Queen’s Speech

Lord Parekh Excerpts

Wednesday 11th June 2014 Lords Chamber

[Lord Parekh (Lab)]

My Lords, I want to address two issues arising out of the Queen’s Speech. One relates to foreign affairs and the other to constitutional matters.

By and large we have enjoyed very good relations with India. The recent election of Mr Modi as the Prime Minister presents us with a unique opportunity in India’s history to deepen and expand our relations with that country. Mr Modi has brought about several extremely important changes in the administration of his country and injected new life into what has so far been a largely somnolent Government. His party has a clear majority and will stay in place for the next five years. Therefore, there is no danger of unstable coalitions.

Mr Modi has concentrated on good governance, administrative affairs and speedy decision-making. Most important of all, he has decided to concentrate on three issues: development and infrastructure projects of all kinds; university and pre-university education; and good relations with neighbours, especially Pakistan. All three have profound implications for us. The tremendous concentration on development opens up all kinds of opportunities for our businessmen and entrepreneurs. Pedagogical advice will be needed to fulfil the desire to expand education and create scores of new universities. That is going to require an enormous amount of help from the rest of the world. We can certainly capitalise on the opportunities that that offers. Only yesterday the Indian Prime Minister said that the Foreign Education Providers Bill will be passed. The Bill, which has lain quietly for four years in the lower House of the Indian Parliament, will enable foreign universities to set up their own campuses and provide a series of exchanges with their own satellite institutions. Given all this, we ought to consider urgently how to deepen our co-operation with India.

Mr Modi has said that he would like to have closer relations with Pakistan and put an end to the rivalry between the two countries. Afghanistan may become more stable when the Americans leave provided that India, Pakistan and the UK adopt a sensible foreign policy towards it. For all these reasons I believe that we should take the initiative in finding ways to expand and deepen co-operation between the two countries at various levels, as we did some months ago when we talked to Mr Modi on these issues.

Some people raise concerns about the communal violence that took place in Gujarat when Mr Modi was Chief Minister there. My own feeling is that, although the communal violence that took place between Hindus and Muslims should not be forgotten, one should not be too obsessive about it either. Mr Modi’s role in that episode has not been proven. The violence occurred when he had been the Chief Minister for hardly more than three or four months. He asked the neighbouring states for police help but it was not readily available. Similar incidents have happened in other parts of the country, including when Mrs Indira Gandhi was Prime Minister, but they were largely ignored. From my point of view, the more important consideration is that Mr Modi tried to reach out to the Muslim community after the events. Therefore, it is not at all surprising that 22% of the Muslims voted for him in the last election. In the light of all that, I suggest that, although we should not forget what happened in 2002, we should put it behind us and concentrate on how best to co-operate with the Indian Government.

The constitutional issue that I want to touch on briefly concerns something that matters to me greatly. Glasgow University gave me my first job as an academic. I have great affection for Scotland just as I have great affection for this country. The idea that Britain could split up is something that I find deeply painful, although intellectually I can see that a case can be made for it. With fewer than 100 days to go to the referendum, there is no clear indication which way it will go. Some of my senior colleagues who work in Scottish universities tell me that it could go either way and that one mistake on the part of the Government here or on the part of those who advocate a no vote could sway the result. As a student of history and politics who has studied secessionist movements in India, I sound a note of caution. I am pained by the way we seem to be making the mistake that is often made when dealing with secessionist, nationalist movements of this kind, which is to use the language of intimidation and to threaten people with dire consequences if they vote to put their proposals into effect. Telling Scots, “If you do this, there will be do defence work, there will be no participation in the pound, you might not be able to stay on in the EU—in other words, your economy will not be what it is and you will be worse off by 30% or 40%”, is counterproductive. We think it might frighten people into doing our bidding. It does not do that. It has three consequences, none of which we would want to happen.

First, if I were a Scot, I would immediately say, “Don’t you think I know these consequences? Do you think I am so stupid, that I am your country cousin that you need to be telling me all this? This is what you have been doing for all these 300 years. We have resented your patronising, condescending attitude, and that is precisely at work here”. Secondly, the Scots might feel that we are bullying them or blackmailing them and not allowing them freedom of choice. Thirdly, and more importantly, we are confronting them with a stark choice: if you want to be Scottish, you cannot be British. If you want to be British, you cannot be Scottish. That is not at all what we want. I therefore suggest that, rather than use the politics of intimidation, we should be adopting a twofold approach.

