Draft Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) (No. 2) Regulations 2025
(1 day, 8 hours ago)
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The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stephanie Peacock)
I beg to move,
That the Committee has considered the draft Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) (No. 2) Regulations 2025.
It is a pleasure to serve under your chairship, Mrs Jardine. I am pleased to speak about the draft regulations, which were laid before the House on 30 October. They form an important part of the foreign state influence newspaper mergers regime, which is designed to protect our newspapers and news magazines from foreign state influence and control, while permitting legitimate investment that can support newspapers to thrive at a challenging time for the industry.
An independent press is crucial for our democracy. Just as we value the importance of a press that is independent from Government in the UK, we must equally ensure that foreign states are unable to assert influence over this sector. The foreign state influence regime carefully balances these two priorities: an independent press and the importance of investment in the sector. In July, the Government introduced targeted exemptions to allow certain state-owned investors to invest up to 15% in UK newspapers and news periodicals. This approach will still limit any scope for foreign state control or influence of news organisations, while giving newspapers much-needed flexibility to seek business investment that supports their long-term sustainability.
The 15% ceiling is lower than the level at which the Competition and Markets Authority generally identifies that material influence arises. The regime has a low bar for intervention. Regardless of whether there is an intention to influence, if the Secretary of State 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, she must intervene. This is not discretionary.
During the parliamentary scrutiny process in the lead-up to the debate on the 15% targeted exemptions, colleagues raised concerns about a potential unintended consequence that could allow multiple state-owned investors acting on behalf of foreign powers of different countries or territories to each invest 15% in one newspaper enterprise. The argument was made that foreign state-owned investors could collectively own the majority of a newspaper enterprise.
The Government made a commitment to deliver today’s draft regulations; in fact, it was I, as Media Minister, who first made that commitment in the Third Delegated Legislation Committee on 18 June. While we considered it a remote risk, we saw the concerns in this House and in the other place, and committed to putting the matter beyond doubt through an additional statutory instrument. That is what brings us here today, having consulted on the draft regulations, with the response published on 30 October.
The draft regulations will introduce a 15% cap on investments in a newspaper by a state-owned investor acting on behalf of foreign powers of different countries or territories. That will apply to the combined total of direct and indirect holdings of shares or voting rights. To make the limit workable, the regulations also introduce a specific and narrow exemption for holdings of 5% or below in quoted companies. This will apply only when calculating 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.
That exemption will avoid a chilling effect on legitimate inward investment by removing the need for state-owned investors to take account of existing, undisclosed, small direct or indirect investments in the same newspaper. Holdings in companies with publicly traded shares are not disclosed unless they cross certain thresholds; 5% is a common benchmark, beyond which the investor must declare the interest to the company and wider market.
The draft regulations also impose new transparency requirements on state-owned investors that acquire shares or voting rights in UK newspaper enterprises. They must notify the Secretary of State if acquiring a direct holding of more than 5% in a newspaper, before the end of a period of 14 days after the relevant transaction is made. If a state-owned investor is required to notify the Secretary of State, they must also publish certain details of their investment within the same timeframe of 14 days. That will allow the Secretary of State to report to Parliament on the published details of acquisitions.
The purpose of those requirements on state-owned investors and the regular report is to improve the confidence of both the public and Parliament through greater transparency about news enterprise ownership. We intend for the Secretary of State to report to Parliament every six months, beginning in July 2026, six months after the notification and publication requirements come into force. If a state-owned investor makes an acquisition that results in them having a direct holding in a newspaper of more than 5%, and does not comply with the notification and publication requirements, the Secretary of State will be compelled to issue a foreign-state intervention notice, and refer the case to the Competition and Markets Authority.
Essentially, the regulations address the remote risk of multiple state-owned investors from different countries each investing 15% in one newspaper, and further improve transparency around investment. Both those things benefit the UK press sector and the role that it plays in our democracy.
I commend the draft regulations to the Committee.
Mr Louie French (Old Bexley and Sidcup) (Con)
As always, it is a pleasure to serve under your chairmanship, Mrs Jardine. I am grateful to the Minister for her remarks in outlining the regulations. The Opposition broadly welcome the regulations, to which His Majesty’s Government committed during discussions on the No.1 regulations before the summer recess.
