Stephen Glover on The Press

The case against the 'Guardian': muddle, exaggeration, hypocrisy

When a huge company sues a newspaper my sym-pathies are instinctively with the newspaper. When that company is Tesco they are apt to blossom into enthusiastic support for the paper in question.

So after reading that Tesco is suing The Guardian for "libel and malicious falsehood," I thought of all those acres of Britain's green and pleasant land that Tesco has concreted over, and of the countless other acres it is sitting on, and my heart hardened against the mighty supermarket chain.

Yet the more I look into it, the more it seems to me that The Guardian has exaggerated its claims that Tesco has avoided paying tax, and even got its taxes in a muddle. More remarkably still, the Guardian Media Group is itself guilty of a tax avoidance scheme similar to that which has aroused its ire in respect of Tesco. Is hypocrisy built into The Guardian's DNA?

On 27 February the paper ran a front page story, with much accompanying stuff inside, alleging that Tesco had "an elaborate corporate structure involving offshore tax havens which enables it to avoid paying up to £1 billion of tax on profits from the sale of its UK properties."

The article apparently thought that the tax being avoided was Corporation Tax. The next day an editorial in the paper castigated the company for shirking its duties.

Tesco's response is that the "savings" it has made relate to stamp duty on property transactions. Hitherto they amount to £23m. A further £30m to £40m may be saved, according to the company. It claims that all these property transactions are, or will be, included in Tesco's UK tax returns.

I am very far from being an expert on company taxation, but I have a friend who is very competent in these matters. He says The Guardian appears to have mixed up corporation tax with stamp duty. Tesco has been selling, and then leasing back, stores in order to free up capital, and has found a way of minimizing its stamp duty by using offshore trusts. Evidently this is a common procedure. The sums involved would appear to be much less than the £1bn suggested by The Guardian.

More interesting still, the Guardian Media Group has itself recently participated in a similar tax avoidance scheme. Tacked on to a story in the paper about offshore havens on 4 March was a brief admission that the Guardian Media Group, in partnership with Apax Partners, has set up a new company registered in the Cayman Islands as part of its proposed acquisition of Emap plc. The purpose of such an arrangement is to minimize tax liabilities.

The Guardian newspaper can hardly be held responsible for all the activities of the Guardian Media Group, which owns it. But it has spared its owner the charges of shirking duty which it has laid at Tesco's door. Moreover, the Guardian Media Group is answerable to the Scott Trust. Among its 11 members are Alan Rusbridger, editor of The Guardian, and Larry Elliott, its economics editor.

My guess is that the newspaper has greatly over egged its allegations against Tesco. You might say that this was the old, left-wing, capitalist-hating part of The Guardian asserting itself, and not being prudently reined in by Mr Rusbridger.

At the same time the new, capitalist-loving part of the Guardian group, which jumps into bed with a private capital outfit such as Apax Partners, indulges in the very tax practices of which its journalists accuse Tesco.

This seems an institution in a state of some moral confusion. One way or another, I don't expect The Guardian will come terribly well out of this case.

Onward, upward: the road Mr Alton should follow

So Roger Alton has been made editor of The Independent in place of Simon Kelner, who remains editor-in-chief of the paper and its Sunday sister, and becomes their managing director.

I may owe the Media Guardian website a slight apology, having suggested in this column five weeks ago that it may have been 'too fast on the draw' in announcing these appointments. So too, perhaps, does Mr Alton, who said it was 'nonsense' that he had the job. Strictly true, no doubt, but it was coming his way, and he gave the impression it wasn't. Better to have said, 'No comment'.

Anyway, let's put all that behind us. What does his appointment portend? One might put the question another way: how can the loss-making Independent become profitable, which, as Mr Kelner was quoted as saying in last Thursday's Financial Times, should remain the goal?

In a market in which almost all newspapers are losing sales, The Independent is not very likely to gain swathes of new readers. Nor can there be much scope for further cost-cutting in an operation that looks pretty lean.

So the challenge is to extract more money out of a readership that will probably not grow much larger. One way of doing this would be to raise the cover price to £1. But would the readers bear it? Only if they felt they were getting something not available elsewhere – that they were part of a special club. This suggests to me that the paper should edge further upmarket, and become more glamorously intellectual.

If The Independent could establish an even more refined readership profile – as the Financial Times has done in its market – it could also justify charging advertisers a higher premium to reach readers not available in such concentrations on other titles.

Easier said than done, I know, when The Guardian is trying to pull off a similar trick. But The Guardian is hamstrung in becoming 'the top people's paper' because of its leftist reputation. I was encouraged to read Mr Alton saying that The Independent will be neither left wing nor right wing under his editorship. Quite right. Not having the baggage of The Guardian, The Independent can reach out.

Is Mr Alton the right man for the job? He was a very successful editor of The Observer, but he tended to take that paper a shade downmarket. He should do the opposite with The Independent. Mr Kelner is evidently going to burnish the brand so that the paper is again seen as the fashionable, must-read accessory of the intellectual elite. If Mr Alton produces an exciting and upmarket newspaper, they could be in business.

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