If it ain't broke don't fix it

Information Commissioner Richard Thomas has dramatically raised hopes that the Government will think again about its controversial plans to water down the Freedom of Information Act.

Thomas told MPs the proposed changes would “significantly” reduce the flow of information at a time when the Act was working “dramatically better” and had settled down in Whitehall.

Following Thomas’s testimony to the Constitutional Affairs Committee, director of the Society of Editors Bob Satchwell said it would now be “outrageous” if the Government did not think again.

Public consultation on the proposed Freedom of Information and Data Protection Regulations closed on 8 March and the Government is currently deciding whether or not to press on with changes which will dramatically increase the number of FoI requests thrown out on cost grounds.

Press Gazette’s eight-week Don’t Kill FoI campaign culminated two weeks ago with the presentation of a petition to Number 10 signed by nearly every UK national newspaper editor.

Thomas – whose job is to enforce the FoI Act – appeared to deal a blow to the Government’s logic that the proposed changes to FoI are needed to save money.

He said: “There is a real prospect our existing scarce resources will be spent resolving complex disputes rather than resolving the substantive issues of what information should be disclosed.”

He told MPs that the existing fees regime “was working well” and said he was concerned about changes proposed by Lord Falconer.

Thomas also expressed concern over the proposal to allow authorities to take account of the time taken to read, consult and consider requests in working out the cost of complying with them. If costs exceed £600 for Whitehall departments and £450 for councils and other public bodies, FoI requests can be rejected, regardless of the public interest.

The Government has estimated that an extra 17,000 requests under the proposed new rules would be turned away, saving around £10 million a year.

But Thomas said: “In my views the existing fees regime is simple, clear and straightforward and doesn’t appear to act as a deterrent to requesters.

“In overall terms, I do not consider that the overall impact of FoI is proving burdensome for public authorities.

“The benefits, especially in terms of improved transparency, accountability and democracy, are clear and I am concerned about the practicalities of the proposals and recognise that the amount of information of genuine public interest that is released in the public domain will be reduced.”

The committee has already told the Government it does not favour the changes, but recommendations were previously rejected.

The MPs now plan to submit a renewed report following this week’s evidence which should pile more pressure on the Government to think again.

Bob Satchwell, executive director of the Society of Editors, who was at the meeting, told Press Gazette: “The Information Commissioner’s evidence shows it is not just the media who are worried.”

“In the face of this overwhelming evidence, it would be outrageous for the Government if they don’t think again.”

If Trinity Mirror adopted the same investment strategy as News Corporation or the Daily Mail and General Trust, the editors of its national titles would be spending an extra £30m to £40m on their staff and titles every year.

In the last financial year, DMGT asked its Associated Newspapers subsidiary to deliver an operating margin of 10.3 per cent, while News Corp’s titles around the world delivered 12.6 per cent.

Meanwhile, Trinity Mirror squeezed 16.8 per cent from the Daily Mirror, The People and its other titles.

Significant costs savings contributed to this margin performance.

At the Murdoch margin, Trinity would have had an additional £28m to invest. Under the Rothermere regime, it would have been a massive £40m.

Trinity Mirror is run by rational, human beings. So why don’t they run their nationals in the Rothermere style?

For various reasons, including hefty family shareholdings, Rothermere and Murdoch enjoy more freedom than Sly Bailey.

But the brutal truth is that investors are wary of Trinity’s nationals because they occupy third place in the tabloid mass market.

In revenue terms, the Mail’s franchise is worth almost £1bn a year to DMGT. News Corp’s tabloids are probably worth as much, if not more – although the company’s financials don’t offer any detailed numbers.

And the Trinity tabloids? The Mirror, The People, the Daily Record and the Sunday Mail bring in just over £500m in revenue.

Running third in a three-horse race is an uncomfortable place to be. It was Jack Welch, the former boss of General Electric, who routinely culled business units that couldn’t do better.

Financial markets usually offer number one and number two players with strong management teams the freedom to invest for long-term expansion. But they are routinely sceptical about the ability of third- or fourth-placed players to overhaul the leaders – particularly in mature markets like the newspaper industry.

In addition, markets tend to be skittish about the risk of investing in weaker companies that are more vulnerable to economic shocks.

Accordingly, they look for signs of aggressive cost controls from management, something that Sly Bailey has certainly provided at Trinity Mirror.

They also look for a return that compensates them for the risks. Their motto is “jam today, not tomorrow”.

Trinity Mirror rewards the City for its patience by paying out handsome dividends. During 2005, Trinity Mirror paid out £60m to its investors.

That’s 29 per cent of the company’s pre-tax profits devoted to keeping investors happy.

By contrast, DMGT spent just 16 per cent of pre-tax profits on dividends to outside investors. At News Corp, the figure was 18 per cent The logic of financial markets can be viciously circular. In the case of Trinity Mirror, the market demands such chunky dividends because it doesn’t believe that the company will ever catch up with the market leaders.

But by extracting those dividends, the market also constrains Trinity’s ability to invest and expand.

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