Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025

Lord Forsyth of Drumlean Excerpts

Tuesday 22nd July 2025 Lords Chamber

[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

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[Lord Forsyth of Drumlean (Con)]

Before my noble friend leaves the point, would she just pick up on what the noble Lord, Lord Fox, said? She just described the plight of the Daily Telegraph and other newspapers, basically saying they are struggling to be viable. So why would a foreign Government pay a premium price to invest in them? Are we assuming that foreign Governments are profligate with their money and that they do not invest to get a return? The noble Lord’s point was that the reason why they are prepared to pay £500 million or whatever it is for the Daily Telegraph, when other people are prepared to pay only £300 million or whatever, is that they are buying influence.

[Baroness Stowell of Beeston (Con)]

As my noble friend knows and as I have already described, we are now in a different situation from that which we were facing in March of last year, when there was a real prospect that a foreign Government could be the owner of a British newspaper. That matter has been dealt with. What we are dealing with now is state investment funds and, as I am going to come on to talk about, the question is whether the safeguards in place are sufficient.

I am grateful to Lisa Nandy for meeting me on several occasions over the past few months and I am pleased that, because of pressure from me and other noble Lords, the intolerable prospect of multiple foreign powers each owning 15% of a newspaper will be ruled out in the supplementary regulations that the department published in draft last week. Let us be absolutely clear: the 15% must be an aggregate cap. But how on earth that loophole went unnoticed is hard to understand and, once it was pointed out to them, it is baffling, as well as hugely regrettable, that the Government took two months to find a way to close it and chose to do so via additional regulations, instead of immediately withdrawing the regulations before us today and relaying a comprehensive set, so that we could tie all this up in one go before the Summer Recess. I would be grateful if the Minister could tell us why they could not do that. I know she has told us that they plan to lay the supplementary regs by the end of October, but I would like to know why it was not possible to do what I advised them to do back in May.

This foot-dragging and apparent incompetence have given rise to legitimate questions about who or what has really influenced the Government’s approach to this incredibly important matter. If the Government were acting only in the interests of the press industry, we would have sorted all this and resolved the Telegraph’s ownership long before now.

Although I can accept a 15% aggregate cap for state-owned investment, it will require rigorous government oversight of the boundaries that passive investors must not extend, and Parliament will need to be better equipped and more active in holding Ministers to account. In my view, it was frankly unacceptable for the Government to stay silent for 11 months on the matter of the secondary regulations and on what they were doing to safeguard the Telegraph’s future ownership during that time.

Noble Lords may have seen, and indeed have heard already from the Minister, that the supplementary regulations that are to follow these include a new notification requirement, meaning that any state-owned investor that acquires more than 5% must notify the Secretary of State within 14 days of that acquisition to be eligible for the exemption status. In my view, as a follow-on to that, the Secretary of State should be required to notify Parliament twice yearly about any or nil such notifications, together with information about action taken by her as a result. In future, we are going to need more information. Can the Minister ensure that this additional requirement of accountability to Parliament be added to the supplementary regulations the Government are now consulting on?

Although parliamentarians must respond to any failings by Ministers, when it comes to upholding press freedom, the most important line of defence is the newspaper proprietors. They are who and what must provide a strong shield between newsrooms and illegitimate pressure or demands from investors and advertisers. They know that not doing so undermines public trust in journalism, and that would damage the value of their investment.

It is not for Parliament to dictate how proprietors should discharge their responsibility, but in a media world that includes the presence of state-owned investors, clarity and some transparency about what proprietors are doing to protect their newspapers’ independence and editorial freedom becomes important. This is particularly so where proprietors are new to the newspaper industry or are private equity funds. Can the Minister tell us, therefore, what such demands the Government will make of the new Telegraph owners if and when that transaction is completed? Can she confirm that the Telegraph deal, once finalised, will be subject to detailed scrutiny by the CMA before it is completed?

If the noble Lord, Lord Fox, pushes his amendment to a Division, I will vote against it. Of course, as a former Leader of your Lordships’ House, I have a general aversion to this Chamber seeking to block legislation. Indeed, it was me, as Leader, who was the last Minister at that Dispatch Box defeated by this House on a piece of secondary legislation. But I am not against this amendment for any kind of constitutional-like reasons of convention or tradition, important though they are. Believe me, if I thought that supporting this amendment was the right thing to do, I would. But I do not.

While I respect those who are framing this debate as a battle over the future of press freedom, actually, if it is a battle about anything, it is over the future of a financially viable press. We do not just need our newspapers to be editorially independent; we need them to survive.

When it comes to the Telegraph, of course I would have loved someone serious to have come along with a consortium that could offer investment and honour a cap of 5%. Indeed, I would have loved it if this sorry saga, which has been so destabilising to the editorial team at that newspaper and has gone on for more than two years, could have been avoided altogether. But, as I have already argued, this is not just about the Telegraph; it affects all newspaper titles.

