PARLIAMENTARY DEBATE
Russia: UK Companies - 7 December 2022 (Commons/Commons Chamber)

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on continued involvement by UK companies in Russia.

I am grateful to the right hon. Lady for her question.

The UK and international partners have moved in lockstep since the invasion to impose the largest and most severe economic sanctions that Russia has ever faced, designating more than 1,200 individuals and over 120 entities. That includes a ban on new outward investments in Russia, and £18.4 billion-worth of Russian frozen assets reported to the Government. On Monday, in alignment with coalition partners, we banned the import of Russian oil and oil products into our markets. In conjunction with partners, we have prohibited UK ships and services from the maritime transportation of Russian oil unless the price paid is at or below $60.

The Government do not comment on individual commercial decisions. The process of divesting themselves of assets in Russia will be complicated for companies, which need to ensure compliance with financial sanctions. However, since Russia’s illegal and unprovoked invasion of Ukraine, we have seen commitments from many firms and investors to divest themselves of Russian assets.

The Government have been clear that we support further signals of intent to divest of Russian assets. In March this year, the then Chancellor—now the Prime Minister—said he welcomed

“commitments…made by a number of firms to divest from Russian assets”,

noted that he

“supports further signals of intent”,

and said that

“there is no case for new investment in Russia.”

That remains the Government’s position.

Mr Speaker, thank you very much for granting this urgent question. I thank the Minister for his reply. However, after listening to it, I would simply say to him that the Government have constantly talked about taking back control, and if there is one issue on which they should take back control it is this: ensuring that no British company invests in Russia.

Today is the 286th day of Putin’s invasion of Ukraine. In February, three days after the war started, BP said it

“will exit its 19.75% shareholding in Rosneft”,

Russia’s main oil company. Despite this promise, BP remains one of the largest shareholders. According to the excellent research by Global Witness, it is set to receive £580 million in dividends on the back of bumper profits fuelled by the war. Does the Minister agree with me that it is utterly shameful that a large, publicly listed British company profits from the sale of oil that is funding Putin’s war?

Does the Minister further agree with the words of Mr Ustenko, President Zelensky’s economic adviser? He wrote to BP and said:

“This is blood money, pure and simple, inflated profits made from the murder of Ukrainian civilians.”

BP’s claim that it is locked in as a shareholder is both laughable and easily solved. To put this into perspective, BP’s dividends are equivalent to over one quarter of the total military and humanitarian aid provided by the UK Government to Ukraine.

Does the Minister agree with Mr Ustenko that BP and any other company still invested in Russia’s fossil fuels must donate the entirety of its wartime profits to the victims of the war? Does he further agree that it is our duty to ensure that companies are not damaging Britain’s national interest? Will this Government therefore work to persuade BP to donate the entirety of its Russian dividends to the reconstruction of Ukraine, and if that fails, will the Minister commit to acting and forcing it to do so through a special windfall tax?

I am grateful to the right hon. Lady and pay tribute to her for her long-standing record of holding Governments to account on issues such as sanctions and international finance—I was previously Justice Minister when we had the strategic lawsuits against public participation issue. She has been very active, including across party lines.

I entirely understand why people feel so strongly on this subject, and I feel strongly too—what Putin has done in Ukraine is appalling—but I am not going to comment on a specific UK company or taxpayer or their commercial decisions. I have set out the range of measures we are taking, and it is important to stress that while we all want companies that have committed to divesting to do so, there are of course issues. I do not say this with specific prejudice to any individual, firm or company, but, for example, should a firm divesting from Russia by selling its shares sell them in such a way that they returned to an individual entity that was sanctioned, there would rightly be condemnation of that. This is not a straightforward process—and I repeat that I do not say that in reference to any specific company.

I totally agree that we should do everything possible to support the people of Ukraine, and we can be very proud of the enormous effort our country has made. The right hon. Lady rightly talked about our duty, and I believe we have a duty to support Ukraine. We are second only to the United States in the amount of aid we have given to the people of Ukraine, now totalling over £6 billion, and, as I understand it, we have been training its soldiers—22,000 of them—since 2015. This country has done its bit in relation to Ukraine. We are proud of that, and of course we want to do more and go further, which is why we work with our partners; that is why only on Monday we announced a decision in partnership with G7 states and Australia in relation to Russian oil across the piece. We have a record of taking decisive action, and in terms of the Treasury, of the most powerful sanctions against Russia on record, which is hitting its economy. We of course have no dispute with the Russian people, who will feel the impact of that, but we are doing everything possible, bar direct military action, to support the people of Ukraine.

