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I am sure that that is one contributory factor that makes it harder for the commercial business model for a local newspaper to be viable and to continue.
Going back to Hammersmith and Fulham, its justification for having a fortnightly council-funded newspaper was interesting: there was not an independent local paper that had a circulation sufficiently robust to be able to communicate with local residents and get messages into the community. Now that Trinity Mirror is planning a free newspaper, which will hit 99 per cent. of households, surely the council should be announcing a timetable for getting out of the state-run newspaper business. Of course, not every area has a newspaper group such as Trinity Mirror, with the resources to change its business model and move to a free sheet. In many cases, local papers are wilting under the pressure of council competition.
My final example is from Waltham Forest. The council relaunched its in-house magazine in 2008 as a local newspaper, the Waltham Forest News, which is distributed free to 110,000 households. The council withdrew its advertising from the local independent press and now places all its ads in its own paper-that goes back to the point that Harry Cohen made. As well as turning off the tap on advertising revenue, the council is actively marketing its paper for advertising.
Not only has the funding tap been turned off but news stories are being held back to be given to the council's paper on an exclusive basis. I am told that, as a result, on a number of occasions the Waltham Forest Guardian received complaints from its readers for not reporting events that had a council connection. In fact, the council had kept it in the dark about what was happening. In 2006, Waltham Forest spent £464,000 with the Guardian series. That fell to £177,946 in 2007 and just £9,749 by 2008. That was a crippling drop in revenue for a significant employer in Waltham Forest. The council's decision to withdraw its advertising damaged the paper and contributed to job losses and the closure of the paper's local office.
Getting a handle on the true cost of council-controlled newspapers is hard because often it is not clearly set out in a codified set of accounts. The costs are buried in other budgets, making it difficult to pull together a complete picture. Nevertheless, a combination of freedom of information requests, investigative journalism and so on has allowed us to put a figure on what the pseudo-newspapers are costing. In London, some £10 million a year is being spent on them. I understand that in a couple of weeks, under the auspices of the Tower Hamlets business manager, all the business managers of those effectively commercial council-run newspapers will meet to compare notes on how to be even better at selling advertising in their areas in competition with their local papers.
I said that my purpose today is to urge action. In June last year "Digital Britain" reported on and acknowledged the negative impact on independent local newspapers of local authority newspapers:
"they will inevitably not be as rigorous in holding local institutions to account as independent local media."
It went on to say that there was a need for the Audit Commission to be invited to undertake an inquiry into the impact of council newspapers and to
"make recommendations on best practice and if restraints should be placed on local authority activity in this field."
That is what happened. That request was made and the Audit Commission is undertaking a study and a report is on its way. However, the scope of the Audit Commission's study has been narrowed and will not cover all that "Digital Britain" sought: it will not look at the impact of council papers on independent local newspapers. The wider public interest in a free press is not being considered by the Audit Commission because it is outside its remit. If that is so-I believe it is-it is not good enough. Surely the competition issues must be addressed. I have presented some evidence about why that is so.
Last month, the Secretary of State for Business, Innovation and Skills said:
"a healthy culture of local news in particular is a public good and Government can't just wash its hands of some responsibility for sustaining that public good."
How will the Secretary of State's good intention be translated into action? If the Audit Commission does not do a comprehensive job and does just a half job, surely the Office of Fair Trading must be asked to finish it off and do the job that "Digital Britain" asked to be done. Without such action there is a risk of the creation of 21st century rotten boroughs, where the only news freely available to everyone is provided by the council.
Chris Payne from Tower Hamlets described council-run newspapers as "place shaping". Orwell would be proud. I hope that we can do something to ensure that Orwell is not proud and that we do not allow state-run newspapers.