Ministers have failed to head off a rebellion from up to 60 Tory MPs over plans to strip Huawei of its role in the UK’s 5G and broadband networks, amid claims that a proposed U-turn will not go far enough.
Oliver Dowden, the culture secretary, is expected to announce a climbdown in the Commons on Tuesday, phasing out the role of the Chinese telecoms giant. It comes after the US and a growing number of MPs raised security concerns over surveillance. A final decision is due to be taken by the National Security Council on Tuesday morning.
A source close to the rebels said the expected concessions from ministers were not enough and they “would be beefing up their opposition” unless last-minute changes were brought in.
They had wanted ministers to ban the purchase of new Huawei kit in the next 12 months across Britain’s phone networks, and to eliminate it entirely by 2026, but while the government is understood to have moved in this direction, they were not placated.
One source said the rebels had heard that while there would be a ban on new Huawei kit from January, they were only going to be offered a removal of 5G Huawei kit from 2027 while other 3G and 4G mobile equipment would remain in place until the 2030s. However, this could not immediately be confirmed.
Some believe that the offer is a carefully crafted compromise designed to peel off some of those rebelling and prevent them inflicting a defeat on the government. “It would be interesting to see if there’s a single unified rebel position,” a Whitehall source said.
Downing Street has been caught between the growing number of backbenchers who want Huawei banned, backed by Donald Trump’s White House, and companies such as BT and Vodafone that argue a hasty move would cost billions and affect consumers.
Fast-growing Huawei is arguably China’s first global multinational. The Shenzhen-based company makes mobile phones, base stations and the intelligent routers that facilitate communications around the world.
But its success increasingly concerns the US, which argues Huawei is ultimately beholden to the Chinese Communist party and has the capability to engage in covert surveillance where its equipment is used.
Huawei is by some distance the world’s largest supplier of telecoms equipment with an estimated 28% market share in 2019. It was also the second largest phone maker in 2019, after Samsung and ahead of Apple.
But Australia banned Huawei from 5G in 2018, with its spy agencies declaring they were worried the company could shut down power networks and other parts of its infrastructure in a diplomatic crisis.
Trump banned US companies from working with Huawei last year and has strenuously lobbied others to follow suit, venting “apoplectic fury” in a phone call to Boris Johnson after the UK agreed to allow the Chinese company into 5G.
The company had successfully targeted the UK early on. It has supplied BT since 2003 and gradually expanded to the point where it agreed to create a special unit in Banbury, known as the Cell, where the spy agency GCHQ could review and monitor its software code. Vodafone is another key customer.
Britain’s intelligence agencies said in January that any Huawei risk could be managed as long as the company was not allowed to have a monopoly. As a result, Boris Johnson concluded Huawei’s market share should be capped at 35% for forthcoming high-speed 5G networks.
In July 2020 the UK position changed, and it was announced that Huawei is to be stripped out of Britain’s 5G phone networks by 2027. Oliver Dowden, the UK culture secretary, also announced that no new Huawei 5G kit can be bought after 31 December 2020 – but said that older 2G, 3G and 4G kit can remain until it is no longer needed.
Dan Sabbagh Defence and security editor
Economists at the National Institute of Economic and Social Research (NIESR) have warned GDP could fall by up to 0.75% and inflation rise by up to 0.6% if kicking the Chinese company out of the UK prompted a wider trade conflict with Beijing.
A letter signed by 10 of the rebel Tory MPs on Monday night – who say they number 60 in total – warned Boris Johnson that their support for a planned telecoms security bill was “predicated on ending altogether the role for high-risk vendors” such as Huawei.
The signatories, including the former party leader Iain Duncan Smith, ex-cabinet minister David Davis and Bob Seely, who organised the letter, went on to insist they wanted the government to complete the rip-out of Huawei across 5G and all other phone networks “without unreasonable delay”.
Seely said that if Dowden announced a ban on new Huawei equipment purchases in the next 12 months, that would reassure fellow rebels and they would support a complete removal by 2025 or 2026, after the next election.
Widening their criticism, the rebels also said China cannot be trusted, accusing Beijing of presiding over “systematic human rights abuses” against its Uighur Muslim minority and “the effective ending of one country, two systems in Hong Kong” through the introduction of a new national security law.
Philip Jansen, the chief executive of BT, the largest Huawei customer in the UK, said: “If you want to have no Huawei in the whole of the telecoms infrastructure across the whole of the UK, I think that’s impossible to do in under 10 years.”
He added that the industry would want to be given a seven-year window to rip out Huawei from the 5G networks alone but added “we could probably do it in five”. But he warned moving any quicker could put BT’s service at risk. “If we get in a situation where things need to go very fast, then we go into a situation where service for 24 million BT Group mobile customers is put into question – outages would be possible.”
NIESR economists said in a report released on Monday they believed China could respond by imposing restrictions, which “would depress GDP and put upward pressure on inflation, so that interest rates would increase”.
In the worst-case scenario, it warned that imports and exports could fall by 90% if new trading barriers were erected rapidly, leading to a fall of 0.75% to GDP in 2020 and lifting inflation by 0.6%. Last week China’s ambassador to the UK warned: “You cannot have a golden era if you treat China as an enemy.”
Six months ago, Johnson announced plans to cap Huawei at 35% of the overall network for future 5G, while leaving existing investments unaffected.
The rebels, who theoretically have enough votes to defeat Johnson despite his 80-seat majority, say the Chinese company represents a long-term surveillance risk to the UK, although Huawei says it is an independent company owned by its employees and had never engaged in spying activities against its customers.
They also want the prime minister to eventually go further and remove Chinese companies from their role in the UK’s nuclear programme, where state-owned China General Nuclear Power is a minority investor in the new build at Hinckley Point in Somerset behind France’s EDF.
Huawei insiders have resigned themselves to a defeat, although in a last show of defiance aimed at their customers around the world chose to release financial results showing its revenues had jumped by 13.1% in the first six months of the year.
Britain is gradually becoming embroiled in a more confrontational stance with China. On Monday night it emerged that military chiefs were considering basing the new £3.1bn Queen Elizabeth aircraft carrier in east Asia as one of a number of options for the long term deployment of the flagship vessel, which will make its first grand voyage next year.
