As we approach the publication of the Leveson enquiry findings, the spin doctors have already set up a partial debate. We are told that Statutory regulation would be good if we wish to stop malpractice and law breaking by journali
sts trying to get big stories. We are warned that it could get in the way of press freedom and allow some malefactors to get away with it without press disclosure of their ill deeds. I doubt if either part of this proposition about Statutory regulation is true.
I approach this problem as one who thinks press freedom is important to a democracy, but freedom is not the same as licence. There should be – and is – a law of libel to protect reputations from lies and malice. There should be a more limited right of the state to block publication of matters which could harm us collectively, by exposing the plans of our army in the field or revealing security secrets that put at risk our protectors for example. There is always a danger that this right is abused by those in office, hushing up matters which should be exposed. It needs limiting, with safeguards against abuse.
I also have experience of the press publishing lies about my private life, seeking to tackle and misrepresent me rather than reporting criticially the ideas and people I represent, and listening in to my private conversations. None of this has made me want to regulate them because of it, or seek to curb their freedom of enquiry into others who may have guilty secrets to reveal, hurtful though it has been at times.
We have good experience of what happens when a major activity shifts from self regulation to Statutory regulation. This has happened to the financial industry over the last twenty years. Over this period we have shifted from a world where no major bank went bust, to a world where several major banks have been driven into state hands and public subsidy. We have moved from a world of limited financial crime, to a world where many major institutions face enquiries into abuse of markets and queries over their corporate conduct. We have moved from a world of lower cost of doing business to higher cost of doing business. People have to pay more to cover the cost of regulation, or end up with no professional advice at all. In the City we have moved from a world where the mainstream decent companies applied moral and upright standards to their own conduct, to a world where the main players ask lawyers and compliance officers what they can get away with and are often tempted to push the many rules as far as they can. Rules compliance has all too often replaced a sense of decency in conduct.
Spin doctors and sloppy journalists have conspired together to characterise the noughties as the era of “light touch regulation” or even of “deregulation ” in financial markets. Anyone who weighs the Statute book, examines the volumes of rules, guidance and compliance materials will know that the noughties saw a large increase in the volume of regulation. The Financial Services and Markets Act 2000 put in place a comprehensive system of Statutory regulation for the first time in the UK. This was changed and reinforced by the Financial Services Act 2010. It was also complemented by the EU financial services plan, including wide ranging legislation like MIFID. Never had the UK been so regulated, and never before had things gone so badly.
Unfortunately the Statutory system saw major errors of judgement by the regulators over safe levels of cash and capital for credit creating institutions, which then threatened the whole system. The noughties were not an era of light regulation or self regulation. They were an era of bigger Statutory regulation both at home and in the EU. This new regulatory system defined by Mr Brown’s big changes to the architecture and by the comperehensive financial law introduced, failed both to keep our system safe, and failed to prevent crime. It has been a notable failure of the free press to expose the true nature of the last financial crisis, or even to report sensibly the current state of public finance. I can’t see how a Statutory regulator for the press would help tackle this problem. Ironically some in the press will now find it harder to make the case against Statutory regulation, because they have so failed to explain its manifest massive failures in the case of the City.
Why do people think Statutory regulation of the press would be any more successful or better judged than the financial regulation was? How would it actually stop journalists eaves dropping, twisting replies, failing to read the basic materials, making snide comments about people and causes or getting the wrong end of the stick? Wouldn’t it mean more managers , compliance officers and box ticking, which would slow down stories and draw out mistakes, rather than abolishing them?
Nor would it necessarily prevent newspapers exposing folly and mischief in high places. If a government tried to use its leverage over the Statutory regulator to close down a story or an outlet, that in itself would be a fine story which would probably get out and do more damage to the government than if they had not bothered.
I remain a sceptic about the powers and wisdom of Statutory regulation. There is a lot to be said for having a clear and well enforced criminal law to prevent extreme conduct, and leaving the rest to competition, choice, public opinion and the free play of ideas and views. Now we have such a lively and often unruly medium in the web, if you regulate mainstream media too much it simply will not be able to compete with the new ways of voicing criticism of the powerful.