My Lords, it is a privilege to open this debate and to speak alongside so many expert noble Lords. I take this opportunity to welcome the noble Baroness, Lady Batters, to your Lordships’ House and very much look forward to her maiden speech.
More than 1,000 days since Russia launched its illegal invasion of Ukraine, the Ukrainian people face a third winter of struggle for survival. They have paid a heavy price—thousands of lives lost, families torn apart, and whole communities destroyed beyond all recognition. Russian artillery continues to target civilian infrastructure and degrade Ukrainian energy networks, leaving ordinary people to freeze in icy cold conditions. Every day on the battlefield, Ukrainian soldiers give their lives in defence of their homeland and the common values that we share. Despite all this, the spirit of the Ukrainian people remains unbroken and Ukrainian forces continue to take the fight to their Russian aggressors with courage and conviction.
We should be under no illusion about the stakes. As the Foreign Secretary has said, Putin’s invasion of Ukraine is being driven by an “imperialist” desire to expand his
“mafia state into a mafia empire”.
It has involved forcibly seizing territory to which Russia has no legal right and for which the Russian people are paying an enormous price. It is a strategy built on corruption and the crushing of dissent—including courageous opponents such as Alexei Navalny—and is backed by the spread of disinformation at home and abroad.
Noble Lords will note that this is a fight not only for Ukraine’s territorial integrity and the safety of its people but for the future of Europe’s collective security and prosperity. The Government have consistently been clear that Putin must fail, but our words of condemnation are not in themselves enough. Action is required. That is why the UK’s support for Ukraine has never wavered, regardless, I am pleased and proud to say, of which party has been in government. I pay tribute to noble Lords opposite who stood side by side with President Zelensky and the Ukrainian people in their hour of need. We are united in saying that we will continue to stand with Ukraine for however long it takes.
Last year, the Prime Minister announced the Government’s commitment to provide £3 billion of military support to Ukraine each year for as long as is needed. Overall, the UK’s combined military, humanitarian and economic support for Ukraine now stands at £12.8 billion. That includes state-of-the-art Challenger 2 battle tanks and Storm Shadow missiles, as well as NLAW anti-tank missiles produced in Belfast that helped Ukrainian soldiers bravely repel the initial attack on Kyiv. Through the hugely successful Operation Interflex, UK Armed Forces have helped train more than 50,000 Ukrainian military personnel.
My Lords, I thank the Minister for his helpful and descriptive introduction. I will not repeat all the detail he kindly gave us. Like him, I much look forward to the maiden speech of the noble Baroness, Lady Batters. She is a near neighbour of mine in Wiltshire and a trailblazing first female president of the National Farmers’ Union. We worked together professionally, and I know the House will benefit hugely from her talents and energy.
It is clear from discussions in the other place that there is practically universal support for helping Ukraine in its struggles. The United Kingdom was a first mover in supporting Ukraine in 2022. Prime Minister Boris Johnson led the charge and there has been an encouraging consistency in support through the premierships of Liz Truss, Rishi Sunak and, of course, our Prime Minister Sir Keir Starmer. We have pledged over £12 billion since 2022 and sanctioned more than 2,000 entities. Moreover, many people in Britain have generously welcomed displaced Ukrainian families into their homes.
The proposed arrangement is an unusual one, of which the UK was a vociferous advocate. From these Benches we support the UK loan to Ukraine of £2.26 billion, which will be repaid from revenue earned on frozen Russian assets. We also support the decision to earmark the UK contribution towards military expenditure, including on air defence, artillery and other equipment so desperately needed by our Ukrainian allies. This is particularly important as the £20 billion coming from the United States is being handled by the World Bank, which I believe means that it cannot be used for military purposes.
We therefore support the Bill. We would, however, need convincing if the Government were minded to contemplate seizing Russian assets themselves. That would be a large step with wider ramifications and would need detailed scrutiny.
I should add that I have some professional experience of dealing with Ukraine and, to speak frankly, there were issues with the siphoning off of expenditure in the health area, which the not-for-profit development body I chaired helped to end—with the support of some brave reformers in the Ukraine Government. This was before the accession of Mr Zelensky, and I know that his leadership is determined to avoid a return of this kind of practice. However, it means that the detailed arrangements for the loans need to be clear and transparent, so I have some questions to ask the Minister about the practical application of the Bill.
My Lords, from these Benches, as always, I associate my comments with those of the Minister and the noble Baroness, Lady Neville-Rolfe, on our unwavering support for Ukraine. One thing that has been notable over the past almost three years is the extent to which there has been unwavering cross-party support for Ukraine. The previous Government were clear in their commitments and the present Government are making the right noises and the right commitments to Ukraine. I welcome the Minister’s tone in seeking to reiterate that support for Ukraine in opening the debate.
As the noble Baroness, Lady Neville-Rolfe, reminded us, this is not just a question of Ukraine and its sovereignty but a wider issue. I would like to take the discussion a little beyond the G7 and further than the Official Opposition position. The Liberal Democrat Benches would like the Government to consider going further and seizing frozen Russian assets—to go beyond spending the revenue, which is welcome, and look at the assets.
We are wholly committed to the Bill and do not in any way wish to delay it. It needs to go through today to demonstrate the commitment to the G7 agreement and to allow the £2.26 billion British loans to go forward, but we would like the Government to think again. My understanding is that the regret amendment in the name of the noble Lord, Lord Blencathra, may be about going further. From these Benches we would like to go further but not at the expense of delaying the Bill, which would not be appropriate.
As part of the international community, we have given much support to Ukraine. As we have heard, the United Kingdom has given significant military support and financial aid. That is vital. As the noble Baroness, Lady Neville-Rolfe, said, if our renewed commitments and the loans go towards military defence for Ukraine, that will be welcome. At the same time, as the noble Baroness pointed out, we need to reassure ourselves and the country, as well as our NATO allies, that we are committing sufficient resources to our own defence. There is a very real concern that our defence expenditure is too little and our Armed Forces are too small, not adequately resourced and without sufficient equipment. The 2.5% commitment is essential.
At end insert “but regrets that the Bill as introduced does not include provisions to allow immobilised Russian state assets, reserves, or any other property to be used to fund financial assistance to Ukraine”.
My Lords, I beg to move the regret amendment standing in my name on the Order Paper. I too am looking forward to the maiden speech of the noble Baroness, Lady Batters, and her take on the situation in British agriculture at the moment, which is quite interesting.
Let me make it absolutely clear that I will not press my regret amendment to a vote. I will do nothing to delay the passage of this Bill and, in the highly unlikely event that there is a vote on the Bill, I shall vote for it. I support the Bill, but I have had to adopt this tactic because I cannot table a simple amendment I would like—because it is a money Bill—to add a little additional power to the Bill. I simply cannot understand why the Government are not taking that power, as the United States and Canada have done. Having said that, I congratulate the Minister on his speech and congratulate the current Labour Government for being as robust on Ukraine as my right honourable friend Boris Johnson was when this appalling war first started. I
I am proud of the financial assistance that this United Kingdom has already provided to Ukraine. We have committed £7.8 billion in military support and £5 billion in non-military support. In hard cash terms, the United States has given $135 billion, Germany $16.5 billion and I think our £12.8 billion is $15 billion. However, in terms of GDP we find that Estonia has committed 3.5% and Denmark 1.8%. Norway, Lithuania, Latvia, Finland and Poland also stand out as the highest donors in terms of GDP. The closer you are to Russia, the more you have to fear and the more you spend on defeating the aggressor. In GDP terms, the US contribution is only 0.32%, Germany’s is 0.57% and we are at 0.55%.
Nevertheless, in these difficult financial times we have done a remarkable job in assisting. Of course, as the Minister pointed out, we have done other things as well. We have trained over 51,000 Ukrainian troops and sent over 400 different types of military capabilities and kit, including drones, boats and munitions. Defeating Putin is a point the United Kingdom—including the present Government—repeatedly makes at the United Nations and we have imposed sanctions on over 2,100 individuals and entities, including 100 ships and shadow tankers. We are taking a leading role in the recovery and reconstruction of Ukraine, co-hosting the London Ukraine Recovery Conference in 2023.
My Lords, it is a pleasure to have the opportunity to rise to offer unambiguous support for this Bill. I thank my noble friend Lord Livermore, the Financial Secretary to the Treasury, for his characteristically clear introduction to this debate. I, like others, am looking forward to the maiden speech of the noble Baroness, Lady Batters. I am pleased to follow the noble Lord, Lord Blencathra, and to commend him for the same reasons my noble friend the Minister did: his consistency and his contribution in this area, with particular reference to the issue that informs his regret amendment—which I regret I cannot support. I will come back to that in a few minutes.
This is a short Bill, but one freighted with enormous consequences, as we have heard from the contributions thus far, which were characteristically cogent for your Lordships’ House. It gives effect to our commitment to devote £2.26 billion to the G7 extraordinary revenue acceleration loans to Ukraine scheme, the ERA. This is separate from the £3 billion of military aid that we will also provide this year. I applaud Ministers for their decision to hypothecate these funds and to ensure that they are directed squarely to military procurement.
It is worth being clear-sighted about the purpose of this disbursement. It is to enable Ukraine to stand against unprovoked aggression and to ensure that the new era of great-power competition that is already upon us does not see the normalisation of such aggressive expansionism—a course taken by powers who see their own strength as justification enough for such actions. It is clear that the incoming US Administration cannot necessarily be relied upon either to shoulder its share of the burden in the provision of military support for Ukraine, or indeed to enforce international norms around the appropriate behaviour of great powers or aspirants to that status.
Last week, the President-elect offered a justification for his threat to annex Greenland either by force or via economic pressure. In a somewhat circular piece of logic, he asserted that such a course of action is justified by the fact that the US “needs” Greenland for its economic security. Although Putin’s speech that launched the invasion of Ukraine was more rococo in style, the central message was remarkably similar: that Russia had the moral right to invade to protect its own security interests. In making this comparison, I emphatically do not suggest a scintilla of moral equivalence between the two men or the countries they represent. But taken together, the US, Russia and China will help shape the new norms of this era of great-power competition. As we debate this Bill, we have to ask ourselves what lessons President Xi, for instance, will draw from recent history as he contemplates what he considers to be the daily annoyance of a free and independent Taiwan.
