The Leveson Inquiry into British newspapers prompted by the phone-hacking scandal is getting under way – and Fleet Street is determined to escape regulation, writes MARK HENNESSY, London Editor

LORD JUSTICE LEVESON’S inquiry into the British press doesn’t get into full swing until next week, but already there is concern at the highest levels of Fleet Street that, if the judge ends his investigation by making dramatic recommendations, the result could be one of the biggest transformations of the newspaper industry in decades.

Before the summer, Rupert Murdoch's media empire was on the rack after it emerged that journalists at the News of the Worldhad hacked into the voicemail of Milly Dowler, the murdered 13-year-old English schoolgirl whose body was found six months after she went missing, in March 2002. Between their expressions of outrage at what the tabloid had done, other Fleet Street papers fretted: hacking phones and illegally accumulating private information were not confined to Murdoch's now defunct Sunday red top.

The first part of Brian Leveson's inquiry will tell us nothing new about the News of the World, as the judge, the Metropolitan Police and the Crown Prosecution Service all want to ensure nothing is said that would prejudice later trials. For now Fleet Street's priority has been to take the measure of Leveson, a member of the Court of Appeal and one of the judges who quashed Barry George's conviction for the murder of the BBC presenter Jill Dando.

So far, a few things are clear. First, Fleet Street believes that Leveson knows nothing about tabloid journalism and is being advised by a team of experts drawn, instead, from the more rarified strata of the trade. Second, media executives believe that, despite railing about the media’s sins, and having spent years courting Murdoch and others, David Cameron, the prime minister, has no desire to impose state control on the media.

Instead, influential Fleet Street figures have rushed to head off more draconian changes by advocating belt-and-braces reform of the heavily criticised Press Complaints Commission (PCC), which has been useful as a complaints body but lacklustre as an unofficial regulator.

Their argument is simple: phone-hacking is already a criminal offence. The failure to prosecute more than a few journalists when phone-hacking first came to light, with the royal-reporting scandal of 2006, was down to the Metropolitan Police’s weakness, not to a lack of regulation. The implementation of existing law would prevent a repeat. Yesterday, a 48-year-old employee of News International was arrested by detectives investigating alleged illegal activities by newspapers.

Condemning phone-hacking, one of the giants of Fleet Street, Daily Maileditor-in-chief Paul Dacre, complained of "the rank smells of hypocrisy and revenge" from British politicians exposed to public opprobrium over the MPs' expenses scandal.

Speaking at a seminar for journalists in advance of the Leveson Inquiry, Dacre said politicians are displaying “moral indignation” against the press, which had exposed “their greed and corruption”, while just months ago those same politicians indulged “in sickening genuflections to the Murdoch press”.

Dacre, who, though little known to the public, is one of the most influential people in Britain, insisted that the press is better behaved than when he became a journalist in the 1970s. “Then, much of its behaviour was truly outrageous. It was not uncommon for reporters to steal photographs from homes. Blatant subterfuge was commonly used.

“There were no restraints on invasion of privacy. Harassment was the rule rather than the exception,” Dacre went on, arguing that the much-derided PCC has worked. Newspapers, he argued, are already on the point of being over-regulated: the Data Protection Act means reporters can be criminalised for getting an ex-directory number, even though one is needed to check the accuracy of a story.

The Human Rights Act, brought in by the Labour government in 1998, has created a burgeoning privacy law “by judges who seem to give more weight to the right to privacy than to the freedom of expression”.

Meanwhile, libel bills have been driven sky-high by conditional fee agreements, where lawyers can charge a success fee payable by the losing side. This has led to an increase in the number of legal actions.

Elsewhere, the Bribery Act has been brought into law without offering a public interest defence for the rare occasions when it would be proper for a newspaper to pay a civil servant for information about corruption. If it had been in place in time, the legislation would have prevented the Daily Telegraphpaying an alleged £250,000 (€290,000) to the holder of the computer disc on which years of MPs' expenses claims were stored.

Indeed, tabloid editors argue, in Dacre’s words, the PCC’s code “has blunted Sunday newspapers’ ability to secure the kind of sensational stories that were the bread and butter of their huge circulations in the past”.

ALL BRITISH NEWSPAPERS are facing difficult times. The recession has hit display advertising. Technology has changed, or ended, buying habits, and £1 billion (€1.2 billion) worth of classified advertising has disappeared since 2005.

The British regional press has been hit hardest, suffering heavy job losses. “This diminishes our democracy. Courts go uncovered, councils aren’t held to account, and the corrupt go unchallenged,” argued Dacre.

Technological change is creating a different type of reader, media analyst Claire Enders told the seminar. During August, people drawing their information from the internet spent an average of two minutes 20 seconds a day doing so. “Someone who reads a newspaper will actually read that newspaper for around 40 minutes a day,” she declared, adding, “People who are reading newspapers are reading words. They are not skimming; they’re taking things in.”

The former News of the Worldeditor, Phil Hall, who had long since left the paper by the time of the phone-hacking scandal, rejected the argument of some in the trade that illegal actions were prompted by a desperate desire to get scoops to hold sales. In 1986, for example, the News of the Worldstory about the author and Conservative politician Jeffrey Archer, alleging that he had paid a vice girl, delivered no increase in circulation. Readers buy "the strength of the package", he told the seminar.

John Mullin, editor of the Independent on Sunday, a newspaper that has not used private investigators and faces no allegations, published or unpublished, over hacking; accepts change is coming. "One of the things I would fear is having people making judgments about what should be in a paper rather than making judgments about how it is done," he told The Irish Times.

Mandatory, beefed-up self-regulation, with the power to fine offenders, is the key, Mullin believes. It is certainly better than the current situation, where Richard Desmond, publisher of the Daily Expressand the Daily Star, has simply walked away from the PCC. "It feels a long time since there has been a really good scoop in the tabloids, so there is clearly a best-behaviour approach on show. There is a risk of it being duller," says Mullin.

However, criminality is one thing. Culture is another. Former Daily Starreporter Richard Peppiatt spoke for many when he argued at the seminar that the biggest flaw in the British press is its immutable, rigidly-defined world view. "In approximately 900 newspaper bylines, I can count on fingers and toes the amount of times I genuinely felt I was telling the truth, but only the same amount can I say were outright lies. This is because much of the skill of the journalist today is not about finding facts; it is about knowing which ones to ignore. The job is about making the facts fit the story.

“This is because the story is almost pre-defined. Laid out before you is a canon of ideological and commercially driven narratives, and it’s your job to fulfil them.

“The newspaper appoints itself as moral arbiter, and you must stamp [its] world view in all the journalism that you do,” said Peppiatt, who said he quit the tabloid because he was unable to do that any more. Offering examples, he went on: “A scientist is to announce that ecstasy, they have found, is safer than alcohol. I know that my job as a tabloid reporter is to portray this man as a quack and his research methods to be flawed. If a judge hands down a community sentence to a controversial offender, I know my job is to make him appear lily-livered and out of touch.”

Peppiatt is not popular with many senior figures in the British media but his view of the world is supported by evidence, particularly in the case of Chris Jefferies, the man arrested by police in the opening days of the Joanna Yeates murder inquiry in Bristol last Christmas.

Though Jefferies was never charged, his reputation was destroyed by newspapers. After the High Court case in July that ordered eight newspapers to pay Jefferies substantial damages, his solicitor, Louis Charalambous, said Jefferies was a victim “of the regular witch hunts and character assassination conducted by the worst elements of the British tabloid media. Many of the stories published in these newspapers are designed to ‘monster’ the individual, with flagrant disregard for his reputation, privacy and rights to a fair trial,” Charalambous said.