John McDonnell sponsors the Local Newspapers debate in Parliament

I opened the debate by placing on record that he is the secretary of the National Union of Journalists parliamentary group. It is a cross-party group of MPs who have raised issues on behalf of the union and journalists generally over a number of years.

Let me briefly explain what has been happening in recent years. The NUJ has published a chronology of closures and job losses in local newspapers over the past nine months. It is a shocking roll-call of cuts on a significant and worrying scale. I will not go through it in detail now, but I will place in the Library, for Members’ information, the short report that the NUJ has provided. It illustrates the range of titles that have gone in the past nine months, and the scale of cutbacks of journalists, sub-editors and photographers.

Throughout the ’90s and until about 2005, local newspaper profit margins ranged from approximately 20% to 35%. In a normal business, profits on that scale would be reinvested in the industry long term which would fund the transition to the new model. That did not happen, unfortunately. I hate to say it, but some of the company results make it clear that instead of being reinvested, those profits were used for sizeable shareholder dividend pay-outs. In addition, the pay of newspaper executives was enormous.

Another issue that has affected the sector over the past 10 years is the rapid closure of local presses.  As a result of such closures, any new entrant to the regional newspaper market is forced to choose between bearing the virtually prohibitive expense of a new press, entering into contract arrangements with potential competitors, or printing outside the UK and building import costs into their overheads from the outset

I repeated the statement in the NUJ briefing, which was sent to all MPs. It believes that journalists should be at the heart of local communities, speaking and listening to readers. It believes that there is a strong future for local papers that enjoy high levels of trust among their readers, but the sector is in a precarious position. That is why year-on-year cuts, pay freezes and increased work loads are creating low morale among journalists at local papers and undermining the product that companies are seeking to sell. Professional journalism, community journalism and investigative journalism could be casualties in the coming years if we do not act soon.

I went on to say that the NUJ has been running a country-wide campaign with Co-operatives UK and the Carnegie Trust to consider how good journalism could be funded. An issue that has come up, including at our seminar, is that the NUJ believes that this Government’s Localism Act 2011, which we supported, should be amended to give local newspapers protected status as community assets to prevent newspaper titles from closing overnight and allow new owners—including co-operatives and other community initiatives—time to put together bids for the paper. Newspaper groups should not be allowed to close a paper and lock away a title that has resonance in the local community. Legislation is also needed to prevent newspaper owners from refusing to offer titles for sale before closing them. They should at least be offered to others who might want to make them a going concern.

The NUJ asks the Government to open an inquiry into the future of local papers to explore how Government could support new models of ownership, such as co-operatives and community ownership by readers, and investigate how Government subsidies and tax advantages could work for local newspapers. I welcome yesterday’s statement, but tax concessions and reductions in business rates should not be allowed to go towards featherbedding companies with increased shareholder dividends or into high salaries for executives.

We should consider how local papers could be funded or part-funded, as others are, on a public service model. If local papers receive public subsidies through tax concessions or otherwise, there should be a public benefit test. Do they report council meetings? Do they report what is happening with local statutory agencies, and hold them to account? We have also been proposing for a while that the use of industrial levies should be investigated: for example, a 1% levy on pay TV operators such as Sky and Virgin Media would bring in about £80 million a year to fund the development and transitional costs of the local newspaper sector. A 1% levy on the five big mobile phone operators could generate £208 million a year. On boardroom greed, one proposal that has been debated is to link chief executives’ and executives’ pay not just to performance but to their employees’ pay, and to ensure trade union and proper representation on remuneration committees, so that there is more transparency and openness.

In finishing, as we have seen today, despite all the travails of the local newspaper sector, the recognition of its importance is prompting Government and all parties to consider seriously how we can intervene to support it in this period of transition into the new digital age. It will survive and thrive only on the basis of preserving and promoting quality journalism. Without that, a local paper is undermined as a product and will wither on the vine. I urge whoever is in government next to seize the NUJ proposal of an open and engaging inquiry involving all stakeholders into delivering a way forward to enable an essential public service to flourish once again.


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