Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025
Debate between Baroness Twycross and Lord Forsyth of Drumlean(1 week, 3 days ago)
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The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, I shall also speak to the Enterprise Act 2002 (Amendment of Section 58 Considerations) Order 2025 and the Enterprise Act 2002 (Definition of Newspaper) Order 2025.
This set of regulations will broaden the scope of media merger regimes and strengthen the public interest protections, as well as setting the scope of exceptions that will apply to foreign state influence in UK newspapers. Taken together, these are the most significant changes to the media public interest regime since the Communications Act 2003. I know that many noble Lords have sincerely and strongly held views on the matters to be debated today and I am grateful to those across your Lordships’ House who have met me, the Secretary of State or officials to discuss them. It is good to see the noble Lord, Lord Fox, back in his place.
I will go back to first principles to place the new measures in their proper context. Fundamental to this is the need for us all to consider the very real risks to the survival of UK newspapers, including very high-profile names, and the wider news media. I understand and share noble Lords’ concerns about the growing threat of foreign state actors seeking to undermine our institutions and our democracy. There is a risk that this might translate into efforts to interfere with our media and freedom of the press. This is not the only risk, although it is a risk that these measures seek to manage.
The far greater risk is how UK news media, national and local, face significant, genuinely existential—I do not use that word lightly—challenges as their business models move away from print towards digital, and new technologies emerge. Publishers have sought to consolidate and make efficiencies in response, with three publishers accounting for over 80% of national print copy sales in the UK, and three accounting for about 70% of the local news market. There have been some notable successes for newspapers that have been able to develop and deliver a strong subscription offer, but others have fared less well. Some are struggling in an economy where good-quality news content does not always translate into the revenues that our news media needs to prosper and innovate.
The issue is seen most starkly in our local media, a particularly trusted news source that has consolidated to survive, and in many places local newspapers have had to reduce journalist numbers to a bare minimum. While it is vital that we support stronger protections for UK newspapers and other news media, we need to make sure that we do not inadvertently make it harder for newspaper groups to survive.
A UK-wide free press, which I know all noble Lords value—the type of press landscape we are rightly proud of in this country—also has to be sustainable. Let me be clear: the Government are unequivocal supporters of a free and plural news media, even when it does not agree with us. A free media is an essential safeguard that ensures accountability and effective government. The measures being debated strongly support this objective.
Lord Forsyth of Drumlean (Con)
Is the Minister seriously arguing that the survival of our newspapers, both national and local, depends on changing the law, as she is doing, to allow foreign Governments to have ownership of them?
Baroness Twycross (Lab)
It is important to distinguish between foreign Governments and state-owned investors. If the noble Lord will allow, this is covered in my opening remarks.
The first set of measures extend the scope of the media merger regime to online news publications. The Enterprise Act 2002 (Definition of Newspaper) Order 2025 will amend the definition of “newspaper” in the Enterprise Act 2002 to encompass both print and online newspapers and periodical news magazines. Crucially, this will enable the Secretary of State to intervene on public interest or foreign state influence grounds, subject to jurisdiction, in the acquisition of an online-only newspaper. Until now, she has not had the power to do so. The Enterprise Act 2002 (Amendment of Section 58 Considerations) Order 2025 creates the term “news media”, which captures newspapers, as newly defined, and news programmes that are broadcast. The order extends key public interest considerations in Section 58 of the Enterprise Act 2002 to all news media.
Noble Lords have long called for these changes, and Ofcom recommended them in its 2021 and 2024 media ownership rules reviews. The definition of newspaper order also ensures that the foreign state influence regime introduced in May last year will be extended such that foreign powers will now also be banned from acquiring control or influence over the policy of an online newspaper or an online news magazine enterprise.
Let me now turn now to the draft foreign state influence exception regulations, which are the subject of the fatal amendment in the name of the noble Lord, Lord Fox, and the regret amendment in the name of the noble Baroness, Lady Stowell of Beeston. The FSI regime, for which, as noble Lords will be aware, the previous Government legislated in May last year, bans foreign states from having any control or influence over the policy of UK newspapers or news periodicals. The legislation includes a wide definition of foreign power that includes sovereign wealth funds and public pension funds, among the largest investors globally, whose objectives are to seek long-term, stable investment opportunities in sectors requiring new capital for growth.