My Lords, I strongly welcome the Bill. It gives a clear signal of our continuing commitment to the people of Ukraine and our defence of European security. We are reminded every single day of the appalling impact on Ukraine of President Putin’s illegal and unprovoked invasion.
Today, the Minister has given us a very clear and welcome exposition of the purposes of the Bill. It is quite simply to unlock the UK’s contributions to the G7’s extraordinary revenue acceleration scheme by using the extraordinary profits generated on immobilised Russian sovereign assets held in the EU.
I was interested in paragraph 6 of the Government’s Explanatory Notes for the Bill. That makes it clear that the Government consider that the legal basis for this UK action—and I welcome that—is rooted in EU regulation 2024/2773, which was adopted by the European Parliament and Council of the European Union. Paragraph 6 states:
“This provides a legal basis within the EU for the UK to receive repayments from the ULCM, from the extraordinary profits on the immobilised assets, proportionate to the UK’s contribution to the initial funding for Ukraine provided by the G7 as a whole”.
That contribution was $3 billion. I was just thinking about what my noble friend Lord Blencathra said. When I read this, I found it both intriguing and potentially encouraging for future legal action, and I emphasise “legal”.
Paragraph 14 of that European regulation offers two routes by which the UK, as a post-Brexit third country—in EU parlance—can legally make payments to assist Ukraine. First, it says:
“It should be possible to support the Mechanism by providing extraordinary revenues stemming from the immobilisation of Russian sovereign assets held in relevant jurisdictions other than the Union. To that end, it should be possible for third countries or other sources to contribute to the mechanism”—
so far, so good indeed. Secondly, it says:
“Furthermore, it should be possible for third countries to directly use extraordinary revenues stemming from the immobilisation of Russian sovereign assets within their jurisdiction to reduce the repayment needs of any respective bilateral loan provided to Ukraine, thereby supporting the Mechanism by reducing the total level of support that would be required for that loan”.
My Lords, I join other noble Lords in looking forward to the maiden speech of the noble Baroness, Lady Batters. I represented a rural constituency in the other place for 23 years, I worked with the NFU, and I know the effectiveness of her leadership of that organisation. I am sure that she will bring to this House not only her knowledge of the farming sector but her passion for it.
Next month, we will see the third anniversary of Russia’s illegal and brutal invasion of Ukraine. Few people imagined back in February 2022 that Ukraine would be able to resist its much more powerful neighbour and the brutal way in which it invaded a sovereign state—but it has, which is down to the determination of the Ukrainian people, along with the bravery and innovation shown by its armed forces.
That is why I welcome today’s Bill to help the Ukrainian people to continue to resist aggression and to defend the principle that a sovereign nation’s territory should never be taken by force. That principle was one of the cornerstones of the international rules-based order that came out of the ashes of the Second World War, which is today being defended on the battlefields of Ukraine. Along with the determination of the Ukrainian people, the financial support provided by the UK, US, Europe and international partners has been vital in resisting Russian aggression.
The agreement by the G7 is an example of why our membership of international organisations is so important. That collective effort and endeavour not only keeps us safe but means that our voice is stronger when it is deployed with those who share our values and interests. Three years into the war, this Bill and the efforts of the G7 send a very clear message to Russia that its aggression will continue to be resisted. As a member of the NATO Parliamentary Assembly, I also know from our meetings with Ukrainian parliamentarians that the single voice that is put out by the UK Parliament is very much appreciated by Ukraine. I am pleased to see that, today, that is again echoed in the cross-party support for this Bill.
The $50 billion produced by the agreement by the G7 will provide vital funding for Ukraine to support its military, humanitarian and—as already outlined in the debate—economic recovery. The UK’s £2.6 billion contribution to the ERA fund will be earmarked for military procurement to bolster Ukraine’s self-defence. We can look at the way in which Russia has indiscriminately fired missiles into Ukraine’s civilian population to see why that investment is important. As the Minister said, this is in addition to the £12.8 billion that the UK has already given in support of Ukraine. It is also in addition to the support given by ordinary men and women in this country who opened their doors to Ukrainian refugees in the early stages of the conflict.
My Lords, I too support this Bill. As has been said, it will enable the payment to Ukraine of the UK’s share of the $50 billion financial assistance package agreed by the G7 in summer 2024. I congratulate the Government on bringing it forward.
However, I also emphatically support my noble friend Lord Blencathra’s regret amendment that the Bill does not also contain a provision allowing the transfer of the circa £30 billion of immobilised Russian state funds located in the UK. As my noble friend said, the noble Baroness, Lady Chapman, stated in response to a Written Question that I tabled before Christmas that the provision of the $50 billion loan, backed by the interest made on the immobilised Russian assets in the EU was
“an important step towards ensuring Russia pays”.
This is right, but it is only the first such step. I find it hard to understand why, having agreed to use the profits from the immobilised Russian funds, the Government are not now taking the opportunity to legislate at least through enabling powers and at least for the possibility of transferring the entire amount of Russian immobilised funds to Ukraine. Again, as my noble friend said, if there is a legal way to transfer the interest, it follows that there is a legal way to transfer the capital. In banking law terms, the interest and the capital are owned by the same person. There is no coherent basis for a legal distinction between the two in this context.
About a year ago, the previous Foreign Secretary, my noble friend Lord Cameron of Chipping Norton, confirmed his view that there is a legal route to seizing and transferring the entire amount—and rightly so. I explained the legal basis when I last spoke on this issue in the House before Christmas. The current Government have told us repeatedly that the issue is being considered—or “actively considered”, as the Minister put it. Will he please confirm how much longer this process of consideration is going to go on before a decision is actually taken?
My Lords, it is a great honour to address this House for the first time, and I thank the Minister and the noble Baroness, Lady Neville-Rolfe, for their kind words.
In March 2022 I had a request to speak with Mariia, director of the Ukrainian Agrarian Forum. I will always remember that first call. Mariia talked of farms, miles away from towns and villages, being individually targeted: poultry sheds and dairies bombed and destroyed; cows and calves left to burn alive; and fields planted with crops that were deliberated mined to destroy the farmers and the harvest. Russia stopped exporting nitrogen fertiliser three months before the illegal invasion of Ukraine, and your Lordships’ House should be under no illusions that the war in Ukraine is as much about food as it is about territory—and this at a time when England was paying farmers not to produce food.
As an ambassador of Farm Africa, I dedicate my maiden speech to the many farmers I have met across the world, and especially the 46,000 members of the National Farmers’ Union that I was privileged to lead. The NFU is an organisation led by farmers for farmers. Its great strength is the professional team of staff that I was fortunate to work alongside, and I am delighted that a few of the London team are in the Gallery today.
I am a fifth-generation tenant farmer on the Longford Estate in Wiltshire. We have a herd of Aberdeen Angus cross suckler cows and grow spring barley and British cut flowers, alongside a wedding barn and holiday cottages. Back in 2010 I became the NFU county chairman of Wiltshire, a role I very nearly did not take on due to my fear of public speaking. I hope the fact that I was elected as the first woman to lead the National Farmers’ Union in 118 years gives hope to others that fear of failure can be overcome.
Having four Prime Ministers—three in one year—was challenging, but for me 2020 was the standout year. In March we left our NFU headquarters in Stoneleigh Park, Warwickshire, to work from home. My twins’ GCSEs were cancelled. Prime Minister Boris Johnson and President Trump planned to conclude a UK-US trade deal by August. There was one point, at the beginning of lockdown, when the Government thought we would run out of food. I remember a text from a Government Minister that read, “You can have as many people and as much money as you want, as long as we don’t run out of food”. For a few days, the reality of being seven meals from anarchy was very real. Farmers were key workers then, and I am enormously proud of the role the NFU played, working with government, to keep the country fed.
My Lords, what an honour it is to follow such a brilliant maiden speech. Clearly, the noble Baroness, Lady Batters, has overcome any fear of public speaking. What she is not afraid of is bringing not just her knowledge and intelligence but her emotion to this Chamber, and we should applaud her for it. It will be an honour for the Chamber to have in its presence a woman who has brought such change to the farming industry, who has been a voice that many of us will have been very familiar with. I feel that I have woken up with Minette Batters over many years, courtesy of Radio 4. Now it is a delight to see her here among us and to listen to her impassioned speech on behalf of an industry to which she has given so much.
We should be aware that the noble Baroness is a co-founder of Ladies in Beef. Even women who are not great meat-eaters may feel that that organisation gives them something to strengthen their resolve in holding their own in what may still, for some, be a bit of a man’s world. I am also intrigued to see that she has chosen to be the noble Baroness, Lady Batters, of Downton. No abbey was mentioned, but perhaps there is a new series in the making—I am sure we will all look forward to it. I also thank the noble Baroness for bringing the attention of the Chamber to the plight of farming in Ukraine, the importance of farming to all of us, and the importance of food security—which, of course, brings me to the Bill.
I welcome the Bill as far as it goes—but how much further it could and should go. The money pledged in it is a fraction of what Ukraine needs. Restricting the funds involved to the income that would be generated by the Russian assets frozen in the EU is simply not enough. Others have already talked about this. Huge Russian assets have been frozen which should be handed to Ukraine as quickly as possible.
The noble Baroness, Lady Neville-Rolfe, voiced concerns about such a move, but even some of her colleagues in the other place have come to this conclusion and have voiced their views not only there but in a letter to the Times on 6 January. They say that there is at least £25 billion in UK accounts which the Government should hand over, and now. The noble Lord, Lord Blencathra, made an eloquent plea for the UK to be braver, and I commend his stance, although, like him, I would not wish to do anything to jeopardise the Bill directing funds to Ukraine as quickly as possible. The noble Baroness, Lady Smith of Newham, raised this issue too.
