Lord Mitchell
Member of the House of Lords · Labour · United Kingdom
“In those days, no one quite understood the long-term dangers of radiation, and protection was rudimentary. For him, it was fatal. In 1998, he was diagnosed with acute myeloid leukaemia, which he knew was terminal. He told me, in his usual blunt way, “I know how this story ends and it is not pretty.”
“My Lords, on 9 October 2000, my parents-in-law, Jack and Ruth Lowy, committed joint suicide. He was dying and she had decided to accompany him on this last journey. Jack was born in Bratislava in what was then Czechoslovakia. The family were Jewish and following the events in Munich in 1938, they fled to Philadelphia.”
“My wife in particular sensed that they would carry out their wishes. After all, they were both intelligent people who had carefully thought this through. There was no one to support Jack and no one on hand to help Ruth in what must have been hell for her.”
“I cannot be certain about my mother-in-law’s motivation to join him, but they both knew that his own suicide at home could well run the risk of her being charged with committing a crime as an accomplice. What I do know is that had this Bill been law, she probably would have chosen life.”
“I always felt that the issue of antisemitism on campus did not emanate solely from the students. It also came from the laissez-faire attitude of the faculty.”
“We kept the brief tight, with no references to the Middle East; we judged that there was nothing we could do or say that could make any difference. Where we could definitely make a difference was through reference to our common UK experiences and our heritage. I think we made progress.”
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“The logic for the growth in surcharges is obvious. As used to be said when I was in business, it goes from the top line to the bottom line, from gross to net, without touching the sides. In basic business there is generally a cost associated with generating revenue. Staff, depreciation, rent, electricity and the like all make up the cost of goods sold. It is the usual model. But today the quest is to persuade the customer to part with his cash without there being any cost implication. As I say, what hits the gross revenue line also hits the net revenue line. It is nice work if you can get it.”
“My Lords, I had hoped that more noble Lords would be taking part in this debate, since I am sure that most of us in our time have remonstrated against the budget airlines. But it is quality not quantity that counts and I am sure that we can have a very interesting debate this evening. The debate features internet bookings for budget airlines. This, in my opinion, is just a subset of what my right honourable friend Ed Miliband has referred to as surcharge Britain. We all know what that means: all those little extra costs that it seems everyone these days attempts to load on to an unsuspecting public. We see them on bank overdrafts and on credit card usage. We see them on mobile phone charges and on online shopping. In every direction you turn there seems to be somebody there trying to suck that extra tenner out of you.”
“My Lords, over Christmas almost every bus in London was advertising wonga.com, which was going out of the way to encourage people to have these payday loans—loans that the firm itself was advertising at rates of 4,200 per cent per annum. Will the Government consider banning the advertising of these payday loans?”
“To ask Her Majesty’s Government whether they plan to take action to cap the interest rate charged by finance companies offering payday loans.”
“I thank the Minister for that reply. Some 3.5 million people in this country use payday loans. Yesterday I decided to become one of them. I applied for a loan for £300 over a 21-day period. I went on a very friendly website and filled out all the forms very quickly. It told me that if I clicked the button, I would have £300 in my bank account in 15 minutes. I had to repay, in three weeks, the sum of £369, which is an annualised interest rate of 4,200 per cent. I did not click the website. Will the Minister say whether the Government plan to regulate this industry? There are a lot of very desperate, vulnerable and gullible people out there, and I think that they need help.”
“Anyhow, they must have liked what we said because the FCO and the British Council are encouraging us to set up a partnership with CAUSE-NY, New York—an important example of transatlantic collaboration on intercultural issues. It is a British export of British ideas. Changing deep-seated opinions and prejudices is not easy. I believe to my innermost core that meeting each other, working with each other and understanding each other’s cultures through interfaith dialogue is a vital way to reduce tensions and make our country a happier place.”
“They are taught leadership skills, which will be required when they enter the workplace. They are our leaders of tomorrow and what we are doing is really making a difference. Finally, last April I was invited by the British consulate in New York and the British Council, also in that city, to tell the American Jewish community about our activities. There were many misguided opinions about Britain, some quite absurd, but I think that we did a great job of convincing them that we are robustly addressing the problem and when we pushed hard we were astonished to learn that American campuses, too, face many of the same issues that we have in the UK.”
