‘UK must be as hard on white-collar fraud as on terrorism' – British MP

In a free market society, the prosecutorial approach must be as tough as it is easy for corporations to hire and fire people, British MP Dominic Raab tells RT, adding that he’d treat white-collar crime “in the same way he would counter-terrorism.”

Raab represents an emerging group of young right wingers in the Conservative Party, who have recently written a book called Britannia Unchained.

RT:In the book you say that the British are “idolous [sic], obsessed with the idea of the gentleman amateur.” What does that exactly mean? Do you think that British are living beyond their means?

Dominic Raab: What we actually do is we quote the great British historian Niall Ferguson, who says Europeans are the idols of the world. And we look how Britain has become steadily more Europeanized over time. We are not saying all Brits are lazy, far from it, what we are saying is you have a shrinking proportion of people in Britain who are pedaling harder and harder to sustain not just our economy but also to pay for the vital precious public services we all enjoy and that is not sustainable economically, it is also socially divisive. So we do need to look at things like welfare dependency. We also need to look at things like marginal rates of taxation. “Hard work should pay,”- that is the message we are sending out in a book.

RT:That’s interesting, because the recent report shows that more than half of the households in Britain take more from the state than they contribute.

DR: Well, there’s some interesting incentive of policy studies to produce this report. And it is fascinating, because there is lots of talk, for example, about a wealth tax, but actually, what you have got at the moment is something like the top 10 percent paying something like 55 percent of income tax overall, and actually until you are earning something in the region of 40,000 pounds a year, you don’t actually net of all the other things that you take out; a pay of any tax - pay any tax - and so I think it’s quite interesting within the concept of austerity and fairness.

Actually, we probably don’t have a wide enough tax base at the moment, and we’re all going to work a bit harder and we’re all going to put a bit more in; we are going to have to retire a bit later. I think it is questionable whether we need quite so many people staying in full-time education for so long. What about the idea of youth apprenticeships, the 14- to 16-year-olds. That was the Labour [party] idea that was abandoned, actually, something that would be quite sensible to look at. I think it’s also about, saying, you know, you don’t need to be a success in this country; you don’t have to go to university. The vocational root is also critically important; so we are looking at this in the round, but it’s certainly true to say that we must make sure that hard work pays.

RT:Aren’t all those things more to do with the economic situation rather than people not working hard enough, not wanting it enough.

DR: It’s partly about that, but let’s face facts: since 1950 the average working as of this country have come down by third, so it’s certainly a bit of that as well. You can look at the difference between private sector pay and public sector pay. Overall public sector pay is higher than private sector pay, yet they work lower hours and are less productive. There are differences between sectors and between professions, so there is actually a fit, a very crude stereotype of certain distinctions, but overall one of the things we are going to have to do if we are going to keep up with the ambitious hungry industrious countries spanning Asia to Latin America, we are going to make sure that hard work pays; and that’s exactly what George Osborne said.

RT:Is the British way of life in danger?

DR: I don’t think so. Remember what Niall Fergusons in his story said is that there are, you know, a few key things that made Britain great in the 19th century and one of them was hard work and a lot of people are working their socks off. I think what we need to see that those that work the hardest, the grafters, the grinders, the strugglers, the strivers need to make sure they see the fruits of their labor and that’s the key message.

RT:You are a great proponent of a free market, so let’s talk about that for a bit. One of the results of a free market is that it makes easier to fire people among other things, but surely it must also then be made easier for businesses and bankers to face the music if they do screw things up, so instead of bailing them out, they must be allowed to fail. How likely is that to happen in a country like this where there is such strong corporate and banking lobby?

DR: It is an interesting question. I don’t believe I am unfettered or I am reservedly in the free market. We need the rule of law, we need competition law, we need regulation. I think the idea if we would have none would be rather extreme. The question is: has the pangolins swung too far the other way and not just that we have got too much regulation, have we got the right kind of regulation at our banking sector; and the city wasn’t under-regulated, it wasn’t smart regulation, so I think that’s an element. I think that banking reforms are absolutely critical. But look, I would like to see far tougher prosecutorial approach to white-collar crime in the same way as I would to counter terrorism. And actually what we have seen is that the Serious Fraud Office is quite a weak institution. If you look at things like false accounting and some of the other crimes in this white-collar sector, actually, our conviction rate is not nearly robust enough. If you are fiddling the system, if you are breaching the law, than certainly you should be brought to book. I have absolutely no bones about that.

RT:One example of an embryonic free market is Russia 20 years ago and the free market seems like it was something never actually achieved, but in the process of trying to get there a lot of people are forced into poverty and made redundant. So unless society is perfectly just and free from corruption, a free market surely will always work better for those who hold the economic reins.

