Proposed Merger of Three UK and Vodafone

George Howarth Excerpts

Tuesday 19th September 2023 Westminster Hall

[Navendu Mishra]

That is an important intervention. I accept the point that the hardware and the software are both quite open to interference, and I hope the Minister will be able to address these concerns from Members.

Following a merger, Three’s ultimate parent company, CK Group, will gain significant control over a business that will serve 40% of the UK’s population. Evidence suggests that there is extensive collaboration between the CK Group, the Li family that controls it and the Chinese state. It is well documented that the Li family has strongly backed pro-Beijing hardliner John Lee as the Chief Executive of Hong Kong, and supported a draconian new security law that would suppress dissent. On top of this, top CK Group executives sit on Chinese Government committees and have access to the inner circle of the Chinese elite. Does the Minister feel comfortable with a hostile foreign actor potentially having access to millions of UK citizens’ data?

Last month, I wrote to Greater Manchester police, my local force, sharing my concerns about the impact that such a merger would have, and Greater Manchester police is just one of the many police forces that have contracts with Vodafone at present. I am aware that Unite the union is happy to provide a list of police forces that have contracts with Vodafone, so I urge Members across the House to contact their local force to seek assurances about security and privacy measures. I implore the Minister to meet Unite to discuss these concerns as a matter of priority.

I have grave concerns that China’s domestic and counter-intelligence laws and Hong Kong’s national security law may pave the way for China’s security services to obtain confidential data from companies such as CK Hutchison. While in theory UK law prohibits the collection or transfer of individual user data, in practice there have been numerous examples in the UK and elsewhere where data has been accessed and transferred to China. Can the Minister give his assurances that he will do all in his power to prevent this from happening?

Although Ministers may assure us that they will do all in their power, I remain worried that that is not enough to stop sensitive UK Government communications being exposed. It goes beyond the police, as Vodafone has contracts with the Ministry of Justice and the national health service, too. The recent report by the Intelligence and Security Committee of Parliament found that the UK is of “significant interest” to China

“when it comes to espionage and interference”,

and notes that China uses

“all possible legitimate routes to acquire UK technology, Intellectual Property and data”,

but that such overt

“acquisition routes have been welcomed by HMG for economic reasons”.

Now would be a good time for the Government to acquit themselves of that allegation, and to put British consumers and our national security first.

In the past, the Prime Minister met the Intelligence and Security Committee yearly. I hope the Minister will give the House his assurance that the Prime Minister will reinstate those meetings. Now, faced with this significant merger and a litany of other national security threats, would be a good time to do so.

Unite the union has commissioned analysis from digital security expert Dr Alexi Drew, an academic and the director of tech security at consultancy Penumbra Analysis. Dr Drew found that the potential merger created substantial security risks, noting:

“Domestic laws and internal company policies will do little to hinder the exercise of nation-state intelligence gathering apparatus from leveraging any means of access to data that company mergers and acquisitions might enable. If a merger creates the technical or human means to collect valuable data, then the security services of any nation-state, Chinese or otherwise, are likely to make use of it.”

The Government have said that they will assess this risky merger through their investment security unit, so what stage has the ISU assessment reached, and will the acquisition be called in for a further national security assessment? Knowing what we know about the proposals, they seem wrong on so many levels. They are bad news for British customers, will result in significant job losses, and plainly pose a national security threat to the UK. Perhaps things would be very different if the Government actually had an industrial strategy for the UK and were not asleep at the wheel while our national infrastructure got sold off to hostile actors.

In the light of all this, I will be interested to hear the Minister’s contribution and whether he supports the merger. If he supports it, why? If he does not, what will he do to stop the merger?

[Sir George Howarth (in the Chair)]

I remind Members that they should bob if they wish to be called in the debate.

--- Later in debate ---

[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.