Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) (No. 2) Regulations 2025
Debate between Baroness Stowell of Beeston and Baroness Twycross(3 days ago)
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The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, the foreign state influence regime is designed to prevent foreign states controlling, influencing or owning our newspapers and news magazines. It is essential that we safeguard our free press and a pluralistic media landscape for the sake of our democracy. Newspapers remain a vital trusted news source. The Ofcom survey News Consumption in the UK: 2025 reported that 73% of regular news users consider newspapers trustworthy, which is more than any other media.
However, noble Lords are aware of the considerable challenges faced by the news media industry. Newspapers require investment to grow and thrive. Balancing this need for investment with protecting news from the influence of a foreign state is at the heart of the foreign state influence regime. This is what underpinned the three statutory instruments that we made in July. We made regulations to amend the foreign state influence regime to allow 15% of shares or voting rights in a newspaper or news magazine to be held by a state-owned investor provided that they are investors with no right or ability to control, direct or influence the newspaper’s policies. The 15% threshold is below the level where the Competition and Markets Authority typically considers that material influence may arise.
The foreign state influence regime, rightly, has a low bar for intervention. The Secretary of State is given no discretion. She must intervene if she has reasonable grounds for suspecting that a foreign power may hold the ability to influence or control the policy of a UK newspaper enterprise as a result of a merger. This is regardless of whether there is an intention to influence. When we introduced the previous regulations earlier in the year, colleagues in your Lordships’ House and the other place challenged us on whether they had the unintended consequence of permitting multiple foreign powers, investing through state-owned investment vehicles, to each invest 15%. The argument was made that it would be possible for the majority of a newspaper enterprise to be owned by state-owned investors, albeit passively.
We were clear that this is a remote risk. However, we understood the concerns of your Lordships’ House. The Government committed to bring forward an additional statutory instrument to put the matter beyond doubt. That is why we are here today, following our consultation in the summer and the response published on 30 October. I take this opportunity to thank the noble Baroness, Lady Stowell of Beeston, for her invaluable engagement on this matter. I recognise the excellent role that your Lordships’ House so regularly plays in scrutinising and improving legislation.
Noble Lords may find it helpful for me to set out the detailed effect of these regulations. First, the regulations ensure that a 15% cap applies to the percentage of shares or voting rights that may be held in a newspaper by state-owned investors acting on behalf of foreign powers. This means that we are now putting it in statute that multiple state-owned investors, acting on behalf of different states, will not be able each to hold up to 15% in one newspaper. The 15% cap will apply to the combined total of direct and indirect holdings of shares or voting rights. We are introducing a specific and narrow exception for stakes of 5% or below in quoted companies. The exception affects the calculation of whether the 15% cap has been reached in cases where multiple state-owned investors from different countries or territories all have investments in the same newspaper. The exception catches only small shareholdings, and its purpose is to avoid a chilling effect on investment.
Secondly, we are using this opportunity to impose new transparency requirements on state-owned investors that invest in UK newspapers and news magazines. If a state-owned investor acquires a direct holding of more than 5% in a newspaper, they must notify the Secretary of State within 14 days of the relevant transaction being made. State-owned investors which are required to notify the Secretary of State must also publish these details within the same timeframe. This will enable the Secretary of State to report to Parliament on a regular basis—we intend for this to be every six months—on the published details of these acquisitions. This will benefit public and parliamentary confidence by increasing transparency around state-owned investment in newspapers.
If a state-owned investor which acquires a direct holding of more than 5% of shares or voting rights fails to comply with the notification and publication requirements, the transaction will be a foreign state newspaper merger situation, and the Secretary of State will be under a duty to issue a foreign state intervention notice and refer the case to the Competition and Markets Authority.
I want to reassure noble Lords about the nature of the 5% quoted company exception. It applies only to a limited type of investment by state-owned investors, as defined in the legislation. Additionally, the intention behind it is to avoid state-owned investors having to take account of holdings by state-owned investors from other countries, which newspaper groups are unable to track. Holdings in companies with publicly traded shares are disclosable only if they cross certain thresholds. These thresholds differ in different markets, but 5% is a common benchmark. If crossed, the investor must declare the interest to the company and the wider market.
