Murdoch pays £3m-plus to atone for Dowler hacking

WHAT'S HAPPENED?NEWS International is ready to pay £3m to settle with the family of the murdered teenager Milly Dowler, whose phone was tapped by the News of the World in 2002, according to overnight reports by newspapers including the Murdoch-owned Times. They claim that at least £2m will be paid to the family, while Rupert Murdoch himself will pay £1m to charity.

WHAT DOES IT MEAN?The unprecedented payment resets the bar for this kind of compensation. It far outstrips the £60,000 paid by the News of the World to Max Mosley after breaching his privacy with an article about him taking part in a sado-masochistic orgy.

It also puts in the shade the £100,000 paid to the actress Sienna Miller, one of the many celebrity victims of phone-hacking at the News of the World.

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It even exceeds the six-figure sum – the exact amount is unknown – paid in total this year by a number of publications to Chris Jefferies, the landlord of the murdered Joanna Yeates, in compensation for the allegations made against him when he was questioned by police over her death.

But the circumstances of the Dowler affair are unprecedented, too. The News of the World did not just hack into the missing teenager's voicemail – they deleted messages to make room for more, thus giving the family false hope that she was still alive.

As the Labour MP Tom Watson said, it "was the most disgraceful and egregious invasion of privacy we could imagine".

Lawyers and other observers of the case are calling the settlement an act of contrition, or atonement, rather than compensation.

Geoffrey Robertson QC, quoted in the Times, calls it "conscience money, not compensation". He said: "This is vastly more than a judge would award, although a jury might well do so — and perhaps that is an argument for juries deciding privacy cases.

"But actually this is not compensation at all. It is conscience money — both for the hacking and for the insincerity of Rupert Murdoch's original apology to the family while he was paying the hacker's legal fees."

Another QC, Richard Lissack, raised the notion that the size of the sum might actually offend some people. "This award is not in any sense comparable with what you'd expect as compensation for the loss of an arm, or eye — it is a different order of magnitude. Those awards could be in six figures.

"But the size of it mimics the noise surrounding this issue. If you have suffered an accident, and you are reading your newspaper and you see this award — terrible though the hacking was — you might feel there is somewhat of [a] disparity."

WHAT NEXT?A final agreement between News International and the Dowler family is not yet signed and sealed. The Guardian reports that the Dowler family's lawyers may be seeking more – closer to £3.5m.

Tom Watson said he hoped the settlement would help the Dowlers "get some peace, and some privacy". There is the danger that it might do quite the opposite – with the tabloids treating the Dowlers more like lottery winners.

While the payout might bring Rupert Murdoch the chance to atone for his journalists' sins, it is unlikely to soften the attitude of the Commons culture committee when it recalls his son, James Murdoch, to "clarify" his previous testimony. That is expected to happen in November.

Before that comes another important date – the News Corp AGM on October 21. Shareholders were assured earlier this year that the compensation bill for phone hacking would not exceed £20m. Murdoch's £1m donation to charity is a private matter. But the £2m-plus settlement with the Dowler family is likely to encourage the many phone hacking victims who have not yet been compensated to seek a higher payout. As Tom Watson told BBC News last night, the total compensation bill is now likely to be "dramatically" more than £20m. "I would imagine the shareholders would be very concerned to hear this statement [about the Dowler compensation]," he said.