I am sure the entire House agrees with the Minister that the UK has done a tremendous job in supporting Ukraine ever since it was illegally invaded, but what we want is a way for the Government to intervene to stop private companies somehow drilling a hole in the bottom of the bucket, as it were, while we are pouring in water at the top. Is there really nothing that can be done to impound, confiscate or levy a tax against money that has been raised in this unacceptable way?

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.

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.

There is no doubt that the UK has led the Ukraine war effort with the United States, and there is no doubt that the UK has led the international sanctions regime, but this urgent question is about UK companies. Does the Minister share my concern that DP Eurasia is selling pizzas in Russia, Unilever is selling Cornetto ice creams in Russia, and HSBC is still servicing Russian corporate clients? Does he think that is acceptable? What more action can the Government take to encourage those companies to remove their services and businesses from Russia and to divest themselves fully, rather than just give interviews to corporate magazines and offer warm words?

My hon. Friend makes an important point. It is for good reason that we do not entertain specific discussions on individual companies and their commercial interests, but we have been very clear on the need to divest. We have an outright ban on investment in Russia, and I sincerely hope that companies are not abusing that. I am not going to suggest that the companies he mentioned are doing so or comment on those specific cases, but I am always happy to meet my hon. Friend, or receive correspondence from him, if he has concerns in that regard.

It seems to me to ring a little bit hollow to say that companies are still trying to unwind their various operations in Russia. If some companies can do that quite easily, can the Minister explain to me why companies such as Infosys are still working in Russia?

As I said to the right hon. Member for Barking (Dame Margaret Hodge)—I apologise if this becomes a relatively repetitive point—I am not going to comment on specific individual companies. As I say, there is very good reason for that, and it is a long-standing Treasury policy that I think any Government would follow.

We have set out our policy. In my opening answer to the right hon. Member for Barking, I read out the statement from the Prime Minister when he was the Chancellor. We have been very clear that we want to see companies divesting from Russia. There are some complexities in there—of course there are—but the direction of travel is very clear.

As a Member of the House of Commons Defence Committee, I visited Ukraine about three weeks ago. We were welcomed literally with open arms, so grateful are the Ukrainians for staunch British support. They know a hard winter is coming, so may I make a practical suggestion? They clearly need more weapons, but they also desperately need generators in order to keep hospitals and other critical facilities operating even if they lose main power stations to missile strikes. Is there anything the Minister and the Government can do to encourage UK companies of all types that might be able to spare even one or two generators from their stocks to get them to Ukraine, where they would be put to incredibly good use?

My right hon. Friend speaks not only with his expertise on the Defence Committee; he also served in His Majesty’s armed forces and, of course, as a Defence Minister. He makes a very important point, and I was delighted to hear about his visit. It is inspirational to me and, I think, to the rest of the country when we see leading British politicians going over to Ukraine and showing that we are not afraid to go there. We will give the Ukrainians every form of support that we can.

On the specifics of that support, my right hon. Friend makes a good point about generators. I do not know the specific answer on that, but I do know that the Foreign Secretary recently set out measures to provide ambulances. Of course, the energy network is being affected by attacks from Russia, so military support remains so important, because that is how we enable the Ukrainians to defend themselves so that they can thwart these attacks. It will be tough, and there will be further attacks—this is not going to finish tomorrow—but we are doing all we can, and it helps when people such as my right hon. Friend are going out there and showing the support of the British people.

I am sorry, but this is just terribly complacent. It is 3,218 days since the annexation of Crimea, and there are still British companies that seem to be invested in Crimea, let alone British companies—including Infosys, from what I understand; the Minister did not refute that point earlier—that are still operating in Moscow and Russia with a staffed office. He says he will not comment on individual companies, but he does it all the time: that is what sanctions are. That is the whole point of sanctions. Some £778 million-worth of Russian oil has ended up coming into 10 British ports this year, having been transferred from one ship to another on the route here. This is complacency. We have to have a total effort from every Government Department to make sure that we stop funding Putin’s illegal war.

As ever, the hon. Gentleman makes his point with his usual passion. The point I was making was not to refute or in any way entertain points about individual companies; I am simply saying that it is long-standing Treasury policy not to comment on individual taxpayers or companies, or on their commercial activities, and I suspect that would be true of any Government.

The hon. Gentleman mentions oil. I remind him that on Monday, in alignment with coalition partners, we banned the import of Russian oil and oil products into our markets. In conjunction with partners, we have prohibited UK ships and services from the maritime transportation of Russian oil unless the price paid is at or below $60 a barrel.

