Labour pledges to close foreign states loophole to ease Telegraph sale
The House of Lords has been preparing to derail proposals by Lisa Nandy, the Culture Secretary, to allow the United Arab Emirates to own a passive stake in The Telegraph of up to 15pc.
She intends to ease an outright ban on foreign state shareholdings and end two years of damaging limbo.
However, the Government was facing a rare Lords defeat after it emerged that it had failed to account for the risk that multiple foreign powers could take stakes of up to 15pc each in a single title. It raised the prospect that states could secretly team up to gain sway over Britain's free press.
Responding to these concerns in the Commons on Wednesday, Stephanie Peacock, the media minister, pledged to introduce further legislation to close the loophole.
She pledged to publish draft legislation to guard against the risk by July 16, which would allow peers to review them before deciding whether to allow 15pc foreign state ownership. The vote to close the multiple stakes loophole would be likely to come after the summer recess.
Ms Peacock said: 'Our policy intention has always been to prevent any foreign state influence over the affairs and policies of UK newspapers and news periodicals.
'Although a remote risk, we acknowledge that in some circumstances different state-owned investors from different states could, in theory, each acquire up to 15pc of UK newspaper enterprises.
'The Government intends to lay, in draft, a second statutory instrument in the autumn to amend the foreign state investment exceptions to put the issue beyond doubt.
'We have chosen not to withdraw the regulation before us today due to the pressing need to have the main foreign state investment exceptions in place as soon as possible. This is important in order to give UK newspapers, and potential investors, greater certainty about the overall regime.'
Planned takeover
By pressing ahead to set the limit on foreign state ownership at 15pc, ministers hope to avoid further delays to a planned takeover of The Telegraph led by RedBird Capital, a US private equity firm.
It had been the junior partner in the attempted takeover last year by RedBird IMI, a vehicle mostly funded by the UAE vice-president Sheikh Mansour bin Zayed Al Nahyan. That bid was blocked following an outcry over press freedom.
Baroness Stowell, a Conservative peer who played a critical role in changing the law to prevent the UAE takeover, said the Government pledge to close the multiple stakes loophole could satisfy concerns.
She said: 'This is a step in the right direction. Nothing is certain yet, but it will mean that we can consider and vote on a 15pc limit having had sight of draft legislation to close the loophole.
'We all want to see certainty for The Telegraph, its readers and staff. However it remains unacceptable to create a risk that multiple foreign states could own 15pc each of any newspaper. If the Government delivers on what it has promised there could be a way forward.
'The outcome has to be both press freedom and financial stability.'
Gerry Cardinale, the founder of RedBird, has been putting the finishing touches to his planned takeover of The Telegraph and awaiting legal certainty before notifying regulators. He has pledged significant investment in journalism.
As well as IMI, the UAE's media investment vehicle, the ownership consortium is expected to include as minorities Lord Rothermere, the owner of The Daily Mail, and the billionaire businessman Sir Leonard Blavatnik.
The Conservative government last year proposed a 5pc cap on foreign state ownership. However, Ms Nandy has opted to treble the limit after lobbying from Rupert Murdoch and Lord Rothermere. They argued that a lower cap would have a chilling effect on investment in news publishing at a time of business upheaval.
Ministers have been seeking to repair relations with the UAE, which were badly damaged by the decision to block its attempted takeover of The Telegraph.
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