“We set up the trust in such a way that it reflects a balance between both communities. Our trustees, many of them speaking this afternoon, are all Members of your Lordships’ House. Three are Jewish and three are Muslim. Our employees also come from both communities. Our donors are nearly balanced between Muslims and Jews. It means that I can face down anyone who says that we have a bias in either direction. On each campus we have student ambassadors whose function is to engage with both communities. The National Union of Students positively encourages our work, as does the Union of Jewish Students. We are progressing in our links with the Federation of Student Islamic Societies in the hope that they, too, will back us. Our employees and campus ambassadors are taught conflict resolution, which they will need when the situation arises.”
“Students, they say, must be prepared to hear things that they do not like, things which may cause them distress; such is campus life. Who will disagree with that? However, when administrators and faculties believe that the laws of the land are somehow not relevant in the campus, as I have witnessed, we have problems. Free speech is of paramount importance, but it has to exist within the law. Universities also have a duty to ensure that hate crimes and racial slurs are not committed. They also have a duty of care to all their students. How do we go about trying to change these attitudes? The Coexistence Trust addresses issues between Jews and Muslims on 12 of our national campuses. We confine our activities just to Jews and Muslims, just to universities and just to 12 campuses—we have limited resources and we have to be very focused.”
“The Coexistence Trust, which I chair—I declare my interest—has a very focused remit. We seek to bring greater understanding between Jewish and Muslim students on our university campuses. Many people are surprised when I tell them that among the Jewish community several universities have been considered no-go areas. They are also surprised to learn that anti-Semitism and Islamophobia exist not just among the students, but among the faculty. I do not want to overstate the case, but the fact is that it lurks below the surface and comes to prominence every time there is an incident in the Middle East. Many faculty members and university administrators have a curious attitude towards these anxieties. They say that universities are not only places of learning, but also places of intellectual challenge.”
“I would like to see the Government begin a programme of instruction to develop interfaith understanding. I would like to see schoolchildren really immersed in other religions so that they know what being a Muslim or a Hindu is really about. I would like to see university administrators and faculty members, school teachers and civil servants versed in minority religions. Here I must pay tribute to the Three Faiths Forum, which does sterling work encouraging school teachers to understand other faiths. Dietary rules are very important to observant Muslims and Jews, so campus administrators and employers need to know about halal and kosher. It is outrageous that universities still hold exams on major minority religious holidays and then claim, as I have heard them say, that they had no idea.”
“Many people from minority communities are worried that their children will become assimilated and their culture diluted. In the UK, more than one-third of young Jews are marrying non-Jews: but this is no reason to live in hermetically sealed silos. For this reason, I feel very uncomfortable with faith schools, although I concede that on this matter and in the Chamber this afternoon I am probably on a losing wicket. Our ignorance of each other's religions and traditions is shameful. I find it amazing that Rosh Hashanah, Yom Kippur and Pesach—major Jewish religious holidays—are simply blurs to most non-Jews. But then, what do I know about Islam and Muslim holidays, or Hindu or Buddhist? Not much, I grant you, but these days I am trying hard to learn.”
“Like three other Lords in your Lordships' House, including the noble Lords, Lord Sacks and Lord Young of Graffham, I went to a grammar school in Finchley called Christ's College. The name is ironic given that all four noble Lords are Jewish, as were at least 50 per cent of boys at the school. Even though we did not attend Christian prayers, we had religious studies on the syllabus. We learnt about the New Testament and Christianity. I am glad to have a good understanding of what is still the dominant and established church in this country. Has this made me a lesser Jew? I think not. Today, it seems that many minority faith schools pay only lip service to understanding other religions and customs. How can a child from one faith understand a child from another if they never mix, play together or visit each other's homes?”
“Some came to escape persecution, others for the opportunity to participate in the freedom and prosperity that this country has to offer—but all of them came to be part of our nation. When I hear people say that immigrants are lazy scroungers, I look at what the children of immigrants have achieved in business, science, sport, the arts and entertainment, and the professions. This country has been enriched by us all. I do not know this for sure, but I would bet that getting on for 15 per cent of your Lordships' House can trace their ancestry back to relatively recent immigration. What an achievement and what a statement about our country. In Mr Cameron's view, our multiculturalism has failed because we have, “encouraged different cultures to live separate lives, apart from each other and the mainstream”. In truth, I agree with him.”
