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Exclusive | 'Sunak's 2 years were disappointing; his party not ready for July 4': Lord Karan Bilimoria on UK snap polls

Jun 14, 2024 02:56 PM IST

A crossbench peer in the House of Lords, Bilimoria discusses the UK's snap elections, a potential Labour victory, and its impact on UK-India relations

British Prime Minister Rishi Sunak shocked everyone by announcing a snap election at Downing Street on May 22, catching even his own Conservative Party off guard. Tory MPs confessed they were unprepared, with one revealing he found out about the plan via a note handed to him during a select committee meeting that day. Later, while explaining his decision, Sunak stated he chose July 4 for the polls to allow the public to decide whether to continue building on the country's progress or revert to "no plan and no certainty."

File photo of House of Lords member Karan Bilimoria PREMIUM
File photo of House of Lords member Karan Bilimoria

According to several experts, Britain's opposition Labour Party might be headed for its biggest election victory ever, with a recent poll predicting a thumping 194-seat majority. The poll, conducted by the market research company YouGov, which analysed voting estimates across all UK constituencies, suggested that Labour could secure 422 out of 650 seats in the upcoming election, while the Conservatives, led by Sunak, were predicted to win 140 seats.

During an exclusive interview with Hindustan Times, Lord Karan Bilimoria, a crossbench peer in the House of Lords and chancellor of the University of Birmingham, extensively discussed the UK's snap elections, the country's post-Brexit trajectory, a potential Labour victory, its impact on UK-India relations, and the status of the ongoing India-UK FTA negotiations.

What are your thoughts on Rishi Sunak’s decision to call a general election on July 4, especially considering the Conservative Party’s current standing in the polls?

We were completely caught off guard when the election was called early. Most people expected the election to be held in the autumn, either before or after the American elections. The early announcement surprised everyone, including his own cabinet, and certainly the whole country. It was unexpected, and I believe it was a poor decision. His party is not ready for the elections. The country is not ready for elections. So, I think it was a very, very poorly thought-out move and was not consulted at all.

Almost all opinion polls suggest a Labour victory in the upcoming elections. Do you believe these predictions will hold true on election day? After 14 years of Conservative rule, what do you think are the main reasons behind the party’s current struggle in the polls?

It's still a month until July 4, but the Conservatives consistently trail by up to 25 per cent in the polls. The reasons behind their struggle date back to the Brexit referendum in 2016, and quite frankly, it's been downhill for the UK ever since. Brexit was a very, very bad move and an act of great self-harm by the country. There has also been political instability, with five prime ministers and a series of crises, including the pandemic and the Ukraine war, along with domestic issues like the energy crisis and inflation that peaked at 11 per cent.

Watch: Anti-Immigrant, High Taxes: Why Sunak's Party Will Lose UK Snap Polls | Lord Bilimoria Explains

When Sunak noticed that the economy, which had been in recession at the end of the previous year, showed a slight growth of 0.6 per cent in the first quarter of this year, and that inflation, previously at 11 per cent 18 months ago, had decreased to 2.3 per cent, nearing the desired 2 per cent, he saw it as positive economic news and decided to call for elections.

But people are fed up, especially given the Conservative Party's internal conflicts and controversial policies like sending asylum seekers to Rwanda. These actions have eroded trust and credibility, compounded by tax hikes and a cost-of-living crisis. So, there's a strong anti-incumbency sentiment, and if you look at the polls, people are saying that they'll vote for Labour.

How would you evaluate Rishi Sunak’s tenure as PM? What have been his key successes and failures? Also, as the first Indian-origin prime minister, how significant do you think Sunak's leadership is to British Indian voters?

When I was awarded Asian of the Year in 2002, I predicted we would see an Asian PM in the UK within my lifetime. It took 20 years, and Sunak's appointment was a huge celebration, especially for Asians and Indians. I've known Rishi since before he joined Parliament, through his father-in-law Narayan Murthy. He's bright and capable, and we had high hopes.

Unfortunately, the past two years have been disappointing, especially regarding UK-India relations. Despite expectations, a Free Trade Agreement (FTA) hasn't been signed and there's been no major delegation to India. Taxes have also increased significantly, with corporation tax rising from 19 per cent to 25 per cent. As the first ethnic minority president of the Confederation of British Industry (CBI), I advised against these tax hikes, but Sunak didn't listen.

Another thing that has greatly upset me regarding India is this government's attitude toward international students and immigration. They've been anti-immigration, despite the UK having some of the best universities in the world. This government restricted the rights of international students to bring dependents and this policy discourages them from coming here. The most concerning issue was the attempt to remove the two-year post-graduation work visa, which I helped introduce in 2007.

Thankfully, the Migration Advisory Committee recommended keeping the graduate route, and with pressure from many, including the education minister, Sunak backed down. But this is not what I expected from an Indian-origin PM.

What impact do you foresee a Labour victory having on the UK’s political and economic landscape? With PM Modi back for a third term in India and a new government soon to be in place in the UK, how do you think relations between the two countries will evolve if Labour comes to power?

The Labour governments I've worked with, under former prime ministers Tony Blair and Gordon Brown, were very friendly towards India. I've been on delegations with both leaders, including Brown when he was Chancellor. Labour has always valued strong relations with India, even before the Conservatives launched Conservative Friends of India.

From a business perspective, the most supportive government I've known since starting Cobra Beer over three decades ago was the Blair-Brown Labour government. They had low capital gains tax, entrepreneur relief, and a top tax rate of 40 per cent for most of their tenure. They were very business-friendly and encouraged entrepreneurship and startups.

