I would like to thank my hon. Friend John Glen for securing this debate. I also thank other hon. Members for their contributions. It is quite right that we should be debating the regulation of advertising, because these are clearly issues that attract strong interest in the House. I should like briefly to reflect on the fact that we have a successful advertising industry in this country, and that is why good, strong regulation is important. There is a need for consumers to trust advertising.
Advertising in the UK is worth some £13 billion. It is the second highest contributor to our economy in the creative industries sector, and it has doubled in value over the past five years. It employs around half a million people, if we take into account everyone employed in the wider advertising industry. It is also crucial to our economy in other ways. Without advertising, brands cannot make their mark in the marketplace. It also helps to stimulate competition, innovation and expansion. The UK has some of the most awarded ad agencies in the world.
At the heart of the industry lies great creativity but, as I said earlier, there must also be a system of regulation to enable consumers to trust advertising, whatever its nature, from the multi-million pound broadcast on ITV to the simple, straightforward advertising in a local newspaper. No one is arguing that the industry should not be regulated, and one of the questions raised by this debate is how that regulation should work. As a matter of principle, this Government would prefer effective self-regulation wherever possible, rather than statutory regulation. We support the system of co-regulation and self-regulation for broadcast and non-broadcast advertising that is enforced by the Advertising Standards Authority. We believe that this regulatory system has worked well for consumers and advertisers. Indeed, an assessment carried out in 2013 held up the ASA as an exemplar of successful self-regulation. As you can imagine, Mr Speaker, we therefore take the concerns raised by hon. Members in tonight’s debate very seriously indeed.
The current system should provide an easy one-stop shop for the public and for advertisers. It should be flexible and allow the ASA to take on different responsibilities. For example, online advertising barely existed 10 years ago. The system does not cost the taxpayer anything, so it is cost-effective, and it should in most cases allow for harmonious decision making. Clearly, however, the circumstances raised by my hon. Friend and alluded to by other hon. Members show that the system has not always worked as well as it might. It would be inappropriate for me to comment on the specific case of Innovate that my hon. Friend raised, because I am not familiar with the details, but I will use what he referred to as the authority of my office to facilitate a meeting between the Advertising Standards Authority and my hon. Friend so that they can discuss that case. Let me turn to the issues relating to the second case that he raised, which took up the majority of his speech.
My hon. Friend raised issues of transparency, for example. Whatever the whys and wherefores of the points under debate, my strong advice to the ASA is that if hon. Members are prepared to come and debate its workings late into the night, it should listen well. It is sometimes the case that hon. Members do actually have something effective to contribute, so I hope that the ASA will take their points on board, meet all hon. Members who have taken part in this debate and reflect on whether it can take forward some of the judiciously put critiques of how it has worked in relation to their constituents.
As it stands, the ASA is meant to publish the full outcome of formal investigations and to indicate the number of cases that it has resolved informally. It should publish all its research and reports, guidance for advertisers, compliance reports and factsheets on current hot-topic themes. Information about the number of complaints and cases received and resolved are in the annual report, of which there is an archive going back to 1961. It has a long-established practice of material exchange and disclosure with parties in cases, which has been consistently upheld by courts as fair, proportionate and reasonable. However, I noted that Holly Lynch indicated that she felt that only part of an adjudication had been published, not the full context, so that is exactly the sort of point—the case of the constituent of my hon. Friend the Member for Salisbury is another—that the ASA should take into account. I hope that it will sit down with both hon. Members to talk through how it can increase transparency in order to embed greater trust.
My hon. Friend also raised the relationship between the ASA and trading standards departments and suggested that the latter might conduct their own investigations into cases after the ASA had concluded its own investigation. I must make it clear that it is not the role of trading standards officers to approve ASA processes or to follow up on ASA rulings. Trading standards departments act as the ultimate legal backstop in cases in which consumer protection laws have been breached and act under business and consumer protection regulations. I am unsure whether my hon. Friend’s suggestion would work in this case, but I am obviously happy to put it to the relevant trading standards department. He did, however, indicate that trading standards officers had been in touch with his constituent today.
My hon. Friend asked whether the ASA could be required to publish when it has drawn on legal advice and the details of that advice. It is true that the ASA engages external expert advice on a case-by-case basis when claims are capable of objective substantiation. It assesses its need to bring in external advice, but it also has an amount of in-house expertise. It should be the case that the ASA’s published rulings make it clear when it has received external advice and that it publishes the details of that advice, and it should be clear from its assessment what influence the advice has had on the ruling. Advertisers subject to rulings should also be told who the expert is and what their credentials are, and they should receive a copy of the expert’s report.
My hon. Friend also raised concerns about the severity of the sanctions imposed by the ASA on his constituent, and he detailed those sanctions in his excellent speech. The ASA can deploy sanctions of varying degrees of severity on advertisers that it regards as non-compliant. There could also be an ultimate referral to a trading standards department if there has been a breach of consumer protection law. It is appropriate for the ASA to consider stronger sanctions when advertisers persistently break the code or ASA rulings. I hasten to add that I am not saying that that is the case with his constituent; I am talking generally. It is important to stress that the enforcement team’s main aim is to bring about compliance with the advertising code, not simply to punish.
Finally, my hon. Friend also commented on the legal status of the ASA, and it is important to emphasise that it is independent from the advertising industry. Its council, which decides whether advertising has breached the advertising code, is an independent jury. Its chairman, and two thirds of council members, are independent of the advertising and media industries. Members are appointed through an open recruitment process, with all positions advertised, and an independent member is appointed by the chair to participate in all council members’ recruitment.
It is true that the ASA is funded by the advertising industry, through levies on advertising spend, but funds are collected at arm’s length by the Advertising Standards Board of Finance and the Broadcast Advertising Standards Board of Finance. That ensures the system’s independence, and that ASA decisions are not influenced by those who may or may not be funding the system. In terms of its legal status, the ASA’s regulatory system is not based on quasi-judicial processes; it is not a court of law and does not seek to emulate the courts through its own processes. The system was deliberately set up as an alternative to the courts, with all the attendant benefits from being a more nimble and agile regulator. Judicial reviews of ASA rulings have endorsed the processes that the ASA goes through.
As with any regulatory regime, there is always room for improvement, and I am told that the ASA would welcome suggestions on how its procedures might be improved. Once again, I make the serious point that Members of this House are experienced; many different constituency cases come across our desks or are raised in meetings. We tend to use our judgment when we want to raise cases in a more high-profile fashion, such as in a debate. Any organisation, particularly one such as the ASA, which has such an important role to undertake, should take note of the fact that three Members of this House have chosen to participate in this debate, with others also sitting in the Chamber. I hope that the ASA will meet them and take on practical suggestions as to how it can improve its processes.
I have no doubt that the ASA is an extremely responsible and effective regulator, and I have praised it in the past for being an exemplar of self-regulation. But, as has been said, there is always room for improvement and the opportunity to refine and improve processes. Given the process that my hon. Friend’s constituent has gone through, which sounds pretty gruelling, it would potentially be satisfying for her at least to see that some of the processes that she underwent might be refined and improved should others find themselves in a similar situation. As I say, we are dealing with an effective regulator, although I of course treat with the utmost seriousness the points that all hon. Members have made tonight.
Question put and agreed to.