Johnston Press - Statement

– in the House of Lords at 6:42 pm on 19th November 2018.

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Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip) 6:42 pm, 19th November 2018

My Lords, with the leave of the House, I shall repeat in the form of a Statement the Answer to an Urgent Question on Johnston Press asked in the other place:

“Mr Speaker, as the House will know, on Friday Johnston Press confirmed that it was going into administration. Johnston Press had debts of £220 million that were due to be repaid in June of next year. It operates titles at a local, regional and national level. It has explored a range of refinancing options over the past 18 months, including a debt-for-equity swap with bondholders. In October, it entered into a formal sales process, but no suitable buyer was found. On Saturday, it was announced that the newspapers and assets owned by Johnston Press would be acquired by JPI Media, a new consortium established of Johnston Press creditors.

JPI Media has said that the operation of its newspapers and websites will continue. It has also said that the debt will be reduced to £85 million, repayable at the end of 2023, and that it will be injecting £35 million into the company to help it operate, including supporting the transition to digital. It has also released a statement saying that the situation will have an impact on employees and pension holders on the defined pension scheme, and that it is working through what this will mean for around 250 current members of staff who are impacted. The Pension Protection Fund has been notified. As noble Lords will know, this is a fund set up by the Government to provide pension benefits to members of defined-benefit schemes whose sponsoring employers have become insolvent. The PPF, with the assistance of the trustees of the scheme, will assess whether the scheme needs to enter the PPF.

Over the weekend, I spoke to David King, formerly the chief executive of Johnston Press and now the chief executive of JPI Media, and today I spoke to the head director. They set out that they believed this move was the best course of action for the long-term future of their staff and titles and that the only alternative would have been liquidation and redundancies. Like Members across the House, I am committed to a vibrant and free press. Johnston Press, with over 200 titles and 2,000 staff serving communities across the UK, plays a significant part in that—three of these titles serve my own constituency. Its future sustainability is therefore very important to us all.

My deepest sympathies are with anyone who is facing uncertainty as a result of these changes. However, it is important to note that this takeover may come under the rules set out in the Enterprise Act 2002. Under that legislation, where it appears that a relevant merger or takeover situation arises, the Secretary of State can then consider, in a quasi-judicial capacity, whether the merger raises media public-interest considerations. As such, I am sure that the House will understand that at this stage I am not at liberty to set out any views on the impact of this specific transaction.

What is clear is that this is an example of the challenges faced by the newspaper industry more broadly and in particular of the challenges faced by local papers. Local papers help to bring together local voices and shine a light on important local issues, in communities, courtrooms and council chambers. But it is clear that these papers have to make difficult decisions to try to adapt to the changing market. At this challenging time for print journalism, we are working hard to ensure its sustainability. In March, we launched an independent review, chaired by Dame Frances Cairncross. This will look at how the production and distribution of high-quality journalism can be sustained in a changing market, with a particular focus on the online space. Dame Frances’s report and recommendations will be published early next year. The Minister for Digital and the Creative Industries will, on 28 November, host an open session with Dame Frances, so that Members of this House and of the other place can share their views on these important issues.

At national and local levels, a press that can hold the powerful to account remains an essential component of our democracy. That is what this Government are working to support.

Photo of Lord Griffiths of Burry Port Lord Griffiths of Burry Port Opposition Whip (Lords), Shadow Spokesperson (Digital, Culture, Media and Sport), Shadow Spokesperson (Wales) 6:47 pm, 19th November 2018

My Lords, I come in at the point at which the Minister left the Statement. My first real job was, week after week, to write the front page of our local newspaper, the Star. It produced Llangennith, Llwchwr, Llanelli and Burry Port versions, and I did the Burry Port bit. My brother worked as a linotype setter with the local press. The loss of 200 titles and more than 6,000 jobs since 2005, with printing presses now far distant from the communities where the titles are published, leaves us with an absence of democratic accountability and engagement. I knew everybody whose hair was being cut in Burry Port when I was reporting. When a baby turned out to be twins, I did investigative journalism of a primordial nature.

How can we measure the beat of a community’s heart and provide for community cohesion if we are being asset stripped in this way? A further 200 titles are now at risk and 2,000 jobs are uncertain. Pension rights are under threat. The future is bleak. Can we really wait for the Cairncross review? Are not some of these tendencies only too clear already? Must we not do something before it goes too far? They say that Facebook is going to give £4.5 million to train 80 journalists over the next two years. Where will they be employed at the end of those two years? How many more titles will go? It is a serious question. If Facebook was taxed properly, could the Government not then invest in embodying and implementing whatever the Cairncross review comes up with? All these questions rose to the surface when this peremptory action came to our attention on the news this morning. Will the Minister give some concrete replies to these genuine concerns?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

The noble Lord makes a number of good points. First, I wholeheartedly agree with him about the need to support, where we possibly can, local newspapers. They have been the lifeblood of communities, and they provide essential and very necessary information for communities, whether on local democracy and local councils, or on births, deaths and marriages or on much more—I could go on—so it is important that we do our best to support them.