Even in terms of immigration, Labour has historically been more welcoming compared to the current government's hostile approach. They would also be more sensible about immigration, and labour shortages in various sectors. The current Conservative policies, like setting high minimum salary thresholds for immigrants, have created unnecessary barriers and contributed to these shortages.

But Sunak argues that his plan is delivering an economic recovery. Do you see evidence of this recovery, and how convincing do you find his promises of more tax cuts?

The promises of tax cuts haven't materialised effectively. While national insurance was reduced twice by two percentage points, overall taxes are at their highest level in 70 years. The income tax threshold has been frozen, meaning it doesn't adjust with inflation, therefore, effectively acting as a stealth tax.

More people are being pushed into higher tax brackets, leading to increased taxes for everyone. The increase in corporation tax contradicts their claims of reducing taxes. High taxes are harmful to investment, business growth, and job creation.

The Labour Party has assured they won't increase most taxes, except for adding Value Added Tax (VAT) to private school fees. This could make private education unaffordable for many, pushing more students into state schools and overburdening the system. So, I think that plan will backfire. But Labour has promised not to raise income tax, capital gains tax, or corporation tax, which is a relief for businesses and industry.

Labour has pledged to forge closer ties with Europe. How feasible and beneficial do you think this will be for the UK post-Brexit?

Brexit has been incredibly damaging to the UK. In my speeches, I often ask if it was a mistake, and almost everyone agrees. Politicians avoid discussing Europe and Brexit in this election because Labour is focused on winning back the seats they lost in 2019. However, if Labour wins with a strong majority, they might push to get closer to Europe, possibly adopting a Norway-style model within the European Economic Area (EEA) or the European Free Trade Association (EFTA).

This would mean rejoining the single market and customs union, allowing free movement of people, goods, capital, and services. This move would reduce the costs, bureaucracy, and red tape caused by Brexit, benefit businesses and make travel to Europe easier again.

As someone deeply involved in UK-India relations, how can the UK and India strengthen their economic partnerships in the coming years?

We need a period of stability after the constant instability since Brexit. A Labour government with a large majority could provide the stability needed for consumers, the public, and international partners like India. UK-India trade is nearing £40 billion (approximately $50.8 billion) annually, but there's potential for much more, especially considering we trade nearly £100 billion ($1.27 billion) with China. India should be a top partner for the UK. Currently, India is only our 12th largest trading partner, but with the right support from a Labour government, trade, business, and investment with India could significantly increase.

With the snap election now scheduled, how do you see this affecting the ongoing India-UK FTA negotiations that began in January 2022? What are the potential short-term and long-term impacts of this?

If we rejoin the EU Customs Union, it will work alongside the EU FTA, which is also close to being finalised alongside the UK-India FTA. During my time as the CBI president, I've been deeply involved in trade agreements, including those with Australia and New Zealand.

The UK-India FTA is a significant one, dealing with issues like high duties on Scotch whisky and cars, as well as concerns about Indian workers coming to the UK. It hasn't been an easy process, but after 14 rounds of negotiation, we're almost there. With the possibility of a new government in the UK and after the Indian elections, I'm hopeful we can wrap up this free trade agreement soon. It'll be a win-win for both countries.

How significant are issues like market access for skilled professionals and import duties on goods?

Very important. The movement of people is very important. And this is where, I think, the current Conservative government has been very damaging. Including international students in net migration figures, despite cross-party opposition, distorts the numbers and creates unnecessary fear. We absolutely need genuine migration. Asylum seekers from places like Ukraine and Afghanistan, and skilled workers, especially from countries like India, are crucial to address labour shortages in various sectors. However, a hostile approach to immigration hinders this process.

I hope Labour will adopt a more welcoming approach. While illegal immigration must be addressed, methods like sending people to Rwanda are inhumane and impractical. And as a crossbench player, an independent voice, I speak out against such policies.

Considering the UK's Indo-Pacific pivot and its fiscal constraints, how do you foresee the UK balancing its foreign policy priorities, including relations with the EU, Ukraine, Gaza, and India?

The UK may not be a superpower, but it's still the sixth-largest economy and holds a huge global influence. It's a key player in various international forums like the UN Security Council, G7, G20, North Atlantic Treaty Organization (NATO), Five Eyes, AUKUS (Australia, United Kingdom, United States), and now the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

To strengthen its alliances, I believe the UK should join the Quad security alliance, including India, Australia, Japan, and the US. The UK and India should deepen their defence and security ties through initiatives like defence manufacturing, joint training exercises, and officer exchanges. As time goes on, it's important for the UK and India to become even closer allies in defence and security matters.

The Conservative Party has proposed reintroducing a form of National Service. What are your views on this proposal? Do you see it being successfully implemented? Especially, because it costs £2.5 billion annually?

A national service scheme is always a very good thing to have, but it needs careful planning and resources. Springing it on people suddenly makes it seem like a gimmick. While it's commendable to offer young people opportunities to serve, we must face reality. I've advocated for increased defence spending since 2019, given global instability like the Ukraine war and tensions with China.

Sunak's government suggests 2.5 per cent spending, but I argue for 3 per cent, or even returning to Cold War levels at 4 per cent. Our armed forces are respected, but they need more investment. Partnering with India could enhance defence capabilities through manufacturing, technology, and joint exercises.

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