My first question is on the 5% carve-out. In the other place, the Secondary Legislation Scrutiny Committee quoted the correspondence it has had with the Minister’s Department about the carve-out and the way in which it will be used. The Department for Culture, Media and Sport said:
“Our judgment is that the possibility of the carve out being misused is remote”.
We can appreciate where the Government are coming from. Even though the scenario that the previous Government initially looked at—of multiple countries getting together and each seeking to acquire a 15% stake—was perhaps a little far-fetched, it was not entirely implausible. So it is right that this Government have listened and now acted to close that loophole.
Peter Fortune (Bromley and Biggin Hill) (Con)
I welcome the statutory instrument, and I wonder whether my hon. Friend agrees that this is about ensuring not just the future of the free press and editorial independence, but the financial stability of the industry? It is vital that any state-owned investors do not deter legitimate investment or the capital investment that the news industry needs.
Mr French
I thank my hon. Friend and neighbour for that intervention. I agree with his sentiment, and I will come on to explain why. The approach that the Government are taking, of carving out holdings of 5% or less in quoted companies, reduces the risk further. However, will the Minister tell us about the work that has been done by her Department to ensure that even in the unlikely event of foreign-state investors seeking to circumvent the rules, this has been ruled out?
As my noble Friend Lady Stowell said in the other place last week, the path to getting to this point has been rather longer than any of us expected or would have wished. Delay has a price for investors and vendors, as well as for the readers and journalists of our newspapers. My noble Friend took the opportunity to ask about whether and when we might expect a conclusion to this for the sake of The Daily Telegraph, and more broadly, whether His Majesty’s Government will look again at the Enterprise Act 2002 regime to ensure that future scenarios do not have to play out at such length.
We are all aware of the underlying need for investment in our newspapers, national and local, if they are to continue to flourish and perform the job that they do, which is vital for public discourse and democracy in the UK. That is why it is important that we get the rules right in the regulations before us, and that we maintain a framework that properly protects this essential part of our democracy, while still giving room for responsible investment. We need a regime that safeguards independence and free speech, but that also ensures that our newspapers and media organisations have the ability to grow and thrive for years to come.
Stephanie Peacock
I appreciate the shadow Minister’s comments and the broad support that he and his party have given. I read the Lords Hansard debate, so I am familiar with some of the topics that were discussed in the other place. I join the shadow Minister and other Members in paying tribute to the work of Baroness Stowell; it is a fair representation to say that she felt these regulations were a proportionate way forward. Indeed, DCMS officials have worked very hard with several Members of Parliament.
To respond to concerns raised about the 5% exemption, I highlight the narrow applicability: it applies in very limited circumstances and for an explicit and important purpose—which speaks to the intervention the hon. Member for Bromley and Biggin Hill made—removing any chilling effect that may occur as a result of requiring a state-owned investor to be aware of undisclosed smallholdings from other countries in quoted companies before deciding whether they can invest.
I do not recognise the delay. It is a complex piece of legislation. I took the other instruments through Parliament; I believe that this Government have moved apace and that we will crack on. The shadow Minister will of course appreciate that I cannot comment on The Daily Telegraph, but I draw his attention to the written ministerial statement placed on record by the Secretary of State on 24 November.
Question put and agreed to.
Draft Producer Responsibility Obligations (Packaging and Packaging Waste) (Amendment) Regulations 2025
(1 day, 8 hours ago)
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The Minister for Food Security and Rural Affairs (Dame Angela Eagle)
I beg to move,
That the Committee has considered the draft Producer Responsibility Obligations (Packaging and Packaging Waste) (Amendment) Regulations 2025.
It is a great pleasure to serve under your chairmanship, Mrs Hobhouse. These draft regulations were laid before the House on 3 November, and they introduce amendments to extended producer responsibility for packaging—referred to as pEPR—in England, Wales, Northern Ireland and Scotland. The amendments mark a significant milestone in our journey towards a more circular, resource-resilient economy in which producers take greater responsibility for the packaging they place on the market, and in which waste is designed out from the beginning.
The Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations 2024 established a new framework for managing household packaging waste. They shifted the financial burden of disposal from taxpayers and local authorities to the businesses that supply the packaging. As a direct result, producers are now obligated to cover the cost of managing the packaging waste they have produced, and to ensure that a proportion of the packaging they supply is recycled, with evidence provided to the regulator.