My Lords, I add my congratulations to the noble Baroness, Lady Batters, on her maiden speech. I came across the NFU many years ago through my very good friend Lord Plumb, who introduced me to this Chamber. He taught me quite a bit about the NFU and mentioned the noble Baroness to me as one of the up and coming stars of the institution. I am surprised that she had difficulty with public speaking, but clearly she has overcome it extremely well. We all look forward to many contributions in this House, given her special knowledge of agriculture, Ukraine, Africa and other subjects.
You can always depend on me when we have a debate on Russia. I am the one who makes the speech no one wants to hear. Today, unfortunately, my two co-religionists, the noble Lords, Lord Skidelsky and Lord Campbell-Savours, are not present, so I am left to do this all on my own. My message has not changed over the years. My message is very simply this. We have all agreed that Russia was wrong to invade Ukraine. It does not take an O-level in geography to recognise that. But what we have not been very good at is looking at the consequences of where we are now and where we are heading to. We need to remember my good friend John Major’s advice: in a hole, stop digging.
We need to look at some perspective. The Minister in the Commons, Darren Jones, said that we were going to carry on until Russia ceases its war of aggression and we win. I will first ask a very simple question. What is “win”? I have seen no evidence of any movement in Crimea to go back into Ukraine. Nor have I seen any evidence from Luhansk or Donetsk to the same effect.
The Ukraine Government made, as I have said many times, a tragic and stupid mistake when it outlawed the Russian language in places where 100% of the people spoke Russian. That alienated the eastern provinces, and the chasing out of Viktor Yanukovych did the rest. We now have to live with the consequences and build for the future.
The extraordinary revenue acceleration is a Group of Seven agreement, but has it been implemented elsewhere? Is this particular programme on the statute book of the US Senate? Will it sustain itself in the face of a President Trump? Is it passed by the Canadian Parliament? Will it sustain itself with a Prime Minister Poilievre, whom Canada is likely to get? Is it on the statue book of the Federal German Republic? Will it survive a new Chancellor in Germany? Has it gone through the French Parliament? That Parliament appears unable to pass any legislation at all at the moment, let alone something like this.
My Lords, I congratulate the noble Baroness, Lady Batters, on her speech today. I listened to her many times during Covid on the radio and television, and I was so thrilled to hear she was coming to this House. I look forward to working with her on food and other issues in the future.
This Bill is a welcome example of international co-operation. The additional financial assistance to Ukraine from the United Kingdom and other parts of the G7 is £38.6 billion of loans. These loans will be repaid from immobilised Russian assets held in the EU and will not be repaid by Ukraine. These assets will be divided between the G7 lenders in proportion to their contribution, £2.26 billion in the case of the United Kingdom. A crucial element is that the EU has adopted a regulation that will govern the repayment mechanism. This provides the legal basis within the EU for the UK to receive the repayment.
Like colleagues, I hope that throughout all this there will be no hold-ups, little glitches here and there or amendments. We have to make this happen now. This is an illustration of how vital it is for the UK and the EU to work closely together. This is crucial when the context is supporting Ukraine, helping it to resist and defeat the wicked, illegal and reckless Russian invasion and providing security for Europe as a whole.
The noble Baroness, Lady Wheatcroft, spoke about refugees in countries nearby. I have had calls from people in those countries, in Vilnius and even in Poland, who are worried about what the future holds for them and what the future could be for us and other countries. They are really worried. This Bill is an important aspect of the package of measures in a battle that has been well described as one of the defining issues of our age.
The World Health Organization has reported more than 2,000 attacks on health facilities, further straining Ukraine’s capacity to address mental and physical health needs. In 2024, 14.6 million people in Ukraine were estimated to need humanitarian assistance. This includes access to water, healthcare, shelter and psychological support. In the third quarter of 2024, the share of temporary protection decisions for children increased to 31%. As we know, children are now being taught in the underground during the day. They want to go to school to learn, but are frightened of what they might come back up to. The fighting and air strikes have caused more than 30,000 civilian casualties, including children.
My Lords, I join in the expressions of welcome and praise for the noble Baroness, Lady Batters. I am sure that her excellent, touching maiden speech will have great resonance with working mothers everywhere. I know that the whole House looks forward to her contributions on the importance of British farming and so many other issues.
I welcome the measures in the Bill, which will continue to provide Ukraine with the financial support it so desperately needs. The funds in question are drawn from immobilised Russian sovereign assets, and rightly so. The extraordinary revenue acceleration mechanism is an innovative example of what is possible when the focus of our G7 partners is rightly directed at the aggressor. Russia unleashed this illegal war on the people of Ukraine, and Russia will have to pay. It is heartening that that sentiment has been nearly universally agreed to in your Lordships’ House this afternoon. As President Zelensky said, the measures we are debating are a strong signal that:
“Russia must pay for its brutal war”,
because
“accountability for acts of war is inevitable”.
I hope the Bill will be passed as swiftly as possible. I join others in thanking the Minister for his work on this, which I know has taken much of his engagement and focus.
On the payment timetable and the disbursement of funds, we understand that the G7 has agreed that payment will be in three equal tranches over the next three years. Given the urgency of the matter, and the many questions raised today in your Lordships’ House about the military use of the UK’s contribution to ERA, I ask the Government to consider submitting a speedier timescale than three years. That is what is needed. As we have heard so many times in your Lordships’ House, Ukraine urgently needs all the military equipment it can get, as soon as possible, so military use must be allowed.
To that end, I associate myself with the powerful and cogent arguments of my noble friends Lord Blencathra and Lord Banner about what has been left outside the scope of the Bill. I understand that the Government must seek to pass legislation as soon as they can in this area and the difficulties of designing legislation and drawing its scope, but we have heard here this afternoon some powerful arguments for widening the scope of this measure to the seizure and transfer of Russian sovereign assets in the United Kingdom.
My Lords, it is a pleasure to follow the noble Lord with his very considered remarks, most which I agree with entirely. His points reflected the three words that I thought could sum up this debate—the need for urgency and clarity, and at scale. These are the priority areas where we would wish to see the Government continue to move. Notwithstanding, as my noble friend Lady Smith said, that we support the Government’s work on this entirely, those aspects, the next steps on how we are going to be moving at pace, will be of fundamental importance.
We are still technically debating the regret amendment from the noble Lord, Lord Blencathra. As a long-standing former Minister and Chief Whip, he knows that this is a Budget Bill and that he cannot amend it in this place, but, as anybody who has seen the speakers’ list will know, he also knows how to get the last word. I commend him for that, because these Benches agree with the thrust of his argument. If there is anything that we can do to help him persuade his noble friends on the Front Bench to support our positions on seizure, he can count on our support.
The debate also had the outstanding maiden speech by the noble Baroness, Lady Batters. My former constituency was on the north side of the border, so I used to deal with NFU Scotland rather than the NFU. I recall that at my first meeting with NFU Scotland as a brand-new Member of the Scottish Parliament, I thought that I had listened attentively, but it was rather complicated, with lots of very difficult, technical words. I jotted them down, but at the end, I went home and had to ring up the then president of NFU Scotland, who was the noble Baroness’s counterpart. I said, “I’m really sorry. I’ve looked at my notes and can’t now remember what the animal disease or the animal medicine is, because the words are so complicated”. He said, “Jeremy, you don’t need to understand what we say; you just need to understand that you do what we say”. With the clarity of the noble Baroness’s contribution, I hope that Ministers will do what she says in this House, and she is most welcome.
My Lords, it is a privilege to respond to this Second Reading of the Financial Assistance to Ukraine Bill, and to the regret amendment tabled by the noble Lord, Lord Blencathra. I join others in congratulating the noble Baroness, Lady Batters, on her incredibly powerful maiden speech. She brings a wealth of experience to your Lordships’ House, particularly on agricultural and rural issues, and is widely respected for her stewardship of the National Farmers’ Union. We might not always agree, but I very much look forward to her further contributions in debates such as this.
I am grateful to all noble Lords for their contributions and for the unity the House has shown in supporting Ukraine. I am very grateful in particular to the noble Baronesses, Lady Neville-Rolfe and Lady Smith of Newnham, for their support for the Bill. Many noble Lords have spoken movingly about the ongoing plight of the Ukrainian people in the face of Russia’s illegal invasion. It is important that we keep them in our minds today as Ukraine endures a third winter at war. The consequences of Putin’s war are profound: thousands dead and wounded, families torn apart, and enormous damage wrought to Ukraine’s infrastructure and economy that will take many years to rebuild. Despite the carnage that the Russian war machine has wreaked, including scores of innocent civilians killed and thousands of communities devastated right across the front line, the spirit of the Ukrainian people endures, and their resolve to defeat Putin’s army remains undiminished.
In case it needs saying, I profoundly disagree with the contribution from the noble Lord, Lord Balfe. I am heartened by the fact that there has otherwise been near uniform support across your Lordships’ House. The Government’s position remains resolute: Putin must fail, and we must stand with Ukraine for however long it takes, including by working with our G7 allies as part of this scheme. The Government will continue to stand with Ukraine as it wages this fight for freedom. That is why, to date, the Government have provided £12.8 billion in combined military, humanitarian and economic support to Ukraine. The UK has also introduced the most wide-ranging sanctions regime ever imposed on a major economy, depriving Putin of vital finance for his war machine.
I do not have that information to hand, but I will happily check for the noble Lord.
The noble Baroness, Lady Neville-Rolfe, asked whether the UK’s contribution to the scheme would increase if the United States or another participant chose to withdraw. I can confirm to noble Lords that this would not affect the UK’s contribution, which will remain at £2.26 billion. We are clear that that is the right and balanced approach, reflecting our fiscal pressures and Ukraine’s needs. The £2.26 billion figure is also proportionate to our GDP share within the G7 and the EU. We will of course continue to co-ordinate with G7 partners on the scheme going forward.
The noble Baroness, Lady Anelay of St Johns, asked for an update on the proceeds from the sale of Chelsea Football Club. The Government are working hard to ensure the proceeds from the sale reach humanitarian causes in Ukraine as quickly as possible. The proceeds are currently frozen in a UK bank account while a new independent foundation is established to manage and distribute the money. Creating an organisation of this scale is complex and officials continue to hold discussions with relevant parties to reach a resolution. As you would expect, we must review the details of any such arrangement to maintain the integrity of our sanctions regime.