On the noble Lord’s question about Johnston Press, I would argue that it is good news that the JPI consortium has been formed—it is good news to the extent that it has pledged to take over Johnston Press. This is just the beginning, and there is much work to be done to settle things down, but it is good news that JPI has said that it wishes to continue business as normal. Obviously, we will have to see how things progress. JPI has also been open and transparent about the pensions issue, and it is fair to say that, as a Government, we will be looking at how the PPF responds to this particular matter.

Finally, on the local democracy issue, the noble Lord may have alluded to a different point but the BBC local democracy reporting scheme is one way forward. So far, 144 journalists have been appointed to that scheme, which enables the very thing that we want to do, which is to support local reporting.

Photo of Baroness Pinnock Baroness Pinnock Liberal Democrat Lords Spokesperson (Communities and Local Government)

My Lords, this is a very serious moment for the reporting of local events. First, I want to raise my concerns particularly about the future of the Yorkshire Post, which is a renowned newspaper that provides, in Yorkshire and surrounding areas, a regional perspective on news that would otherwise reflect only the London-centred media—that is why it is so invaluable to local people. Secondly, I have concerns about the future of the 200 or so titles that Johnston Press publishes, which provide real local news reporting and which, fundamentally, act as the organ that shines a light on local democracy. No other organisation is able to do that; the only way that the fourth estate can hold our local democracy to account is via these local titles. Can the Minister suggest a constructive way forward to safeguard these titles, particularly as the Cairncross report is unlikely to be able to provide recommendations until early next year, by which time many of these titles may have disappeared?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

The noble Baroness is right that the Cairncross review will not be reporting until next year, but she may be reassured by the very fact that JPI is rescuing Johnston Press—as she will know, this is a consortium made up of GoldenTree, Fidelity and two other quality fund managers—and has pledged, crucially in thinking of the Yorkshire Post and the other 199 publications, to put £35 million into the pot to aid the move to digital. This is the way forward. These publications have to move and take note of the changes in the marketplace, and this £35 million will be crucial in enabling that change, which will in turn aid the transfer of advertising back to these newspapers. In addition, as I mentioned earlier, the injection of £135 million to reduce the debt is clearly a step in the right direction. This is just the beginning step—there is much more to be done—but it is a good first step.

Photo of Lord Garnier Lord Garnier Conservative

My Lords, I share the noble Lord’s nostalgia for the many titles that our local communities and regions used to enjoy reading, as does the noble Baroness on the Liberal Democrat Benches, but may I caution my noble friend not to commit the Government to investing huge sums of taxpayers’ money, whether it comes from Facebook or other media platforms, in a product which the public is increasingly not reading? My noble friend’s point about investing in online local media outlets is the one that we need to concentrate on, and if public money is to be spent on this exercise, surely that is where it ought to be spent. Young people do not read print national newspapers, let alone local newspapers, so surely we need to concentrate on the future offerings of the media world rather than, sadly, the many forms of local newspaper that we so much enjoyed in our youth.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

I thank my noble and learned friend, who makes some good points. First, as I said, the move to online is happening, it is inevitable and it is fair to say that a lot of young people only go online. But it is also important that the transfer for local newspapers from paper form to online is effected in a measured way that does not lead to the sudden putative loss of jobs that might have happened if JPI had not stepped in for Johnston Press. I also take note of his point that it is very important that any government money should be put into a long-term future. We await the results of the Cairncross review, which will be looking at all aspects of this, including the online focus.

Photo of Lord Blunkett Lord Blunkett Labour

My Lords, would the Minister acknowledge that the £220 million debt run up by Johnston Press over a number of years was a scandalous mismanagement, which led to its mortgaging the operations, including the work of local journalists, for reasons other than for delivering what we want—and what I am sure the Government would want—in terms of the revitalising of local democracy that we will be talking about? Is it not true that, in picking up the pension entitlement, the Pension Protection Fund will have to use public money once again to bail out what was a scandalous misuse of the resources of Johnston Press over the years?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

I am not prepared to comment or respond to the comment made about the debt. The fact is that the debt is there, Johnston Press had it and JPI is taking it on and is looking ahead. On the PPF, again I think that it is right that the Government do not comment until we hear back from the PPF, which will in due course take a view on the pension situation at Johnston Press.