Conditional reprieve for the 'last-chance saloon' cleaned up its act

If, as David Mellor warned in January 1991, the press was "drinking in the last-chance saloon", then it appears that newspaper editors have been enjoying the world's longest after- hours lock-in.

The former cabinet minister's famous warning followed the publication of the first report by Sir David Calcutt, the QC drafted in by the Government to head an inquiry into press intrusion and how to protect privacy.

Sir David's reports concluded that while self-regulation was the ideal way forward, the current system under the toothless Press Council was manifestly failing. Proof, if it were needed, came with the Sunday Sport's unsolicited call on the actor Gordon Kaye, who was recovering in hospital from brain surgery.

The press was given one last chance to clean up its act. Sir David recommended the creation of a Press Complaints Commission, which like its predecessor would police the press according to an industry code of practice. If that failed, Sir David said, then a statutory Press Complaints Tribunal should be established, consisting of a judge and two lay members appointed by the Home Secretary.

The press took the threat seriously and the PCC, under the chairmanship of former advertising watchdog Lord McGregor of Durris, was duly set up.

Progress in the first year was good. The News of the World was forced into devoting a full page to the commission's 36-point ruling against the story about Labour MP Clare Short's former boyfriend, who was killed with a shotgun. It seemed that the Press Council's gummy approach had been replaced by a body with a full set of teeth.

It was the summer of 1992 and the "silly season" that was to spell trouble for the press and the system it was on trial to defend. In June, the true state of the Prince and Princess of Wales's marriage was laid bare with the newspaper serialisation of Andrew Morton's Diana: Her True Story.

In the media feeding frenzy that followed, Lord McGregor - without consulting other commission members - angrily denounced the "odious exhibition of journalists dabbling their fingers in the stuff of other people's souls".

When it then emerged that the book had been written with the Princess's blessing and that both sides were waging their own private campaigns through favoured newspapers, Lord McGregor, the public face of self- regulation, looked an increasingly isolated and forlorn figure, unable to cope with this new style of sophisticated media manipulation.

Crucially, he lacked credibility, both political and public. On 9 July, the Government recalled Sir David Calcutt to review the PCC's progress.

A week later, the People, revealed that David Mellor, the minister responsible for the press, had been conducting an affair with an actress. In an atmosphere of high drama, Lord McGregor called an emergency meeting of the commission.

Afterwards he told the expectant ranks of media, that because no complaint had been lodged, the commission intended to do precisely nothing.

Although the tabloids then quickly turned their attentions to the Duchess of York's escapades with her financial adviser, and the recorded details of the "Squidgy" telephone call, allegedly involving her sister-in-law, the commission's apparent impotence lingered in Sir David's mind.

It was no surprise then that when he reported back in January, Sir David concluded that self-regulation had failed. His second report recommended a statutory commission with powers to levy large fines as well as repeating calls for legislation to make criminal offences of trespass, bugging and long-lens photography by newspapers.

Two months later the National Heritage Select Committee, suggested that the press create a powerful lay-dominated commission which could fine newspapers, order corrections and award compensation; a government-appointed ombudsman with similar powers would act as a final court of appeal.

As the PCC limped towards the end of 1993, it was difficult to see how things could get worse. Then in November, the Sunday and Daily Mirror newspapers published photographs taken with a hidden camera of the Princess of Wales exercising in a private gym.

Once again without consultation, Lord McGregor condemned Mirror Group Newspapers and called on advertisers to boycott its titles.

Mirror Group withdrew from the PCC in fury and the system appeared on the verge of collapse. At an emergency meeting, the pieces were glued back together in an agreement brokered by the most senior figures in newspaper publishing, up to an including Rupert Murdoch.

By early last year, the newspaper industry realised that something had to be done.

In response to the select committee's call for an ombudsman to preside on serious intrusions, the PCC appointed a respected academic, Robert Pinker, a professor at the LSE, as privacy commissioner.

It changed its constitution to grant itself power to initiate its own investigations, persuaded publishers to incorporate the code of practice in editors' contracts and demanded that publishers take putative action where a calculated breach of the code had taken place.

The industry also intensified its search for a successor to Lord McGregor and the Tory peer Lord Wakeham was persuaded to accept the industry's offer.

While they share a passionate belief in self-regulation, Lord Wakeham represents everything his predecessor was not - a heavy hitter with influence in government, shrewd, calm, a master tactician and all-round Mr Fixit. He recognised that while the Government was not keen to legislate on the press, it would have no choice unless self- regulation was strengthened.

Lord Wakeham has handled the big stories in a way that has enhanced rather than undermined the PCC's credibility.

When the identity of a pounds 19m lottery jackpot winner was revealed against his will, the PCC established a code to prevent a repeat. When the News of the World delved too far into the private life of Countess Spencer, Lord Wakeham advised Rupert Murdoch, the paper's publisher, of the serious nature of the breach. And in a response he could only have dreamt of, Mr Murdoch publicly rebuked the editor, Piers Morgan.

For more than two years the Government has felt unable to deal with the press. Now that legislation is politically acceptable, it seems persuaded that the press can deal with itself.