Foreign and Commonwealth Affairs and Defence

Part of Debate on the Address – in the House of Commons at 6:56 pm on 23 November 2009.

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Photo of Gisela Stuart Gisela Stuart Labour, Birmingham, Edgbaston 6:56, 23 November 2009

I very much want to continue the debate where Mr. Maples left off, rather than focusing on Afghanistan as many Members are doing. Without ignoring Afghanistan completely, I want to look at our foreign policy both over the last 12 months and in the coming years. Whoever forms the next Government, they will have to take a serious look at the role of Britain in the world, and the way we see ourselves as a global power will define what we do.

That involves, first of all, how we see our role in the United Nations. A few weeks ago, when the Foreign Affairs Committee went to New York and then to the Pentagon, it was noticeable that when we talked about Iran a language started to develop. On the one hand, we talked about the P3, meaning Russia, China and the United States, and then we talked about the EU3-France, Britain and Germany. It was a reflection of the fact that France and Britain have not exercised their veto in the P5-I think for the past 20 years. It also raised the issue of what to do about Germany, which is a significant power but does not have a seat on the Security Council. Reforms of the Security Council seem to be far off. We are a nuclear power and we need to decide where we see ourselves both in the UN and in relation to the European Union.

I will not pretend that I think what happened in the EU last week was a particularly edifying spectacle. The Herman and Cathy show may turn out to be the equivalent of Cousin Itt and Uncle Fester, or Gomez and Morticia-it certainly looks as though the Addams family are running Europe at the moment. Perhaps they will prove us all wrong. I certainly know that anybody who thinks that Cathy Ashton is an easy person to overrule will learn otherwise. However, given that it was supposed to be a significant step in the EU's establishing itself in the global world, I very much doubt whether those appointments were a good way of going about it. More will be said about the EU a week on Thursday, when we are to have an Adjournment debate on European affairs.

I want to talk about our NATO partners and our foreign policy, but not just in relation to Afghanistan. We have just been celebrating 20 years of German reunification. I have certainly not been reluctant to criticise Germany about its military engagement. However, it may be worth reminding ourselves occasionally of what the world looks like from the standpoint of the German Government.

For the last 20 years, for the first time in the entire history of Germany, the country's boundaries were concurrent with the notion of its ethnicity. To be German, and to be perceived as German, was concurrent with the boundaries of Germany, which had never happened before. Germany has 10 neighbours and all of them are peaceful-again, for the first time in its entire history. The economy is going relatively well, too, so why pick a fight? Germany thus often looks at how both Britain and France deploy their troops in a quite aggressive way. Not only does Germany wish to be peaceful, but the current generation of politicians have become genuinely pacifist in their approach to the world. They will try to use soft power, rather than what they call hard power. If they were to use hard power, they would want to do so wearing not German uniforms but European Union uniforms. That is not Britain's approach, but we need to understand where they are coming from, and developments in the EU have not changed their ways. If we want to be a serious player in the EU, we need to accept that.

I now want to move on to something that has not been mentioned today. During the debate on the Queen's Speech, we will not have a special debate on international development, but when we talk about the Foreign and Commonwealth Office and defence, we cannot ignore the role of the Department for International Development. Frankly, when we arrive in some places in the world and see a plaque saying that a certain bit of the embassy was opened by the Secretary of State for Foreign and Commonwealth Affairs and then go to an even bigger office that was opened by the Secretary of State for International Development, we realise that the FCO has a smaller budget than DFID. There is a slight suspicion that we have two foreign policies and doubt about who is running the show. That is not entirely true wherever we go, though. If we go to Helmand, we now find that what is called the senior representative-Hugh Powell-is bringing together what the MOD, the FCO and DFID do, but that does not necessarily happen in the entire world.

I want briefly to deal with international development, which is not usually in my remit as a member of the Foreign Affairs Committee. Christian Aid staff in the west midlands came to see me to bring to my attention a campaign and its report called "Death and taxes: the true toll of tax dodging". Essentially, it argues that taxation policy and the profits and tax policy of international companies in the developing world are deeply damaging developing countries. If we worked together and brought much greater accountability to the way that multinational companies deliver their taxation, we would help not only ourselves but many developing countries to move out of dependency to a degree of independence.

Christian Aid estimates, for example, that developing countries lose about $160 billion because corporate taxes are dodged by what it calls transfer mispricing or false invoicing. It wants international accountancy standards that require multinational companies to report on their activities on a country-by-country basis, as that would clearly identify where profits are made and where tax should be paid. If the tax was not paid, revenue authorities could therefore target their resources on companies that might be avoiding or evading their tax obligations. At the moment, because we do not do that, companies can shift their profits from developing countries to tax havens and jurisdictions where tax rates are lower.

We ought to work together much more to develop the International Accounting Standards Board, because it contains the people who make the recommendations for legal practice in more than 100 countries, but what can we do here in the UK? The Government can do something; but, much more importantly, we can work with the big four accountancy firms-KPMG, PricewaterhouseCoopers, Deloitte, and Ernst and Young-because they have an extraordinary influence on that kind of governance, without the accountability that we as politicians would sometimes expect. In this context, we need to work with the European Commission. That matters for reasons of corporate social responsibility, corporate responsibility and trade.

About 60 per cent. of the world's trade is done on a country-to-country basis, but it is accounted for by international companies, so we cannot trace 60 per cent. of the world's trade on a country-to-country basis because the multinationals control it. Whether in Afghanistan or any other country, once we get proper accountability and proper taxation, we can eradicate corruption, achieve transparency and help countries to become less dependent and get the benefits of their own wealth.

The UK Government supported such an initiative at the G20 in Berlin last June, and I very much hope that we will continue to fight that battle. Of course, we in the UK could do something fairly quickly about international tax evasion. I suggest to Ministers that, first, we should require all British nationals to file a UK tax return. Any British national paying a lower rate of tax abroad should be required to pay the Exchequer the difference between that rate and the UK tax rate. The argument for that is very simply that anyone born in this country who continues to carry a British passport and has benefited from either a British education or the health system should pay a contribution to the UK.

I wonder whether Lord Ashcroft would support my suggestion, as I understand that he still refuses to tell us whether he pays UK taxes. That also makes me rather surprised about why Sir Malcolm Rifkind, in a rather uncharacteristic and ungenerous comment, criticised the Chairman of the Foreign Affairs Committee for devoting a significant part of his speech to the Turks and Caicos Islands. The Foreign Affairs Committee has managed to bring about extraordinary changes in the governance of the Turks and Caicos Islands as a result of its report, but the right hon. and learned Gentleman thought it inappropriate for its Chairman to spend so much time on that. I am sure that the fact The Independent reported on 19 November "Exclusive: Ashcroft's bank lent millions to disgraced premier" of the Turks and Caicos Islands had absolutely nothing to do with that whatsoever.

If we want to build democracies and if Opposition Members, who now look rather sneering, want to form the next Government and if they want to criticise this Government's ethical foreign policy, their conduct will be just as important as the conduct we expect from the countries we work with. I look forward to the Opposition's response as much as I look forward to the response from the Government.