Lord Jitesh Gadhia, who is a non-executive member of the Court of the Bank of England – the governing body of the 330-year-old venerable institution – commands wide respect across the political spectrum when he talks about how to improve the British economy.
He won the GG2 Hammer Award last year – the top accolade of the evening – for over three decades of public and community service.
He wants the UK to be attractive to investors which is why he has expressed concern about the way government tax policies have been driving non-doms out of the country.
Baron Gadhia, of Northwood in the County of Middlesex, who sits in the Lords as a non-affiliated peer, emphasises the need for “predictability, certainty and consistency” in boosting investor confidence.
He has shown skill in maintaining diplomatic relations with both the Conservative and Labour parties.
“You have to be big tent on these things,” he suggests.
He says: “I was the first parliamentarian to raise the topic of people leaving the UK due to non-dom tax policy – an important topic for the Asian diaspora – and questioned whether we would raise the revenue originally projected.”
Also from April 6, non-dom status will be abolished, hastening the exodus of millionaire investors, as few want their world-wide assets to be subject to inheritance tax at 40 per cent.
Choosing his words carefully, he quips: “The politics of envy is seductive but economically destructive.”
On how he sees his own role in public life, he explains: “I often tell people that while I don’t have a constituency as a member of the House of Lords, I see probably the entire British Asian population of the UK as my constituency.”
He urges British Asians: “Be proud of your identity. My lifelong view is that you should be authentic. You shouldn’t be embarrassed by your roots or origin. It hasn’t prevented me from being a board member of the Bank of England of FTSE 100 companies.”
Gadhia was born in Kampala, capital of Uganda, on 27 May 1970, came to Britain at the age of two with his family during the refugee crisis, flourished at school and got into Fitzwilliam College, Cambridge, to read economics.
He entered the Lords after a career as an investment banker with, among others, Blackstone, Barclays, ABN AMRO and Barings Bank. He is now also a non-executive director at Rolls-Royce Holdings, which has interests in aerospace, defence and power systems, and at the leading housebuilder, Taylor Wimpey.
It was David Cameron who gave him his peerage in 2016. Gadhia presented a copy of the Rig Veda, an ancient Indian collection of Sanskrit hymns, to the House of Lords library.
“I took my oath on the Rig Veda,” he recalls. “If you understand and appreciate Vedic culture and philosophy, it’s quite profound. It’s pretty appropriate if you’re a British citizen of Indian origin sitting in the House of Lords. It’s a tailor-made motto for you. Vedic philosophy is hugely inclusive.”
His coat of arms uses a Sanskrit phrase from the Rig Veda inscribed in Devanagari text: Aano bhadra krtavo yantu vishwatah (Let noble thoughts come to me from all directions).
He is also a key figure in the trade and business relationship between Britain and India. And since February 2022, he has been chairman of the British Asian Trust, a charity which remains close to King Charles’s heart. When Sir Keir Starmer was the opposition leader, he was persuaded by Gadhia to attend one of the trust’s functions.
Gadhia set out some of the problems of attracting inward investment in the Lords in September last year: “First, we are no longer the gateway into the EU, which was a previous tail-wind underpinning inward investment flows. The data speaks for itself: since 2016-17, we have seen a 30 per cent drop in the number of FDI (Foreign Direct Investment) projects.”
Then he spoke about non-doms: “Secondly, taxation matters—not just corporate taxes but those levied on investors themselves.”
He explained that “on personal taxation, I believe we have miscalculated the impact of the latest changes to the so-called non-dom tax regime, which is often intertwined with FDI decisions made by high net worth individuals. The Treasury modelling will have made assumptions about the number of people expected to leave the UK. There is now substantial evidence that the assumed leaver rate has been far exceeded. We will, therefore, face the double whammy of losing Exchequer revenue and adversely impacting FDI.”
He wanted to know “whether the Treasury and the OBR (Office for Budget Responsibility) are still confident that the measures announced in the March 2024 Budget will still raise £2.7 billion a year by 2028-29.”
It seems the exodus has been worse than he had feared.
He now says: “A lot of people have left. I think it’s sometimes more than just tax. Increasingly, what I am being told is also concern on the security front. People coming to London and being mugged or having their phones or watches snatched. I’ve heard of so many stories that I think it’s got to be more than just anecdotes. There’s a clear pattern. When you look at the Gulf, whether it’s Dubai and Abu Dhabi, the security situation is very different. There is zero tolerance.”