The amendments before us today are designed to improve the fairness, clarity and operational efficiency of the scheme. They respond directly to feedback from producers, local authorities and other stakeholders, and they reflect our commitment to international best practice. I will highlight three key areas of reform in the amendments.
First, we are enabling the appointment of a producer responsibility organisation from 2026, which is a significant development. The producer responsibility organisation will be an independent not-for-profit body established with the support of producers to take on core responsibilities for the operation of the pEPR scheme. This responds to a critical request from industry and aligns with successful models seen in countries with mature extended producer responsibility systems, ensuring that producers are not only accountable but actively involved in shaping the system. The PRO will operate under conditions agreed by the four Governments, and it will work in close partnership with the scheme administrator, PackUK. Sovereign functions related to sign-off and ownership of data, models and fee-setting cannot be delegated to the producer responsibility organisation, and will be retained by PackUK.
Secondly, we are introducing a targeted expansion of the scheme’s offsetting provisions. Large producers that operate closed-loop recycling systems for food-grade plastics—a system whereby they collect their own food-grade plastic waste directly from consumers and send it for reprocessing into new food-grade recyclate—will now be able to deduct these closed-loop package tonnages from their disposal cost obligations.
Eligible producers will be able to resubmit data for the 2024 reporting year and receive revised invoices for the 2025 assessment year. We are doing this because we want to increase the recycled content in food-grade plastics. Despite sorting techniques, it is currently difficult for local authorities to keep plastic that is intended for food contact separate from other types of plastics, and the result is that food-grade plastics often get downcycled, so we lose that valuable material. Closed-loop recycling systems help to keep food-grade plastics separate and decrease our reliance on virgin plastics. The approach we have chosen supports moving the UK towards a circular economy.
Thirdly, we are making a series of technical amendments to improve the scheme’s operability and ensure clarity for producers. Those include refining the definition of fibre-based composite materials by introducing a threshold—where plastic layers constitute no more than 5% of the packaging by mass, the item will be treated as paper and card. That provides greater clarity for reporting and fee calculation.
We are clarifying obligations across producer classes, including how responsibilities transfer when businesses merge or change ownership. We are also strengthening enforcement powers to tackle non-compliant “free riders”, which are businesses that meet the producer threshold but fail to register or report data. Such entities gain an unfair advantage over compliant competitors and undermine the integrity of the system. The scheme administrator, PackUK, will now have powers to charge free riders and recover costs. Updating regulator fees to reflect increased activity and inflationary pressures, as well as the introduction of new services such as recyclability assessment methodology and digital infrastructure, also form part of the change.
The amendments do not change the core policy of pEPR; rather, they enhance its delivery and ensure that the system is fair, transparent and effective. They have been developed through extensive consultation and co-design sessions with stakeholders, which brought together producers, local authorities and others from across the packaging value chain to shape the future of the scheme. The amendments before us today strengthen our commitment to a circular economy, support innovation, reward sustainability and ensure that our packaging system works for the environment, the industry and the public.
Dr Neil Hudson (Epping Forest) (Con)
It is a pleasure to serve under your chairmanship, Mrs Hobhouse. These draft regulations seek to lay the legislative foundation for the transfer of many of the powers currently held by the scheme administrator, PackUK, to a private producer responsibility organisation. The PRO will remain an independent body working closely with the devolved nations and the public sector.
In March 2025, Karen Graley was appointed head of the EPR PRO, bringing extensive experience from the Food and Drink Federation. I ask the Minister whether she or her colleagues have met Ms Graley to discuss the issues already identified with the scheme. I note that should the PRO fail to meet the expectations set out in its conditions of appointment, the scheme administrator, acting with the consent of the four nations, may revoke its appointment. Can the Minister reassure us that if such a step were ever required, there would be no adverse disruption to the scheme and no consequential adverse impact on businesses?
The Minister will also be aware that Wildlife and Countryside Link, the Environmental Investigation Agency and Everyday Plastic wrote jointly to the Secondary Legislation Scrutiny Committee to seek clarification from the Department for Environment, Food and Rural Affairs on certain aspects of the scheme. They expressed concern that they found the explanatory memorandum to contain insufficient information about intended implementation. Although DEFRA has responded to their three specific questions, I hope the Minister can set out in greater detail the evidence required for the producers.