The regulations before us set the cap at 15%. As long as the Government follow through with the supplementary regulations to close that loophole and are prepared to give the necessary undertakings to ensure that that cap will be enforced, I am willing to accept them. Everyone else gets to fight another day; let us make sure the same applies to the Telegraph Group and the wider UK press industry.

Of course, if the noble Lord, Lord Fox, withdraws his amendment and supports mine instead, noble Lords can express their regret and record their dissatisfaction with how the Government have handled this matter by supporting my amendment.

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[Lord Clement-Jones (LD)]

If a company has a series of 5% ownership stakes it will have a plurality of shareholders and therefore a mix of influence, but if you own a 15% stake you have a much higher share in the company and are probably entitled to a single board member.

[Lord Forsyth of Drumlean (Con)]

Is it not that there is a difference between 5% being held by a foreign government and 5% being held by a national wealth fund or something of that kind?

[Lord Clement-Jones (LD)]

I entirely agree with the noble Lord. I do not understand why the noble Lord, Lord Knight, is raising what seems to be a pretty obvious issue.

The British public deserve to know that their morning newspaper delivers journalism guided by British values and editorial independence, not the preferences of foreign powers.

Briefly on this House’s conventions: the guidance issued in the 2006 report from the Joint Committee on Conventions—which was mentioned by noble friend Lord Fox—is still current, despite the 2015 Strathclyde review. It concluded:

“On the basis of the evidence, we conclude that the House of Lords should not regularly reject Statutory Instruments, but that in exceptional circumstances it may be appropriate for it to do so. This is consistent with past practice, and represents a convention recognised by the opposition parties”.


Subsequently in March 2007, with strong support from the then Archbishop of Canterbury I succeeded with a fatal amendment that prevented a super- casino being located in east Manchester. Since then, in January 2013, the noble Lord, Lord Bach, succeeded in defeating a legal aid order. I welcome what the noble Baroness, Lady Stowell, had to say about the existence of the convention.

Those were exceptional circumstances and so too are today’s. The ownership of our press is a matter of great public policy importance, and we are fully entitled to defeat these regulations. I urge noble Lords to support my noble friend Lord Fox’s fatal amendment. Let us send a clear message that the integrity of the British press is not negotiable: 5% is sufficient, but 15% is a doorway to influence that, once opened, may prove impossible to close. I commend the amendment to the House.

We on these Benches also oppose the draft Enterprise Act 2002 (Amendment of Section 58 Considerations) Order 2025 and the draft Enterprise Act 2002 (Definition of Newspaper) Order 2025, which have been tabled for approval today. These orders propose extending the ambit of the Enterprise Act to encompass digital media and broadening the definition of “news media” to explicitly include online news, websites and broadcasting. If we were at one on the question of media ownership then this would be a welcome extension. However, expansion at this time, while fundamental concerns regarding foreign ownership of traditional newspapers remain unresolved—or, indeed, are potentially being dangerously broadened—is illogical and dangerous, and we will not support these draft orders.

[Lord Forsyth of Drumlean (Con)]

My Lords, I always pay careful attention to the advice given to me by my Chief Whip. The advice—which I am not sure I am allowed to reveal—is that we should not support this amendment on the grounds that we do not vote for fatal Motions. I was very impressed by the speech by the noble Lord, Lord Fox. In fact, I agreed with every single word. That is a real first for me on something coming from the Liberal Benches.

Until quite recently, I told people that I have never voted for a fatal Motion, but in fact I discovered that I did some six weeks ago, as the noble Lord pointed out. We had a fatal Motion, and quite rightly so, because it was on a matter that we thought was in the national interest: the position of the Government on their treaty on the Chagos Islands. So both I and the noble Baroness, Lady Stowell, have voted for fatal Motions in very recent history, so I am a bit confused by the suggestion that we should deal with this matter on the basis of some kind of procedure. We have heard the nature and seriousness of the arguments. If this House now feels that it cannot vote on a matter of this seriousness because of some mythology about fatal Motions, what is the point of us being here at all? What is our purpose? This is a central issue.

The other reason why I am a little confused is that, when we amended the legislation last year under the previous Government, my noble friend Lord Parkinson mentioned an amendment being made at Third Reading and said:

“We will amend the media merger regime explicitly to rule out newspaper and periodical news magazine mergers involving ownership, influence or control by foreign states”.—[Official Report, 13/3/24; col. 2042.]


I emphasise “foreign states”. He said:

“Direct investment in newspapers of any size will be banned … We will therefore introduce an exemption for investments where the stake is below 5% of the total … This would apply to passive investments by … sovereign wealth funds, pension funds or similar”,


not by foreign states. That was primary legislation passed by this House. There was no vote because there was unanimity across the whole House about the importance of banning foreign Governments from owning parts of newspapers.