As the secretary of the all-party parliamentary group on Ukraine, and as a constituency MP with a large Ukrainian community, I gently prompt my hon. Friend the Minister to urge BP, if it is unable to sell its stake in Rosneft, to take the profits and commit them to the reconstruction of Ukraine and to aiding the victims of Putin’s barbaric invasion.

My hon. Friend is right to remind us of the many Ukrainians who have made their home here and, of course, the many UK nationals who have opened their homes to them. It has been an extraordinary contribution. The reason we do not comment on individual companies’ commercial affairs is that, for a start, these are matters of commercial sensitivity. I appreciate that there are strong feelings on this point, but that is a consistent policy irrespective of the issue at hand.

We have been very clear on the need to divest from Russia. We have put in place a strong sanctions regime and banned further investment in Russia. I think that sends very strong signals, but we should not detract from the fact that this country is second only to the United States in what it is doing to support the people of Ukraine.

Last week I met Andrii Zhupanyn, a counterpart of mine from the Energy Committee in the Ukrainian Parliament. His priority was to source as many generators as possible to back up the Ukrainian energy system, so may I ask the Minister a specific question? Will he, at the very least, write to the chief executive officer of BP to suggest that the moneys gained by the company be used to pay for generators for Ukraine?

I should say that we have seen a positive attitude and support for Ukraine from across the House. On the specific issue of generators, I will go away and look at it. I will write to the hon. Gentleman and my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois), because I do not have the answer to hand.

I will not comment on what individual companies do. We in the Treasury are responsible for UK tax and spending decisions, and we have been extremely clear in setting out a windfall tax, which will be funding energy support for our constituents this winter and now, in fact, next year. That is very generous support, and it is ultimately connected to the impact on our country from Putin’s illegal invasion. All of this is about supporting the people of Ukraine but also helping our people with the wider shocks resulting from that invasion.

I very much welcome what the Minister said about the United Kingdom stepping up to the forefront in support for the people of Ukraine militarily, economically and diplomatically. As the former Minister for sanctions, I agree with him that the United Kingdom took decisive action, but may I ask him to clarify a specific point? On the oil price cap coming at $60 per barrel, that is not set in stone. It can be subject to review, taking into account implementation, international adherence and alignment, market developments and the potential impact on coalition members. When does he expect that review to take place so that we can take further decisive action, looking at the levers that are really having an impact?

I am grateful to my hon. Friend, who speaks with great expertise on these matters. The key point is that the action in relation to oil was agreed at G7 level with Australia. He talked about the review, and it is very much about the constant dialogue we have with international partners—that is where we will be reviewing these things. Obviously, it is a step we have only just taken, but I am happy to confirm that, as ever, the Treasury keeps all these matters under review.

On 17 November, my hon. Friend the Member for St Albans (Daisy Cooper) asked the Prime Minister whether he agreed that

“private citizens in the UK should follow the example of several British businesses and sell any shares they have in businesses that still operate in Russia”.—[Official Report, 17 November 2022; Vol. 722, c. 837.]

For some reason, the Prime Minister was unable to give my hon. Friend an answer on that occasion, so I wonder whether the Minister might be able to answer that question today.

That is an important point and I understand why the hon. Lady asks about it. In March the Prime Minister—as Chancellor—set out our very strong position on urging companies to divest, making it clear that there was no further case for investing in Russia. As for what happens with individual shareholdings, I said that I would not comment on specific companies and, to be fair, the hon. Lady has not asked me to. However, as I hope we can all acknowledge, it is not necessarily straightforward to divest. We want companies to do that, but as I said to the right hon. Member for Barking (Dame Margaret Hodge), if firms divest their shares, they have to be clear that any new owners will comply with the sanctions regime and that they will not be sold on to an entity or individual who is part of the regime. It is not straightforward, but that does not mean that we do not want every possible step to be taken to divest.

The flipside of this narrative is that companies are doing the right thing. I am concerned—I have read such reports locally—about companies that have divested their interest in Russia but are now struggling to get legal and audit services. As a result of having that previous interest, companies are reluctant to touch them. It is bizarre that companies and organisations that have done the right thing cannot access those statutory services. Will my hon. Friend ensure that he has conversations across Government, particularly with the Department for Business, Energy and Industrial Strategy and professional service providers, to ensure that companies that do the right thing on Russia are not penalised as a result?

My hon. Friend—I think he was a lawyer by training—gives a good example from a sector where one can imagine that might be happening. If firms are complying with the regime, other firms should have no fear of working with them. If he wants to raise specific cases with me, he is, as ever, welcome to write to me. He makes a very good point and it is on the record.