“I confess that, for much of my life, every time I heard the word “interfaith”, my heart sank. I saw it as the language of do-gooders—people who speak well and do nothing. My gradual immersion in the world of interfaith dialogue has been a personal journey of overcoming my prejudices. The more I am exposed to the subject, the more convinced I am that it is a crucial way to achieve greater understanding in our society. Like many noble Lords speaking today, I am a descendant of immigrants. I am Jewish: my grandparents and great-grandparents emigrated to this country from eastern Europe during the 19th century. They trod a well worn path. Like Huguenots and Irish Catholics before them, and Caribbeans, Indians and Pakistanis after them, they came to this country for a better life.”
“With the tenth anniversary of 9/11 almost upon us, we all know too well that murderers and madmen are everywhere. When we learnt that Breivik had strong links to the extreme right-wing and racist groups in our own country, we knew that we must be on our guard. Indeed, the community response to the English Defence League protest in the East End of London last weekend is a testament to the strength of this vigilance. The Prime Minister in his speech in Munich last February addressed racism, terrorism, and the failures of multiculturalism. Addressing the issues of extremist ideology, he concentrated on two platforms. The first was to tackle all forms of extremism; the second was to encourage stronger citizenship. He coined the phrase “muscular liberalism”. I would like to introduce a third component: greater understanding.”
“I have twin sons who are the same age as Haroon, and I very much doubt whether I would be so generously minded were the same thing to happen to one of my boys. His words are seared on to my soul. Tariq Jahan said more about inter-communal dialogue in those few words than any of us could do in a lifetime. Two weeks earlier, in a senseless act of Islamophobia, a white supremacist slaughtered 77 white teenagers at a political holiday resort in Norway. A white killing whites: how can that be Islamophobic, you might ask. Anders Breivik saw the Norwegian Labour party’s policy of defending diversity and tolerance as being supportive of minorities, which indeed it is, and therefore, in his twisted mind, worthy of the terrible carnage that he wrought. His gun was aimed at whites but his true targets were Norwegian Turks.”
“My Lords, I am quite overwhelmed by the response of noble Lords to this debate. I am sure that the next 90 minutes are going to be both illuminating and enhancing. I know it is only four minutes per noble Lord, but I am sure it is going to be a good debate and I thank everybody for participating. I was on holiday during the August riots, but even following events on the internet, one incident made a huge impression on me. Tariq Jahan had just lost his son, Haroon, who was murderously mowed down when he and his friends were trying to protect local shops from looters. Mr Jahan’s words were haunting: “Why do we have to kill one another? Why are we doing this? Step forward if you want to lose your sons. Otherwise, calm down and go home, please”.”
“Even as we speak, a massacre is in the making. A thousand Syrians have already been murdered by Assad and his henchmen. Very shortly and very sadly, more will be slaughtered in cold blood. It is simply awful. Where are the demonstrations in London? Where are the protests outside the Syrian embassy? Where are the Socialist Workers Party and all the other protestors who turned out in such force against Israel at the time of Gaza? There is a not a word on Syria, on Libya or Iran, but when Israel overstretches the mark, everyone goes nuts. Many Jews think, and with good reason, that anti-Israeli invective is often anti-Semitism masquerading under a different name. The fact is that to criticise Israel is not anti-Semitic, but to single out Israel simply because it is a Jewish state surely is.”
“One of the rules that we have at the Coexistence Trust is to avoid discussing the Middle East. The reasoning is simple: we cannot change the conflicts, but we can change how we interrelate in this country. But I must address one aspect of this conflict that does affect us in this country. What gets to many Jews is the way in which Israel is singled out in the media and by those in power. Clearly, it is both wrong and illegal to attack Jews for being Jews, but somehow it seems perfectly acceptable to attack the only Jewish state simply because it is Jewish. I must confess that I am no great lover of the current Israeli Government and am highly critical of their behaviour. Criticising them is totally legitimate, but how about some of Israel’s neighbours? Let us take Syria as an example of how double standards apply.”
“Recently, two Jewish protesters went to SOAS to protest against Israeli Apartheid Week, where they were set upon. One of them was bitten on the cheek and was told that the best thing that the Jews had ever done was to go into the gas chambers. This behaviour is simply unacceptable and the universities need to be much more robust in preventing its repetition. Why cannot universities take a look at the calendar of religious holidays for some of the minority religions and try to avoid having exams on those days? As has been said, this very day is the Jewish holiday of Shavuot. It is a prime example. Here we are, smack in the middle of the school and university exam period, and there are students who are precluded from taking their exams or have to take them on different days.”