The previous Government also made clear before the election that they would put in place exceptions to encourage investment by sovereign wealth and other state-owned investors and issue a consultation. To clarify —in response to the point from the noble Lord, Lord Forsyth—this exception applies only to a very narrow group of public bodies: sovereign wealth funds and public pension schemes or similar. It does not apply to states themselves or other state bodies, so a foreign Government cannot buy and own a newspaper.
The responses received, including from News UK, said that the proposed thresholds were overly complex and drawn too tightly. We broadly agree with this assessment; we believe that a higher 15% threshold is appropriate and would meet their concerns. However, this would not weaken the regime. The 15% threshold would still be below the level that the CMA considers typically gives rise to material influence when assessing jurisdiction under the Enterprise Act 2002, meaning that the risk of influence would be low.
Noble Lords have raised questions about whether an investor with up to 15% of shares or voting rights can really be a passive investor. The regulations include a strict requirement that the state-owned investor must hold the investment passively. They must have no right or abilities to appoint or fire directors or other officers, and they must have no ability to direct, control or influence a newspaper’s policy or activities. These are continuing requirements that must be satisfied every day the shares are held. The exceptions should be seen as a privilege and not a right.
The legislation requires the Secretary of State to refer a merger to the CMA if she suspects that a state-owned investor is not entitled to the exception or is not complying with these requirements. If the CMA advises that the investment does not comply and concludes that a foreign state newspaper merger situation has arisen, the Secretary of State must take action to unwind the transaction or to block it. This is a very significant penalty and safeguard.
As noble Lords will be aware, the Government published a further draft SI for consultation last week to deal with two specific concerns that noble Lords raised about the draft regulations, which we laid on 15 May. First, the changes proposed by the draft SI would close off any risk of multiple state-owned investors acting on behalf of different states, each being able to hold up to 15%. This change would be applied retrospectively from 13 March 2024 to ensure that there is no regulatory gap.
Secondly, we have addressed concerns around the lack of a notification requirement on state-owned investors who plan to take significant shareholdings. This second draft SI proposes a new requirement for direct investments by state-owned investors of more than 5% to be notified to the Secretary of State as a condition of the exception. If the notification is not made, or made late, the investment would not comply with the exception and would be prohibited.
Following a consultation, which will run until 16 September, the Government will aim to lay, in draft, the second statutory instrument by the end of October. The new notification requirements will come into force after the second regulations are made. The changes proposed in the second draft SI, while important, are not fundamental to the operation of the exceptions and not so critical to the FSI regime that we should delay these regulations and leave newspapers—which are publicly calling for us to act—to a further period of uncertainty. I thank the noble Baroness, Lady Stowell, for her constructive engagement with the Secretary of State and DCMS officials on these issues. I hope that she and other noble Lords who have raised these concerns feel that this safeguard fully deals with the issue.
I will now address the constitutional questions that arise from the amendment to the Motion in the name of the noble Lord, Lord Fox. The second regulations to follow later this year will strengthen protections and put the issue of multiple-state ownership beyond doubt. As I explained earlier, the provisions on multiple-state ownership will be backdated to 13 March 2024 to ensure that there is no regulatory gap.
It is also important to recognise that existing sovereign wealth fund investments at any level made after March 2024 in a UK newspaper may trigger the Secretary of State’s requirement to intervene under the FSI regime. We are very concerned that a protracted delay in putting exceptions into place would prolong the uncertainty this creates for investors and the wider investment climate. I appreciate that the noble Lord’s amendment comes from concerns around the impact of the FSI regime on the British press. I have not come to the same conclusion that he has, and I will of course reflect very carefully on the points that he and other noble Lords make during this debate.
