Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) (No. 2) Regulations 2025

Motion to Approve

Moved by

That the draft Regulations laid before the House on 30 October be approved.

My Lords, the foreign state influence regime is designed to prevent foreign states controlling, influencing or owning our newspapers and news magazines. It is essential that we safeguard our free press and a pluralistic media landscape for the sake of our democracy. Newspapers remain a vital trusted news source. The Ofcom survey News Consumption in the UK: 2025 reported that 73% of regular news users consider newspapers trustworthy, which is more than any other media.

However, noble Lords are aware of the considerable challenges faced by the news media industry. Newspapers require investment to grow and thrive. Balancing this need for investment with protecting news from the influence of a foreign state is at the heart of the foreign state influence regime. This is what underpinned the three statutory instruments that we made in July. We made regulations to amend the foreign state influence regime to allow 15% of shares or voting rights in a newspaper or news magazine to be held by a state-owned investor provided that they are investors with no right or ability to control, direct or influence the newspaper’s policies. The 15% threshold is below the level where the Competition and Markets Authority typically considers that material influence may arise.

The foreign state influence regime, rightly, has a low bar for intervention. The Secretary of State is given no discretion. She must intervene if she has reasonable grounds for suspecting that a foreign power may hold the ability to influence or control the policy of a UK newspaper enterprise as a result of a merger. This is regardless of whether there is an intention to influence. When we introduced the previous regulations earlier in the year, colleagues in your Lordships’ House and the other place challenged us on whether they had the unintended consequence of permitting multiple foreign powers, investing through state-owned investment vehicles, to each invest 15%. The argument was made that it would be possible for the majority of a newspaper enterprise to be owned by state-owned investors, albeit passively.

My Lords, as this is the Minister’s second statutory instrument debate today, I commend her stamina, and indeed I commend my noble friend on my own Front Bench for his, too. I welcome this statutory instrument, which meets the commitment that the Minister gave in July to close what was a gaping regulatory loophole that would have allowed multiple foreign states each to own up to 15% of a British newspaper, with all the risks that flow from that. I am also grateful to the Secondary Legislation Scrutiny Committee for its thorough examination and report on these No. 2 regulations. I am also pleased that the Government Chief Whip scheduled this debate on the Floor of the House and not in the Moses Room.

Of course, all of us could have been spared this additional work if the Government had done what I and others advised some months ago, once the so-called “multiples loophole” was spotted, and that was to withdraw, amend and lay a consolidated set of regulations, rather than us having to handle this piecemeal approach. I am not going to get sidetracked, but, as I have said before, the Government’s unwillingness to take the straightforward route raises questions about who or what has been prioritised when dealing with this matter. However, we are where we are, as they say, and I am pleased that these regulations now ensure that the 15% limit for investment from state-owned investment funds is a single aggregate cap.

Since it became apparent two years ago that our legal framework could not prevent foreign Governments owning, controlling or influencing British newspapers and news magazines, it has been clear that the future of our free press is not just about protecting editorial independence; it is also about ensuring financial sustainability. The pace of technological change and the economic challenges facing the news industry continue to worsen, making investment urgent and consolidation within the industry increasingly likely. So, while I respect those who maintain their position that, even as an aggregate at 15%, the cap has been set too high, my view, as I said in July, is that, restricted to passive investment only and with additional reporting safeguards, which I will come on to in a minute, an aggregate 15% cap for state-owned investors is acceptable and still supports the principle of press freedom.

What I believe is important, once this regime is fully in place, is vigilance, and that is why I am pleased that the Government have extended the reporting requirements. Now, beyond notifying the Secretary of State, state-owned investors that take a stake of more than 5% within the aggregate cap will be required to publish the information online, which will in turn allow the Secretary of State to report this information to Parliament. Clearly, it would be better if the regulations themselves required the Secretary of State to inform Parliament every six months of such investment activity, but without the necessary power in the Enterprise Act to create such a regulatory requirement on her, we have to rely on the Secretary of State’s commitment to do so, as outlined in her Written Statement to Parliament on 30 October. As much as that is a firm commitment that we can hold her to, I think we should keep open the possibility of amending the Enterprise Act to hardwire this requirement on the Secretary of State as soon as an opportunity in primary legislation allows, but I am grateful for the innovative approach that has been taken by the department to ensure that the fundamental requirement that I made in July that the Secretary of State reports to Parliament on this has been met within the powers available to it.

Will the Minister confirm when the first report to Parliament will occur? Will that first report provide the starting position for state-owned investments over 5% in newspapers and news magazines, not just any transactions in the preceding six months? It would be quite helpful to see what the starting position is.

While I am content with these regulations, I want to raise two other matters that are not covered by this instrument but are related. The first is debt financing. Will the Minister explain how this works with a 15% cap? I know that it has long been the Government’s position, and I think the same was true of the previous Government, that it is not necessary to add specific legislative provisions to exempt debt financing from the regime. In a letter to me, the Minister explained that this position is on the basis that,

“the Secretary of State will need to consider the specific facts of the case when considering any acquisition under the Foreign State Influence regime, including whether the loan agreement would enable the lender to exert influence on the policy of the newspaper enterprise in a given case involving debt instruments”.