The provision prevents the regulations having a chilling effect on investment. It removes the need for state-owned investors to establish whether state-owned investors from other countries have existing undisclosed or small investments in the same newspaper, which would affect whether their intended investment would or could exceed the 15% cap. Ultimately, these regulations address what the Government believe is a remote risk that multiple state-owned investors from different states could each invest 15% in a single newspaper. This cements the measures that can be taken against foreign state influence in UK newspapers and news magazines. These regulations also further improve transparency around investment, thereby helping to protect a thriving plural press essential to our democracy. I hope your Lordships’ House will support these important steps.
Baroness Stowell of Beeston (Con)
My Lords, as this is the Minister’s second statutory instrument debate today, I commend her stamina, and indeed I commend my noble friend on my own Front Bench for his, too. I welcome this statutory instrument, which meets the commitment that the Minister gave in July to close what was a gaping regulatory loophole that would have allowed multiple foreign states each to own up to 15% of a British newspaper, with all the risks that flow from that. I am also grateful to the Secondary Legislation Scrutiny Committee for its thorough examination and report on these No. 2 regulations. I am also pleased that the Government Chief Whip scheduled this debate on the Floor of the House and not in the Moses Room.
Of course, all of us could have been spared this additional work if the Government had done what I and others advised some months ago, once the so-called “multiples loophole” was spotted, and that was to withdraw, amend and lay a consolidated set of regulations, rather than us having to handle this piecemeal approach. I am not going to get sidetracked, but, as I have said before, the Government’s unwillingness to take the straightforward route raises questions about who or what has been prioritised when dealing with this matter. However, we are where we are, as they say, and I am pleased that these regulations now ensure that the 15% limit for investment from state-owned investment funds is a single aggregate cap.
Since it became apparent two years ago that our legal framework could not prevent foreign Governments owning, controlling or influencing British newspapers and news magazines, it has been clear that the future of our free press is not just about protecting editorial independence; it is also about ensuring financial sustainability. The pace of technological change and the economic challenges facing the news industry continue to worsen, making investment urgent and consolidation within the industry increasingly likely. So, while I respect those who maintain their position that, even as an aggregate at 15%, the cap has been set too high, my view, as I said in July, is that, restricted to passive investment only and with additional reporting safeguards, which I will come on to in a minute, an aggregate 15% cap for state-owned investors is acceptable and still supports the principle of press freedom.
That said, the Government’s decision to tackle this in a piecemeal way means that these regulations are not the easiest to follow, so I am grateful to the excellent senior DCMS officials for their patience in responding to my questions seeking clarification over the past few weeks, and I am also grateful for the Minister’s explanation of these regulations in her opening remarks. Other noble Lords may still have questions about how the cap works, with the carve-out for small holdings of 5% and below for listed media companies, but I am satisfied that what is proposed is a reasonable approach. Indeed, I am conscious that we must not make this regime even more complex and that doing so could deter legitimate investment or prevent our news industry accessing much-needed investment capital.
Telegraph Media Group: Ownership
Debate between Baroness Stowell of Beeston and Baroness Twycross(1 month, 2 weeks ago)
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Baroness Stowell of Beeston
To ask His Majesty’s Government, further to the Written Answer by Baroness Twycross on 16 September (HL10228) and following media reports in August of Redbird Capital Partners’ formal notification to the Department for Culture, Media and Sport to acquire Telegraph Media Group, when they will update Parliament on action they are taking to resolve the Telegraph’s ownership and ensure compliance with Chapter 3A of the Enterprise Act 2002.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
Noble Lords may have seen press reports that the department has received a formal request from RedBird IMI to progress the sale of the call option to own the Telegraph. Thorough due diligence will be conducted on the proposed transaction, and should the Secretary of State have reasonable grounds to suspect either public interest or foreign state influence concerns, she will intervene. The Telegraph Media Group remains protected under pre-emptive action order. The Secretary of State will inform Parliament when regulatory decisions are made, as is consistent with standard practice.
Baroness Stowell of Beeston (Con)
My Lords, I am grateful for the Minister’s confirmation that the formal bid has been received and that during this phase of scrutiny the existing protections for the Telegraph remain in place. I very much hope that the Secretary of State will soon be able to say that she is minded to involve the CMA and Ofcom in the scrutiny of this bid. That will be important, should she decide to give it the go-ahead, for our future confidence in the Telegraph’s editorial independence. Meanwhile, can the Minister please confirm that the regulations to prevent multiple 15% equity stakes from state investment funds will be laid before the end of this month and applied to this case? Will she also make clear—and confirm, I hope—that the 15% is an absolute cap, and that any financial arrangements such as debt or earnout on top of a state investment fund’s proposed 15% stake would go against the intention of those regulations?