Under the packaging extended producer responsibility scheme, producers must demonstrate that they have collected and recycled packaging waste that is either reusable or not ordinarily collected by local authorities. As I understand it, there is currently no requirement for that evidence to be third-party verified. Can the Minister explain how the accuracy and reliability of such information will be ensured? I discussed the extended producer responsibility scheme in a recent Westminster Hall debate with the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Coventry East (Mary Creagh), so the Minister will be aware of my concerns about its general implementation.
The Minister will also be aware that the Leader of the Opposition and the shadow Secretary of State for Environment, Food and Rural Affairs, my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins), recently chaired a food and farming emergency summit with farmers, fishermen and food producers. One of the issues raised repeatedly was the impact of the EPR scheme on food, drink and hospitality businesses, many of which—local pubs included—feel that they are being unfairly charged twice. Following that summit, and after listening carefully to industry representatives, my right hon. Friend the shadow Secretary of State wrote to the Government urging them to work with the Conservatives on a rapid review of the scheme’s impact on the food, drink and hospitality sectors, including the problem of the double charging of pubs.
That emergency summit took place before the autumn Budget, in which the Government announced that they will consult in early 2026 on proposals to measure the performance and effectiveness of local authorities’ use of the packaging EPR scheme. Has the Minister considered extending that consultation to include stakeholders so that practical issues with the scheme’s operability can be identified sooner?
The amendments contained in these regulations are sensible and show some movement in response to feedback and concern from the frontline. However, they do not address some of the wider concerns raised in our recent debate or those voiced by stakeholders, particularly regarding glass recycling and the consequences for hospitality businesses. Tackling these issues should be a priority for this Government not just in 2026, but as soon as possible.
Dame Nia Griffith (Llanelli) (Lab)
I welcome that these regulations give credit to those companies that already operate a closed-loop system. I secured a Westminster Hall debate on this issue back in 2023 after it had been brought to my attention by Wiltshire Farm Foods, which has a facility that I have had the pleasure of visiting in Burry Port in my constituency. The business delivers ready-made meals to its customers, largely on a very regular basis, so it is in an excellent position to collect the empties when making the next delivery. That enables the business to recycle materials for use in future packaging, thus saving on using new materials.
I am grateful to the then Minister—the former Member for Taunton Deane—and the current Minister, my hon. Friend the Member for Coventry East (Mary Creagh), and officials in the Department for listening to our concerns and carrying out the necessary work to bring forward this legislation to reward rather than penalise the operation of this closed-loop system.
I also welcome the measure to enable the appointment of a producer responsibility organisation. To ensure the scheme works effectively, and to influence the scheme’s further development, it is vital that producers are fully involved. However, I reiterate my concerns about steel and glass, which are perversely affected because the current EPR fee methodology prioritises material weight, meaning that heavier materials such as steel and glass face higher fees even though they are very easily recyclable, while lighter, less recyclable plastics gain a competitive edge. This particularly affects companies in my constituency, including the famous Felinfoel brewery, Parsons Pickles and Tata Steel’s Trostre tinplate works, which produces materials used to make food cans.
There has been talk of future adjustments, and I know from the response of the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Coventry East, in Westminster Hall a fortnight ago that she has met the steel and glass industries, but I stress again the urgent need to reform EPR fees to reward the genuine recyclability and circular value of steel and glass. Change needs to be implemented soon so that businesses are not left struggling. The worry for the steel industry is that its food-producing customers will turn away from tin cans to materials that attract a lower fee, and that the business will be lost forever.
I have continuing concerns about dual use and double charging, but that is a discussion for another day. I appreciate the Minister’s response a fortnight ago outlining the complexity of the situation and the lack of consensus on the issues she has encountered. I know she is committed to getting this right, as is the Minister for Food Security and Rural Affairs, so my plea is simply that they resolve the issues as soon as is practical. That would be very much appreciated.
Sarah Dyke (Glastonbury and Somerton) (LD)
It is a pleasure to serve on this Committee with you in the Chair, Mrs Hobhouse. The Liberal Democrats welcome the Government’s desire to make manufacturing and packaging more sustainable, to minimise waste and to create the foundations for a truly circular economy. As a party, we recognise that the previous system was not fit for purpose following the Environmental Audit Committee’s inquiry, and we supported the Committee’s recommendations to incentivise better recyclability and transparency of products to help the transition to a circular economy.
