Financial Assistance to Ukraine Bill

Richard Fuller Excerpts

2nd reading
Wednesday 20th November 2024 Commons Chamber

[Richard Fuller (North Bedfordshire) (Con)]

Before I turn to the Bill, I just say that the Chief Secretary, in an earlier debate, kindly welcomed me to my new role, and I would like to reciprocate that welcome today. He and I have worked together as members of the Business and Trade Committee, which he chaired and of which I believe you were also a member, Madam Deputy Speaker. We had a shared desire to use Parliament to hold to account fearlessly, factually and, when needed, ferociously those who hold authority and power over our constituents. He now finds himself in such a position of authority and power, and I will hold him to account fearlessly, factually and, when needed, ferociously. However, today is not a day for ferocity.

We welcome this Bill. It is an important signal of the continuing commitment of the United Kingdom to the people of Ukraine, the defence of Europe and the achievement of peace through strength. We join the tributes to the people of Ukraine—the men and women who have had to leave behind their peaceful endeavours in order to stand shoulder to shoulder to defend their land and liberties. Today we are talking about financial contributions, but we should never forget that the greatest sacrifice is being made each and every day by members of the Ukraine military and civilians, upon whom Putin’s rockets rain down destruction each and every day.

Under the strong leadership of former Prime Minister Boris Johnson, the United Kingdom led the world in defending Ukraine, and since 2022 we have pledged more than £12 billion in overall support. We were often the first mover on vital lethal aid, from Storm Shadow missiles to Challenger and main battle tanks. We imposed the largest and most severe set of sanctions that Russia had ever seen, to cripple Putin’s war machine. We sanctioned around 2,000 individuals, companies and groups, and this economic pressure restricts Russia’s ability to prosecute its illegal invasion. More broadly, we built up a formidable sanctions regime during our time in office and brought in a major new sanctions strategy to deter and disrupt malign behaviour, and it is pleasing that the current Government are continuing those efforts.

On behalf of the United Kingdom, my right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak) hosted the Ukraine recovery conference last year, raising over $60 billion for Ukraine’s recovery and reconstruction. This Bill takes a further step forward in our commitments to Ukraine, and does so alongside our allies. It fulfils the United Kingdom’s part of June’s G7 mandate—confirmed by G7 finance Ministers in Washington last month—to disburse for the benefit of Ukraine approximately $50 billion from the extraordinary revenue acceleration loan, or ERA, as the Chief Secretary termed it. The United Kingdom’s share is £2.26 billion, and this is earmarked as budgetary support for Ukraine’s military spending. I understand that it will be in addition to the UK’s existing annual commitment of £3 billion of military aid. Each loan will be in the form of a bilateral loan, but will be based on common principles to ensure consistency and co-ordination between each loan.

We support the Bill and will support the Government if any other party seeks to divide this House, but I would be grateful if the Chief Secretary or the Minister could provide further clarification on several questions. The first is about disbursements to Ukraine under the extraordinary revenue acceleration loan. Point 5 in the annexe to the G7 statement says:

“Loans will be fully disbursed to the benefit of Ukraine between 1 December 2024 and 31 December 2027.”

The whole House will be aware of the current heightened levels of military activity and the urgent demands from Ukraine for assistance, including UK Storm Shadow missiles. What discussions has the Minister had with the Secretary of State for Defence about the timings and scale of distributions?

Secondly, I want to ask about the asset base. Can the Minister update the House on the total value of Russian assets seized by the G7, and on the total assets seized by UK jurisdictions? The last estimates we had were in March 2023, when the total was £48 billion, of which £18 billion was seized by UK jurisdictions. As the extraordinary revenue acceleration loan refers only to sovereign assets, will the Minister tell us what consideration was given to the inclusion of income streams from other seized Russian assets, and why it was determined that they should not be included? Do the commitments made by each G7 country relate to the amount of Russian assets seized or held by a jurisdiction, or are they done on some other basis? If so, what is the basis for those allocations? Can the Minister give some indication of the allocation of seized sovereign assets by type? As they are sovereign assets, I assume that many will be in the form of cash holdings, but there may be properties and other assets. It would be helpful for the House to have some understanding of the allocation of these assets by type.