The French and Norwegian energy companies have successfully managed to exit Russia while BP has not. That is embarrassing, and the stain on Britain’s reputation needs removing. We appear to be undermining our efforts to support Ukraine and its people. The Treasury must ensure that the £580 million dividends that are due are used to provide aid to Ukraine and its people. Will the Minister ensure that if that does not happen, we will legislate to ensure that it does?

I understand why people make the link between what they have heard alleged about the shareholding of a particular company and how that should be spent, in an ideal world. I cannot comment on an individual company or its commercial interest and I am not going to, but I understand why people make that point. It therefore falls to us to talk about where we can act. The hon. Member talks about humanitarian assistance. We have given more than £6 billion of assistance—military aid and humanitarian assistance—and that is second only to the United States in scale. It is having a huge impact. We can safely say that the world, and least of all Vladimir Putin, did not expect Ukraine to fight back as it has done. One reason for that is the armaments and training provided by the United Kingdom.

European payments for Russian oil and gas have totalled more than €100 billion since the illegal invasion of Ukraine began. I welcome the efforts of this and other Governments to end the use of that oil and gas, but the fact remains that millions of barrels of oil a day are still being resold through third-party countries back into our markets. Can the Minister give us some detail about the efforts to stop that illegal resale, which is just giving succour to Putin and his illegal war?

My hon. Friend makes an excellent point. As I said, not only have we banned the import of Russian oil and oil products into our markets but, in conjunction with other parties, we have prohibited UK ships and services from the maritime transportation of Russian oil unless the price paid is at or below $60—in other words, the onward trade from within our respective jurisdictions. Effectively, he also makes an important wider point about the amount of money that has been spent in Europe on Russian energy historically. There has to be a long-term answer to that. Ultimately, we as a country, and with our European and G7 partners, have to wean ourselves off all forms of Russian energy. The way we do that, as he knows—he represents a Cumbrian constituency—is by investing in nuclear and UK energy production, as well as by living up to our net zero commitments and driving up even further our offshore wind capacity, which, I am proud to say as an East Anglian MP, is the largest array of offshore capacity in Europe.

Should not the position of the Government be that UK companies must not profit from activities that sustain Putin’s war? And having said that, should the Government not say to those companies, “Where you do profit, we will use all the powers at our disposal to sequester those funds and make them available for the regeneration of Ukraine”?

We have set out precisely that with the commitments that the Prime Minister made in March, when he was Chancellor, on the desire to see businesses divesting from Russia. The hon. Member for Eltham (Clive Efford) is aware that there have been many high-profile public cases of firms divesting, and other colleagues have spoken of companies in their constituency. They all use the phrase that the shadow Minister used, which is “doing the right thing,” and I totally agree. Ultimately, that is why we have our very strong sanctions regime.

I congratulate my right hon. Friend the Member for Barking (Dame Margaret Hodge) on securing this important urgent question, and I associate myself with the calls for generators for Ukraine. For Putin to be defeated, and for him to know that he will be defeated, it is essential that there remains rock-solid support for Ukraine from the UK and the west. Not only is that about defence materiel, military equipment and humanitarian aid, but it means ensuring that no British company, for whatever reason and in whatever way, benefits Putin’s regime. The Minister mentioned a desire to achieve certain things, but a desire is not enough, so will he go away and look again at what more can be done in legislation—if necessary, through new legislation—to ensure that that situation stops, and will he make a statement to the House next week?

We always keep our sanctions regime under review. In particular, we are looking with our international partners at what more can be done on illicit finance and so on. [Interruption.] The hon. Member talks about desires, but these very strong sanctions are having an impact in practice on Russia’s economy. We are sanctioning 1,200 individuals and 120 entities. We have already heard reports of frozen assets worth £18.4 billion. What matters above all—this is what he wants—is that we stand with the people of Ukraine and show that we support them. No country, other than the United States, has done more than we have, and we should be proud of what we have done. I absolutely guarantee that the Government will work night and day to keep supporting the people of Ukraine in the wake of this terrible invasion.

May I raise the issue of a UK company, the Lawn Tennis Association, being fined $1 million by the ATP—Association of Tennis Professionals—tour for banning Russian and Belarusian players from all tournaments, including Wimbledon, with further sanctions potentially to come? That is on top of a similar fine and ruling from the Women’s Tennis Association. Will the Minister join me in condemning the ATP and the WTA, which have both shown an extraordinary lack of empathy towards the people of Ukraine? Given that they were rightly urged by Ministers to ban Russian players from the tournaments, might the Government pay the fines for the LTA, should any appeals fail?

That is an interesting point. My colleagues have been clear on the record about where we stand on that. I will not comment on any specific appeals, but our sanctions regime, to which he referred, is very strong and is working in practice. We are always committed to looking at what more we can do as a Government and working with our international partners.