In conclusion, we must ensure that Putin has no path to military victory in Ukraine. That means continuing to provide military and economic support to enable Ukraine to defeat Putin’s war machine. The combined $50 billion of new funding, delivered together with our allies in the G7 and backed by profits from immobilised Russian assets, will provide a crucial boost to Ukraine as it continues its third winter at war. It represents an investment not only in Ukraine’s future but in the security and prosperity of Europe more widely, and it demonstrates the shared resolve of the international community in the face of ongoing Russian aggression. I welcome the fact that noble Lords from all sides of the House have been united in saying that we must stand with Ukraine for as long as it takes. This Bill will allow us to honour that commitment.
Before the noble Lord sits down, there was one question about the announcement on the 2.5% of GDP. The noble Lord helpfully clarified that the money in this Bill was extra, which is good news, but I think several of us were concerned to know when decisions would be taken on the timing of the 2.5%.
My Lords, I begin by congratulating the noble Baroness, Lady Batters, on a superb maiden speech, which impressed everyone in this House. I particularly liked her remarks on food and nature. British farmers can grow more food and we can also do nature recovery; the two are not mutually exclusive. I may be one of the few in the House who is not surprised at the noble Baroness’s powerful speech- making because, for the last six years, I was the deputy chairman of Natural England, and at times I felt that her powerful rhetoric was targeted against us as we sought to implement some of the ELM schemes. Nevertheless, she made a very powerful contribution to this House and she will be an excellent replacement for the late Henry Plumb in my opinion.
I am very grateful to all noble Lords who have supported, in various ways, the amendment I put before the House. In particular, there was powerful support from the noble Baroness, Lady Wheatcroft. I thank her and my noble friends Lord Banner and Lord Kempsell for their very strong support. I have now had to change my opinion on a matter. I always believed that no one under 50 could make any worthwhile contribution in this House, but the two noble young Turks behind me have proved me utterly wrong.
I am also grateful to those who gave some sympathetic support, including the noble Lord, Lord Beamish, and my noble friend Lady Anelay of St Johns. Please do not tell my noble friend Lord Forsyth of Drumlean, but I have to praise the two Lib Dem spokespersons who gave qualified support; they support the concept of what I was trying to do.
I must say to my noble friend Lord Balfe that of course, like many others, I profoundly disagree with what he said. But I admire and respect the fact that he said it in this House. While we may disagree with him, we respect his right to speak. It is something that other institutions outside this building could take note of—to let people speak their minds, even if we profoundly disagree with them.
I will pick up on just two points he made. First, he said that the Council of Europe, of which I was a member, expelled Russia. I voted for that to happen, but I was agonising about it. I like Churchill’s expression that jaw-jaw is better than war-war. I thought that maybe if we kept the Russians inside, we could communicate with them. But what they did in Ukraine was so evil that I voted to have them expelled. The noble Lord also made the point that by expelling Russia we deprived 135 million Russians of the right to go to the European Court of Human Rights. That is true, but a fat lot of good it did them when they did have the chance to go, because Russia never implemented any of the decisions of the court.
Lord Blencathra’s amendment withdrawn.
Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.
In total, the UK has now delivered around 400 different military capabilities to Ukraine, with a new £225 million package of drones, boats and munitions announced in December. This builds on the introduction of the most wide-ranging sanctions regime ever imposed on a major economy. As a result of this, we have successfully restricted Russia’s access to global financial markets, reduced its energy revenues and weakened its ability to finance this illegal war. This includes sanctions on more than 2,100 individuals and entities, amounting to over £20 billion. More than 100 ships used for transporting Russian energy have been targeted, including 93 oil tankers that form part of Russia’s shadow fleet, used to illicitly transport billions of pounds’ worth of oil across the globe. The oil price cap has reduced Putin’s tax revenues from oil by 30%.
We are continuing to keep up this pressure. Just last week, the Foreign Secretary announced the designation of two Russian oil giants that together produce more than 1 million barrels of oil per day. The UK has also taken steps to bolster the Ukrainian economy, including by signing the UK-Ukraine digital trade deal to ensure that Ukraine benefits from cheaper and quicker trade. UK Export Finance has provided over £500 million in loan guarantees, including for Ukraine’s own defence industry. We have committed £4.1 billion in fiscal support through loan guarantees on World Bank lending.
However, we cannot stop there. We must continue to back Ukraine, to help its people deter Russian aggression so that they can secure a just and lasting peace on their terms. That is why the Chancellor has committed £2.26 billion to the G7’s extraordinary revenue acceleration loans to Ukraine scheme. This scheme will provide a combined upfront loan of £50 billion from G7 lenders—including the US, Canada, Japan, the UK and the EU. This loan will be repaid from the extraordinary profits generated on holdings of immobilised Russian sovereign assets held in the Euroclear bank in the EU. Euroclear is an international central securities depository with a unique business model, allowing for these profits to be generated.
The EU has already enacted the necessary regulation to operationalise the Ukraine loan co-operation mechanism, which will distribute the profits from the immobilised sovereign assets. The UK’s contribution to the scheme will be provided to Ukraine as budgetary support earmarked for military procurement such as air defence and artillery. It will be delivered in three tranches over three financial years, with the first tranche intended to be delivered early this year. The funding will be issued from the Treasury estimate and was scored in the Budget in October. This new funding is additional to the £3 billion of bilateral military support, which, as I have said, the Government are committed to providing for as long as it takes.
I am aware that the noble Lord, Lord Blencathra, has tabled an amendment to the Motion, calling for immobilised Russian state assets to be used to fund financial assistance to Ukraine. I commend the noble Lord for his work on this issue and the support he has shown for Ukraine. The Bill does not allow for the seizure of assets themselves, in the EU or elsewhere. The Government continue to actively consider all lawful options for ensuring that Russia pays for the damage it has caused in Ukraine. Any action must be taken in tandem with the G7—this is vital to maintain the strength and unity the G7 has already shown in the face of Putin’s aggression. The Bill before your Lordships’ House is designed to deliver new funding to Ukraine as quickly as possible.
Importantly, the Government have agreed with our G7 allies to ensure that Russian sovereign assets remain immobilised across our jurisdictions until Russia ceases its war of aggression and pays for the damage it has caused to Ukraine. G7 lenders have worked closely together to design the scheme in a way that allows repayment in a scenario where profits cease and Russia pays reparations to Ukraine. The sole purpose of the Bill is therefore to provide the Government with a spending authority to deliver this contribution to the G7 scheme. It enables the Government to sign the loan agreement with Ukraine and begin dispersing funds.
By unlocking new funding backed by profits generated from immobilised Russian sovereign assets, we will enhance Ukraine’s ability to defend itself and step up international pressure on Putin’s war machine. We know that this war is already costing Putin dearly. It is a fight for land to which Russia has no right and for which the Russian people are paying an enormous price. To restore peace we must ensure that Putin has no path to military victory. That means deepening our resolve by working in partnership with G7 allies to provide the support Ukraine needs for as long as it takes, not only in defence of Ukrainian sovereignty and the safety of its people but for the liberal democratic values we cherish and the security we depend on. I beg to move.
First, can he outline for the House the specific mechanisms by which our UK loans will be distributed and managed? Ensuring that this significant financial commitment is deployed in a timely way will be critical to achieving the desired impact.
Secondly, what parties will be involved in the transfer of these loans? Will the money be transferred directly by HM Treasury to the Government of Ukraine, will it be added to a shared pot with the G7 or will the Government use a third party, as the US is doing, which in our case might be a law firm, a specialist bank or some other body?
Thirdly, I have a novel point since we will have a new United States President in a matter of days. He has expressed a determination to bring the war in Ukraine to an end, so we need to reflect on the ramifications for this Bill. Any Trump deal might contain financial provisions. The Government need to be vigilant in ensuring that any terms ensure that the repayment of the sums provided by the Treasury continues—otherwise, there will be a substantial and unplanned cost to the UK taxpayer. The Minister will wish to comment and let us know whether the arrangements planned make that a needless concern, as I very much hope.
As we provide financial aid, we must also remain vigilant about the broader security implications of this conflict. The war in Ukraine is a stark reminder that the peace and stability we often take for granted are not guaranteed but must be actively defended. The international situation is more concerning by the day, whether in the Middle East, North Korea or the South China Sea. In recent weeks, NATO chiefs have issued warnings that the alliance must increase defence budgets to match the levels of threat we face. The new US President has called for a major increase in spending by European states, so this is a matter of key concern. The Government are yet to announce when they will reach the target of 2.5% of GDP on defence spending, a figure that many influential observers now consider to be too low. There is a strong case for speeding up this announcement. Perhaps the Minister will be kind enough to update us on the Government’s plans.
Furthermore, it is vital that we take a long-term view on this issue. Have the weapons that we have sent Ukraine been replaced? While immediate military aid to Ukraine is crucial, we must also ensure that our own Armed Forces are adequately equipped, trained and funded to address a broad spectrum of potential threats. This includes not only conventional military readiness but investments in emerging domains, such as cyber defence, where adversaries are increasingly active.
Although the moneys under discussion today do not come out of the defence budget, it is important, in an increasingly dangerous world, to focus on our defence. Can the Minister reassure the House that the Government remain fully committed to raising defence spending to 2.5% of GDP as soon as possible?
In conclusion, supporting Ukraine is not only a moral imperative but a strategic necessity. This Bill, which we support, represents a new step in reinforcing our commitment to Ukraine’s sovereignty and independence. However, it is incumbent upon us, as legislators, to ensure that this financial assistance is delivered effectively and transparently. I look forward to hearing from all noble Lords and to receiving answers to my questions from the Minister. Let us together send a clear and united message that the United Kingdom stands firmly with Ukraine.