It is perfectly legitimate for your Lordships’ House to debate the fatal amendment before it today, but it is a very firm convention that the power to annul is not used. In this specific case, the FSI exception regulations have been expected since the passage of the digital markets Act last year. They have been subject to consultation and extensive parliamentary engagement and have now been approved in another place. This Government have come to a different conclusion to the previous Government on thresholds. Although the threshold is slightly higher, it is also simpler and supplemented by additional safeguards. I have set out our reasoned arguments for settling on 15%, including why we gave weight to the views of UK newspaper groups that are directly affected.
When noble Lords debate legislation, a small but significant phrase is sometimes heard: that Parliaments cannot bind their successors, and commitments made by one Government cannot bind any future Government. While the 5% and 10% split threshold was announced by the previous Government during the debate on the digital markets Bill as a possibility, and subsequently featured in the consultation, it was not a settled matter. It was left open at the time of the general election last year. It is both right and responsible for the Government to look at this afresh. However, we agreed that in some sensibly managed circumstances, an exception to the regime was reasonable. Our intention in doing so is to make a decision which protects press freedom from foreign state interference while not, in the words of one consultation respondent, creating a chilling effect on the investment the British press tells us it so badly needs.
To conclude, I urge Peers from all sides to look at these issues in the round. The Government believe these regulations provide the certainty that UK newspapers desperately need and have asked for. They will, in spite of suggestions to the contrary, guard against foreign state influence while allowing our news media to face the future with confidence. I hope noble Lords will accept the rationale I have presented to the House in support of this important package. I beg to move.
Amendment to the Motion
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—
Lord Forsyth of Drumlean (Con)
The Minister has just made an absolute commitment that “Foreign Governments will not be allowed”. That is what I understood her to say, so why does she not incorporate that in the regulations?
Baroness Twycross (Lab)
My understanding is that that is what the regulations would mean in effect. The noble Lord shakes his head, but I want to be explicitly clear that this is not going to allow foreign Governments to buy newspapers. This is about state-owned investors, which, as I made clear in my opening remarks, is a different matter.
Lord Forsyth of Drumlean (Con)
If that is what she thinks the regulations already say, she will not have a problem with making it explicit.
Baroness Twycross (Lab)
We have the regulations before us. I cannot be more explicit than I have already been.
To continue, investment by single or multiple state-owned investors will be capped at 15%. The regulations that we aim to bring in by the end of October will require a state-owned investor taking a direct holding of shares or voting rights of more than 5% to notify the Secretary of State of the transaction. This will enable her to quickly review any cases where there are suspicions that the shareholding may be more than a passive investment and to refer appropriate cases to the CMA for advice on whether a foreign state merger situation has emerged. This will be a condition of the state-owned investor exception. A failure to make this notification or making it late will mean that the investment in question is prohibited.
The noble Lord, Lord Fox, asked about the redactions in the consultation responses and why they were not published earlier. I have already outlined my acceptance of the criticism from the noble Baroness, Lady Stowell. DCMS has now published the responses. One organisation asked for its views not to be attributed and for some information to be redacted on the grounds of commercial confidentiality. The original consultation by the previous Government specified that responses would not be published and respondents would not be named. This Government’s current consultation makes it clear that they will be.
The noble Lord, Lord Newby, asked about the Secretary of State’s role. The legislation requires that the Secretary of State must refer a merger to the CMA if she suspects a state-owned investor is not entitled to the exception or is not complying with this requirement. This should provide protection in the interim, and was why we did not think the original SI defective. The one in draft was published in response to concerns, not, in our view, to correct an error, although it puts everything beyond reasonable doubt and was a reasonable request.
The noble Lord, Lord Fox, asked about the protections we have against hostile states trying to acquire influence or control. The FSI regime strengthens the Secretary of State’s powers and sits alongside her powers to intervene in a relevant merger situation on the basis of public interest concerns. These powers can be applicable in acquisitions involving state-owned investors within the threshold set by the draft regulation. Taken together, the existing legislation, draft regulations and second statutory instrument would allow the Government to act to guard against the kind of malign interference with UK democracy and press freedom about which noble Lords are concerned.
