Budget Resolutions and Economic Situation

Liam Fox Excerpts

Monday 8th March 2021 Commons Chamber

[Dr Liam Fox (North Somerset) (Con)]

I broadly welcome the Budget. It comes at an unprecedentedly difficult time for the public finances as a result of the pandemic and the Chancellor is indeed wise largely to leave the economy alone in the coming year. This is not, as we had in the financial crisis, a fundamental problem with the workings of the economy itself, but an external shock, and the economy will self-right if we allow it to do so.

It is not a surprise that there is a bigger drop in GDP in the United Kingdom than in some other countries. We have a much larger service sector economy, and service sectors require people to move for them to work, therefore it is not a surprise that, if people cannot move, we get a bigger shock than an economy that is largely manufacturing based.

However, I question some of the attitudes to the financial years ahead. We tend to get much of the same old, same old on tax and spend; that the way to balance the books is either to raise taxes or to reduce spending. No one looks at what a business would do, which is to ask how it can earn more money. This country could earn a lot more money.

British exports now count for under 30% of our GDP. That needs to improve—the figure for Germany, for example, is nearly 49%. We have identified 400,000 businesses that we know could be exporters because they have counterparts and peers that already export. Governments need to help companies into markets. The market will do the same.

The Government can also help by setting a wider and better international framework for business. We can liberalise global services post Brexit, with our freedom in world trade policy. We should do so. Britain, the United States and Japan, the world’s three biggest service economies, would benefit enormously from trade liberalisation.

We need more wealth creation in the country. Wealth creation is not the same as growth. Any idiot Government can spend tomorrow’s money today and call the result growth. Labour Governments have made careers of doing that since the first Labour Government. Wealth creation is taking someone’s unique intellectual property and turning it into a good or a service that does not exist today, or a better good or service than exists today. That is why I would like to see more creativity in what we do in the time ahead.

Are we really saying with a £39 billion tax rise that we can find no major efficiency savings in the years ahead? Are we really saying there are no supply-side changes in our economy that could make it work more effectively? Do we really have to be saddled in perpetuity with the balance of spending and the patterns that we see today? I hope not. I hope that, in the Budgets ahead, once we put the covid pandemic behind us, we can return to a Conservative tradition of not just tax reform, but tax simplification, because those are the things that will make a market economy work better. We cannot fund the public services we want to see unless we have an efficient capitalist economy working at its maximum level, and that is the duty of any Conservative Government.

Telecommunications Infrastructure (Leasehold Property) Bill

Liam Fox Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Tuesday 10th March 2020 Commons Chamber

[Ronnie Cowan]

I wholeheartedly agree. The whole concept of a 5G network rides roughshod over the concept, which was brought into 2G, 3G and 4G, of a core and a periphery; once anyone is in that network, they are in that network.

This is not an attack on China or the people of China. They have done what we should have been doing; they have built what we should have been building. Because as I understand it, currently there are no wholly owned and run UK companies that can provide the services of a Huawei, a Nokia, an Ericsson or a Samsung. But with guaranteed work and a guaranteed cashflow we could create the perfect environment to grow such a company. Amid the Brexit jubilation did this UK Government not say they were “taking back control”? Well, they should put their money where their mouth is.

Finally, rhetoric in itself will not revitalise or rejuvenate a marketplace. I am asking this UK Government to plan, invest and grow a state-owned digital infrastructure company.

[Dr Liam Fox (North Somerset) (Con)]

It is essential in this debate that we do not conflate the issues of trade and security. In order to achieve greater trade with China we do not need to sacrifice our national security by including Huawei.

I worked hard as Trade Secretary to improve our trade with China, and getting better Chinese trade is good, not least for bringing millions—billions—of people out of poverty in that country. That is in itself a good thing, but—and it comes with a very large but—it must, as my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith) said, come with a rules-based system.

We know that there is an incredible lack of transparency in China about what is in the state sector and what is in the private sector, and Huawei is a classic example of that. The distinctions that we accept in the free-market west are not accepted in the Chinese system, which is why, for example, it is so able to get around some of the pricing constraints that we put in tenders. It is very unclear how investment is funded. While competitors to Huawei such as Samsung have to make very clear to their shareholders how investment is raised and then spent, that transparency does not exist when it comes to Huawei. When I spoke to Samsung about this issue and asked why it was not at the forefront in countries such as the United Kingdom, its answer was, “Well, we have to invest along with the international rules and we have to account to our shareholders and to the law.” These are not things that apply to Huawei, and in any case the way that the tenders were constructed allows a company that lacks transparency such as Huawei always to underbid. If I wanted to get into someone else’s national infrastructure, and I was able to count on ghost state funding to do so, I would certainly take that opportunity. Why would we be surprised that that happens with Huawei?