Is the Minister able to help the House understand when the spring fiscal event may happen? One thing about parliamentary or governmental time is that it does not necessarily fit with a standard calendar. For most of us, spring starts either on 1 March or in late March, depending on which approach you take and whether you look to the moon or to the calendar. For the Government, sometimes an Autumn Statement has happened in late December. Can the Minister reassure the House that a spring fiscal event might happen well before Easter and will ensure not just that the £3 billion in military support for Ukraine is still in place but that His Majesty’s Government are not making any cuts to defence, providing us with a clear timeline for 2.5% of GDP for defence?
Earlier in the week, there was discussion in the other place about the Chancellor’s visit to China and the fact that, since taking over last July, the Prime Minister has been very active on the international scene. It is very welcome that Government Ministers talk frequently to our partners and allies in the G7 and NATO, and to the wider international community. The discussions with China are perhaps a little more unusual.
Is the Minister able to tell the House whether the Chancellor was able to talk to China about the sanctions that have been imposed? While the Minister was very clear that we need to work with the G7 and the European Union in terms of the imposition of sanctions, those sanctions would be so much stronger if China were also fully on board.
Further, what conversations have the Foreign Secretary, the Prime Minister or the Chancellor—or indeed any other Minister—had with our Commonwealth allies? While the response from the West, including the United States, so far to the Ukraine crisis has been very strong, the support from our Commonwealth partners has not been so strong. If the international relations in which the Government are currently engaged are really to be as effective as they might be, using the opportunity to engage with our Commonwealth partners to try to explain to them the importance of the sanctions regime and the importance of supporting Ukraine would reinforce the United Kingdom’s place on the international scene and help us give additional support to Ukraine.
In short, from these Benches we support the Bill, but we would like to see the Government go further and use all the tools at their disposal, diplomatic as well as military and financial, to give Ukraine as much support as we can as it reaches the third anniversary of the Russian invasion.
Then we come to the G7 summit in Italy in June 2024, which is the father of the Bill before us. The official communiqué said:
“We, the Leaders of the Group of Seven … gathered in Apulia … reaffirm … Ukraine’s fight for freedom and its reconstruction for as long as it takes … we decided to make available approximately USD 50 billion leveraging the extraordinary revenues of the immobilized Russian sovereign assets, sending an unmistakable signal to President Putin”.
The important words there are
“leveraging the extraordinary revenues of the immobilised Russian sovereign assets”.
So what are those assets? The figures vary, but total immobilised Russian assets are believed to be from $280 billion to about $300 billion. About $240 billion is in the EU, up to $28 billion to $30 billion in the United Kingdom and the rest elsewhere. The US does not have much at all. The $50 billion loan will be advanced to Ukraine under the G7’s extraordinary revenue acceleration scheme—the ERA—and is due to be paid back to lending countries from the interest that we are making from those immobilised Russian assets. The UK, as the Minister said, is about to extend our share of £2.26 billion under the ERA loan scheme, to be repaid from approximately 15 years-worth of interest on those Russian state assets that have been immobilised in the EU.
That $50 billion in ERA loans is, however, merely a temporary financial buffer. It falls far short of addressing Ukraine’s long-term needs, with damage requiring reconstruction surpassing $486 billion, according to the World Bank’s February 2024 assessment, and western contributions to Ukraine’s defence expenditure of roughly $105 billion annually.
The little amendment that I wanted to make to this Bill was simply to add after the words “money provided by Parliament” a sentence that said, “or out of any assets, reserves or any other property held within the jurisdiction of the United Kingdom directly or indirectly by, for or on behalf of the Russian Federation”. That would permit us, if we so decided—it is a permissive power—to utilise the whole of the $30 billion of Russian assets that we have. I am very happy to use taxpayers’ money in the Bill, but I am more keen to use Russian money. The whole purpose of my amendment today is to ask the Government: why on earth not take that permissive power to utilise Russian assets? Why are those words not in the Bill?
Since it is morally and legally right in international law to keep the Russian money immobilised but spend the interest raised on it to help the reconstruction of Ukraine, it must also be legally right in international law to spend the capital assets themselves to help Ukraine. Canada and the United States have taken this path. In 2022, Canada introduced legislation that enables its Government to seize state and individual assets frozen in Canada in cases of grave breaches of international peace and security. In 2023, the United States passed the Rebuilding Economic Prosperity and Opportunity for Ukrainians Act—the REPO Act—which allows immobilised Russian sovereign assets seized and transferred under US jurisdiction to be sent to Ukraine.
Some have suggested that our Treasury has blocked this because of a misguided fear that it will deter foreign investment in the City or the UK, since it could send a message to foreign investors that the UK will suddenly seize their assets without good reason. That is just not the case and is not going to happen. The concerns that seizure would lead to the withdrawal of global reserves held in the G7 currencies and their ultimate devaluation are grossly exaggerated. The practical impact of indefinite immobilisation, as we have done, and confiscation is exactly the same. Three years of immobilising these Russian assets have not led to a flight of capital from the US dollar, the euro or Great British pounds, and there are no grounds for believing that confiscation will have that effect either.
In January 2024, the United Kingdom and Ukraine signed an agreement on security co-operation. Among the 66 paragraphs or articles were the following:
“The Participants reaffirm that the Russian Federation must pay for the long-term reconstruction of Ukraine. Russian sovereign assets in the UK’s jurisdiction will remain immobilised until the Russian Federation has paid for the damage it has caused to Ukraine. The UK, working with its partners, will continue to pursue all lawful routes through which Russian assets can be used to support Ukraine … As a priority, the Participants will continue to work together with others, including G7 states, to explore options for the development of appropriate mechanisms to provide reparation for damage, loss, or injury caused by Russian aggression”.
That is what the last Government said, but what do the current Government say? It seems exactly the same, I am pleased to say.
On 6 December last year, in answer to a Written Question from my noble friend Lord Banner, the Minister said:
“This Government is clear that Russia must be held responsible for its illegal war. That includes its obligations under international law to pay for the damage it has caused in Ukraine. Working with allies, we continue to pursue all possible lawful avenues by which Russia is made to meet those obligations. Our agreement with G7 partners to provide approximately $50 billion in additional funding to Ukraine, repaid by the profits generated on sanctioned Russian sovereign assets, is an important step towards ensuring Russia pays.”
Note the words, “an important step”—not the only step. The only way that Russia can be made to pay is to use all the immobilised assets held in the UK, EU and US. These should be transferred to an international fund, as the Council of Europe has called for.
It is morally right to use those assets; it is legally right under international law to use those assets. The whole point of my Motion today is to plead with the Government to take those permissive powers, to use when the time is right. Will the Government please explain to me and the House in more detail why they are not taking that route? I beg to move.
Being mindful of these precedents is one of two reasons why I believe this Bill and our wider aid for Ukraine is important. The other is the state of public opinion in western Europe. In democratic politics, public opinion today is in general a pretty accurate guide to the attitude of leaders tomorrow. That being the case, polling conducted by YouGov in December makes sobering reading. It reveals that in seven key European countries, including our own, support for continuing assistance for Ukraine has fallen markedly. Equally, support for ceasing support and reconciling ourselves to a compelled peace, even on terms markedly unfavourable to Ukraine, has increased.
To some extent, this is a consequence of the more ambivalent US attitude Europeans expect from the new Administration when they take office. The figures are striking, none the less. In Germany, Spain, France and Italy, support for continuing assistance to Ukraine is now lower than for concluding a peace favourable to Russia. Even in Britain, there is only 4% between the two options.
Concerning though these figures are, the purpose of government is not to act as a weathervane reflecting public opinion but to lead it. I applaud the efforts of Ministers in the previous Administration—not least the noble Lord, Lord Ahmad, who I regret is not in his place to hear this—in the support they afforded Ukraine. I also have complete confidence in the Ministers on our Front Bench and in the other place; I am sure they will prove equally adamantine in their resolve.
What Ukraine needs is constancy, and the mechanism to which this Bill gives effect provides that. An ebbing of our support and that of our allies would lead to a collapse of the rules-based international order, a spiralling refugee crisis and the subjugation of a free and sovereign people. It would be not only morally wrong but run counter to our own interests and those of any country which values stability and collective security.
In 1941, President Roosevelt gave one of his celebrated fireside chats in which he described the US as an “arsenal of democracy”. It contained some words which apply to our situation, as they did to his:
“We have furnished … great material support and we will furnish far more in the future. There will be no ‘bottlenecks’ in our determination … No dictator … will weaken that determination by threats of how they will construe that determination”.
It is in that spirit that I offer this Bill my unambiguous support.
There is more to do in exploring the use of frozen Russian assets, but that lies outside the scope of this legislation. I am sure that those who support that ambition and who are yet to speak, or who will speak on other occasions, are aware that there was a Back-Bench debate on this issue in the other place, led by the Liberal Democrat Mike Martin, on 6 January. I draw noble Lords’ attention—I am not stepping in for the Minister; he is perfectly capable of doing this himself— to column 671 of that debate. Stephen Doughty, the Minister of State at the Foreign, Commonwealth and Development Office, responded to the debate. I will read the following passage in full to your Lordships:
“The fundamental questions about what more we can do to use Russian assets for the benefit of Ukraine were at the heart of the debate. The Government and our G7 partners have repeatedly affirmed our position. Russia’s obligations under international law are clear: it must pay for the damage it has caused to Ukraine. The ERA loan and our contribution will ensure that Ukraine can receive the financial support that it needs now—it was right to focus on getting that out the door, because we urgently need to support Ukraine now—with the profits generated on sanctioned Russian sovereign assets providing that. I reassure colleagues throughout the House who have rightly asked a lot of searching and challenging questions that we are committed to considering all possible lawful avenues by which Russia can be made to meet its obligation to pay for the damage it is causing to Ukraine. We continue to work with allies to that end”.”.—[Official Report, Commons, 6/1/25; col. 671.]
Thereafter, the contributions, few that they were in that debate, were supportive of that position, as I am.
It is in the spirit of President Roosevelt that I offer the Bill my unambiguous support. I am proud that we have devoted to Ukraine more assistance than any other single country save the US and Germany, and trust that we will continue our support, conscious that Ukraine is not defending merely itself but the UK and all its European allies and friends.
My question, therefore, is: can the Minister confirm today—just for clarity for the House—which of those two avenues has been adopted? I appreciate that we are following an absolutely legal route.
