Lady Hollins moved for an amendment which would allow victims of phone hacking to claim court costs against media organisations, adding the effect of the change would be to implement “the courts costs expenses and protections” of Section 40 of the Crime and Courts Act 2013.
Section 40 has yet to be implemented by the government, but it could see publishers forced to pay both sides’ costs in libel or privacy actions even if they successfully defend a case in court.
Lady Hollins claimed it was “wrong” that small local newspapers would be at risk from such legislation because they could choose to join a recognised press watchdog and “get the same costs protections that the public will get – unlike newspapers that choose not to join”.
She continued: “The local newspaper threat is a smokescreen. The protests are really coming from the big newspaper groups who own most of the regional papers and are effectively using them as newsprint shields.”
In response, Gary has written to Lady Hollins stating the threat was “anything but a smokescreen”.
He added: “In his determination of the phone-hacking inquiry, Lord Justice Leveson made clear that local newspapers were guilty of no wrongdoing and should not be penalised as a result of his report.
“Yet we face huge financial hardship if the proposed cost sanctions outlined in the Crime and Courts Act 2013 proceed – and similar hardship if we are forced to join a recognised regulator.
“The reasons for the former are clear; for the latter may be less so. Regulation under Royal Charter requires newspapers to participate in compensatory arbitration.
“In the only approved scheme from IMPRESS this would require us to pay all the costs of an arbitrated complaint, up to £3,500, plus potentially the successful complainant’s costs of up to £3,000, in addition to unspecified damages.
“For tiny papers who have seen readers and classified advertisements migrate to entirely unregulated websites and social media, these are enormous sums.”
Last week the Press Recognition Panel, set up in the wake of the Leveson Inquiry, approved Max Mosley-funded body Impress as an official press watchdog under the government’s Royal Charter, potentially opening the way to S40 being implemented.
However industry leaders are confident the controversial clause will never be activated after culture secretary Karen Bradley suggested she would take a fresh look at the issue.