial decision that the Secretary of State was going to have to make, got into the business of leaking documents, talking about tactics and substance, exchanging views, and never thought to tell his Secretary of State what was going on, to check with him that he was happy with that or to report to him on any of the content of those exchanges? Is that actually the story that the Government is inviting the House and the country to believe?

Once again, the noble Lord is fielding reports from the media that have not necessarily been substantiated, and it would be wise to wait to see which of them are true. All I can say on the question of Adam Smith’s role is to refer to his letter of resignation in which he states that,

“the content and extent of my contact was done without authorisation from the Secretary of State”.

Does my noble friend agree, first of all, that the allegations made about the Secretary of State are extremely serious; and, secondly, that the Secretary of State’s Statement in the House of Commons was an explanation of what occurred but what we need to see is the evidence on which the explanation was based so that Parliament and the public can make up their mind about the events that have occurred?

Are we not missing something of the big picture here? The questions over News International have not appeared only in the past 18 months. They have run beneath the surface, at the core of public life in this country, for some 15 years. Now what we have is an inquiry that is tasked to look at this. I, too, looked at the terms set out for the Leveson inquiry. The case has been made that they are not relevant, but they are exactly relevant. What is being considered now is the relationship between press and politicians and, specifically, the extent of unlawful or improper conduct within News International and other media organisations. That is highly relevant. We now have an inquiry that is two-thirds of the way through its consideration, which should be allowed to consider this important issue in the round—and which this Government actually set up.

I agree with my noble friend that that is the position, and that a lot of lessons will come out of the Leveson inquiry that could range very much wider than the remit that was set for it. We certainly hope that the end of the inquiry will not be the end of the matter and that these various disturbing cases will be taken forward and we will reach a resolution.

Where are we up to on the Government’s commitment to a statutory register on the lobbyists of public affairs committees, and when are we likely to see legislation enacted?

My noble friend is quite correct that in January the Cabinet Office announced that it was looking actively at a statutory register of lobbyists. It was interesting that we saw in the debate just before this one support for the positive power of lobbyists to make valuable changes to things going forward. On the actual dates, I am afraid that I do not have the answer, but I will write to him.

Will the Minister say whether the Government think it right that they should seek from the most interested party in an application of the kind that has precipitated this affair a comment on the submission of another interested party opposing that application?

My Lords, there were many aspects of the matter that need more inquiry and further looking into. On the issue that the noble Lord raised, we need to look at exactly what happened and who was told what, and why. There may well come out of that lessons about what we could learn to do better in future. But he is right that that is certainly an area of concern.

I congratulate the Minister for handing these questions in difficult circumstances on behalf of the coalition Government. Would she like to join in congratulations to the Department for Business for the way in which it conducted itself during these troubles? Also, while we have had a number of attacks on the role of special advisers, we should also congratulate the behaviour of the special adviser in that particular department during this time.

I thank my noble friend. We can see that there was much that went correctly in the Department for Business—but as we all know, the matter was transferred to the DCMS. On all these things we need to look and see what went right and what went wrong and try to do it better next time. This is definitely not the end of this particular matter.