When the sky was the limit for Murdoch

While the attention of most people was focused on the illegal invasion of Iraq in 2003, legislation was making its way through Parliament that would open up media ownership and create the conditions for Rupert Murdoch’s empire to flourish in Britain.

The Communications Act 2003 received Royal Assent on 17 July 2003 and represented New Labour thinking about globalisation, markets and ownership. It allowed cross-media ownership – newspapers owning TV stations – and opened up the market to non-British companies.

“Ownership rules must reflect the reality of a global marketplace,” the then culture secretary Tessa Jowell told MPs.

Many of the media specific rules in force that prohibited particular accumulations of broadcast licences, or combinations of press and broadcasting interests were abolished. Media concentration was primarily to be dealt with on a case by case basis.

The secretary of state was given power to block any deals that might threaten “plurality” in any sector, although this measure was forced on the government by a revolt in the Lords led by Labour peer Lord Puttnam. The real clout went to a non-government body, the regulator Ofcom which itself was there to champion competition and the market as its first priority.

In his acute analysis about the political elite and its relationship to the media, and Murdoch in particular, John Harris notes how Margaret Thatcher cleared the way for his move into British television. But he adds that “as with so many things, the rot decisively started under New Labour”, saying:

“The Murdoch factor undoubtedly informed swaths of New Labour politics: not least, an ingrained reluctance to embrace the more economically interventionist aspects of the European Union, and a reckless belief that Britain should always support American foreign policy, no matter how dangerous the consequences (never forget: all of Murdoch's newspapers loudly backed the invasion of Iraq).”

He relates how two Labour MPs as far back as 1996 had mysteriously disappeared during a crucial vote on a clause in a Tory bill that gave Murdoch monopoly over the equipment required to watch BskyB. The vote was tied 11-11, “Murdoch got his way – and we began our passage into that brave new TV world where BSkyB has a UK market share of 80%.”

Harris suggest that the price of cosying up to Murdoch was an electoral quid quo pro. He cites Blair’s press secretary Alastair Campbell who in his diaries refers to a meeting with senior News International figures: "I emphasised that they had to understand that there would be a big price to pay in the party if we restricted and curbed the natural desires of people to do something about Murdoch, and ultimately the Sun and News of the World really went for us.”

After Blair resigned in 2007, Murdoch’s papers began their shift away from New Labour and plumped for the Tories in 2009. David Cameron was feted and courted by Murdoch and took on Andy Coulson, first at the Tory Party and then in Downing Street. The rest, as they say, is history.

The British political regime is imploding and not just because some phones were hacked by unscrupulous journalists and investigations. It’s a case of one scandal too many because it follows the banking collapse, involving financiers close to and admired by New Labour, the MPs expenses scandal that undermined any residual trust in Parliament and attempts to offload the economic crisis on to the backs of ordinary people.

Harris is worried that the crisis might “actually push us into a deadening stand-off between most of those at the top, and a public who now simply trust no one at all”. He is right to be concerned. This is a profound moment for a political system that few have any faith in to sort out pressing problems. A plan for a truly democratic alternative to a corrupt, market state in thrall to corporate power is more urgent than ever.

Paul Feldman

Communications editor

The political system is part of the problem not the solution

The somewhat contrived outrage by politicians of all parties over the hacking of phones by the News of the World should not blind us to the permanently changed relationship between Parliament and corporations that goes well beyond Murdoch’s News Corp.

Those who talk of a “triumph for democracy” and the “will of the people” as expressed through the House of Commons following Murdoch’s withdrawal of his bid for the rest of BskyB’s shares, are fooling themselves as well as the electorate.

New Labour became infatuated with Murdoch precisely because his was a global corporation, exercising media power on both sides of the Atlantic. He was symbolic of market-driven globalisation that Blair and Brown embraced before they took control of their party in the mid-1990s.

They sought and won Murdoch’s support at the 1997 general election because New Labour actually believed in his free-booting style of capitalism that symbolised the period. Built on debt, Murdoch’s empire was to be admired, notwithstanding the destruction of trade unions at his British papers.

New Labour, according to the author and journalist Peter Oborne (whose book The Triumph of the Political Class foreshadowed what has been revealed), went on to develop a “corrupt, complicit, and conspiratorial system of government” that in essence matched the way the corporations functioned.

During its heyday, Murdoch’s malign influence was matched by a range of other corporate “interests” equally favoured by New Labour:

- the banking and financial sector, further deregulated and freed from any significant supervision by the ever-so-tame Financial Services Authority

- major supermarkets, allowed to take over and destroy high streets (with Sainsbury and Tesco executives sitting on government ‘task forces’)

- energy corporations like British Gas who allowed to drive up fuel prices according to “market conditions”

- rail companies who fleece commuters and charge the most expensive fares in Europe

- big contractors, who were given access to £90 billion of public sector contracts on exceptionally favourable terms through the so-called public-finance initiative

- house builders who were given control over the market for new homes, driving up the cost of land beyond the reach of housing associations

- IT corporations like Microsoft who became partners in education programmes

- Private health firms that provided treatment centres for profit financed out of NHS funds.

The fact that this relationship turned sour when Murdoch switched back to the Tories in 2009 coincided with the collapse of the whole period of corporate-driven globalisation championed by New Labour.

And, as we well know, when the banks went belly-up, prime minister Brown rushed to their support and used taxpayers’ money alongside unlimited state guarantees to prop up a financial system that was no longer sustainable. Parliamentary sovereignty had come to express no more than the power of the banks.

None of the major parties could or would challenge this effective merger between the parliamentary state and corporate power. As a result, the political establishment lied about the spending cuts that inevitably followed last year’s general election campaign. The Coalition that emerged has no democratic mandate for the onslaught on living standards that has taken place over the last year but instead takes its marching orders from financial markets.

The shock and horror at the underhand, criminal methods used by the Murdoch press is an attempt to get people to view Parliament in a better light, as an institution that will stand up to powerful interests. However, it is window dressing because global corporate power is very much alive in the hearts and minds of ministers, opposition leaders and MPs.

As the Real Democracy Now movement in Spain established, the existing political system remains very much part of the problem and not the solution. A deconstruction of the capitalist parliamentary state and its recreation along truly democratic lines, around a system of people’s assemblies, is an alternative way forward.

Paul Feldman

Communications editor