Three and Vodafone: Potential Merger

Baroness Laing of Elderslie Excerpts

Thursday 14th December 2023 Commons Chamber

[Navendu Mishra (Stockport) (Lab)]

I refer the House to my entry in the Register of Members’ Financial Interests, in particular my membership of Unite the union. I am grateful to Unite for providing a detailed briefing on the merger. It has been campaigning on the issue for a long time, because, as both Members—my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) and the hon. Member for West Dorset (Chris Loder)—who have contributed so far mentioned, almost 1,600 jobs could be lost. I thank my right hon. Friend the Member for Birmingham, Hodge Hill for securing the debate. He has done a lot of work in the background, including as Chair of the Business and Trade Committee.

There are two key points I want to cover. First, the merger is bad news for customers. There are 650 constituencies represented in this House and I believe this merger impacts every single one. If the merger goes through it will mean higher costs for consumers. Currently more than 2.2 million households in the UK are struggling with the cost of mobile services, so it is not as if they are in a good position to start with. The merger will reduce competition and increase monopoly and pricing power for these operators.

I want to say a little about Greater Manchester, because that is the part of the world that I represent in the House. A Liverpool University study found in 2020 that as many as 1.2 million residents of Greater Manchester alone faced some form of digital exclusion, while the Office for National Statistics has found that 40% of Greater Manchester benefit claimants have very low digital engagement and 23% of residents are not using digital services because of lack of money. This merger will increase prices and dramatically worsen the situation.

The hon. Member for West Dorset talked about his patch. He represents a rural part of England, while my constituency is more urban, but there will be people in each and every constituency who are digitally excluded, in many cases because of a lack of financial resources. My right hon. Friend the Member for Birmingham, Hodge Hill mentioned the research conducted by the former chief competition economist at the European Commission. According to that research, we can expect an average increase of about £300 in mobile phone bills. Reference has been made to Vodafone’s customer service. I am not a Three customer, so I do not know what its customer service is like, but we are looking at nearly 1,600 job losses. Given the cost of living crisis, not only is the merger terrible news for UK customers, but the livelihoods of the people who work in these businesses is on the line.

I will not repeat many of the points that have already been made about national security, but we should be clear about the fact that Three is owned by the Hong Kong-based CK group. If the merger goes through, the new entity will have access to the data of 27 million UK nationals, as well as highly classified data under Vodafone’s existing contracts with, for instance, the national health service, the Ministry of Defence, the Ministry of Justice, and several police forces. I have been campaigning on this issue for a long time, and was lucky enough to secure a Westminster Hall debate on it earlier in the year. In July, following my campaign to stop the merger, I wrote to the chief constable of my local force, Greater Manchester police, about its contract with Vodafone. I received a speedy response, and I am grateful to the chief constable, Mr Watson, and to the force.

The chief constable told me that under section 17 of the Local Government Act 1988, forces are not permitted to take non-commercial considerations into account when awarding contracts. The exclusions set out in subsection (5) are wide-ranging, and without intervention from the Secretary of State on specific issues, public bodies must adhere to the rules set out in the Act. I am quite concerned about the fact that my local police force has a contract with Vodafone, as have several other forces in England. The issue of the data transmitted through Vodafone from those police forces, as well as the NHS, the Ministry of Defence, the Ministry of Justice and other public bodies is a very serious matter. I could go on and on about CK group’s close personal links with the Chinese state and the Beijing-supported Hong Kong Government, but I will not go through them again.

The Chair of the Intelligence and Security Committee, the right hon. Member for New Forest East (Sir Julian Lewis), made this point earlier, but I would like to reiterate that no parliamentary scrutiny of the security approval process is under way. The Government are thought to be assessing the merger under the National Security and Investment Act 2021, but have refused to inform Parliament about the process or how they will make their decision. I am told that the Prime Minister and senior Ministers have held closed-door meetings with CK group executives in the last 12 months. I think right hon. Gentleman used the word “sinister”, and I agree with him: I too think that there is something quite sinister going on. The Government are not being upfront.