Baroness Twycross (Lab)
I thank the noble Baroness for her engagement, not least with me, with the Secretary of State and with officials, which has enabled us to get to what I hope everyone agrees is a better place than where we were previously. I would like to reassure her that we still intend to lay the regulations preventing multiple foreign state-owned investors owning an aggregate of more than 15% of UK newspapers by the end of this month. This cap will apply to any live merger at the time it comes into effect. The cap means that state-owned investors can own up to a maximum of 15% of the total shares or voting rights in a UK newspaper, provided that their investment is passive. We are absolutely clear that the overall intention of the policy is that a foreign state should not have any control or influence. This is what the Secretary of State considers carefully when she looks at the details of each case.
Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025
Debate between Baroness Stowell of Beeston and Baroness Twycross(4 months, 1 week ago)
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Baroness Stowell of Beeston (Con)
If the Minister is going to come back to it, I will happily sit down, but I asked her a question about those new notification requirements in the draft regulations yet to be made, and whether the Government would consider my recommendation that the Secretary of State be required to notify Parliament on a twice-yearly basis if she receives any such notifications, and about the actions that she has taken as a result. Is she able to give me a response to that?
Baroness Twycross (Lab)
That is not in my speech, but I have an answer for the noble Baroness. We think that it is a reasonable suggestion. We need to work out how we can do that. There was a suggestion, for example, that it might require primary legislation. Obviously, that feels a little bit heavy-handed in terms of where we would want to get to. If the noble Baroness is content, I will come back to that. We think that it is a good point and it is worth doing, but I am not able to commit until we have clearer legal advice on how we could achieve that.
Going back to the other points, we have listened carefully to the concerns raised by noble Lords. I thank many noble Lords for the time that they have taken to meet me and the Secretary of State as well as officials. On the new regulations that we put out for consultation on 16 July, we have committed to change the legislation to eliminate entirely the risk that was identified by the noble Baroness, Lady Stowell, and others, and to backdate this change to 13 March last year, which is the date on which the foreign state influence regime came into effect. I give noble Lords an absolute commitment that we will lay regulations in the autumn. I am not allowed to say that we will do it by the end of October; I am allowed to say that we will aim to do so by the end of October.
Some noble Lords queried the difference between sovereign wealth and government control. I want to be explicitly clear: for the avoidance of doubt, this is not state ownership. It is not about Governments owning or influencing our media. We do not want that to happen either. The term “state-owned investors” refers to a narrow group of organisations that will need to be different and distinct from the Government who sponsor them. Foreign Governments will not be allowed to hold a direct stake. Key is the requirement that they make or manage investments, including international investments, as their principal activity. I agree with the point made by the noble Lord, Lord Udny-Lister, that this is not necessarily about influence. I give way—
UK Newspapers and News Magazines: Foreign Investment
Debate between Baroness Stowell of Beeston and Baroness Twycross
Baroness Stowell of Beeston
To ask His Majesty’s Government when they intend by regulations under Schedule 7 to the Digital Markets, Competition and Consumers Act 2024 to provide exemptions for certain funds associated with foreign powers, such as sovereign wealth or public-sector pensions funds, to invest in UK newspapers and news magazines.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, the Government are clear that foreign states should not be permitted to influence the policy or operation of UK newspapers and news magazines. Exceptions to the new foreign state intervention powers in the Enterprise Act are required to permit sovereign wealth funds, public sector pension funds or similar to invest up to strict limits. As I mentioned to the noble Baroness in our previous debate on this, we are carefully considering responses to the consultation published by the previous Government. We hope to publish a response to that very soon and lay the SI shortly after.
Baroness Stowell of Beeston (Con)
My Lords, the Minister will not be surprised that I am disappointed that the department has not provided her with any more information than that which she gave us last time. If the Minister is not able to tell us when the Government will bring forward these important regulations—they are important to the whole news industry and to the sale of the Telegraph—I must ask her why they have not done so. It is not a question of time—they have had eight months since the consultation closed. We are left to assume that the Government are prioritising the sensibilities of a foreign Government, who do not share our commitment to press freedom, over the news industry, the importance of press freedom and the survival of one of our national newspapers. I ask again: could the Minister please tell us why the Government are not acting in line with the intentions of Parliament when we legislated last year to ensure the financial sustainability of the news industry and to protect press freedom?