I am fortunate to represent a constituency with a thriving food and drink sector, but as producers are facing substantial added costs, they need to be properly supported, not punished, during the transition to a more circular economy. Although we wholly support the Government’s intention to tackle waste by improving recycling processes, we remain unconvinced that the introduction of EPR in its current form will achieve the desired goals.
By creating a system that will impose unaffordable added costs on producers, the Government run the risk of forcing them to use cheaper and less recyclable materials, or else jeopardising the viability of key local businesses that are driving growth, which is something the Government should be committed to protecting.
Dame Angela Eagle
I am happy to address some of the points that have been raised. I welcome that the official Opposition are broadly supportive of this system, and I will come to their questions in a minute. The Liberal Democrat spokesperson, the hon. Member for Glastonbury and Somerton, sounded like she was in favour on principle but not quite in favour of this particular system. That is an interesting approach, but ripping up the whole thing and starting again would not help our recycling rates. I prefer to think that the best way forward is to keep refining what is happening, to see how it works and to see if there are obvious things that we need to change.
These draft regulations are part of that iteration, because they introduce, for example, a change on the closed loop for food-grade plastics, and they shift to a producer-run organisation so that we can integrate how packaging is produced and try to drive up recycling rates. These measures will be responsible for returning over £1 billion to local authorities through fees and structures that enable them to recycle waste collected at people’s doors.
The hon. Member for Epping Forest asked whether Ministers have met industry groups affected by dual use, and I hope to reassure him that the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Coventry East (Mary Creagh), has done so. We recognise the strength of feeling on the need for a system that can be effectively monitored and enforced, given the impact of pEPR on packaging that remains in scope of fees.
Through our workshops, we are looking at what we can do to refine the system further to deal with the issues of double charging, as the shadow Minister put it. He asked what would happen if the PRO collapsed. PackUK can take control in the event of a catastrophe while it seeks to establish a successor, so that there does not have to be any other system.
We recognise the issues with glass, raised by my hon. Friend the Member for Llanelli, and the issues with measuring by weight, on which we are in touch with producers. There is also Government support for energy costs in the industry, which will hopefully deal with some of the additional costs that traditional industries are having to shoulder. I hope my hon. Friend accepts that we will continue to keep all of this under review.
To conclude, the amendments made by these draft regulations are necessary to maintain the circular economy for packaging in the UK, to ensure that the key industry request that producers are involved in running the scheme is taken forward, and ultimately to ensure that materials and products are kept in use longer. I trust that hon. Members on both sides of the Committee understand and accept the need for these draft regulations, and accept that the changes will benefit the scheme.
Dr Hudson
As I mentioned, the Budget document talked about a consultation on this going into 2026. I raised with the Under-Secretary of State for Environment, Food and Rural Affairs, the hon. Member for Coventry East (Mary Creagh), in the Westminster Hall debate that such consultation needs to be urgent, rather than kicking the can down the track. Can the Minister reassure us that she and her DEFRA colleagues will urgently review the system and act to mitigate any adverse consequences? A consultation is good on paper, but unless it is urgent, stakeholders on the frontline are going to suffer.
Dame Angela Eagle
We are trying to take the scheme forward in a positive, iterative way. The consultation is not kicking the can down the road; it is recycling the can to see what we can do to ensure that the system is changed and iterated to fit more effectively, to drive up recycling rates in our economy and to move towards a circular economy. I hope the hon. Member feels reassured by that response.
Sarah Dyke
The Liberal Democrats have urged the Government to consider exempting pubs from the EPR, and to review the scheme’s scope and timeline to stop further damage to the hospitality sector, which we all know is already struggling. Will she commit to monitoring that progress as the scheme is rolled out so that pubs and the hospitality sector are not hit further?
Dame Angela Eagle
I know that the responsible Minister, my hon. Friend the Member for Coventry East, has met the industry, and that workshops have been held over recent weeks to urgently and carefully identify options that address the issues that the hon. Member for Glastonbury and Somerton raises. We all need to find positive ways forward to address those issues. I hope she is reassured that my hon. Friend the Member for Coventry East is on to that one and already taking action. I hope that, with those explanations, this measure has the support of the Committee.
Question put and agreed to.