“Manchester in particular has issued a powerful code of conduct instructing administrators and faculty how to deal with the conflict. The issue is clear: universities are places to learn and experience new thoughts and ideas. Free speech is an integral part of our national life, and students must expect to hear views and opinions that may make them uncomfortable. Equally, universities have a duty of care to their students and they, too, must abide by the laws that this Parliament has passed to protect everyone from hate, speech and racism. I should like to quote from the all-party report: “The Government expects universities to have measures in place to ensure that their students are not subject to threatening or abusive behaviour”.”
“Most of all, we seek to encourage students to realise that we are none of us all that different from one another and have much to learn from each other. Islamophobia and anti-Semitism exist on campus; they emanate from certain students and certain faculties which are neither Jewish nor Muslim. But, sadly, they come, respectively, from Jews towards Muslims and Muslims towards Jews. Fortunately, during the three years that I have been chair of the Coexistence Trust, I have noticed an improvement on campuses. For example, in the immediate Gaza aftermath, we were encouraged not to be present at the universities of Manchester and Nottingham. It was judged that the situation was too inflammatory and that we would only worsen it. Today, I am pleased to say, we are welcomed and work closely with them.”
“The fact that international terrorists with murderous intent have been students at our own British universities is chilling. At the Coexistence Trust, we seek to bring Jewish and Muslim students together. Social engagement is the best way to dispel preconceived views. In January, we launched our campus ambassadors programme. These are students, one Muslim and the other Jewish, from both communities who operate at each of 12 pilot campuses. Their job is to engage students from both communities and encourage them to begin dialogues and work on joint programmes. For example, we look at issues that are common to both communities, including mutual threats. We discuss the BNP, which sees Jews and Muslims in much the same light as does the English Defence League.”
“Right from the beginning, it has been important to our trust that we strike a balance between Jewish and Muslim participants. Our employees are both Jewish and Muslim and so too are our donors and trustees. In particular, I am pleased to say that the noble Baroness, Lady Deech, who will speak later, is one of our trustees. I must also thank the noble Baroness, Lady Warsi, who has been hugely supportive of everything that we have done since our early days. There can be little doubt that our university campuses have allowed many forms of extremism to take hold. This week’s announcement by the Home Secretary on the successor to the Prevent agenda bears witness to the seriousness that this Government attach to the problem.”
“My Lords, this is the first time that I have used this technology, so it had better work. I have never been described as a rose before and I quite like it, actually. The inclusion of this debate today is very timely, and I thank the noble Lord, Lord Boswell, for introducing it this evening. I have the privilege of being the chair of the Coexistence Trust, whose principal remit is to engage with Jewish and Muslim students on UK campuses, with a view to lessening the undoubted tensions that exist between the two student communities. I thank my noble friend Lord Janner, who founded the trust and whom I succeeded three years ago. He is our co-president; the other co-president is His Royal Highness Prince Hassan of Jordan, whom I must also thank.”
“Secondly, it was close to the centres of finance, fashion, theatre and advertising companies. It has produced these raw entrepreneurs, to the extent that today American companies such as Cisco and Google have decided to invest in these areas and in these companies. It is very exciting. These companies are now running out of space. Where will they go to? After the Olympics in 2012, many of them will work in the Olympic park and, for the first time anywhere in the world, an Olympic Games will have a true legacy made up of high-tech and creative industries.”
“I recommend to any noble Lord taking a drive around Silicon Roundabout to see the bars, the restaurants and the unbelievable enthusiasm around there. It is full of young people all working in small businesses in creative industries such as applications for iPhones, music, advertising, fashion and movies, in all of which London is to the forefront. As I said, young people are doing all this. There is something about that area that Cambridge would never have and the City and the West End never have. It is edgy and cool and it attracts these sorts of people. How did this area come about? It did not come about under this Government or the previous one either. It was spontaneous. It just happened. It has just grown like Topsy. Why? First, low rents were available.”