DR: Well, the big problem we had in Russia is that the institutions that guarantee the rule of law were either nascent or faintly week and let’s be clear about it: in the same way is in democracy and in the free market: we need strong institutions, you need the rule of law; that is what was missing in Russia. I don’t think that Britain is in the same kind of situation, but actually some of that stuff about cronyism and the complaints about the banksters. Actually I think that if those that have clearly broken the criminal law were seen to be brought to book without scaring them, without bashing the whole industry, without becoming anti-inspirational and telling everyone that makes money, creates wealth, creates jobs for the same brush. That is an important message to send to the public: “You can’t get away with murder if you are at the top end of the income scale.”

RT:We do see charges brought against corporations. They don’t win and then inquiries launch, but nothing ever seems to come of it. What can be done about that?

DR: Well, I think, for example, in the Libor vote interest rate-rigging scenario. I mean, the thing that strikes me, and people have said, is the legislation strong enough and broad enough in order that prosecutions can take place to deal with that kind of behavior. I mean, fraud is already a criminal offence. False accounting is already a criminal offence. I don’t think, personally, the key issue or overriding issue is lack of legislation. What you need is a serious fraud office which is equipped with the expertise and the manpower; it’s not hugely expensive when you think of all the other money that goes into our regulatory bodies, but to have the vigor and the robustness to take on and prosecute when the case is there, when they have got enough evidence, and that’s where we lack. We lack a sharp enough prosecutorial cutting edge.

RT:You seem to be advocating a more results-driven society in which, as you say, “the talented and the hard-working have nothing to fear”. But what about the average, the mediocre, if you like? They are always going to exist in society. Where is their place here?

DR: Look, there is the society; I believe in the compassionate form of conservatism. We should have a safety blanket for the vulnerable, for the sick, for the disabled, for the homeless. All of that of course is critically important. I also think for the strivers on their middle-income jobs, actually they should see more fruits of their labor; that’s the whole point about lifting 2 million people out of income tax at the lowest end. I am making sure work pays and the welfare dependency doesn’t become a lifestyle choice.

So absolutely I think that the tax rates need to be addressed across the board, but let’s also bear in mind that 1 percent pays something like 30 percent of the income tax in this country, 10 percent pay 55 percent. This idea that we can plug out the dead whole by whacking the gazillionaires, we will be quite able enough to do it but, you know, if you want to do it and that’s some catharsis for the country, you know, there is an argument for it, and frankly I think it smacks a bit of a lynch law. But don’t pretend and don’t kid ourselves for a second that that will plug the dead hole this country is in.

RT:But some might say that smacks of social engineering essentially.

DR: Well, I don’t think so. What he is trying to send is that message which is that: if you are for example with - they have talked about housing benefit, and benefits, for example - why should a home on a loan with middle income who have got, let’s say, two children, and they take a financial decision. Can we afford to have more children? Shouldn’t actually families on welfare with more and more children, shouldn’t they take some responsibility as well? I mean, I think for a lot of people that would strike a certain degree of resonance.

RT:There is a government strategy that politicians have been talking about where regions that do well economically get rewarded and incentivized for that, but regions that do badly are essentially left infested. That’s also presumably a free market idea, but how is it justifiably in terms of fairness?

DR: I think it’s right to say that we want to incentivize growth; are that actually, if you are taking the kind of measures locally, they kind of attract business; you are to see more of the revenue back from that; that’s a positive incentive, but there is a huge amount being down under the infrastructure rate to money gaining into road and rail, but also broadband, to try to make sure we have got the infrastructure that would not just only boost Britain’s competitiveness as a whole, but attracts investment to pass the country which haven’t seen the huge private sector investment for some time. That is very much the one nation ideal and vision that both George Osborne and David Cameron are talking about.

RT:Doesn’t all of this in summery leads to the UK becoming an even more unequal place than it is already?

DR: Well, labor taught about equality for years and yet according of the Gini coefficient, which the…the wonks tell me, is the measure of inequality, just got inequality in Britain got worse. What we can’t, we are not going to plug the inequality problem by spending more money, but the truth of the matter is that in the 21st century, with the globalization, with intense competition - George Osborne talked about this, the competition from Latin America and from Asia - the number one priority is economic growth. 

If we don’t drive the dynamism of the private sector and get that economic growth, who will pay for it, who will create the jobs, who will pay the revenue from our precious public services? If we can’t compete, then frankly, unless we have got the money coming in, unless we are earning our keep, you know, debating about how we are going to spend that money, frankly, is an academic conversation. We have got to make sure that bedrock fundamentals for our competitiveness are in place and after that, we will hopefully be in the position that we can look at, not just for those on the lowest incomes and for the vulnerable, but also make sure that we can take those measures to make sure your hard work pays, make sure the strivers, the middle class, to see more of their money back.