Of course, I welcome the fact, as the Minister explained earlier, that we are using the contribution that we are making for improving even further our contribution to the military needs that Ukraine has to defend itself. I welcome everything he said in that regard. Like my noble friend Lord Blencathra, I am tempted now—and I go beyond temptation—to range a little more widely. I am grateful to the Minister for giving such a very clear explanation and for adding—as was alluded to by the mention of the comments of the Minister in the other place—that the Government were open to other options, subject to genuine conditions about legality. Of course, I hope that if an agreement were to be reached within the G7 in the future that said that the Russian sovereign assets themselves could be seized and used to assist Ukraine, that might provide a legal basis on which we could then fulfil what my noble friend has put down in his amendment to the Motion today.
I recognise what my noble friend on the Front Bench Lady Neville-Rolfe said about how one has to be very careful and look at the consequences. However, I have in mind the response to a Question that I put to my noble friend Lord Cameron of Chipping Norton— I think that my noble friend knows what is coming—when he gave evidence to the European Affairs Committee just over a year ago. In this regard, I asked him how we could go further and what the Government were doing—this was the Conservative Government in December 2023 —to take some really gutsy action. I got a gutsy answer. He said in response:
“We are in a real fight for the sort of security on our continent that we believe in, and extraordinary times require extraordinary measures, so I am instinctively in favour of trying to do this”—
that is, to get agreement with the G7 to go further. I have to ask the Minister whether he is also “instinctively in favour” of trying to go further—within international law. I always agree with that.
To go a little more widely still, UK Governments, both Conservative and now Labour, have been admirably consistent in their imposition of sanctions on those who support the illegal invasion of Ukraine, either directly or indirectly. In relation to that, I will refer very briefly to the unresolved matter of Mr Abramovich’s delaying tactics to avoid fulfilling the commitment that he made way back in March 2022 to use the £2.5 billion of frozen assets arising from his sale of Chelsea Football Club that he promised in support of Ukraine.
For over a year now I have been asking Ministers in both Conservative and Labour Governments during evidence sessions in the European Affairs Committee why we have had to wait so long and still nothing seems to happen. We do not seem to be able to break through Abramovich’s prevarication and obfuscation and hold him to his promise. The response from Ministers in both Governments has been that they are thoroughly determined—they are on the case, and they want to ensure that the long-promised charitable foundation will be established and deliver funds to those in need in Ukraine, both now and during the reconstruction of the devastation caused in Ukraine by Russia. Can the Minister update us? Is there any progress with this negotiation with Mr Abramovich? If the Minister is not in a position to answer my questions today, I will not try to hold up the debate any longer—I just hope that he will write to me.
I look forward to the noble Baroness, Lady Batters, giving her maiden speech, and I look forward to the Bill getting Royal Assent ASAP and the money reaching those who need the extra-military defence in Ukraine.
The unique nature of this agreement means that the loan will be paid not by Ukraine but from the extraordinary profits made on sanctioned Russian sovereign assets that are held by the EU. As we know, many of those assets, both private and state, will have been stolen from the Russian people to benefit the elites around Putin. The sanctions and asset freezes, as the Minister pointed out in his opening address, have been an important tool in limiting the Russian aggression in Ukraine, not only by the Russian state but, it can be argued, by individuals who are perpetuating the myth that Ukraine is part of sovereign Russia.
More needs to be done, however, whether controlling Russia’s use of its grey tanker fleets to evade oil sections or the export of UK and EU goods through third countries to Russia to avoid sanctions. Sanction-busting exports range from electronic goods that are useful to the Russian military all the way to Rolls-Royce motor cars. What more can be done to clamp down on this circumvention of sanctions, not only through exporting to third countries but through companies in this country whose products are still ending up in Russia?
I do not know whether the Minister saw the article in the latest Sunday Times about the export of Rolls-Royce cars to Russia. In it, Chris Brownridge, Rolls-Royce’s chief executive, commented that there was no evidence of its dealers breaking sanctions. Considering the unmistakeable evidence that Rolls-Royce motor cars are still appearing in showrooms in Moscow, this seemed quite a pathetic response; he clearly does not have a very inquiring mind in asking how they are getting there. Rolls-Royce cars may be one of the more visible signs of sanctions evasion, but we know that components for electronic and other goods are being sent through third countries to Russia to help in the building of components for military equipment, which is then being used in Russia’s war in Ukraine.
I have some sympathy with the amendment tabled by the noble Lord, Lord Blencathra. More needs to be done on how we free up these assets. We also need to look at what else can be done to find assets in this country that have clearly been used and salted away with third parties to avoid sanctions or freezing.
I once again welcome the Bill and the continuing cross-party support for Ukraine in its struggle against Russian aggression. This will be a clear message from both this House and the other House that Russian aggression will be resisted, and that Ukraine has our full, united support.
With respect, there comes a point when protracted consideration may start to be perceived as dithering, and I suggest that we are not far off that point. I hope I am not right to fear that the Government may be disinclined to use the independence that the UK now has following withdrawal from the EU to take a lead on this issue, instead preferring the herd mentality of waiting until Europe finally has a collective position on the subject—if it ever does.
Either way, whether I am right or wrong in that fear, Ukraine cannot afford to wait—that is the important point. The $50 billion loan will provide vital support and is of course to be welcomed, but how long will it provide that support for? The money will literally be used to keep the lights on during the war, but Ukraine’s wartime budget deficit is around $40 billion per year. Even taking into account other sources of financial support, the loan will last through this year and no further.
It will also not fund any military support for Ukraine, an issue that is becoming increasingly pressing in light of the return to the presidency of Donald Trump in the US in a few days. According to the US Government, the US has provided some $93 billion in military support since the start of the full-scale invasion, as my noble friend explained. Should that stop or be reduced, funds will have to be found to plug the gap. It has often been rightly said by the Government, in this House and elsewhere, that it must be for the people of Ukraine alone to choose how much longer the war goes on for. But without the right support, it is not a meaningful choice; these are empty words without the support that Ukraine needs.
I commend and welcome the Minister’s comments that we must support Ukraine for as long as it takes, no matter how much it costs, but those comments need to be translated into actions, and it surely must be Russia and not the British taxpayer footing the bill, as far as we are concerned.
The illegal war in Ukraine is in its third year or, for those from the east of Ukraine or Crimea, its 11th year —it has been going on since 2014. It is now a war of attrition. Only this week, the Financial Times reported that Russia’s war economy is on the edge of collapse, as “a house of cards”. The western sanctions are working. Our task must now be to convince Putin that the Russian economy would not be saved by giving him back the immobilised funds as some sort of prize or reward for ending the war. The only resilient response and future-proof way of ending this war is if Putin knows that unless he stops for good and does not repeat the actions of the last 10 years, he will lose his grip on Russia’s economy completely and, with it, his grip on power.
I urge the Government to catch up with the US and Canada and finally introduce—as they have done—legislation permitting seizure of Russian state funds, if only to send a clear message to Russia that waging a war of aggression does not pay and that there will be serious consequences for the continued flouting of international law. Let us not wait any longer: let us get on with it and show leadership on the global stage on this issue. The Bill is a missed opportunity to do that, and I urge the Government to bring forward the necessary legislation without delay. I now very much look forward to hearing the maiden speech of the noble Baroness, Lady Batters.
Brexit posed the ending of farming under the common agricultural policy. Farmers in England are nearly at the end of the transition into the environmental land management scheme. In this time, we have rewritten primary legislation for farming in England into the Agriculture Act 2020, raising the standards of environmental protection and animal welfare above those of the European Union. It was and remains an unacceptable contradiction to raise standards for farmers here and not for our trading partners.
Our history is littered with either embracement or abandonment of whether producing our own food matters. The Arab spring was the last time that government advisers and scientists gave serious thought to our role in delivering global food security. Post the financial crash of 2007 to 2009, the markets took off. Since then, the line given by officials is that the UK is a wealthy nation and can afford to import its food. The increases in farm taxes proposed in the Budget are a symptom of this all too often desk-based advice to Ministers. On this issue I urge the Government to listen to my successor, Tom Bradshaw, to pause and to consult with the industry. With so much change in the last six years, farming and our food security are at a major crossroads. Much will depend on the Government delivering their manifesto commitment to make food security national security.
I would like to finish with three points. First, the global population is set to rise to 10 billion by 2050. We will need to produce 50% more food with half the water and energy we have now. To achieve this, farmers will need access to the best science and innovation. Government must invest in and incentivise the optimisation of sustainable food production. The UK, with its maritime climate, should be producing much more of its own food. With targets for renewable energy, housing, nature, trees, water and air, it is wrong that we still have no target for food. Instead, we continue to rely on countries such as Spain and north African countries to produce so much of our salads, fruit and vegetables. It is unsustainable, both for them and for us.
Secondly, food and nature must become mutually inclusive. I am opposed to any form of nature bank. Instead, we must enable these vital environmental markets to come to fruition. Nature reserves are the jewels in the crown but they are a minuscule area, less than 8% of land in England. Over 70% of the country is farmed and can deliver food, nature and biodiversity net gain within a farmed landscape, at the scale that is needed.
Finally, I ran a catering business for 25 years. I am passionate about good food and cooking from scratch. Learning how to cook, for every child, should be as fundamental as maths and English in the school curriculum. The principles of a garden city should be applied to every urban area—orchards, allotments and beautiful green spaces for everyone, everywhere.
I conclude by thanking the amazing people who have helped me on this journey: the Defra Minister the noble Baroness, Lady Hayman; former Prime Minister Rishi Sunak; and my supporting Peers, the noble Duke, the Duke of Wellington, and the noble Lord, Lord Soames. And enormous thanks to every single member of staff: Black Rod, the clerks, the Doorkeepers, the security staff and the catering staff, who most certainly do know how important food is to this House. Thank you—you have made me feel so welcome. Finally, my thanks to my family and those who work for me. Like all working mothers, the juggle is real and seldom mentioned. So, to my own mother and my two children: thank you so much for the sacrifices you have made on my behalf.