There was also consensus across the House for extending that to other media services, which the other instruments refer to. The noble Lord, Lord Clement-Jones, quite rightly points out that they would, I think, be supported by the House were it not for the fact that they change the ownership rules to allow foreign Governments to be involved not just in our newspapers but in other news media organisations.

My noble friend Lord Parkinson also said that the Government recognised the

“risks that foreign state ownership of … the UK’s newspapers and news magazines could pose to democracy and to free speech”,

allowing them to

“over time corrode trust in our media as a whole”.—[Official Report, 26/3/24; cols. 584-85.]

What has changed in the past 12 months about those principles? The Government have changed, but that is not a reason to change one’s principles on this side of the House. This Government have sought to take secondary legislation and use it to change not just the intention but the effect of primary legislation. Now they are the Government—we lost the election.

[Viscount Hailsham (Con)]

On that point of the use of statutory instruments, does my noble friend agree that many of the problems he has identified arise from the fact that statutory instruments cannot be amended? Is it not bizarre that in the autumn we are going to have a remedial statutory instrument, the terms of which could be incorporated into the present statutory instrument if we were able to amend it?

[Lord Forsyth of Drumlean (Con)]

As always, my noble friend makes an excellent point, but it takes me slightly off the subject. I am kind of arguing that these procedural arguments are trounced by the fact that what is being done here is that primary legislation is in effect being amended by secondary legislation—to which, as he says, we cannot make an amendment. That is completely wrong. If we allow this to go forward, there will be other examples. This is the Executive thumbing their nose at the Parliament. This is the Executive taking power.

I believe that these regulations abandon an important principle. In her introduction, the Minister deftly avoided and elided the suggestion that investment was needed from foreign Governments. I have no objection to national wealth funds. Indeed, we amended the legislation, and the 5% had nothing to do with foreign Governments. As I recall, it was introduced to allow the Norwegian pension fund to be able to continue its existence. That was an exception to the rule, necessary because of the nature of those funds. Now we have regulations that allow 15% to be held by foreign states; that is what is at stake here.

Notwithstanding the powerful advocacy from my noble friend Lord Black for the Daily Telegraph, this has nothing to do with the Daily Telegraph. This is about a general principle that foreign Governments could take a stake in our newspapers and other media assets. When I say that it is nothing to do with the Daily Telegraph, I am slightly suspicious, just to take my noble friend’s point, that we are being asked to do this at such speed, in such a hurry. It is nothing to do with the Daily Telegraph bid, I am sure. Why did the Government not just withdraw the amendments and table new ones, which we could discuss at length in the autumn? Could it be to do with some other business going on with the Daily Telegraph? I may be cynical, and perhaps I am being unfair, but it feels like that.

I took the liberty of sending to colleagues—I promise not to do it very often—an article written by Fraser Nelson, whom I hold in the highest regard as a political journalist. I have circulated it to a number of colleagues. It tells the inside story from his ringside seat of what has been going on with the purchase of the Daily Telegraph. I commend it to noble Lords because, if they read that article, they will certainly vote for the amendment in the name of the noble Lord, Lord Fox. It is completely unacceptable that our parliamentary procedure should be overwritten and that we should create an open door for foreign Governments to get into our media services to meet a particular bid.

The remarkable thing is that when you ask the Ministers why they are making this change, they say that it is nothing to do with the Daily Telegraph—it is because they had a consultation exercise. As the noble Lord pointed out, they had all of four people responding to this consultation exercise, which made them change their minds. Who were the people who responded to the consultation? They actually said that they were not going to tell us—it was going to be kept secret, because it was so embarrassing to discover that it was the newspaper owners themselves.

Of course, it is always very dangerous to cross newspaper owners, especially if you are in politics, which is why Fraser Nelson is to be commended on his excellent article today. If we have foreign Governments owning newspapers, as opposed to foreign investors, there will be a conflict of interest between our journalists and their proprietors, because our journalists might want to write unpleasant things about some regimes that may or may not be allowed to own the newspapers. For this House, if it is a choice or conflict, which are we going to support, the freedom of the journalists or the financial interests of the proprietors? There can be only one answer: we have to support the freedom of the journalists, even if they do not always reciprocate in respect of this House.

There is one further point I would like to make, and it is about RedBird. I do not have a clue where RedBird’s money is coming from; it is not disclosed. How can we possibly feel comfortable with that? I know that the noble Lord, Lord Alton, who has been so spectacularly successful in arguing in this House for freedom, not just in this country but all over the world, has grave concerns about the relationship between RedBird and the Chinese Government at the highest level. I know nothing about RedBird, and therefore I feel even more despairing that the Government should be bringing forward these regulations, instead of the Secretary of State having by now instituted for the MMC to carry out an inquiry into precisely those matters.

