Russia: UK Companies

Debate between Pat McFadden and James Cartlidge

Wednesday 7th December 2022 Commons Chamber

[James Cartlidge]

I pay tribute to my right hon. Friend for his great expertise on these matters but say to him that we have to differentiate. We have taken explicit and direct action on firms within the sanctions regime—120 entities and 1,200 individuals have been sanctioned and, as I said earlier, £18.4 billion-worth of frozen assets have so far been reported to the UK Government. There has been a clear commitment from a number of important UK and indeed global businesses to divest from Russia—I am not specifically talking about any one—but we must recognise that there is complexity in that. When the Prime Minister was Chancellor back in March, he was very clear about what the Government want in terms of divestment, and we obviously support companies in taking that action, but I am happy to look at what further can be done in this space and to work with colleagues.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I thank my right hon. Friend the Member for Barking (Dame Margaret Hodge) for tabling this urgent question.

Right now in Kyiv, the temperature is around freezing. Putin aims to weaken the resolve of the Ukrainian people by freezing them over this winter. But with every Russian missile that falls on energy infrastructure, he does not weaken the resolve of the Ukrainian people—he strengthens it. The resounding answer to the question posed by President Zelensky—without electricity or without you?—should be heard loudly and clearly in Moscow.

To support the efforts of the Ukrainian people, many British companies have ceased their Russian operations and divested themselves of their interests. Those decisions have cost businesses money, orders and jobs, but they have made them because they want to do the right thing. And other businesses are paying higher energy costs as a result of the war. But some companies either continue to operate or have not fully divested themselves of their interests.

The excess profits made by energy companies have rightly been called the windfalls of war. Energy is the central pillar of the Russian economy and the profits from it fuel the Russian war effort. My right hon. Friend the Member for Barking has told the House today that the dividend due to BP as a result of its stake in Rosneft is worth about £580 million. Those funds may be frozen at the moment, but what do the Government believe should happen to those funds when they are eventually released? Do the Government believe that those funds should be used for the welfare and benefit of the people of Ukraine, whose country is being devastated by Russian aggression? How many other British companies are still operating in Russia and why are they still operating? What is the Government’s position on money they could be making there, which could also be described as the windfalls of war?

We are united across this House in our support for Ukraine and for the incredible bravery shown by both its armed forces and its people. The question the House poses today is how will the Government make sure that British companies are not profiting from the appalling Russian aggression we have seen in Ukraine?

[James Cartlidge]

The right hon. Gentleman poses a number of very important questions. On a general point, he talks about strengthening the resolve of the people of Ukraine. This country can be rightly proud of every step it has taken to strengthen that resolve, and, I must say on record, of the leadership of two former Prime Ministers, as well as the current Prime Minister. They have shown extraordinary leadership appearing in Kyiv under huge pressure and supporting President Zelensky, alongside the support we have given to the Ukrainian armed forces and our massive humanitarian aid. I know there is consensus on that, but we should not in any way be defensive about the steps we have taken to support the Ukrainian people.

The right hon. Gentleman talks about companies doing the right thing. He is absolutely right that companies are divesting and exiting from Russia. We welcome that. I explained about the statement made by the Prime Minister when he was Chancellor back in March, which is obviously something we welcome. I think there are some complexities in that process and I will not be drawn on individual firms. That is long-standing Treasury policy for very good reason.

The right hon. Gentleman mentions the windfall tax. We have a windfall on North sea oil and gas which will raise £41.6 billion—an enormous sum of money. Why are we raising that money? It is in part precisely to fund the extraordinary support we are putting in place to help British people and British businesses through this winter. He talked about the impact on companies of Putin’s war and the impact on people. Yes, of course, the harshest impact is on the people of Ukraine, not least the bereaved families, but there is an impact on our people with higher prices, including energy prices, here and throughout Europe and the world. Our windfall tax funds that support so that this winter we are doing everything possible to support our businesses and our people, alongside massive support for the people of Ukraine.

Economic Responsibility and a Plan for Growth

Debate between Pat McFadden and James Cartlidge

Wednesday 19th October 2022 Commons Chamber

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

I am pleased to conclude the debate on behalf of the Opposition. I welcome the new Chief Secretary to the Treasury to his position. His colleague the Exchequer Secretary is an old-timer: she has been in post for six weeks. No doubt she is sitting at the Treasury talking about the old times back in September.