[Bob Seely]

Between 6% and 7% of our overseas export trade is with China, and we are worried about offending it. One third of the Australians’ export trade goes to China. China would therefore have the power to cripple Australian export trade if it chose another supplier for some of those products, but it does not do so, and Australia has said no and ruled out high-risk vendors in its 5G. So the economic risks and the economic threats are much exaggerated.

[Dr Fox]

Not only are they greatly exaggerated, it is utterly untrue that there is a link between the two. My hon. Friend has made the case perfectly clearly that the Chinese knew that the Australians were ruling out Huawei involvement yet they still trade with Australia, so the argument in this debate is a red herring entirely. This is an issue about national security. Also, in terms of trading and China, we have not yet resolved issues such as dumping, illegal subsidy and intellectual property theft—and that is before we take into account the 2017 national intelligence law.

[John Redwood]

Will my right hon. Friend confirm that in the important talks between the US and China, the issue of intellectual property theft and the legitimate defence of western technology was absolutely central and the US got guarantees in that deal which we still do not have?

[Dr Fox]

That was absolutely central, as my right hon. Friend says; whether the guarantees will turn out to be enforceable is a separate issue, however, and that of course points to some of the issues the United States has about Chinese membership of the World Trade Organisation.

[Mr David Davis]

As my right hon. Friend intimates, there is a massive subsidy from the Chinese state to Huawei, and that is for a purpose. Would he care to expatiate on what that purpose might be?

--- Later in debate ---

[Dr Fox]

In a moment I will come on to why I think our values must be a part of our approach to this particular issue, as well as national security, but there is a key question for the Secretary of State to answer in this debate, and it is a very simple one: do the Government believe that there is any risk to the United Kingdom’s national security if Huawei is involved in our 5G system? The Government cannot talk about a small risk; we do not want there to be a risk at all. One of the things I have found extremely irritating in this whole debate and in many of the briefings that have come forward is the response, “Don’t worry, we can mitigate the risk of Huawei being there.” Why would anyone want to mitigate a risk when they can avoid the risk in the first place?

That goes to the root of the issue. The idea that we must have Huawei because there are no alternatives is untrue. The United States is going to get 5G and it will get it without Huawei, because it will not bring that risk to its own national security. So what is wrong with the United Kingdom having to wait a little longer to get 5G, but to get a 5G that will give us security in the long-term—and, as has been rightly said, so what if it costs us a little bit more? The cost is much less than the risk to long-term national security.

[Andrew Bridgen (North West Leicestershire) (Con)]

We have all heard the Government say that they can mitigate the risks of Huawei being involved in the roll-out of 5G, but my response to those security briefings was that the Government do not have to persuade me; they have to persuade our Five Eyes partners. If the Government cannot persuade the Americans, Australians, New Zealanders and Canadians that they can mitigate the risk, it does not matter whether they can mitigate it or not, as we will lose access to that security information, and that is a price we cannot pay.

[Dr Fox]

Although I accept my hon. Friend’s point, I think the Government’s first duty is to persuade the House of Commons that we are not taking a risk with our national security.

I want to come briefly to the point raised by my right hon. Friend the Member for Ashford (Damian Green) about reputation. It is beyond doubt that countries around the world will be looking to the United Kingdom to see what decision we make. If we send out the signal that we, a country that is so highly regarded in terms of our national security infrastructure, think it is all right to involve Huawei in our 5G, others will follow. In fact, it is worse than that; we are already being cited as an example by other countries who intend to make that decision. Today, we have an opportunity to pause and say that the United Kingdom cannot be cited as a precedent, because we have not yet taken that decision—and hopefully we never will.

[Mr Paterson]

My right hon. Friend is making a very powerful point. Does he agree that if we did that, we would be in a tremendous position to work with our Five Eyes partners on a common programme, as suggested by US senators in their letter to MPs last week?

[Dr Fox]

I could not agree more. This decision comes down to the wider issue of our values and what our world view is. This decision will demonstrate that to countries around the world. What China wants is to make the world a more permissive place for autocratic regimes. What we need to do is to make the world a more permissive place for those who believe in freedom, democracy and the rule of law. Our national security is intrinsic to protecting those values. The decision we take will say more than just what we intend to do for the 5G network and the internet of things; it will say something about what Britain is and intends to be in the years ahead, and how we intend to shape the world around us.

[Jeremy Wright (Kenilworth and Southam) (Con)]

I am very grateful to my right hon. Friend for giving way. May I take him back a little in his speech? I agree entirely that it is not a good argument for the inclusion of Huawei that not to do so would cost us a little more or take us a little longer, but does he accept that if we pursue our 5G network with other suppliers, it is highly likely that those suppliers will also use Chinese equipment? Therefore, whatever we do with Huawei, it is important to strengthen our entire telecoms supply chain network against all types of threat.

[Dr Fox]

I entirely agree with my right hon. and learned Friend, and I am grateful to him for raising that point. When I was practising medicine—or, as my wife would say, “When you had a proper job”—I was never inclined to do the cheapest or the fastest treatment. It was always the best treatment and that is what we have to apply here. This is a much more important issue. If we have to wait a little longer and pay a little more for the security of this country, then we should do just that.