Additionally, the National Security and Investment Act 2021 can enable the Government to call in and, if necessary and proportionate, block, unwind or impose conditions on acquisitions of control over UK newspapers, including acquisitions that may give rise to national security concerns.
Newspapers: Foreign Ownership
Debate between Baroness Twycross and Lord Forsyth of Drumlean(2 weeks, 2 days ago)
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Lord Forsyth of Drumlean (Con)
My Lords, why are the Government inviting the House to vote for secondary legislation that they have now admitted is defective in so far as it allows foreign Governments to own 15% and several foreign Governments collectively to own an additional 15%? Although the Government may have tabled amending legislation today, which will have retrospective effect, what is the reason for the speed of this, and why are the Government using secondary legislation to reverse what was clearly understood before, which is that foreign Governments could not hold stakes in our newspapers and media interests? Now, they are allowing foreign Governments to do so, despite undertakings given when the primary legislation was passed that that would never be allowed.
Baroness Twycross (Lab)
On the regulations and the exception, I want to be clear: this is a privilege, not a right. It is about passive investment, which is why the level has been set at 15%. The Government have published the second set of regulations today, to put it beyond doubt that multiple states cannot act in concert to take a stake in a UK newspaper that is bigger than 15%. The FSI regime gives the Secretary of State a specific duty to intervene and to refer to the CMA for investigation merger cases that she suspects may have resulted, or may result, in foreign state control or influence over a newspaper enterprise’s policy. So these safeguards are in addition to what we would already consider to be quite clear duties on the part of the Secretary of State.
UK Newspapers and News Magazines: Foreign Investment
Debate between Baroness Twycross and Lord Forsyth of Drumlean
Baroness Twycross (Lab)
The noble Viscount raises exactly the type of complex issue that requires careful consideration. I am committed to bringing this matter back to your Lordships’ House in the near future—I have been told that I can continue to say “in the near future”—and we will bring an SI to your Lordships’ House shortly thereafter.
Lord Forsyth of Drumlean (Con)
My Lords, I sympathise with the Minister’s position. Later today, we are going to discuss the Employment Rights Bill. Are the Government considering the position of the employees of the Telegraph and the uncertainty that is occurring, as well as the important issue of the newspaper? She gave a commitment to the House today that they would table the necessary secondary legislation. Will that be soon, shortly, in due course, or before the Summer Recess?
Baroness Twycross (Lab)
I reassure the noble Lord that it will be very shortly—though how you define “very” in that context is probably open to interpretation. As noble Lords will know, I did go back and press the point, having been told that I could say “very shortly” last time, as to whether that was still the case. On staffing, I do not underestimate how unsettling this would be for staff. I note the noble Lord’s commitment to the Government’s legislation that is being discussed later this afternoon, which is welcome. Staffing is clearly a matter for the paper itself, but we hope that all decisions made in the interim would be in the best interests of both the paper and the staff.
Victory in Europe and Japan: 80th Anniversaries
Debate between Baroness Twycross and Lord Forsyth of Drumlean
Baroness Twycross (Lab)
As a Government, we are clear that we want to tackle ideologies that undermine our democracy and freedom wherever they are. I believe that the public are fully aware of the fragility of our world order at the moment. I would find it very odd if that did not come through in a lot of the commemoration of those events.
Lord Forsyth of Drumlean (Con)
My Lords, many of the people who fought on after VE Day used the phrase “the forgotten army”, so can we make sure that we emphasise the sacrifice and real hardship that many of the prisoners of war experienced from Japan? If I might just gently say to the right reverend Prelate the Bishop of St Albans, the brutal truth is that, had the Americans not been involved and not used their nuclear weapons, hundreds of thousands of people would have died needlessly. It was a horrible thing to do, but that nuclear deterrent played an important part in giving us the freedom which those people who interrupted our proceedings today enjoy.
