Public funds should be used to rescue local journalism, says report

Local news coverage could disappear unless the government provides direct financial support, according to an independent report on the future of the British media, which warns the industry’s collapse poses a threat to the “long-term sustainability of democracy”.

Dame Frances Cairncross was appointed by the government last year to investigate ways to secure the future of high-quality journalism in Britain.

Her report has concluded there should be a public investigation into the dominance of Facebook and Google in the marketplace. She also recommends a new regulator to oversee the relationship between news outlets and technology giants, which have taken much of the advertising revenue that used to subsidise reporting.

Local papers which are vital to a functioning democracy are owned by debt-laden publishers which have cut investment and sacked hundreds of journalists in an effort to maintain profit margins.

She drew parallels with once-dominant businesses which have failed to make the digital leap, such as Kodak or Blockbuster, and said the priority should be ensuring high-quality journalism continues to be produced in Britain rather than attempting to save the newspaper industry in its current form.

Key recommendations in the report include:

  • Direct funding for public-interest news outlets, with public funds used to support the reporting of local democracy through a new institute of public interest news.
  • An investigation by the competition regulator into the online advertising marketplace, which would consider whether Facebook and ’s position is too dominant.
  • A new code of conduct between publishers and large tech companies, overseen by a regulator which would ensure tech firms treat news publishers fairly.
  • Tax relief for publishers which invest in public interest journalism, potentially by giving charitable status to some publishers.
  • Removing the 20% VAT tax on digital news subscriptions, bringing online paywalls in line with printed newspapers.

Cairncross said that job losses at local newspapers meant there was a crisis in the coverage of democracy. “The cost of investigative journalism is great and rarely seems to pay for itself … given the evidence of a market failure in the supply of public-interest news, public intervention may be the only remedy.”


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