We have a choice in politics and it is fairly binary: at whatever level and on whatever issue, we either choose to shape the world around us or we will be shaped by the world around us. I believe that the values we have in this House—certainly, the values we have as a party—and the conventions and traditions of this country are not something gathering dust on a shelf. They are a route map to the future. We have to believe in those values and be willing to defend them.

I hope the Secretary of State can give us enough concessions today to allow him to go away and think again about these issues. If he does not, I am afraid the Government will face an embarrassing vote today. As someone who is a former Secretary of State for Defence who sat on the National Security Council, it would give me no pleasure to vote against a Conservative Government because I believed they were undermining our national security. I urge the Secretary of State to go away and think about these issues, and bring them back in a way that provides satisfaction that our national security will not be sold for any reason whatever.

[Mr David Davis]

I have three very simple points to make. First, we are told that we should listen to the experts, namely the Government experts, but what is their argument? Their argument is this: the experts at our national security agencies, the greatest experts on this matter in the world, are wrong; the Australian Secret Intelligence personnel, who know China better than any other western agency, are wrong; and that the people in the Government of Japan, who are explicitly opposed to this policy and who are closest to China in terms of threat, are wrong. So if we listen to the experts, we should listen to the experts who are closest to this problem and who have the most resources, namely those or ours.

--- Later in debate ---

[The Secretary of State for Digital, Culture, Media and Sport (Oliver Dowden)]

Connectivity is the lifeblood of any modern digital economy. It is vital if we are to create the conditions where anyone can succeed and thrive, regardless of their background or their postcode. The Bill is crucial if we are to deliver that. It is one of a number of steps that the Government are taking to increase connectivity speeds, reduce costs and create the right environment to encourage investment. The Bill is a crucial plank in delivering the manifesto commitments, on which we on the Conservative Benches stood and were elected three months ago, to deliver broadband to the whole of the UK and to support the levelling up agenda. However, I have concerns that some of the amendments would undermine that work. They could mean the UK risks losing out on the economic benefits of nationwide access to faster broadband networks and that many families living in blocks of flats would not be able to benefit from new broadband services.

It has been clear from the debate so far that there is one principal amendment at stake, amendment 1, in the name of my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith). Amendments 4 and 5, which I will deal with together, relate to high-risk vendors. The first point I would like to make is that I genuinely understand concerns, which many hon. Members have raised with me, that they have not had the time to consider these issues or to scrutinise them properly. The reason for that is that we will be bringing forward a Bill—as my right hon. Friend the Member for North Somerset (Dr Fox) said, my first task as Secretary of State is to convince the House on the approach to high-risk vendors—on telecoms security, which will enable the House to consider all these points. We will bring forward that legislation before the summer recess, so all hon. Members will be able to debate these points extensively. There will be opportunities for amendments to be made and an opportunity for the whole House to consider all these issues at great length. I will proceed to set out the steps that have led us to this point and the further steps that we are announcing today.

[Dr Fox]

Will the Minister give way?

--- Later in debate ---

[Oliver Dowden]

I understand the point that my right hon. Friend is making, but I hope that he would accept that at the moment, aside from Huawei, there is Ericsson and Nokia, which we are currently reliant on, and we need to enhance that capacity. That is why the Government are committing today to ensuring that within this Parliament, we work with our Five Eyes and other partners to ensure that we develop the extra capacity.

[Dr Fox]

My right hon. Friend said that a change in the decision by the National Security Council would be required. In fact, it would require a change in the decision by the Government. The NSC does not govern the United Kingdom—Her Majesty’s Government do. However, I still cannot understand the idea of our having to remove high-risk vendors—we should not be incorporating risk to our national security into 5G at all. That capacity will emerge. The United States will not build a 5G network that incorporates that risk. What is the rush?

[Oliver Dowden]

My right hon. Friend raised two points. First, he referenced the role of the National Security Council. As he will be aware, that was created when he served as Defence Secretary under the former Prime Minister, David Cameron. It is a committee of the Cabinet. That is how decisions are made on behalf of the Government. The Cabinet delegates decisions to the National Security Council. That is the Government’s decision-making process and, of course, it is endorsed by the Cabinet. Forgive me, his second point was on—

[Dr Fox]

The incorporation of risk.

[Oliver Dowden]

The National Security Council looked at that. The National Cyber Security Centre advised on it, working with GCHQ. We took that analysis of the risk. That was then assessed by Ministers through the National Security Council, who weighed up that risk. The Government took the decision that we should have a cap of 35% for high-risk vendors—principally, Huawei—and we would then seek to diversify and reduce that. We are clear in that commitment: we want to diversify away from Huawei. What we are setting out today is the process for achieving that, and that is, first of all, about ensuring that we get the capacity there in the first place.