Faith Group Relationships

Lord Carrington of Fulham Excerpts

Tuesday 8th July 2014 Lords Chamber

Asked by

[Lord Carrington of Fulham]

To ask Her Majesty’s Government what measures they plan to take to improve the relationship between the Muslim community and other faith groups in the United Kingdom.

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi) (Con)]

My Lords, the Department for Communities and Local Government published its strategy Creating the Conditions for Integration in 2012. This sets out the work of the Government and other organisations in helping to create the right conditions for everybody in society to participate. The Government are supporting projects to break down barriers, encourage community cohesion and celebrate what we have in common.

[Lord Carrington of Fulham (Con)]

My Lords, I thank my noble friend for that Answer. With some young British Muslims being radicalised, does she agree that it is very important that they are taught at a very young age, either in school or elsewhere, to understand the similarities between all religions, in particular the shared values of the Abrahamic religions, so they can understand that Christianity and Judaism are not the enemies of Islam? Can she suggest the best way to make this come about?

[Baroness Warsi]

My Lords, it is important that all people, especially young people, have an understanding of the diverse communities in which we live, including different faith communities. My noble friend may be heartened to know from surveys, including a DCLG survey from a few years ago, that 90% of Muslims agreed that people from different backgrounds get on well, as opposed to 87% of the general population; 89% of Muslims agreed that it is possible to fully belong to Britain and maintain a religious identity, compared to 72% of the general population; and 74% of Muslims believe that there should be more mixing between different communities and different ethnic and religious groups, compared to 71% of the general public.

International Trade

Lord Carrington of Fulham Excerpts

Thursday 23rd January 2014 Lords Chamber

[Lord Carrington of Fulham (Con)]

My Lords, I add my congratulations to the noble Lord, Lord Harrison, for initiating this important debate. I declare my interest as deputy chairman of a small bank and as part-owner and director of a small consultancy doing business in many countries, as in the register of interests.

The UK is dependent on international trade, which is why we have pretty much always supported free trade in a largely protectionist world. In no industry has free trade served us better than in financial services. Of course, within the EU, we have from time to time had difficulty in persuading our fellow members that free trade in financial services is a good thing, as the noble Lord, Lord Giddens, pointed out, coming as they do from a more protectionist culture, particularly where agriculture is concerned.

For all that, one of our main global exporting industries is financial services, which has come in for a lot of criticism, some justified and some extreme. We need to help that industry to overcome its failures, not to shackle it so that it cannot deliver economically for the UK. The financial services sector employs between 1.5 million and 2 million people, many, but by no means all, in London. The contribution to GDP is well over 10% and the tax contribution is more than 12% of total tax receipts, so there is no doubt about the importance of financial services.

That is not to say that we do not need to build up other industries; of course we do. Manufacturing has seen a resurgence in the high-tech and high-productivity end of the industry and, of course, our software design and cultural exports have been hugely successful. However, none of these sectors is mutually exclusive. Indeed, a buoyant financial services industry, if working properly, helps other businesses to be even more successful, with innovative ways of providing financial liquidity and risk reduction. I know from my own experience that one of the greatest headaches in exporting is the foreign exchange risk, which can only be reduced with the help of a friendly banker.

As we all know, banking has been through a torrid time caused by the illegal, unethical and self-serving actions of some banks and bankers. The reasons for this, apart from human nature, have been examined in great detail, not least by the Parliamentary Commission on Banking Standards. Many proposals have been put forward to ensure that this catastrophe does not happen again. Hopefully, we are not making the same mistake that we have made many times previously, of regulating now to stop the transgressions of the past. It has been said that our banking sector is too big for our economy. That is only true if we make the absurd assumption that all banks operating in the UK are seeking business in the UK, and many do not, and that they are a risk to the UK taxpayer in case of their failure, which many are not. In any case, the changes to banking supervision that we have introduced make that even less likely.

However, the UK financial services sector is a fragile industry. Because of the employment it brings and the tax receipts it generates, many other countries would like to relocate the City of London to their city. We see this in the strong hints coming from the European Commission that it wants euro-denominated transactions to be located in the eurozone. Also, only this week, Reto Francioni of Deutsche Börse Frankfurt commented about Germany:

“Constituting the largest economy in Europe, Germany should also host the best financial centre in Europe”.

That is not a fanciful proposal. We have seen it happen before, when financial futures trading in German bonds was successfully moved from London to Frankfurt after a concerted effort by the German Government and Deutsche Börse.

What makes London successful in financial services, and how do we protect the advantages we have? In practical terms, because financial services and risk reduction are so specialised, the world will only ever need three global financial centres, each in overlapping time zones: New York, London—hopefully—and one in the Far East, where the battle continues to decide whether Hong Kong, Singapore or Shanghai will emerge dominant. We have a major advantage in London over our European neighbours, in that we have a large population used to working in financial services and, of course, having as their first language English, thanks to the Americans the language of finance.