Thirdly, I want to ask about the use of anticipated income streams from Russian assets to repay the loans. The Bill’s explanatory notes claim:

“The extraordinary profits on the immobilised Russian sovereign assets will then be divided between the G7 lenders in proportion to their contributions. This will happen as the extraordinary profits accrue, on a 6-monthly basis…in three tranches”.

I have three similar questions on this issue. Has there been any modelling of the future flows of anticipated income from seized Russian assets that will be used to repay the loans? Has the Treasury made an assessment of the expected period for their repayment? Can the Minister provide the House with a forecast or estimate for the anticipated revenues available for repayment in each of the tranches?

Fourthly, I want to ask about contingencies. There are five participants in the loan agreement: the UK, the USA, Canada, Japan and the EU. Can the Minister advise whether the terms of the agreement will still stand if one or more of the participants do not ratify it? In the event of a peace settlement, subsequent to disbursements being made, point 12 of the annexe to the ERA loan initiative says that

“the outstanding balances that cannot be covered by extraordinary profits shall be repaid by Ukraine to each lender.”

Can the Minister advise whether that is the case? In such circumstances, what priority will the repayment of these loans have compared with other loans made to Ukraine?

Finally, I want to ask about the Government’s overall defence expenditure. The Government’s Budget committed to setting out a pathway to increase defence spending to 2.5% of GDP at a future fiscal event. Since then, however, Labour Ministers have been unable to confirm whether it remains Labour’s ambition to meet that target by 2030. Can the Minister confirm whether it is still Labour policy to increase defence expenditure to 2.5% of GDP, when that might be reached and whether the commitments contained in this Bill will be included in such estimates?

The principles underlying the Bill are sound. Our commitment to the defence of Ukraine is reinforced. Our prayers are with the people of Ukraine and the cause of peace and freedom. We support the Bill.

--- Later in debate ---

[Richard Fuller]

I will respond briefly to the debate for the Opposition. First, I commend all the speakers, and particularly the hon. Member for Amber Valley (Linsey Farnsworth). It is rare for so many in this House to congratulate a Member on their maiden speech, but it was warranted because she spoke so nicely and kindly about her constituency, as well as with great generosity about her predecessor and very movingly about her father. She should take away the great support from all Members across the House, and we wish her the best of luck in her future here.

The Minister will be aware, having listened to the debate, of the comprehensive support for the Bill. She will have heard calls from some quarters to extend the provisions of the Bill to include seizing not only proceeds from the profits, but the assets. Such a move would be a very large step for the UK to take, and I do not think the official Opposition would support that without very strong convincing from the Government. But on all the other aspects, she will have seen the comprehensive support.

[Stephen Gethins]

On the seizure of assets and the $300 billion, we were trying to make the point that this needs to be explored very seriously. It would be transformative for the Ukrainian war effort and would therefore be transformative for our security. I take on board the hon. Gentleman’s point that this is not easy and about the impact that it might have. However, will he join me in encouraging the Treasury to look at this and come back to us with further details about the possible implications and how it might take this forward, so that we can all, as a House, examine it in greater detail?

[Richard Fuller]

I think I can assure the hon. Gentleman that the Treasury looks at these options on a continuing basis, but, consistently, the point of view held by the previous Government—and I would assume by the current Government—is that that is not the right step to take. But perhaps the Minister will update the House on her views on that in a moment.

Given the support, there was the opportunity for the Government to move forward with all stages of the Bill, so that it could proceed and be completed in this House today. Will the Minister say why that decision was not made and perhaps provide some sense of the timetable for when the Bill will be brought to the House for its concluding stages? But the Opposition’s general message is that we fully support the intentions of the Bill, and we will support it on Second Reading.