I understand the reasons for this case-by-case approach, especially if we are to avoid trying to legislate for every eventuality and in the process deter legitimate investment, but I would like some reassurance about how this works in practice none the less.

Of course, in raising this, I have in mind RedBird IMI’s reported poison pill because I do not understand why Redbird thought it could transfer this to the Telegraph, even though it has since said it will not. Will the Minister be clearer than she was when I raised this during Oral Questions on 19 November and confirm that the law would prevent such a poison pill and therefore the control of and influence on the paper that such a situation would create? That is the critical bit I would like some clarity on. More generally, if the 15% cap was already utilised by one or more state-owned investors, would it also be possible for debt financing to be provided by an SoI, whether at the time of acquisition or at a later date? I have had a briefing from officials, which I found reassuring, but it would be helpful for the Minister to give that clarity on the record.

Finally, I turn to the future ownership of the Telegraph. Of course, since the Minister last answered Questions, Daily Mail and General Trust has announced its intention to acquire Telegraph Media Group and is now in a period of exclusivity with Redbird IMI to finalise the bid. In her Written Statement of 24 November, the Secretary of State gave DMGT and Redbird IMI three weeks to complete the necessary work prior to making a submission to her for the transaction to proceed, which by my reckoning would take us to 15 December. This deadline is welcome, but can the Minister tell us what will happen if that deadline is not met?

I, for one, very much hope that the DMGT and RedBird IMI transaction can be completed, but, if we get to 15 December and a deal has not been achieved, will the Secretary of State use her powers to take control of the situation? Her doing so would not be ideal, not least because it would involve a lengthy regulatory process, but it would put ownership of the Telegraph on a more certain pathway to resolution than it has been for the last two years, in the absence of RedBird IMI and DMGT meeting that deadline, because it would lead eventually to the CMA holding an open auction without any reserve price.

This situation cannot keep dragging on, and on what basis would it be justifiable to keep giving RedBird IMI more time? So could the Minister confirm that the department is preparing to take the necessary steps swiftly if the Secretary of State’s deadline is not met? The economic conditions facing the industry make resolving ownership urgent if we are to protect the future of a great stable of national newspapers.

Protecting the principle of a free press while ensuring its financial sustainability is not easy, but it is vital. Democracy does not require our news organisations just to be editorially independent; it needs them to survive. The path to this legal framework that prevents foreign powers owning, controlling or influencing our news industry has been longer than it should have been, but I am pleased that the final piece will soon be in place.

My Lords, where we are now is, I think, not where the Minister expected to be when the previous statutory instrument was introduced. So how did we get to this point? With great haste, and I would say possibly fuelled by intense pressure from beyond these shores, the Government tabled the secondary legislation that, as we have heard, allowed an unlimited number of 15% stakes to be taken by funds that, to all intents and purposes, have an element of control by foreign Governments—the FOCIs. Then, in late July, when I tabled a fatal Motion, the Minister agreed at least to deal with the multiple-stake issue, which is what we have here.

I pay tribute to the noble Baroness, Lady Stowell, who managed to explain to me the convoluted nature of this SI, having herself presumably had some coaching from the department. It is clear that this is not an easy piece of statutory legislation and her suggestion regarding future changes to the Enterprise Act is something that I do think the Government should consider.

Although the Minister agreed to deal with the multiple-stake issue, she did not agree with the strong yet minority view of the House that even one 15% stake was one too many. That is because, at the time, in my view, this regulation was designed to achieve just one thing: the sale of the Telegraph Media Group to RedBird IMI, which of course included the 15% stake from Abu Dhabi. This is moving into the realms of a dangerous dogs Bill approach to legislation, but actually it is bespoke regulation for a discerning billionaire.

Just as that flawed SI had been rushed through, the RedBird bid backed out, leaving us today with handmade regulation but no obvious client. Had the Conservative Party, with obvious honourable exceptions, not backed the Government and voted through the last SI, I would have suggested that we do not need this one at all. But this at least deals with the multiple-stake issue while, in my view, leaving the substantive elephant in the room.

My Lords, I am grateful to the Minister, who opened this, the second part of our foreign investment regulatory double bill, this evening. I thank her for the remarks she made in outlining these regulations.

Like other noble Lords who have spoken, I broadly welcome these regulations, to which the Government committed when we were discussing the No. 1 set of regulations before the Summer Recess. We are here today thanks to careful scrutiny, not least by my noble friend Lady Stowell of Beeston, who should be congratulated on helping us get to this point. As she says, we could perhaps have got here through a different route and rather more elegantly, but I am glad that she welcomes the closing of the loophole that she and others identified when we looked at the previous set of regulations earlier this year.

Unlike the guidance on football governance, which we were discussing earlier, these regulations have been drawn to the special attention of the House by your Lordships’ Secondary Legislation Scrutiny Committee. Like others, I thank the members of that committee for their careful consideration and for the report that draws our attention to the points that they have raised.

The most serious question the committee raises concerns the 5% carve-out, as we have heard. It quotes the correspondence it has had with the noble Baroness’s department, about that carve-out and the way it will be used. DCMS said:

“Our judgement is that the possibility of the carve out being misused is remote”.