Fenner Dunlop has existed in Marfleet in my constituency since the company Fenner was established in 1861. It manufactures conveyer belts for the mining industry. It refused to trade in Russia and has done the right thing. As a result, it is reviewing the business in Marfleet and 71 jobs are potentially at risk. Everybody can see that the company needs to be commended—it is an excellent employer—but the reason the Minister is having difficulty mentioning specific businesses is because one of them is Infosys. Does he want to put his finger on why he is struggling to talk about that business?

As ever, I am grateful to the hon. Gentleman for his question. All I will say about the company in his constituency—in Marfleet, I think—is that companies divesting their interests in Russia will undoubtedly have an economic impact at home. They will have gone into that market for a commercial reason and there will be a commercial impact if they divest. We have to do everything possible to show our resolve to the people of Ukraine. That includes strong economic sanctions, even if they have an impact here, but by far the biggest economic impact is on our economy from the enormous surge in energy prices and the resulting inflation. Global inflation will drive the economy around the world to experience a hiatus in growth. We want to see growth return, and one of the reasons that we have windfall taxes is to raise funding to support our constituents and businesses through this winter.

The Exchequer Secretary cannot have failed to notice the exhibition in Portcullis House showing the gross human rights abuses committed by Russian forces in Ukraine. As well as justice, the victims of these war crimes deserve compensation, but so far that has not come from seizing and distributing the assets of Putin’s allies or the Russian state. Why can it not come from BP and others’ Russian earnings?

I always enjoyed working with the hon. Gentleman in my previous position at the Ministry of Justice. He makes an extremely powerful point. The abuses that we have seen have been horrific, and he is right to draw attention to them. A great range of activities are taking places in that regard—for example, the significant support that we have given to the International Criminal Court at The Hague so that it can look into those abuses. Of course, it will be very difficult until we get a resolution to the conflict, which is why the most important thing we can do in all these cases is to continue supporting the people of Ukraine, their armed forces and the humanitarian effort.

I fully support the right hon. Member for Barking (Dame Margaret Hodge) in her efforts. Would not one way to dissuade UK companies from investing in Russian oil assets and to encourage disinvestment be to prohibit any such companies from benefiting from the North sea windfall tax investment allowance?

The hon. Gentleman asks an interesting question, knitting together two points. To be fair to him, I have to say that he has consistently attended all the recent Treasury debates at which I have been present. I am grateful to him for that.

We should not confuse divesting and investing. We are clear that there is an outright ban on investing in Russia: the Prime Minister said back in March, when he was Chancellor, that there was “no case” for such investment. Divestment is happening. It is a process that for some companies will take time, but I think we are all clear that we want to see it happening.

The hon. Gentleman is absolutely right to highlight the windfall tax. While it will raise more than £40 billion to support our economy, help us fund public services and, above all, support people with energy bills this winter, it does have a generous allowance. Let me be clear about the reason why, which goes back to my answer to my hon. Friend the Member for Barrow and Furness (Simon Fell): while we want to raise funds from the levy, we also want to incentivise investment in energy security. Ultimately, the long-term answer to the question of how to defend ourselves against being held to ransom over energy prices is by ensuring our energy security for the future.

I thank the Exchequer Secretary for his answer to this urgent question. It is clear to me and to the House that he is doing his best to address the issue in a firm way.

We have seen not only the continued involvement of UK companies in Russia, but the ongoing involvement of Russian companies and kleptocrats in infiltrating UK companies potentially to commit fraud. What steps will the Exchequer Secretary take to ensure that UK companies are discouraged from any involvement with the Russian economy and ensure that a harder stance is taken to protect our economy from the promotion of economic crime and infiltration by Russia itself?

As ever, Mr Speaker, you have saved the best till last. I am grateful to the hon. Gentleman for his kind words. There is a legal side to protecting our economy—the sanctions regime protects it from the impact of sanctioned individuals and companies—but I think the most important way to protect our economy is by providing support this winter to our businesses and constituents, including constituents in Northern Ireland. We will be bringing forward many energy schemes with specific application in Northern Ireland; I know that he takes a keen interest in them. We are working with BEIS to ensure that we deliver those programmes in Northern Ireland, as well as in the rest of the United Kingdom. The hon. Gentleman makes an excellent point. Ultimately, we are supporting not just the people of Ukraine, but our businesses and our constituents.

On a point of order, Mr Speaker—

Order. It cannot come now. It has to come after the next statement.

It is just something that we wanted the Business Secretary to hear.

Well, we cannot change the rules. There are more Members than you with points of order—that is my problem. I would be opening a can of worms. I would love to, but I dare not.