Major newspapers including the Guardian and the Financial Times have joined other national papers in calling for the repeal of a controversial law that could force publishers to pay the costs of the people who sue them, even if they win.

In its submission to the government’s 10-week consultation on press regulation and reform, the Guardian said that the law drawn up following the Leveson inquiry into press misbehaviour risked harming the sort of investigative journalism which uncovered phone hacking in the first place.



Section 40 of the Crime and Courts Act, while supported by celebrities such as Gary Lineker and Hugh Grant as well as some victims of press abuse, is fiercely opposed by the newspaper industry. The Guardian said it was “not fit for purpose” and would hurt the sort of investigative journalism which produced its own reporting on the Panama Papers.

Section 40, already on the statutes but not brought into force, could require publishers to pay the costs of the people who sue them, even if they win, unless they are signed up to a state-backed regulator. No major publisher supports such a regulator, prompting the government consultation.

“This is of no benefit to the public, as it will discourage newspapers from conducting difficult investigations and holding powerful people to account,” said the Guardian, which added that newspapers would be deterred from even pursuing potentially risky stories. “In complex and controversial cases such as terrorism, national security, or where deep source protection sits at the heart of a story, this chilling is likely to be particularly profound.”

In its submission, Guardian News and Media (GNM), the parent company of the Guardian and Observer, also insisted that the proposed merger of 21st Century Fox with Sky be referred to media regulator Ofcom, not just on competition grounds but also because of questions about the conduct of Rupert and James Murdoch during the scandal.



A full merger inquiry should “seek answers to questions about whether the track record of those at the very top of 21st Century Fox ... make them fit and proper persons to own and control the largest pay TV platform, and second largest broadband provider in the UK”.

The Murdochs, owners of the now defunct News of the World, dropped a proposed bid for the whole of Sky in 2011 at the height of the phone-hacking scandal. Fox, controlled by the family with a 39% stake, made a new bid for the satellite company in December after several criminal trials.

As well as joining all the national newspaper groups in objecting to section 40, the Guardian, the FT, the London Evening Standard and the Independent also questioned the need for a second judge-led inquiry into press misbehaviour, or Leveson 2.

While there was no “clear case for proceeding with a further judge-led inquiry”, the Guardian said it would await the outcome of an independent review of the unsolved murder of the private investigator Daniel Morgan “with interest”. This inquiry, which is expected to conclude later this year, includes allegations of corruption at both the Metropolitan police and the News of the World.

Facebook Twitter Pinterest James and Rupert Murdoch giving evidence to the culture, media and sport select committee in 2011. Photograph: PA

The FT argued in its submission that section 40 “would inflict disproportionate, unjust and potentially disastrous legal costs on newspapers, irrespective of their record on the ethical issues”. It said local and regional newspapers, already suffering declining readers and revenues, would be disproportionately hit.

Both the Guardian and the FT argued that section 40 should be removed completely from the statute book. The FT said having the law on the statute book but not in force appeared to give ministers “unacceptable leverage with regard to the newspaper industry”. The FT added: “It is, for the press, a legislative sword of Damocles.”

The culture secretary, Karen Bradley, announced the 10-week consultation exercise to discuss the two outstanding issues from the Leveson inquiry: section 40 and the need for a second inquiry into the relations between the police and the press.

Under the royal charter drawn up after the inquiry concluded, newspapers who refused to sign up to a regulator recognised by the Press Recognition Panel (PRP) would be penalised.

No major newspaper has signed up to a regulator recognised by the PRP. A series of titles including the Daily Mail, the Sun and the Daily Telegraph, are members of the Independent Press Standards Organisation, which has refused to apply for state-backed sanction under the PRP. The Guardian and the FT are independently regulated.

A small regulator, backed by Max Mosley, called Impress has been recognised. Its members are a group of small websites and blogs.

In its submission, the Guardian called Impress and Ipso inadequate as “credible regulators” and called for a new system of self-regulation fit for the digital age. By failing to even recognise the responsibilities of the growing number of online news publishers, the royal charter which gave rise to the new system of regulation was “fatally flawed and anachronistic”, it said.

On the issue of increasing access to justice for all those involved in information disputes, rich or poor, GNM said there had to be recognition of the “wider public policy challenge” in the digital era.

It said: “Focusing on and penalising a small part of the media makes no sense in the 21st century. Leveson has been reduced to less than sum of its parts, leaving much bigger questions unanswered. As a result, no side of the equation – whether those seeking access to justice, parliament, government or news organisations – benefit from such an uncertain, fragmented and fractious policy environment.”

Supporters of Leveson 2 have included politicians such as Gordon Brown and Ed Miliband as well as Hacked Off, which campaigns for victims of press abuse. Evan Harris, a director of Hacked Off, also said there was “overwhelming support for section 40 cost penalties” from the public, citing a YouGov poll.

On Tuesday, the same day as the deadline falls for submissions to the consultation, Bradley announced that her department had started to analyse the public interest implications of the Sky takeover.

Under competition rules, Fox has to notify the European commission of its bid. Once it does so, after starting pre-notification discussions this month, Bradley has just 10 working days to decide whether to refer the bid to the UK authorities.

The official notification is expected some time in March, when a judicial review of the consultation exercise itself is also likely.