“I want to devote the two minutes and 15 seconds that I have left to what is right. It is a very exciting story. The noble Lord, Lord Kestenbaum, in his excellent speech, talked about Silicon Valley. We now have a Silicon Valley in this country. It is not in Cambridge; it is three miles from here and it is a revolution. It has the most wonderful title of “Silicon Roundabout”. It is to be seen around Old Street and Brick Lane—indeed, that whole area. It is the east London cluster development and it is better than anything else in Europe. It is fabulously exciting and it needs an awful lot more publicity. I suppose that one of the things that people always said about Silicon Valley was that it was clusters of people with similar ideas in life getting together after work.”
“However, there is a dark side to being an entrepreneur as well. It is terrifying not being sure that you can meet the payroll, there are problems with the banks, all sorts of things wake you up in a cold sweat at two in the morning and the stress is enormous. So when I hear the Government say that 300,000 public sector employees will, as a result of all the cuts, somehow find another job because of private sector growth and the entrepreneurial society that we are going to form, I simply do not believe it. I cannot conceive that somebody who has been working in the public sector for 10 or 20 years is somehow suddenly going to come out and become an entrepreneur. It absolutely does not make sense to me. The tone of today’s debate has been, “What is wrong with the UK economy?”.”
“My Lords, 11 years in your Lordships’ House and for the first time, I have lost my speech. Actually, it was left on the Northern line, so while somebody was having a lot of fun reading it, I was having a quiet panic in the Bishops’ Bar, trying to reconstruct it. Anyhow, here goes. First, I thank my noble friend Lord Hollick for securing this debate. He started as an entrepreneur, he ran a major media group and now he is with one of the premier private equity companies in the world. He is the quintessential businessman. I, too, am an entrepreneur. I have started three companies from scratch, built them up and eventually sold them. It is great. I have loved being an entrepreneur and I would recommend it to anybody. Seeing companies grow and develop and seeing your staff grow is fantastic.”
“Next week, on 8 March, it will be the 100th anniversary of International Women’s Day. Women for Women International around the world will be linking hands across bridges from our own Millennium Bridge in London to the Sydney Harbour Bridge, Brooklyn Bridge in New York and other bridges around the world. I end with particular thanks to someone who is not in her place but who is very dear to all our hearts: our Lord Speaker, the noble Baroness, Lady Hayman. She has been gracious enough to host several receptions for Women for Women International in the River Room. They have been tremendous successes, and I know she does that for lots of other charities. I am sure that every Member of this House will thank her for what she does.”
“Those conflicts may have ended 15 and 10 years ago, but to the people who are living there, it is as if they ended yesterday. We saw terrible issues which are the result of ethnic cleansing, rape and murder. Women there, particularly Muslim women, who have no confidence in themselves, are now in business. They are rearing chickens or growing mushrooms or tomatoes. The best thing we saw there was the beekeepers of Kosovo. One woman had been trained to raise bees in hives. She started off with three hives that were given to her and now has 10. She has a business and is generating €5,000 or €6,000 a year and is now training 10 other people to do the same. It was a marvellous example of how this system works. You could see the hope that these women were getting in those still terrible circumstances.”
“They make a donation of £20 a month and are asked to write letters to their sister to tell her that she is recognised and that there is somebody in the West who cares about what is happening. To date, there are 275,000 such sisters around the world who are receiving money and £53 million has been received by the charity. What happens to these sisters? These women are trained and taught about their human rights, but most of all they are taught how to run a small business and how to generate income. When that happens, they become self-sufficient and can provide for their families. Women for Women also gives microloans which have been tremendously successful. Ninety-eight per cent of these microloans have been repaid. Last May, my wife and I went to Bosnia and Kosovo, which was a harrowing experience.”
“When all the trouble started in Bosnia in 1994, she went to see what was happening there. She was so aghast at what was happening and, in particular, at the plight of women in that country that she set up this organisation. Today, Women for Women International specialises in post-conflict zones and the issues of women in particular. Various countries are now part of the Women for Women group: Bosnia, Kosovo, Afghanistan, Iraq, Sudan, the Democratic Republic of the Congo and Rwanda. Each country has been subject to great ravaging and terrible consequences, particularly for women. It is those women that Women for Women International seeks to help. It works on an interesting basis in that women, in particular, in the West, and some men, are assigned a sister in these countries.”
