The end of the PCC as a politically credible organisation was hastened by its failed inquiries into phone-hacking at the News of the World. In 2007, after the convictions of Clive Goodman, the News of the World's royal editor, and the private detective Glenn Mulcaire, it issued a report which accepted the newspaper's false claim that Goodman was the only journalist to have engaged in phone-hacking. In 2009, the Guardian published evidence that the PCC had been misled: this included the notorious "for Neville" [Thurlbeck] email, the cover-up settlement with Gordon Taylor, chief executive of the Professional Footballers' Association, and a police source which alleged there had been "two or three thousand" victims (as it turned out, there were four thousand). The PCC rushed back into the fray, with an "inquiry" of such utter naivety that the Guardian's evidence was dismissed as mere speculation: the practice of phone hacking, it confidently concluded, was "not undertaken by others beyond Goodman and Mulcaire" and there was "no new evidence to suggest that News of the World executives knew about Goodman and Mulcaire". The Guardian was rapped over the knuckles for breaching the code of conduct injunction against publishing distorted or misleading information, with a story "that did not live up to its dramatic billing". This PCC report smugly concluded:

The Commission is satisfied that, as far as it is possible to tell, its work aimed at improving the integrity of undercover journalism has played its part in raising standards in this area. It further underlines the important role that a non-statutory, flexible body such as the PCC has in adding value to the work of the legal system to help eliminate bad practice and it would be regrettable if renewed controversy over the historical transgressions at the News of the World obscured this...the Commission trusts that the value of its work in this area is something that others — notably the Select Committee, which is still examining these matters — will recognise. 

These famous last words will haunt the PCC to its grave, notwithstanding the fact that its website reads: "Please note that as of 06 July 2011 the PCC has withdrawn this report." The Guardian story was an excellent example of public-interest journalism, which actually underestimated the extent of phone-hacking. But because it damaged the reputation of the media, and notably of News International (a substantial source of PCC funding), the Commission conducted a public-relations exercise in the guise of an inquiry. Lacking any statutory powers, or any sceptical intelligence, it failed to get to a truth that finally became obvious to the Parliamentary Select Committee in July 2011. The PCC may now consider its report "withdrawn", but Lord Justice Leveson has said that he has to answer one simple question: "Who guards the guardians?"-a role which, on the strength of its phone-hacking report, he is unlikely to allocate again to the PCC.

Before Leveson, the PCC will undoubtedly fight its self-regulation corner. Its most sensible pitch would be to revive the Shawcross proposal and offer to make contractual arrangements whereby newspapers would agree to implement its decisions, including orders for compensation. But its past record, and the fact that it cannot promise to bring all newspapers into its disciplinary fold, are obvious objections to its continuance as a voluntary body. Not only has Northern and Shell withdrawn the Daily Express and all its other titles, but Private Eye has always refused to join. Its editor Ian Hislop has explained that he could not possibly join an organisation influenced by editors whose ethics he despises. The PCC has been beefing up the calibre of its lay representatives, of whom there are now ten as against seven editors, and could offer to reduce its press representatives even further. But the central problem remains that such an unwieldy and diverse lay body — whether it is voluntary or statutory — cannot be an effective decision-maker in relation to specific allegations of falsehoods or privacy breaches with which it should deal expertly and expeditiously. Such a body, if given statutory powers, might deliver decisions that would chill investigative journalism. A recent example is the PCC's ridiculous decision to condemn the Daily Telegraph for using undercover journalists to elicit Vince Cable's hostility to Rupert Murdoch at a time when he was meant to be impartially assessing the BSkyB takeover offer. The journalists (who merely posed as Cable's constituents, which they might easily have been) obtained a scoop from the foolish minister's mouth. If the press was forced to take this PCC decision seriously (i.e. if it had statutory powers to enforce it) public-interest journalism would be seriously damaged.