Labour faces embarrassing defeat over foreign state ownership of newspapers
The House of Lords is preparing to inflict an embarrassing defeat on Labour over its ' deeply problematic ' plans to let foreign powers become part-owners of British newspapers.
Peers including a former chancellor, a former director of public prosecutions and the current chairman of the press regulator are in open revolt over proposals by Lisa Nandy, the Culture Secretary, to relax an outright ban on foreign state shareholdings to allow passive stakes of up to 15pc.
The basic principle was expected to be reluctantly accepted by Parliament, in part to end the destabilising uncertainty at The Telegraph caused by a blocked takeover bid bankrolled by the United Arab Emirates.
However, a loophole that it is feared could allow foreign powers to team up to gain sway over Britain's free press has stoked a rebellion capable of defeating the Government. As proposed, the legislation would enable foreign states to own up to 15pc if they are not cooperating with each other.
Lord Young, the journalist and founder of the Free Speech Union campaign group, has spearheaded an open letter to Ms Nandy demanding she tighten the proposed laws.
It has dozens of signatures from Conservative peers of all stripes, including former Cabinet ministers Lord Lamont, Lord Baker and Lord Lilley, as well as crossbenchers including Lord Macdonald, the former director of public prosecutions.
The letter to Ms Nandy said her proposals to allow multiple foreign powers to own shares in a single newspaper were 'deeply problematic'.
It added: 'It has to be assumed that if different state actors are intent on exerting influence through their shareholding, then some may be prepared to do so covertly and in collusion with other states.
'To guard against this risk, the draft regulations should ensure that the cap in the percentage of shares that can be owned in a British newspaper enterprise is a total cap.'
The letter was also signed by Lord Faulks, the chairman of the press regulator Ipso; Baroness Fleet, the former editor of The Evening Standard; and Lord Goodman, the former editor of the Conservative Home website.
Other prominent backers included Lord Brady, the former chairman of the 1922 committee of Conservative backbenchers; Baroness Deech, the chairman of the House of Lords appointments commission; Lord Swire, the former Foreign Office minister; and Baroness Spielman, the former head of Ofsted. Lord Roberts, the Churchill biographer, has also signed and has written in The Telegraph that the legislation 'must be done in a way that entrenches the traditional freedoms of our press'.
The letter marks a significant escalation of opposition to the legislation in the Lords. Baroness Stowell, who last year played a critical role in forcing the Government to block the UAE bid for The Telegraph, was among the first to raise concerns over multiple state shareholdings in a letter to Ms Nandy last week.
She did not sign Lord Young's letter, but warned the Government it faced defeat if it pressed ahead, even though the Conservative leadership in the Commons had signalled it did not oppose the proposed laws.
The Liberal Democrats have tabled a rare 'fatal motion' to veto the statutory instrument which may become the focus of the Lords rebellion.
Lady Stowell said: 'I really hope the Government reconsiders these proposals quickly.
'It would not be acceptable for multiple foreign states to own stakes of up to 15pc in the same newspaper, yet for reasons unclear, that is a scenario Lisa Nandy wants to allow.
'Unless she closes this obvious loophole, I can see peers swinging behind a fatal motion to block this legislation. It would be a rare step to take, but I know colleagues feel very strongly about this crucial matter of press independence.'
The Conservatives are the biggest group in the Lords. Alongside the Liberal Democrats and some crossbenchers they could readily defeat the Government and spark a battle with the Commons.
Lady Stowell is among the parliamentarians to have said she would accept a limit of 15pc with reservations, were it not for the risk of cumulative shareholdings.
The figure is three times the limit proposed last year by Rishi Sunak's government. Ms Nandy decided to lift it following lobbying on behalf of Rupert Murdoch and Lord Rothermere, the owner of the Daily Mail.
Both media moguls have sought sovereign wealth investment in the past. Lord Rothermere previously considered a takeover bid for The Telegraph with financial backing from the Gulf. Mr Murdoch relied on the support of a Saudi royal shareholder to fight off the investor rebellion sparked by the phone-hacking scandal.
Lobbyists for Lord Rothermere and Mr Murdoch argued that a 5pc cap on foreign state investment would cut news publishers off from a significant source of potential investment in digital growth at a time of upheaval as print newspapers decline.
The row over cumulative shareholdings threatens to further delay a conclusion to the two-year saga over ownership of The Telegraph.
RedBird Capital, the US private equity firm that was the minority investor in the blocked UAE takeover, has agreed in principle to become controlling shareholder in a £500m deal. IMI, the media investment vehicle owned by UAE royal Sheikh Mansour bin Zayed Al Nahyan is expected to retain up to 15pc.
However, the deal has not been finalised and is likely to require a settled legal position before it can face regulatory scrutiny.
The Department for Culture, Media and Sport declined to comment.
Full list of signatories
Lord Biggar
Baroness Meyer
Lord Moylan
Lord Jackson of Peterborough
Baroness Eaton
Lord Brady
Lord Elliott of Mickle Fell
Baroness Finn
Baroness Fleet
Baroness Noakes
Baroness Bray of Coln
Lord Strathcarron
Baroness Lea of Lymm
The Earl of Leicester
Lord Borwick
Lord Roberts of Belgravia
Baroness Deech
Lord Sherbourne
Lord Mackinlay
Lord Ashcombe
Baroness Coffey
Baroness Foster of Oxton
Lord Moynihan of Chelsea
Lord Evans of Rainow
Lord Forsyth of Drumlean
Baroness Buscombe
Lord Sharpe of Epsom
Lord Mancroft
Lord Robathan
Baroness Nicholson
Lord Wrottesley
Baroness Cash
Lord Goodman
Lord Shinkwin
Baroness Altmann CBE
Edward Faulks KC
Lord Swire
Baroness Fox of Buckley
Baroness Spielman
Lord Lamont
Lord MacDonald of River Glaven
Lord McInnes of Kilwinning
Lord Hamilton of Epsom
Lord Reay
Lord Pearson of Rannoch
Lord Lilley
Lord Baker of Dorking
Lord McLoughlin
Baroness Morrissey
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