First, we should invoke common history, common ties and ties of affection that have been built up over the years and show the Scots that they have every reason to be proud of their history and the kind of liberal democracy they have achieved precisely because they have been part of the UK. They would not have achieved what they have achieved, of which they are rightly proud, without being an integral part of the UK. In other words, the source of their Scottish pride lies in Britain, not in Scotland. We need to appeal to shared history and shared ties of affection. Secondly, we should also make it clear that the choice is not simply between things as they are and separation, and that, as my noble friend Lord Judd and others have said, we are prepared to discuss greater devolution of power, although the word “devolution” sounds rather patronising—so perhaps greater decentralisation of power. If we thought in those terms, we might be able to win the Scots over.

Financial Crime: Legislation

Lord Parekh Excerpts

Thursday 17th March 2011 Lords Chamber

[Lord Parekh]

My Lords, I congratulate the noble Baroness, Lady Williams of Crosby, on and thank her for securing this debate and introducing it with such passion and eloquence. As she rightly pointed out, we generally tend to maintain fairly high standards in our internal affairs, both political and economic. However, when it comes to international transactions—whether foreign policy or economic—somehow our standards slip and we do not seem particularly worried. Our legislative record on dealing with bribery, tax avoidance and money-laundering is mixed. In some respects, it is better than other European countries but in others it is much worse. The number of convictions for bribery, for example, is lower in Great Britain than in many other European countries. That is not because our companies are well behaved; it is rather because the Government are unwilling or unable to prosecute them. The Bribery Act received Royal Assent in April 2010 and should have come into effect by the end of last year, but unfortunately it has not.

For money-laundering, we seem to provide more tax havens than most other countries and some of those funds find their way into the City of London. Our taxation system, which we have talked a great deal about, has many easily exploitable loopholes. I have never understood the distinction between the things called tax avoidance and tax evasion. Technically, of course, I do but morally and practically I do not. Supposing I were to do that in my own university by saying there, “No plagiarism or copying from other students”, but that the rule was so defined that if they were to copy from the internet or something else that would not count as plagiarism. How can we have a situation where rules are designed and defined so that they virtually allow you to get away with murder? Then we sanction it in the name of tax avoidance being all right but tax evasion not. The time has come to make sure that this distinction is fairly tightly defined and narrowed as much as possible.

It is because of that distinction that a large number of corporations, multinationals and banks have been able to get away with paying so little by way of taxation. Last year, the tax gap—the gap between the tax that should have been paid and that which was paid—was £42 billion. In the year before, it was £38 billion. I am told that in 2010-11 it could be as high as £80 billion to £100 billion, which is staggering. It is made easier by companies generally being set up so that we do not know what their home base is and where they could be taxed. In this country, as in many others, we allow this to happen by introducing easy mobility between the gamekeepers and the poachers, with the result that there is a serious conflict of interest. Those who should be monitoring and enforcing the system are confronted with all kinds of temptations, some of which are not easy to avoid.

My next remarks will be about, first, tax avoidance, and then money-laundering. We in this House do not seem to appreciate tax avoidance. Perhaps we do, but for the public at large it has undermined the legitimacy of the political system. People simply cannot understand how we can have designed a system in which people earning billions and billions of pounds can get away without having to pay our tax, while a small man somewhere earning no more than £30,000 or £40,000 has to pay an enormous amount of tax. How could this kind of system continue? Therefore there is enormous anger at the systematic undermining of our democratic legitimacy.

Concerning money-laundering, I shall make one point that has often been ignored. Think of a tyrant, whether it is Mubarak, Gaddafi or whoever. He plunders his people and collects billions because he is fully confident that he will be able to enjoy the fruits of the money that he has collected. What gives him that confidence? It is that his money will be easily siphoned off somewhere such as here so that he can quietly enjoy it when he is thrown out of the country. In other words, in so far as we continue to devise a system which allows those characters access to the money, we are complicit in the crimes that they have committed. The blood of their victims is, to some extent, on our hands because we have allowed the system that gives those guys the confidence. Therefore they continue to plunder their own people. We really need to appreciate how morally implicated we are in some of the activities that go on abroad.

I end by making one or two general suggestions. In this country, we ought to be fighting for agreed global norms. We must also make sure that there is rigorous monitoring with an enforcement mechanism. There should be absolute transparency on how the Government and multinationals conduct their business. We should close tax havens. All this is widely known and is nothing new but I will also make two suggestions that have, perhaps, not been explored.

First, there must be a way of naming and shaming those who avoid taxes, even when that is done by exploiting existing loopholes. We name and shame in the cases of schools that have failed and of criminals. Why should it be difficult for us to say, “These are the companies, this is the tax they paid and this is how they arrived at it”, to show how much gap there is between tax avoidance and tax evasion? Secondly, just as all legislation passing through this Parliament has a human rights compliance statement, there should be a declaration of compliance for every major government and multinational transaction: that no form of bribery or corrupt practice has taken place in the execution of that project. That kind of compliance declaration would go a long way in discouraging people from engaging in unacceptable practices and for us in shaming them afterwards, should they be caught.