There are those who have qualms about the legitimacy of a country not only freezing another’s assets but seizing them. However, that view is based on the concept of sovereign immunity, and I argue that Russia has forgone any right to such immunity. Many will feel that Putin’s outrageous assault on Ukraine is enough to have cost it any immunity. But it is Russia’s behaviour in the UK which surely has eradicated any such rights. Russian operatives have come to the UK with the sole purpose of committing murder. Whether it was the poisoning of Alexander Litvinenko or the Salisbury poisonings, they showed no respect for the sovereignty of this country. Why, then, should we respect sovereign immunity in the case of Putin’s Russia?
If Canada and the US can be braver, as the noble Lord, Lord Blencathra, explained, can the Minister explain why the UK is still only considering its position on whether it can go any further on such a vital issue? It might be one small step towards redressing the unedifying reputation the UK has gained as a hub for dirty money. The “London laundromat” was a popular destination for Russia’s billions, which was often money obtained through dubious means. The former Prime Minister Boris Johnson was praised for his staunch support for Ukraine’s fight, and it is true that he was there at the beginning. But it was also Boris Johnson who, in 2010, as Mayor of London, opened a new department at City Hall devoted entirely to attracting Russian investment to London, and I beg to suggest that not all that investment came from the most respectable of sources. I am not sure that that was top of the list of priorities at the time.
Bill Browder has gained a very big reputation for his bravery in pushing through the Magnitsky Act in many legislatures around the world. He had good reason to do that, as he had fallen victim to the Russian state and his lawyer, Sergei Magnitsky, was murdered in jail in Russia—or at least, he died there, and it was thought not to have been accidental. Because of that, Browder has worked steadfastly to get people alive to exactly what is going on in that country and to take action, rather than just speaking about it.
One of the reasons that he cites, which others have not yet mentioned but which we really should be taking account of, is that, if this war is not won, it will precipitate a refugee crisis that will make the small boats look minuscule in proportion. The refugees will flood not from Ukraine but from all the neighbouring territories that are so fearful of what a powerful Russia might do next. The numbers are put at anything up to 25 million. That is one reason—if only one were required—why urgent action is required to get the money to Ukraine and to get it there quickly, handing over the income from the money that is held in the EU, let alone the UK. However, doing it in three tranches, as this Bill talks about, may be a start, but it is such a small start. Surely, the UK could and should do more.
I am unclear as to where we are, apart from the fact that we are passing the Act. What about the rest of the people on the list? What is actually happening? In the case of Italy, Italian support of Ukraine is not at a very high level at the moment. From what I know of Prime Minister Meloni, I wonder what her Government are doing? It would be good to know—not because I will vote against the Bill or try to stop it; it is a government Bill that seems to have the support of everybody in this House apart from me, so it will go through. But we need to know where we are with the Bill.
We also need to know pretty soon where we are with the new United States Administration because, let us face it, they will call the shots; we are not going to. This will be like Afghanistan—the US Administration will decide on a policy, we will be lucky to get a phone call and we certainly will not be able to carry on on our own. We need a European dimension to all this that looks at it from the interests of Europe. Those interests clearly involve the rebuilding of Ukraine but also involve coming to an arrangement with the Russian Federation that will stick. We seem to forget that we expelled Russia from the Council of Europe. “Great”, we said. We expelled 135 million Russians from the protection of the Court of Human Rights. We do not talk about that, though, do we?
We need a reset of our relations with the Russian Federation, with Ukraine and with the riparian countries of eastern Europe that rightly feel alarmed about Russia but also feel a little alarmed about the capacity and willingness of those of us further west to defend them. It is fine to say, “We have Article 5 of the NATO treaty”. I talked not so long ago to a Portuguese admiral —noble Lords will be surprised who I tend to know—who said, “Oh, yes, Article 5 says an attack on one is an attack on all”. It does not say what we have to do about it, though, does it? He said, “Do you honestly think that the people of Portugal would send troops to Ukraine? They would not”.
This is going to be difficult, but it has to be done. We need to think again about European security. We have spent too long behind an American blanket, expecting them to look after us. The fact of the matter is that 80 years after the end of the war, we have to start redesigning a Europe that works for Europe. We cannot continue to rely on the United States.
In building that new unity, we have to get closer to the European Union. I really am on my own on that—in this party, anyway. The European Union and the countries that are closer to us geographically in Europe are our future. I say to both parties that if neither of you can come to terms with Europe, you will lose the youth vote and it is not impossible that we will end up with that little Bench down at the end sitting on that Bench over there, and God knows who sitting on this Bench. Let us think our way through to a brighter future and stop repeating all the shibboleths of the past.
The people of Ukraine are fighting for us all and our freedom. We are sending a message not only to Putin but to autocrats around the world that the international community will always oppose violence against national sovereignty.
Today’s proceedings raise a more significant issue than the technical details of the Bill. The Bill, though welcome, cannot be a substitute for the Government setting out a clear vision for the future of Ukraine and what they would like to see achieved in this crucial year. It is right that the UK’s financial, military and humanitarian support continues and has been maintained by the new Labour Administration. It is right that Ministers continue to visit Ukraine, although I note that, despite his busy and demanding travel schedule, the Prime Minister is yet to visit the country since he has been in office. I hope that he is able to visit very soon—I am sure he will. But none of that is the same as the Government setting out and articulating a vision for what should actually happen in 2025, because this is a critical moment for Ukraine and for the entire western alliance.
I know that Ministers will not want to risk the UK’s leadership or risk any accusation that the UK Government have turned down the volume on their leadership of big-picture vision for what should happen next. When I spoke in the debate on Ukraine in your Lordships’ House in October, I said I was concerned that the UK was at risk of losing that leadership. I said that because the same anxiety had been expressed in those direct terms by President Zelensky himself. Ministers must communicate to the public what this Government believe Ukraine’s destiny to really be. Ukraine is destined to be a free, sovereign, independent, European state in the western alliance. It is not destined to be part of a revanchist, reinvented Russian empire in any sense.
Ukraine’s future was arguably in contention for decades, but Russia’s illegal war has, ironically, settled the issue, because Ukrainians are now completely clear-eyed about what they want. I have heard it from Ukrainians themselves, including from servicemen injured on the front lines, as I made numerous trips to Ukraine last year. I say this in part to answer the questions posed by my noble friend Lord Balfe about what victory means. Ukrainians want to be inside the NATO security architecture. They want the capabilities and permissions to win the war, militarily, in no uncertain terms and for permanent western security guarantees to be in place. To anybody outside your Lordships’ House who might doubt that position, I suggest that they talk to Ukrainian armed forces service men and women themselves, because they possess the most up-to-date and expert experience available to NATO of fighting Russia.
As my noble friend Lady Neville-Rolfe said, when Russia invaded, former Prime Minister Boris Johnson was the leading voice when it came to giving Ukraine the military, financial and humanitarian support needed. But he also set out a vision. He understood that this is more than a kinetic war; it is a battle of ideas about how the world should be. I am worried that that language is slowly changing nowadays. Standing with Ukraine for as long as it takes and helping it pay for this war as long as it takes is, at face value, a laudable concept, but there are some inside the Russian Government who view that as sign of weakness because it suggests that there is an open-ended timetable for concluding this conflict.
I want to commend and thank the Government for supporting a series of Conservative Administrations while they were in office and for continuing that support for Ukraine on entering government. This Bill rightly develops that, so nothing should stand in its way or be done to slow down its passage. That said, I hope the Government will use this opportunity to set out what they believe to be their agenda to regain international leadership on how this conflict is settled. The UK should lead with moral and strategic clarity, because the denouement of this conflict is important to resolve in the best interests of the free world, including of course, and most pre-eminently, Ukraine.
The sober element of this debate was the recognition that the toll on the Ukrainian economy and country has been enormous. We often try to get a picture of what the toll is on the Russian economy; sometimes we get information showing that there is a significant toll on it from our sanctions and from external actions. The news, which I think was from just last week, that one rouble is now worth less than one US cent is one illustration that a toll is being taken, but as my noble friend indicated, there is still too much sanction circumvention and there are still too many areas where the Russian economy is gaining—whether it is the shadow fleet, which we are still seeking to pursue, or other elements of avoiding sanctions. Constant work is of fundamental importance in this area.
I have previously raised something with regard to British Overseas Territories which I hope the Minister will be able to clarify. How are we ensuring that all the actions and all the work that we are doing are consistent across all parts, including the overseas territories?
With regard to the impact on Ukraine, it is now estimated that there has been well beyond £500 billion of war damage. That is just a modest estimate by the World Bank. It is inconceivable that Russia will voluntarily pay compensation, so any thought that if it retrieves assets, they will voluntarily be used for some form of reconstruction in a ceasefire agreement is for the birds. A fundamental question therefore needs to be asked: why would we not use the entirety of the assets for the reconstruction purposes which we know Russia will deny in the future? Given that Ukraine is suffering a budget deficit of well over £10 billion and that, in context, it allocates more than £40 billion—about half of its entire budget—to the defence sector, which shows the scale of what Ukraine is having to do, timing is of fundamental importance, as well as scale.
It is welcome, of course, that there is the G7 consensus on this, but it was agreed in June last year to use the profits on immobilised assets. It was in January last year, when we were in Grand Committee on the Russia (Sanctions) (EU Exit) (Amendment) (No. 4) Regulations, that I called on behalf of these Benches for the equivalent of what the Bill is now. The timing is of importance, but it is also not just about the cost of recovery and contributing to Ukraine now; it is also an argument about accountability.
Our friends in Canada have passed legislation. Given the other debates that we have secured, including in the other place on 6 January this year, as the noble Lord, Lord Browne, and my noble friend indicated, and given the points that my honourable friends in the Commons made in Committee of the whole House on the Bill, the argument is not simply about funding Ukraine’s efforts now for its economy and the war. It is also about ensuring that there is Russian accountability. If part of the argument is that the Putin regime should be held to account for what it is doing, why would it then be able to profit and, in effect, have assets back and be able to use them?
