Proposed Merger of Three UK and Vodafone

Carol Monaghan Excerpts

Tuesday 19th September 2023 Westminster Hall

[Carol Monaghan (Glasgow North West) (SNP)]

It is an honour to serve under your chairmanship, Sir George. I thank the hon. Member for Stockport (Navendu Mishra) for securing this important debate. As the hon. Member for Strangford (Jim Shannon) and a couple of other Members did, I would like to thank Unite the union for the incredibly helpful briefings that it produced for this debate. I also welcome the shadow Minister, the hon. Member for Rhondda (Sir Chris Bryant), to his post.

We have been here before. It is only three years since we engaged in a whole pile of debates about Huawei and the threats posed to national security by the involvement of the Chinese state actor with our 5G network. Despite repeated warnings from allies and security experts, the Tories went ahead and awarded Huawei a huge contract to deliver the UK’s 5G network. Only after months of debates, questions and condemnation did they do a final U-turn to revoke the contract, but not before Huawei had begun its work. That meant that not only was a security risk introduced, but the removal of Huawei from the 5G system cost somewhere between £2 and £3.5 billion. The UK Government’s intransigence in the face of those warnings cost taxpayers a huge amount of money.

We should have learned the lesson. However, it now appears that we are getting ready to hand over control of key infrastructure to the CK Group—the parent company of Three. Following the merger, as the hon. Member for Stockport pointed out, the CK Group will become a person of significant control over a business that will serve 40% of the UK’s population. Unite the union has uncovered extensive collaboration between the CK Group, the Li family that controls it and the Chinese state. A number of CK Group executives sit on Chinese Government committees, with access to the inner circle of the Chinese political elite. That has to raise serious questions about privacy and security for UK consumers, which the CK Group has done nothing to address.

Under the Chinese Government’s state security laws, it would be possible for the personal data of all users of the new merged company to end up in the hands of the Chinese Government. That is bad enough, but Vodafone holds UK Government contracts for the NHS 111 helpline, the Ministry of Justice and the Ministry of Defence.

[Navendu Mishra]

And police forces.

[Carol Monaghan]

And police forces; I thank the hon. Member. Added to that, strategic national assets in the form of Vodafone subsea telecommunications cables between the UK and US would pass to the CK Group. It is quite simply madness.

Security is one thing, but there are other concerns, as a number of Members have pointed out. What would the merger, and any further monopoly of the telecoms market, mean for consumer costs, consumer choice and job security in the UK? The merger would result in nearly half of all UK consumers falling into the company’s market share. As the EU has previously warned when blocking similar mergers, that could harm consumers and give free range for price hikes.

[Navendu Mishra]

The hon. Member is making an excellent speech. Does she agree that the root cause of the problem—the core of the issue—is that the Government do not have an industrial strategy? The merger seems to be bad news for customers, bad news for national security and bad news for people who work for telecoms businesses. The bottom line is that if we had a good, forward-thinking industrial strategy that looked at growing good, well-paid jobs in this country and treating customers well, perhaps we would not be in this place.

[Carol Monaghan]

Of course, we have to look at who the merger is good for. It is good for the shareholders, good for the corporation and good for those who seek to profit off the back of it, but it is not good for the ordinary consumer or, as the hon. Member says, national security.

Given the potential for price hikes, the merger should be thrown out straight away, especially given the cost of living crisis, as the hon. Member for Liverpool, Riverside (Kim Johnson) pointed out. We should not even be here having this debate. The hon. Member for Birkenhead (Mick Whitley) gave an indication of the potential magnitude of such a price hike; I think he mentioned a figure of up to £300 per year. That is astronomical for people who are struggling to make ends meet from week to week. This merger has been portrayed as something that will increase investment, and lead to a better consumer experience and lower prices, but we know what normally happens during a merger: investment falls, profits increase and the customer suffers. I cannot see this being any different.

The difficulty is in who is profiting. We have to look at the Government Benches. Two Tory MPs are on CK’s payroll; that is in the Register of Members’ Financial Interests, so it has been declared. The UK Government must do full diligence, and protect customers from Chinese state surveillance, not override these security concerns.

We need assurances from the Minister that this merger does not compromise national security in any way, shape or form. The two profitable companies concerned, which hold the data of 27 million UK consumers, have critical Government contracts. Will the Government take a “consumer first” and “national security first” approach to any regulatory checks? What steps will the Minister take to ensure that large job losses do not result from any merger? This cannot be allowed to become a repeat of the Huawei scandal, in which ignorance and intransigence not only put consumers at risk but cost billions and led to an eventual U-turn. Security of the telecoms network and of users’ data must come first.

[Sir George Howarth (in the Chair)]

I call Sir Chris Bryant.