“My Lords, like every other noble Lord today, I thank my noble friend Lady Gould for introducing this debate. Four and a half hours are a tribute to how seriously we all take it. I also congratulate the six new Members of our House who have made their maiden speeches today. They made a phenomenal contribution and will add to the great expertise that exists in your Lordships' House. I shall talk about an organisation called Women for Women International. I have a sort of interest to declare in that my wife Hannah sits on its international board. There is a remarkable woman called Zainab Salbi. She is Iraqi, and when she was 15 years old, because her father was a pilot for Saddam Hussein, her mother was able to get her out of the country and she went to the United States to go to university.”
“Ahmadinejad has stated on many occasions—and who are we to disbelieve him?—that the Holocaust never happened and that Israel must be wiped off the face of the earth. So the man both denies the Holocaust and, at the same time, plans for the next one. He plays for time, stringing us all along while he zigzags from side to side. We threaten him but we always back off. We indulge him, hoping that he and his state will change their tune, but they do not. We apply sanctions, which are soft and meaningless, but he ignores them. All the time, the centrifuges keep spinning—at least, they would were it not for the Stuxnet virus. My conclusion is that nothing will stop Iran in its pursuit of nuclear weapons, except crippling sanctions, and these should be implemented before it is too late.”
“It destabilises Iraq and Afghanistan, and it is our soldiers who pay the price. It set up a state within a state in southern Lebanon, such that Hezbollah today is a major threat to Israel, armed to the teeth with more rocketry than it had in 2006, despite the United Nations trying to prevent it. It finances and arms many organisations that we deem to be terrorists and which are threats to our security. Now it is in bed with the North Koreans, who it seems are to supply it with medium-range missiles capable of hitting western Europe: talk about a marriage made in hell. I am a firm supporter of the state of Israel. To Israelis, a nuclear-armed Iran is an existential threat. It sees Tel Aviv as target number one.”
“On Iran, the leaks quote the King of Saudi Arabia as saying that the head must be cut off the snake; the King of Bahrain as saying: “The danger of letting it go on is greater than the danger of stopping it”; and about Ahmadinejad that he is “unbalanced, even crazy”. The Iranians, of course, deny that they are building a nuclear weapons capability; they say that they are building nuclear power plants. Iran is a poor country. Could someone please explain to me why, as one of the world’s largest producers of gas and oil, it should need to build nuclear generators? It is laughable. I see the Iranian situation as a car crash waiting to happen, and it is all in tortuous slow motion. For years, we have known that the Iranian regime is wholly bad. Ever since the revolution, it has been a force for evil in this world.”
“My Lords, I, too, thank my noble friend Lord Corbett for initiating this debate. I do not suppose that any of us are wildly happy about the WikiLeak revelations, but in some ways they throw into sharp relief the true views of the Arab states on Iran. Like many other noble Lords, I have always been surprised by what I have heard Arab diplomats and politicians say in private behind closed doors compared with what they say in public. When talking about the dangers to their countries, they look to the threat from the East—in other words, Iran—rather than to that from the West—that is, Israel. They have one language for the street and another for diplomacy.”
“We’re off to Singapore or Geneva”, I shall say to them, “It’s better to be taxed to death than bored to death”. It is not my Budget; it is Mr Osborne’s. However, if it were mine, I would make it small-business-friendly, I would keep CGT at its current rate for business investment and I would have no hesitation in plugging the carried trade and non-dom loopholes.”
“It is the subject of non-doms—people who were born abroad and are able to avoid tax on their non-UK generated income because they are effectively non-domiciled. This was a hot potato three years ago but it went off the boil when we in government dealt with it in a half-hearted manner because we were frightened of upsetting the City. If the Government want to be fair and courageous, they should say the following. If you were born abroad but live in the UK and you have lived here for seven years or so, then you have become a de facto resident. As such, you should pay tax on the same basis as the rest of us, and it should be based on your worldwide income. That is what the Americans and most other developed nations do. It is only fair. If people say, “Well, that’s too much.”
“However, in addition, when the investors eventually receive their investment back, any additional gain is usually split 80 per cent to the investors and 20 per cent to the managers. The investors have clearly put their capital at risk and any benefit they receive is a very legitimate capital gain and should be taxed as such, but how about the 20 per cent in the hands of the managers? Is that a capital gain? I do not think so. It is a fee earned by the managers and, as such, it should be taxed as income, but currently it is not; it is taxed as capital. This is not fair and should be reversed. Secondly, continuing the example of unfairness, I want to refer to a particular bugbear of mine which I have raised in your Lordships’ House several times before.”