We probably know—the noble Lord, Lord Kempsell, perhaps alluded to this—that there is a distinct incentive for Putin to have some form of ceasefire: to pause, recoup and then string this on. There is therefore no long-term security, and if part of the funds are simply being immobilised so that the profits from them can be used rather than the asset value itself, then unfortunately there is an incentive for Putin not to have a long-term solution. I suspect that that is why there is a last-ditch attempt in the last days of the Biden Administration, as CNN reported yesterday, for them to move towards the seizure aspect. I hope that the Minister might have an opportunity to respond to that.
To help us understand the position—this is where clarity comes in—I hope that the Minister will be able to look kindly on what my honourable friend James MacCleary put forward as an amendment to the Bill. It was to seek government reports: an immediate report but also, for clarity, a report regarding our
“share of the principal loan amount”
and what is able to be seized, if we had the intent to do that. There are ways in which the Government could demonstrate more clarity—as the United States has done, having been asked by Congress, and as Canada has done—as to what the scale of the opportunity is.
Perhaps the Minister could clarify another question for me. How much of what has been committed so far under the G7 programme has been disbursed? My understanding is that, as reported, the US committed £20 billion as a portion to the World Bank in December but that only £1 billion has been disbursed. I wonder what the status is likely to be for when the disbursements will be in place, especially the UK contribution. If the intent of this fund is for the purchase of munitions on a very urgent military operation, it goes without saying that any delay to the disbursement is not to the advantage of our Ukrainian friends and allies.
Let me close by reiterating what my noble friend Lady Smith said at the outset. We believe that it should be the UK’s intent that we move on this, as far as seizure is concerned, and that it is unjustifiable that these assets should be utilisable by Russia in the future. Russia’s actions should not be forgiven by it being able to recoup assets which we have found justifiably should be frozen. Those assets should be seized at pace and at scale and be used for the defence of Ukraine and as part of its reconstruction. That would also show accountability for those terrible crimes that Russia has inflicted on Ukraine.
My noble friend Lord Beamish asked about circumvention of sanctions, which the noble Lord, Lord Purvis of Tweed, also mentioned. The Government are assessing and enhancing the UK’s sanctions enforcement. This includes working with international partners to build capacity and technical expertise within our own systems and to improve sanctions compliance in their private sectors, as well as deploying increased UK sanctions resources across our overseas network. This is a fight not only for Ukraine’s territorial integrity and the safety of its people but for the future of Europe’s collective security and prosperity. That is why the Prime Minister has committed to providing £3 billion annually to support Ukraine for as long as it takes.
Maintaining international pressure on Putin also requires working in close partnership with G7 allies. The Bill before your Lordships’ House does just that. It would unlock £2.26 billion of new funding for Ukraine, backed by profits generated from immobilised Russian assets as part of the G7’s extraordinary revenue acceleration loans to Ukraine scheme. The scheme demonstrates our shared commitment and solidarity in the face of Russian aggression and will provide approximately $50 billion of additional funding overall to Ukraine, taking account of the combined contributions of our G7 allies.
The noble Baroness, Lady Smith of Newnham, asked whether the Chancellor of the Exchequer raised Ukraine with her counterparts during her recent visit to China. In China last week the Chancellor was clear that, although we must co-operate in areas of mutual interest, we will confidently raise concerns where we disagree. She expressed her real economic and trade concerns with the Chinese, including on economic security. We have secured China’s commitment to improving existing channels so that we can openly discuss sensitive issues and our economy. If we do not engage with China, we cannot express our very real concerns.
The noble Lord, Lord Banner, suggested that we are not meeting or matching our words with actions, a sentiment echoed by the noble Baroness, Lady Wheatcroft. The UK has already provided £12.8 billion of military, humanitarian and economic support to Ukraine since the war began. We are committed to providing a further £3 billion of military aid each year for as long as it takes. This is a significant investment. The new spending the Government are committing as part of the G7 scheme is in addition to these existing commitments and is proportionate to our GDP share within the G7 and the EU.
The noble Baronesses, Lady Smith of Newnham and Lady Wheatcroft, and the noble Lords, Lord Banner, Lord Purvis of Tweed and Lord Kempsell, asked why the Government have not gone further by seizing Russian sovereign assets in the UK. This is also the focus of the regret amendment tabled by the noble Lord, Lord Blencathra. I fully understand that strong views exist on this issue, and I assure noble Lords that we will continue to actively consider all possible lawful avenues by which Russia can be made to meet its obligations to Ukraine under international law. I of course agree that Russia must pay for the damage it has caused in Ukraine. However, the Government believe that any action taken should only be in tandem with the G7. It is in this spirit of collaboration that we have agreed the extraordinary revenue acceleration loans to Ukraine scheme, and we continue to work closely with our G7 partners. Our focus now is on delivering this scheme rapidly to provide the immediate support that Ukraine requires.
The noble Baroness, Lady Anelay of St Johns, asked whether I am instinctively in favour of going further. I can only say that I am in favour of considering all legal routes. She also asked about those legal routes that we have taken. Due to Euroclear’s unique business model as an international central securities depository, it is able to generate extraordinary profits on the holdings of these assets, which legally accrue to Euroclear rather than to Russia. We do not believe the specific circumstances that provide profits generated in this way can be emulated in the UK as we do not believe that any UK-based financial institutions employ this business model. The UK is not required by the Ukraine loan co-operation mechanism to provide any extraordinary profits made from assets held in the UK; we are simply providing a financial contribution to that scheme.
The noble Baroness, Lady Neville-Rolfe, asked whether the UK’s contribution to this scheme will count towards the NATO target of spending 2.5% of GDP on defence. The UK’s contribution will be provided to the Government of Ukraine as a loan from the UK Government to spend on military procurement; it is not direct UK defence spending. The £2.26 billion loan will therefore not count as NATO-qualifying UK defence spending; it will be in addition to current NATO- qualifying UK defence spending. The noble Baroness also asked when the Government will meet this target, as did the noble Baroness, Lady Smith of Newnham. The Government have made a clear commitment to spend 2.5% of our GDP on defence, and this commitment has not changed. We will set out the pathway to 2.5% at a future fiscal event.
I will touch briefly on the nature of the UK’s contribution to this G7 scheme. The funding we are providing will be used for budgetary support earmarked for military procurement, bolstering Ukraine’s capacity for self-defence and providing vital equipment and support to the front line. As my noble friend Lord Beamish said, this funding is additional to the £3 billion of bilateral military support which the Government have committed to providing for as long as it takes. The Bill’s sole purpose is to provide the Government with the spending authority to deliver our contribution to this scheme, or any subsequent arrangements that supplement or modify it. It is not designed to facilitate any other spending on Ukraine or spending for any other purpose. The Bill enables the Government to sign the loan agreement with Ukraine and begin disbursing funds to it.
The noble Baroness, Lady Neville-Rolfe, asked specific questions about how disbursals from the fund will work—a point also raised by noble Lord, Lord Kempsell. The Government intend to begin disbursals early this year to ensure the funding supports our Ukrainian allies as soon as possible. We intend to disburse the UK’s £2.26 billion loan in three equal tranches over three financial years, starting in 2024-25. The G7 has agreed that all funds from this scheme will be disbursed by the end of 2027, although we plan to begin disbursals much sooner.
To further address the points raised by the noble Baroness, Lady Neville-Rolfe, this is a bilateral loan whose parties are His Majesty’s Treasury and the Ministry of Finance of Ukraine. The Government have begun talks with their Ukrainian allies to agree the terms of the provision of this funding. We do not intend for there to be geographical restrictions on where funds may be spent, and are instead ensuring that the purchase of much-needed vital military equipment is prioritised. There will be opportunities for the UK defence industry to benefit where this provides good value for money for the UK and for Ukraine. The Government are aware of the corruption risk in Ukraine and we are taking steps in our loan negotiations to mitigate it. I cannot comment on these negotiations in detail as they are still ongoing.
On the UK being repaid for this loan, as my noble friend Lady Goudie said, under the terms of the scheme the UK will be repaid by the extraordinary profits generated from immobilised Russian sovereign assets in the EU on a six-monthly basis as they accrue. The EU has already enacted the necessary regulation, known as the Ukraine loan co-operation mechanism, which will distribute the profits. This came into effect on 29 October 2024.
My noble friend Lord Browne of Ladyton spoke about international support for Ukraine, and the noble Baroness, Lady Neville-Rolfe, asked about the United States’s contribution to the scheme and the approach that will be taken by the incoming Administration. Although it would be wrong to speculate on any policy decisions that the incoming Administration may make, the UK Government have welcomed sustained bipartisan US support for Ukraine, which has been key in the international effort.
In answer to the noble Lords, Lord Balfe and Lord Purvis of Tweed, the US has already dispersed its $20 billion contribution to our financial intermediary fund at the World Bank. The EU has already passed and implemented its legislation, which covers all the European countries listed by the noble Lord, Lord Balfe.
Secondly—I am coming to my conclusion—the noble Lord asked who was calling the shots. Well, it will be President Trump calling the shots on how much money the United States gives in military aid to Ukraine. He will call the shots on what non-military aid the US gives to Ukraine. But he will not be calling the shots on the immobilised Russian assets, because America has hardly any of them. Over 90% of those assets are held by the EU and United Kingdom. So, while he might dictate other measures, he cannot stop the EU and the United Kingdom taking this permissive power to spend that money.
I will not breach the conventions of the House by regurgitating the points I have made, but I just want to clarify one thing. My amendment is not calling for us to immediately confiscate those assets and start spending them in Ukraine. We cannot do that in any case because the Council of Europe—I think it is the Government’s policy as well—wants to see an independent fund. When the assets are confiscated, they will be transferred to that independent fund to then be given to Ukraine and spent on reconstruction.
We do not have that fund yet. My amendment is simply calling for us to take the permissive power so that, when the time comes, in conjunction with our allies—I am not asking us to confiscate that money tomorrow—we will not have to pass any new law; we will have the permissive power to use that money in the defence of Ukraine. That is the only point I wanted to stress and clarify. As I said at the beginning, I am not in the business of delaying this Bill any further. I beg leave to withdraw my amendment.