It has been said that the assets of a bank go “up and down in the elevator”; it is an American expression. It is the people who work in financial services who make the industry a success or a failure. They come predominantly from the home market, but we need to ensure that the UK is welcoming to other nationalities coming here to build our industries. We need to be open to skilled people coming to live and work here, both for their talent in generating and closing deals and for their local knowledge of the overseas markets our financial services companies need to operate in. We need to continue to be welcoming to the already successful but also to the soon-to-be-successful, who will learn and work in London. That means getting our personal tax regime competitive on an international level and, because of the US dominance in these markets, coming to an agreement on personal taxes with the USA, the federal tax regulations of which work aggressively against employing Americans internationally, and against foreign companies doing business with Americans. We and the European Union are far too complacent about the extra-territorial reach of the US tax regime.

However, financial services do not just need highly paid, international employees at the top. They could not function without the skilled staff who analyse, process, record, ensure compliance and take on the multitude of often routine functions that are needed to support the income generators and deal-doers. In short, we need a highly educated, well housed and well motivated labour force. That is why our reforms in education and housing are so important. However, it is the regulation of financial services which is the biggest challenge. There is always a desire to regulate to a point where any risk banks take is minimised, supposedly to the benefit of the consumer and the taxpayer, but there is a balance to be struck. Banks only make money by taking risk and it is up to the shareholders, in the first instance, to decide the acceptable level of risk, although, as we have seen, this does not always work as shareholders do not have enough real-time information to control their investment. This is where the Prudential Regulation Authority and the Financial Conduct Authority come in, providing hands-on, forward-looking supervision.

I think we have now got the level of supervision about right in the UK. What is more worrying is the seeming intention of the EU Commission to micromanage the banks operating in the eurozone, with the inevitable impact on London. We have to get the regulation of financial services right, as it is only because the market is well regulated and safe that many overseas clients do business in London at all.

There is also a problem where capital is concerned. If banks are required to hold too much capital in low-risk, low-earning assets, this will certainly reduce the risk of bank failures but they will also be unable to make an acceptable return on capital and so be unable to raise more capital. Getting our regulation and capital requirements out of line with the rest of the world would not be a problem if the financial services industry were not able quite easily to move its “elevator assets” to another more welcoming or just more lightly regulated location.

We have a very successful exporting industry in the UK, one that employs a large number of people, makes good profits, pays a lot of tax and has potential for even greater growth. It has had catastrophic failures, caused by problems in its culture of personal reward, perhaps, and certainly by its need to produce an unrealistic return on shareholder funds. The then regulator could not prevent such failures but, I hope, the new regulator will be able to help the financial services industry avoid them in the future.

I believe that the regulatory problems have been addressed and I hope that the cultural attitudes are changing. The industry is a vital export earner and one that we should nurture and encourage. We must not sleepwalk into allowing other countries to take one of our most successful industries, to the detriment of the many people and companies in the UK that depend on the financial sector.

Middle East Peace Settlement

Lord Carrington of Fulham Excerpts

Tuesday 14th January 2014 Lords Chamber

[Lord Carrington of Fulham (Con)]

My Lords, I congratulate the noble Lord, Lord Soley, on this extremely timely debate, and on his work in bringing Arabs and Jews to a better understanding via his Arab-Jewish Forum. This debate comes at a time of mourning for the life of General Sharon. His life in some ways is an exemplar of the problems that have bedevilled attempts to find a solution to the Israeli-Palestinian conflict. He moved from freedom fighter—terrorist to some—to being a successful general, to being accused of war crimes and to becoming a hard-line Prime Minister who removed the settlements from Gaza. His was a life that many, including me, would like to interpret as a progression from a belief that the conflict could be solved through violence to a realisation that the only solution is through compromise, negotiation and magnanimity.

Finding that compromise and magnanimity is the problem. As some of your Lordships may know, I have spent much of my working life outside politics doing business in the Middle East, often with devout Muslims. I am also a strong supporter of Israel and its right to exist, and to do more than exist: to prosper as a beacon of enterprise and democracy in an otherwise very challenged part of the world.

In this dispute, sadly, facts and truth often do not matter and perception is everything. Among many devout Muslims who believe in the teachings of the Prophet, which are peaceable and loving, the perception is that American and—perhaps to a lesser extent—EU support for Israel is absolute, and as too often in the region “my enemy’s friend is my enemy”, it is hard for either to act as an honest broker in any negotiations.

It would be wrong to say, as some Arab commentators claim, that the Israeli-Palestinian conflict is the root of all the problems in the Middle East. However, the conflict is certainly not divorced from the Sunni-Shia war and the persecution of Christians in some Arab countries. Without a solution to the Israeli-Palestinian problem, it is impossible to see how the other conflicts in the region can start to be resolved. I would like to think that the European Union role, or the American role, in the negotiations could be seen to be benign and impartial—but, sadly, that is impossible.

The Middle East desperately needs a fair solution to this problem in the short window in which a two-state solution is still possible, but there can be no honest brokers and possibly not even guarantors. The two sides have to come to a realisation that neither one has any alternative to a fair two-state solution. Once that is agreed, we will have the best chance that the men of violence will lose support and that peace will become a reality. The role of the EU has to be to support and put pressure on the Americans, and to make it clear to both the Israelis and the Palestinians that only a two-state solution is possible and that no other solution will be acceptable if money, technology and arms are still to flow to the region.