“If there are to be changes, let them be simple. During the recent election, the Lib Dems, and the Deputy Prime Minister in particular, fought the campaign on the subject of fairness, so I now propose two ways in which CGT and the tax system could be made much fairer and generate significant taxation revenues. The first, referred to by my noble friend Lord Sugar in his excellent speech, concerns the area of reward known as carried interest. These days, hedge funds, venture capital funds and private equity funds gain most of their return from carried interest. When a fund is set up and investors are located, the fund usually pays the managers an ongoing management fee—usually in the region of 1 or 2 per cent per annum of the fund’s value. This amount is used to run the business.”
“The coalition is divided down the middle; next Tuesday we shall see who has won. To me, it is very clear what a capital gain is. It is when an investment is made with the intention of securing a gain over a period of time; it is about the expectation of gain but the possibility of loss; it is about risk; it is about the medium to long term; but, most of all, it is about investment in business. Today’s CGT situation is plainly bonkers. It is far too wide and 18 per cent is clearly inappropriate for all classes of assets. However, I really believe that 18 per cent or something like that rate should remain in place in respect of genuine investments in business where the investment remains in place for the medium term—say, three years. In the UK, we tend to love complex, arcane tax rules that few understand.”
“I created employment and my companies provided a vital service in the high technology marketplace. In each case, I sold my shareholding when I thought that it was time to move on. To be honest, it was when I became bored. In 1987, when Margaret Thatcher—now the noble Baroness, Lady Thatcher—was running the show, I sold one company and was faced with a sizeable capital gains tax bill. It was in the region of 40 per cent. Today, 23 years later, writing out that cheque still hurts. Four years ago, I sold another company when new Labour was in charge and I paid 10 per cent capital gains tax. Now tell me, my Lords, which Government were pro-business and pro-entrepreneur? It is very clear that capital gains tax is going to increase—the Lib Dems demand it. On the other hand, many in the Conservative Party are against any change.”
“This new coalition Government will not get this sort of entrepreneurial growth if they continue in their plans to decimate our education system. Maybe Labour in government did not get everything right, but we were very clear that you cannot build a 21st century economy if you hack into our schools, our universities and our colleges of further education. What is proposed by the coalition Government for science is truly scandalous. The previous Prime Minister, Gordon Brown, has become much maligned, but he was always very clear that small businesses were key to our prosperity and that the tax system should reflect it. I speak as a serial entrepreneur. In my career, I have founded and grown three quite separate businesses in the IT services sector. Each became a market leader, and two had major operations abroad.”
“Being nice to SMEs is not just about speaking warm words, but goes to the very soul of our economy. In the United States, it is estimated that between 1985 and 2005, nearly all new net jobs were created by firms that were five years old or less. This amounted to 40 million jobs. That means that established firms created no new net jobs during that period. I bet that the same is true here. Unemployment will not come from bailing out losers, but only from new companies with new technologies and new business models. Think British Airways and then think Virgin and Ryanair. Think Apple, think Microsoft and think Google. None of them existed 30 years ago; indeed Google is only 12 years old. That is where the growth and jobs are to be found.”
“Nice boys—never nice girls—where I came from joined banks, became chartered accountants, solicitors, or, heaven forbid, even estate agents; but start a business—never. In those days, we were simply not an entrepreneurial nation. However, my noble friend Lord Sugar, through “The Apprentice”, has brought the thrills and spills of being an entrepreneur into the sitting rooms of the nation. Now people know that business is challenging and brutal, but is also fun and creative. We must thank him and others like him for changing attitudes very much for the better. I have to say that I notice young people coming out of universities, even those from Oxbridge, who are rejecting going into the City or the professions. They want to get into business as quickly as they can.”
“This contrasts with what I suspect happens in the inner circles of the Treasury and Her Majesty’s Revenue and Customs, where a PPE at Oxford seems to be the prime qualification for running the tax affairs and business policy of the nation. I thank my noble friend Lord Sugar for introducing this vital and highly topical debate. The noble Lord is an entrepreneur to his very core and his successes are there for us to see. He started his business life selling aerials from the back of his car. I started mine selling vacuum cleaners door-to-door. You do that, you learn a lot and you never forget. But my noble friend has done more. When I started running my own business in the early 1970s, people thought I had taken leave of my senses. Not only was it risky, but it was somewhat socially unacceptable.”