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