Baroness Twycross (Lab)
The purchase of UK newspapers and news magazines by foreign states, as the noble Baroness will be aware, runs the risk of eroding trust in the press. We agree that it is right that the UK has explicit protections in relation to this. Since the consultation closed in July last year, DCMS Ministers and officials have been considering the responses carefully. The consultation raises complex issues and involves multiple interests across government. We are committed to considering this carefully and ensuring we understand the implications of such changes, including on the industry. It is important that we get this right.
Telegraph Newspapers
Debate between Baroness Stowell of Beeston and Baroness Twycross
Baroness Stowell of Beeston
To ask His Majesty’s Government whether they plan to intervene to force a sale of Telegraph newspapers, in accordance with Chapter 3A of Part 3 of the Enterprise Act 2002, to prevent the ownership, control, or influence of a foreign power.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
The public interest intervention notice on the Telegraph sale that was issued by the previous Government is still in place. This means that the Culture Secretary has to make decisions on this in a quasi-judicial capacity, and it would therefore be inappropriate for me to comment on specifics. The Telegraph has a long and proud tradition as a valued national newspaper, and the Government are committed to seeing that continue and the newspaper thrive.
Baroness Stowell of Beeston (Con)
My Lords, it is a year since this House voted to put beyond doubt the possibility of a foreign Government or power owning a British newspaper, yet ownership of the Telegraph remains unresolved. The newspaper continues to function, and all credit to those involved, but the situation is unsustainable because the business needs the freedom to move on. I hear what the Minister says, but after all this time, when there is no sign of a deal, can she tell us how long the Government intend to wait before using their powers to intervene and force a sale, however regrettable such an intervention would be? When will the Government bring forward the secondary legislation to provide a capped exemption for indirectly controlled foreign state investment funds, which is important to the sustainability of all parts of the news industry?
Baroness Twycross (Lab)
I hear the frustration from the noble Baroness. I know she has been campaigning on this for some time. The Government have not issued a foreign state influence notice because RedBird IMI has signalled its intention to sell in compliance with the new law prohibiting foreign state ownership of newspapers, so the Government are allowing it to conduct the sale.
On the SI to which the noble Baroness referred, there has been a general election in the interim since the legislation was passed by the previous Government. Ministers recognise the high importance of foreign states not being allowed to influence the policy of UK newspapers, but there should be a balance to encourage investment into the press sector. Therefore, we are carefully considering a response to the consultation. We hope to publish a response very soon and lay the SI shortly after that.
BBC: Impartiality
Debate between Baroness Stowell of Beeston and Baroness Twycross
Baroness Twycross (Lab)
The BBC, as I said in my initial Answer, has a duty to provide accurate and impartial news and information. I am sure all noble Lords would agree that that is particularly important when it comes to coverage of highly sensitive issues, such as the conflict in Gaza. The BBC is editorially and operationally independent and, therefore, decisions on its editorial line are for it to take. Of course, the BBC has upheld complaints against its own coverage of the Middle East, including for falling below standards of accuracy in its reporting. It is then for Ofcom, the independent regulator, to ensure that the BBC is fulfilling its obligation to audiences as outlined in the charter.
Baroness Stowell of Beeston (Con)
My Lords, I highlight for the Minister, and indeed the whole House, a report called The Future of News, published by the Communications and Digital Select Committee of your Lordships’ House earlier this week. In that report, our inquiry found a growing risk of a two-tier media environment influenced by a combination of technological change and a growing number of people turning away from news because of a lack of trust. The question of audience trust is a matter for the media, including the BBC, but our report has some clear recommendations for the Government. Will the Minister please assure me that she will look at this report and give our recommendations serious consideration, particularly those that we highlight on competition issues, copyright and SLAPPs?
Baroness Twycross (Lab)
I look forward to reading the report that the noble Baroness refers to. The Government recognise that society’s shift online presents new challenges and opportunities to news media as well as to the provision of trustworthy information. That involves the issues around trust, which the noble Baroness referred to. I will ensure that there is a response to the report and look forward to debating it when it comes before your Lordships’ House.