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 group of rebels, supported by Donald Trump’s White House, who want the firm banned, and companies such as BT and Vodafone, who argue a hasty move would cost billions and affect consumers.
Huawei is a Chinese telecoms company founded in 1987. US officials believe it poses a security risk because the Chinese government will make the firm engineer backdoors in its technology, through which information could be accessed by Beijing. Donald Trump has banned US companies from sharing technology with Huawei and has been putting pressure on other nations to follow suit.
The UK has accepted there is some risk in working with Huawei, but security services do not believe it to be unmanageable. It has designated Huawei a “high-risk vendor”, but the company will be given the opportunity to build non-core elements of Britain’s 5G network. The head of MI5 recently said he was confident the US-UK intelligence-sharing relationship would not be affected if London gave Huawei the nod.
Much of the doubt surrounding Huawei stems from founder Ren Zhengfei’s time as an engineer in the China's People’s Liberation Army from 1974-83. His daughter Meng Wanzhou, a senior Huawei executive, was arrested in Canada in December 2018 over allegations of Iran-sanctions violations.
Huawei insists the Chinese government has never asked it to build a backdoor into its technology, and has offered to sign a “no spy agreement” with countries adopting it. The trade rivalry between the US and China has intensified in recent years and the firm believes the White House is simply using it as a weapon in that larger fight.
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 earlier, Johnson had 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.
Victor Zhang, the vice-president of Huawei, said: “Our business depends on delivering what our customers need. These results show that they continue to choose Huawei when they want reliability, security and value. Our priority here is to build a better-connected UK where everyone can benefit from 5G and fibre broadband, no matter where they live.”