A REVIEW into the future of the UK news industry called for ministers to look at new tax breaks for "public interest" journalism, with direct funding for local public interest news.

In a wide-ranging report, the Cairncross Review recommended the creation of a new institute of public interest news, along the lines of the Arts Council, to channel a combination of public and private finance into those parts of the industry deemed most worthy of support.

The review, chaired by former senior journalist and academic Dame Frances Cairncross, was commissioned by Theresa May to investigate the sustainability of quality journalism in the face of declining newspaper sales and falling revenues.

It concluded that after evidence of "market failure" in the supply of public interest news, Government intervention may be the only solution.

The review noted that investigative journalism and "democracy reporting" - such as local courts and councils - were the areas under the greatest threat, as they rarely paid for themselves.

Henry Faure Walker, CEO of Newsquest Media Group, the owner of The Mail, the News and Star, The Westmorland Gazette, The Cumberland News, The Whitehaven News and the Times and Star, welcomed the review and called for action to move this forward.

He said: “We welcome Dame Cairncross’s recommendation that support for public interest reporters, and in particular the great work done by the nascent BBC-funded Local Democracy Reporter scheme, should be expanded.

“Any support must be done in a way that maximises its contribution to local journalism - and this is best done by leveraging the extremely effective and efficient infrastructure already in place in regional publisher newsrooms up and down the country. Diverting funds to setting up an alternative news publishing infrastructure or activities that directly compete with existing local publishers would further undermine the business model for quality local journalism and risks not being sustainable.

“As Dame Cairncross says, there is no other area of journalism so important for the health of local democracy than local news, and finding a way to support local news is now a matter of urgency.

“The focus now moves on to Government who we hope will be bold and ambitious. We look forward to working with them on meaningful and high impact solutions that will support the incredibly important role that local publishers and their public interest journalism fulfils in communities across the length and breadth of the UK.”

The report said that the power of online platforms like Google and Facebook captured the majority of online advertising revenues, making it hard for traditional publishers, such as newspapers, to compete effectively.

In order to create a "level playing field", it called for the creation of new codes of conduct, overseen by a regulator, to "re-balance" the relationship.

These could include commitments by the platforms not to impose their own advertising software on news publishers, "transparent" terms in relation to shares of online advertising revenues and a pledge to work "collaboratively" on how news content is presented.

The review said the Government should place an obligation on the larger platforms to improve how users understand the origin of news articles and the trustworthiness of their sources, so helping their readers better understand what "good" or "quality" news looks like.

"While each platform should devise solutions which best fit the needs of their particular users, their efforts should be placed under regulatory scrutiny - this task is too important to leave entirely to the judgment of commercial entities," the review said.

"If it becomes clear that efforts have not increased the reach of high-quality news, or had a measurable impact on the quality of people's engagement with online news, it may be necessary to impose stricter provisions."

The review also called on the Government to consider new forms of tax relief to ensure an "adequate supply" of public interest journalism, including extending the zero VAT rating for printed newspapers to online newspapers and magazines.

It said ministers should establish a new innovations fund aimed at improving the supply of public interest news - to be run eventually by the proposed institute of public interest news - while expanding direct funding for local journalism through the Local Democracy Reporting Service, currently run by the BBC.

It said media regulator Ofcom should assess the market impact of BBC News Online on the sector and whether it was striking the right balance in aiming for the widest reach for its own content and driving traffic to other local news providers.

The review also called on the Competition and Markets Authority to investigate the workings of the online advertising market to ensure fair competition and for Ofcom to work with the Government on developing a "media literacy strategy".

Dame Frances said: "The proposals I have put forward have the potential to improve the outlook for high quality journalism.

"They are designed to encourage new models to emerge, with the help of innovation not just in technology but in business systems and journalistic techniques."

Culture Secretary Jeremy Wright welcomed the review's findings, saying that while some could be acted on immediately, others would require "further careful consideration" with interested parties on the way forward.