While I am quoting what has been said by earlier speakers, let me quote the hon. Member for West Dorset, who observed that the regulator was weak. I agree with him entirely, but I also think that the Government are weak. The Government should get a grip on the situation, because it is terrible news not only for people in each and every constituency but for the nation.

This merger would result in Chinese state interference in the UK, and it would give the CK group access to sensitive national Government, local government and public body contracts. The merger is not worth the risk. My understanding is that there is no evidence that this merger would increase investment. We have already heard about grey spots and areas with no 5G, 4G, 3G or even simple mobile coverage at all, so we need to ensure that Parliament gives proper scrutiny.

This merger is bad news for British customers and bad news for Britain, but I fear the Government are, yet again, asleep at the wheel on another crucial issue.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I call the SNP spokesman.

[Kirsty Blackman (Aberdeen North) (SNP)]

I congratulate the right hon. Member for Birmingham, Hodge Hill (Liam Byrne) on securing this important debate, which I am glad the Backbench Business Committee has granted. The SNP has concerns on a few fronts. I will not repeat the stats, but I almost entirely agree with what he said. I thank Unite for its work and for its briefing.

There are various issues with the merger, particularly relating to consumers and security. We were pleased when, back in June or July, the Minister talked about regulatory hurdles that have to be cleared for this merger to take place, but those regulatory hurdles are not sufficient. It should not and cannot be a rubber-stamping exercise, so the comments we have heard about parliamentary scrutiny are very important.

The right hon. Member for New Forest East (Sir Julian Lewis) has made me even more concerned about the possible lack of scrutiny. We are, after all, a parliamentary democracy, so we should be scrutinising the merger. Those Members who have the access and the ability to scrutinise the merger, with the assistance of confidential documents, should be doing this, because the merger clearly has a significant impact on national security.

The Government published their annual resilience report just a few weeks ago, and people need to be able to communicate with one another. Consumer data is important, and it is likely that a Chinese company will have access to 27 million people’s data, which is pretty terrifying, but it will also have access to mobile masts. The new mobile masts that are being put up as part of the shared rural network will be owned or are owned by a number of different companies, one of which would be this Three/Vodafone conglomerate. If it happens, the conglomerate would have roughly a third of each mast, which will cover a huge swathe of these islands. If there were any sort of attack on the masts, large chunks of the population would not be able to access 4G. The same issue applies to data security. What data is associated with this critical infrastructure, and what changes would be caused by this possible merger?

There are a couple of other reasons for concern. The risk of job losses is incredibly important; it is not of secondary importance. We are in a cost of living crisis, and having more jobs at threat when people are already stretched, already struggling, is pretty concerning as it puts them in an even worse position.

The hon. Member for Stockport (Navendu Mishra) talked about his local police force’s Vodafone contract. The Procurement Act 2023 has security provisions that mean the Secretary of State is able to proscribe companies that have significant issues. However, given the amount of trouble we had getting the Government to do anything about Huawei, in relation to 5G, and Hikvision, in relation to CCTV cameras, I have no faith that the powers in the new Procurement Act could or would be used, and certainly not with any speed. We do not want to end up with these decisions made and the merger approved in some way, only for the Government to decide to backtrack on it. That would be even worse than if they decided to say no at an earlier point. I do not want us to end up realising that the risk has been created and that we need to try to sort the mess out. None of us wants to be in that position. I am not saying that the deal is terrible and should never go ahead. What I am saying, for all those reasons, is that there should be proper scrutiny, because there are significant concerns about China’s potential interference in critical national infrastructure.

On the consumer issues, the fact that prices are 20% higher in those European markets with only three major mobile phone companies instead of four is especially concerning, given the cost of living crisis, as the hon. Member for Stockport made clear. This deal should be properly scrutinised in order to best serve the public and our national security, and to protect our critical national infrastructure into the future.

[Madam Deputy Speaker (Dame Eleanor Laing)]

I call the shadow Minister.