I thank all right hon. and hon. Members who have contributed to the debate. We have heard many powerful speeches about the impact of inflation and rising energy costs, the pressures on business, the UK’s international reputation and the impact of rising mortgage rates. If you will forgive me, however, Mr Deputy Speaker, I want to single out the speech of the hon. Member for Hazel Grove (Mr Wragg), who not only spoke about his own health issues, but added his voice to those of Conservative Members calling for the Prime Minister to go.

This country has been through very significant economic damage in recent weeks: a run on the pound, a spike in gilt yields that has increased the cost of Government borrowing, emergency interventions from the Bank of England to prop up the country’s pension system, and a spike in mortgage rates that will add to the household costs of millions of people to years to come. All of it has been self-inflicted—not an act of God, not the result of global conditions, but the result of using the country for an ideological experiment. To deal with the argument that the Financial Secretary made at the beginning of the debate—essentially, that this is all global—I will quote from a letter from the Bank of England to the Treasury Committee. If any Conservative Member wants to intervene to say that any of it is wrong, they can be my guest.

Immediately after the mini-Budget, there were two days with the biggest daily rises in gilt yields in 20 years. Over four days, the rise was twice as large as the biggest rise since 2000. The Bank of England says that

“the scale and speed of repricing…far exceeded historical moves”.

Following the mini-Budget, gilts moved more in one day than in 23 of the past 27 years. No such moves happened in gilts in dollars, euros or other major currencies. There were global factors before the mini-Budget, but as my hon. Friend the Member for Chesterfield (Mr Perkins) said, the global context was a reason not to act in such a rash manner, not a reason to behave with all the restraint of a couple of trigger-happy pyromaniacs.

This crisis was not born of global conditions, but made in Downing Street. It has destroyed the Conservative party’s claims to be the party of economic competence and of sound money. The real-life impact of what the Government have done has been to place a Tory risk premium on the country’s borrowing costs and a Tory premium on people’s mortgage rates.

[James Cartlidge]

I asked the shadow Chancellor earlier whether it was correct that Labour’s intervention in energy support would be almost primarily funded by borrowing despite its pledges on the windfall tax. Is that correct?

[Mr McFadden]

We have never argued that there was no need for borrowing. The point we made was that much more of this could be funded by a windfall tax. If the hon. Gentleman thinks that that is some sort of revelation, I can only ask him where he has been living for the last few months.

The Prime Minister and the Chancellor of September behaved like student pamphleteers. When the Prime Minister stood up at her conference and attacked

“vested interests dressed up as think tanks”,

it was an announcement worthy of the gold medal for lack of self-awareness, for never has there been a Government more symbolic of the failure of think-tanks on influential thinking than the one that she leads.

The Prime Minister and her ideological soulmate got the keys to the Treasury Ferrari, took it for a joyride and then crashed it into a ditch. Now, belatedly, by commissioning the OBR report and singing the praises of an independent Bank of England after spending all the summer undermining it, they have signed themselves up for the speed awareness course; but it is too late, because people will continue to pay the price of what they have done.

We have now had two fiscal events with no report from the OBR. This was not just about what was done, but about how it was done. The whole country is paying a price for the Conservative party’s contempt for the institutions that safeguard our economic credibility. And where does it all leave the Prime Minister? The mini-Budget was not a surprise to her; it was not imposed on her; she was 100% its co-author. It embodied her beliefs, her world view, the central core of the campaign on which she fought and won the leadership contest. Now everything she believes in has had to be burned in front of her to try to keep this zombie Government carrying on. This is not a case of “too far, too fast”, as she has claimed, or of a minor policy U-turn. It is a repudiation of everything that she stands for. It is a total and utter reversal.

The one surviving policy that the Prime Minister keeps praying in aid, the energy price guarantee, is the one policy that she campaigned against throughout her leadership campaign, saying that she was opposed to handouts. The question now is, what is her premiership for? Is it for the policies that she really believes in—those in the mini-Budget, now rejected and lying in ashes—or is it for the revenge of the orthodoxy that she so disdains? Each dose of the medicine she takes entails embracing that which she has so publicly rejected. Her argument, in effect, is “Please keep me here so that I can be what I am not.”