Baroness Twycross (Lab)
We value our relationships with the Americans now, as then. The noble Lord makes a powerful point. It is vital that we do not simply focus on VE Day but look at VJ Day as well. The commemorations around VE Day will have a different tone, and there will be more community-engaged street events, and so on. We are clear that the sacrifices made by those who served across Asia and the Pacific will be at the heart of the commemorations.
Telegraph Newspapers
Debate between Baroness Twycross and Lord Forsyth of Drumlean
Baroness Twycross (Lab)
My noble friend makes a really valid point. Yesterday we spoke about Gaza and the horrendous number of journalists and media workers who have died in the course of that conflict. My noble friend referred to the riots in the wake of the attack in Southport. Even in this country, the harassment of journalists reporting generally, but specifically reporting on those public order events, is completely unacceptable and incompatible with a healthy and functioning democracy. We need a situation in which journalists can operate without fear of abuse, threats or intimidation. The Government are committed to defending the role of a free media and the safety of journalists, and we continue to work on these important issues, including by delivering our national action plan for the safety of journalists, working with criminal justice, civil society and media partners.
Lord Forsyth of Drumlean (Con)
My Lords, given that the Secretary of State is acting in a quasi-judicial capacity, which I quite understand, will the Minister or one of her colleagues perhaps endeavour to send a quasi-judicial message to the Secretary of State that she needs to get on with this and might want to involve the Competition and Markets Authority in bringing it to a conclusion?
Evaluation in Government Policy-making
Debate between Baroness Twycross and Lord Forsyth of Drumlean
Baroness Twycross (Lab)
It feels entirely appropriate that evaluation should be built into any new policy area, and the intention is for this to happen. When the Evaluation Task Force was created, an evaluation academy was also set up, which addresses the skills gap that was perceived to be present within the Civil Service, so there is a training scheme whereby more than 2,000 civil servants have been trained in their respective departments. One would hope that no major project would be launched without evaluation being built in from the start.
Lord Forsyth of Drumlean (Con)
My Lords, will the Minister take this opportunity to deny the reports in the press suggesting that Defra was consulted only the night before the Budget on the impact of introducing inheritance tax on small farms? As a result, it is said that the Treasury has grossly underestimated the number of farms affected. What does that say about the evaluation of government policy?
Baroness Twycross (Lab)
I respect the noble Lord’s right to raise that question in this place. However, I will write to him on that matter; this is not something that I can respond to today.
House of Lords Reform
Debate between Baroness Twycross and Lord Forsyth of Drumlean(8 months, 2 weeks ago)
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Lord Forsyth of Drumlean (Con)
I was not questioning her abilities; I was simply pointing out that support for patronage and the hereditary principle is alive and well in the other place.
Poorly thought-out policy and hypocrisy have proved to be the hallmarks of this Government; “party before country and constitutional convention” turned out to be their mantra. We need a comprehensive approach to reform of Parliament. The truth is that the House of Lords is working well and doing an essential duty scrutinising legislation which is not even debated in the House of Commons, as every Bill is timetabled there. The other place needs to put its own House in order. This House has a constitutional duty which we cannot shirk. Labour needs to think again.
The Parliamentary Under-Secretary of State, Department of Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, the advisory speaking time is five minutes. There is an advisory speaking time out of courtesy to other Members. I urge all noble Lords to keep remarks within this time so that the debate may finish at a reasonable time.
Olympics and Paralympics: Competitors in Female Categories
Debate between Baroness Twycross and Lord Forsyth of Drumlean
Baroness Twycross (Lab)
I will repeat the reason why the Government have not had any discussions with the IOC, the BOA or the boxing authorities about this highly speculative report that my noble friend’s Question relates to: it is highly speculative, and we cannot discuss things just because there is high speculation in the media about issues.
Lord Forsyth of Drumlean (Con)
My Lords, if the Minister is not prepared to have discussions with the Olympic committee, might she have discussions with her parliamentary colleagues who seem intent on practising boxing on the streets of our country in the early hours of the morning?
Baroness Twycross (Lab)
The noble Lord raises a matter that I assume is also subject to considerable speculation in the media and is, I suggest, a matter for a Commons Whip and not a Lords Whip.