It is with great pride and pleasure that I shall support the Liberal amendment, not because it has been made by the Liberals, although I have huge respect for the noble Lord, Lord Fox, but because I believe that he is speaking for the whole House as it was before the election, when almost unanimously, without a vote, we upheld the principle, which these regulations seek to undermine, that foreign states should not be allowed to own newspaper assets in this country.

[Lord Robertson of Port Ellen (Lab)]

My Lords, last year I went to the Department for Culture, Media and Sport with the noble Baroness, Lady Stowell, in a small delegation to make representations about the lack of any regulation at that time to prevent foreign Governments buying stakes in British newspapers. In the subsequent debate I certainly supported her view, and I liked very much what she has said today. The consultation may well have produced only four newspaper contingents giving their views, but a lot of other people have given a lot of thought to it in the meantime, as I have.

The question for the House today is whether we accept the compromise of 15%, higher than 5% but lower than the 25% that would have given the statutory controls, or go for a fatal amendment, getting close to what would be regarded as the edges of the constitution. I think that the Government have given a fair account, and I have discussed it and debated it at the same time. I have changed my mind. I think the safeguards that are available and the 15% are reasonable, and I believe we should therefore vote against the fatal amendment.

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I also make the point that the UK media landscape has always had foreign fingerprints. As we have already heard from other people in this debate, the vast majority of people today take their news and media from social media giants that are almost entirely American-owned and remain largely unregulated. Where is the outrage about them?

[Lord Forsyth of Drumlean (Con)]

I do not think any of us are concerned about sovereign wealth funds; we are concerned about Governments. As far as I know, the United States Government do not have any interest—hopefully—in any of the social media organisations the noble Lord is referring to.

[Baroness Fleet (Con)]

My Lords, it is an honour to follow the noble Lord, Lord Udny-Lister, who is an old friend and old colleague. I declare my interest as former editor of the Evening Standard¸ deputy editor of the Telegraph and the Daily Mail and independent director of Times Newspapers.

As an editor, I met many newspaper proprietors, and I know that the very rich who want to invest in newspapers do so primarily because they want to have influence. I have the highest regard for my noble friends Lady Stowell and Lord Black of Brentwood, and I commend their contributions to this debate.

However, while I know that, sometimes, there is need for pragmatism and compromise at times of political and financial crisis, when it comes to freedom of the press, there can be no compromise. There is a principle to fight for.

Several noble Lords have reminded us that in March last year this House came to the conclusion that foreign states should not own newspapers. State control undermines free speech. We have heard the splendid speech from the noble Lord, Lord Alton, who is one of the great masters of this subject. On that basis, the then Government compromised and agreed that arm’s-length sovereign wealth funds could indeed own a maximum stake of 5%. We are now offered a variation whereby a foreign state can own a maximum of 15% of a newspaper.

However, in the statutory instrument, there is no limit on the number of states that can each own 15%—we have heard the argument. In other words, a coalition of states could each own 15%, thus having a majority ownership and the ability to exercise control. Once the Secretary of State was alerted to this possibility of multiple 15% ownership over six weeks ago, the Government could have been fleet of foot and pushed through a second SI to ensure the spirit of the first SI was not abused. But no, we waited and waited. Only last week was a second SI brought forward closing the loophole—but not immediately or as part of the first SI, but with a possible date in the autumn.

Therefore, the SI has a giant loophole, and this is what we are debating today. Would any savvy business sign a deal with a giant loophole only with a promise to close that loophole sometime in the future? No, of course they would not. Either we want to protect our freedom of speech and freedom from foreign state control, or we do not. That is the principle.

What is the justification to vary the 5% ownership other than that a foreign state wants more control or to save face? We have not been told.

Arguing against the fatal amendment on the grounds that the Telegraph urgently needs the deal to be agreed is an unacceptable compromise. This House is not here to consider transactions. This House is here to consider a point of principle. Will the Telegraph fold if a foreign state is not legally allowed to own 15%? I do not know. None of us knows, but that is not the point. I do not accept that we should rely on the Government’s promise of a second statutory instrument—which we have heard it might actually not even be possible to introduce after the legislation—to close the loophole sometime in the autumn. There is no legal or parliamentary reason why the Government could not have pushed through the second SI by today, so I have grave doubts about this promise.

If we agree to today’s regret amendment, there is in theory and in practice nothing to stop, say, four foreign states buying 15% each, making the Government’s promise for the autumn irrelevant. The Government will say that we can rely on the regulator—the CMA, perhaps, or Ofcom. We have all seen the failure of regulators—just think of the water regulator or the City regulator. When it comes to freedom of the press, only the law protects, not regulators. To protect newspapers from any foreign state influence, I will support the fatal amendment.

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[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.