Russia: UK Companies

Margaret Hodge Excerpts

Wednesday 7th December 2022 Commons Chamber

[Dame Margaret Hodge (Barking) (Lab)]

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

[The Exchequer Secretary to the Treasury (James Cartlidge)]

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.

[Dame Margaret Hodge]

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?

[James Cartlidge]

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 million, 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.