Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) (No. 2) Regulations 2025
(Limited Text - Ministerial Extracts only)
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Baroness Twycross
That the draft Regulations laid before the House on 30 October be approved.
Relevant document: 41st Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
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.
Lord Moore of Etchingham (Non-Afl)
I do not want to detain your Lordships’ House, and the speeches already made by several noble Lords are very much to the point. I should declare an interest as a long-serving employee of the Daily Telegraph. In that capacity, I draw the attention of the Minister to what it is like for a newspaper not to know who is owning it for such a very long time.
It seems to me that the greatest power of bureaucracy is delay, which increases the power of bureaucracy with every moment; that is its appalling leverage on everything else. But business, and particularly journalism, has the opposite desire. It needs to get on, and the word “journalism”, of course, comes from the French word for day. It happens every day, and every day lost is a disaster for us. In certain respects, we have been losing day after day—we have lost roughly half the length of the Second World War not knowing who is really going to own us.
I make no distinction really here between Governments of either party because both, it seems to me, were guilty of a similar failure. I draw the Minister’s attention to the fact that there is a strong contrast between the quasi-judicial role that DCMS quite rightly operates, which is necessary in these cases, and all the manoeuvring and use of time and delay to try to satisfy—as the noble Lords, Lord Fox and Lord Young, have pointed out—the needs of a foreign state that the British Government seem to be overzealously courting.
This is a very bad piece of politics—not party politics—and it puts us all in play. If we were to write the history of this, we would have to see that it fell to the journalists of the Daily Telegraph twice to start making a noise before anything could prevent very bad things happening. That seems to be nothing to do with the quasi-judicial process. I hope that the very sharp deadline of 15 December is tacit acknowledgement by the Government of the damage done by delay and that therefore something more drastic is being done now.
In another place, the Justice Secretary, when trying to do something about jury trials, has made the point that justice delayed is justice denied. We at the Telegraph have had justice delayed for a very long time and therefore denied. The noble Baroness, Lady Stowell, and other noble Lords have been clear that it has to be acknowledged that a process of this sort should never go on again and that there is a big lesson here. If, for whatever reason, the Daily Mail bid fails or gets called into question, there has to be an open, swift and fair process.
Baroness Twycross (Lab)
My Lords, this has been an important and useful debate, and I am very grateful to all noble Lords who have contributed to it. I am particularly grateful to the noble Baroness, Lady Stowell of Beeston, for her engagement over many months with DCMS. I think we have a better position as a result of her engagement and persistence on this matter, and I know that the Secretary of State is also grateful for the time she has taken to help us refine this, frustrating as it must have been for the noble Baroness at times.
This regime is about safeguarding a specific industry that has a unique, essential role in the health of our democracy. The noble Lord, Lord Parkinson, made it really clear that this is important for democracy, and I think that is beyond doubt in your Lordships’ House. I need to put on the record that I do not recognise the scenario outlined by the noble Lords, Lord Fox and Lord Moore of Etchingham, of the genesis of these SIs, but I hope all noble Lords feel that we have listened to and addressed concerns raised in your Lordships’ House and have got to a better place as a result.
I will address the points made by noble Lords during the debate. The noble Lord, Lord Parkinson, raised concerns about the 5% exception’s potential for misuse. I stress that this is a narrow exception, applying in limited circumstances. It intends to remove any potential chilling effect by providing that a state-owned investor, or SOI, from one country or territory may ignore smaller holdings that are in effect too small to confer influence in their own right in quoted companies by SOIs from other countries that are not visible to them.
A hypothetical example of the limited circumstances in which the carve-out is in our view necessary to avoid a chilling effect is that if a state-owned investor wanted to invest 15% in a publicly listed newspaper owner they would have to be sure that no other state-owned investors from any other states or territories already held shares in the same newspaper owner. Without the carve-out, they could potentially not be sure that their 15% investment would comply with the limit.