Investors are also put off by passenger experience at Heathrow. He contrasts this with the “ability to travel in and out of Dubai or Abu Dhabi, just the efficiency of the airports and the airline networks. If you are doing business in India, you are only a couple of hours away.
“I think we now have an exodus of people going to the Gulf. There’s almost a critical mass. It’s like what happened when East African Asians, very enterprising people, arrived in the UK. That’s effectively happening in places like the UAE. The government has got be quite bold in not only stopping the haemorrhaging but also re-attracting wealth creators and entrepreneurs.”
He urges the chancellor Rachel Reeves to be “pragmatic”, for example, by doubling the tax exempt period for overseas business folk from 90 days to 180 days.
“That way we could get people to stay in the UK for half the year before they are considered residents,” he argues. “They would be effectively contributing to our economy. To me that is the ultimate test of pragmatism over ideology.
“It’s easy to say, ‘Who cares about a bunch of rich people who live in Mayfair and don’t do anything?’ But the reality is their activity results in employment, business, contribution to arts, culture, educational and other institutions. Cutting your nose to spite your face does not make any sense to me. These people are not avoiding paying tax in the UK which everyone has to do. The issue is if they make money outside the UK, that now falls into the net – and that grates. We are deluding ourselves if we think that’s a reasonable position.”
He acknowledges that on inheritance tax some Indian citizens might benefit under the rules that the UK and India avoid “double taxation”.
Gadhia, who attended the World Economic Forum in Davos this year, feels he understands how foreign investors think. He also closely follows negotiations to conclude the Free Trade Agreement with India.
“I hosted the seventh annual UK-India parliamentary lunch to coincide with India’s Republic Day,” says Gadhia.
It was at the lunch that the chief guest, Jonathan Reynolds, secretary of state for business and trade and president of the Board of Trade, announced he would be going to India.
“I think his mission is to revive the discussions (on the FTA) which were quite advanced under the last government. One of the things the UK was quite keen on was a bilateral investment treaty. This will protect both sides. The history of UK companies investing in India has been quite mixed. Given so much work has been put into the FTA, it’s really a matter of getting it across the finishing line in a way that makes sense for both countries.”
Although many people think visas have been a sticking point – India apparently wants a more liberal regime than the UK has been willing to concede – Gadhia is not one of them.
“Everyone keeps going on about immigration being a sticking point but I don’t think it’s that much of a sticking point anymore,” he counters. “Since we left the European Union and implemented our own visa scheme, the largest single beneficiary has been Indian companies being able to do intercompany transfers.”
If and when the FTA is signed, he agrees that the British Indian business community “will understand how to navigate the corridor. When you’re seeing tariff wars emerge across the world, if the world’s fifth and sixth largest economies decide to go in the opposite direction, that’s a pretty good move.”
He expects discussion on defence and security. “In the case of India, it’s in everyone’s interest they are less reliant on Russia for defence equipment.”
Gadhia’s language has always been reasoned and moderate.
“I try and make evidence based comments,” he says, stressing, “We live in an era when there is so much noise and too little signal. If you’re in any form of public life or interested in public policy, you need to help people find a way through, given how complex things are. I think we need to get consensus on things that really matter.”
On the larger questions of the economy, he has defended the Bank of England against accusations by people like Truss on the right that the organisation is part of the “deep state”.
“As someone who has experienced the Bank in close proximity for the past 18 months, I am pleased to share some observations and hope that I can dispel a few myths and add some nuance to this debate,” Gadhia told the Lords in May last year. “At the outset, it is worth noting that in my brief time serving on the court, I have not come across anything remotely resembling the deep state, but instead a group of truly committed public servants who are faithfully seeking to fulfil their statutory remits.”
He spoke about how the role of the Court of the Bank of England “has evolved over time”.
He explained: “It has modernised into a unitary corporate board responsible for everything up to, but not including, policy decisions. That includes resource allocation and budgets, investments, culture, capabilities, technology and delivery for a 5,000-strong organisation with an £800 billion balance sheet, which processes a similar amount in payments every day.
“The Bank is a unique organisation that plays a crucial role in our nation’s economic life. We should certainly seek to improve its operations and hold it to proper account, something that I am personally committed to as a member of the court, but equally we shoot ourselves in the foot if we undermine the Bank’s credibility, standing and independence, which has largely served us well over the past 25 years and more.”
Responding to the King’s Speech which laid out the agenda of the new Labour government in July last year, he emphasised: “You cannot legislate for growth. That may be axiomatic, but legislators are often like people who possess a hammer and view everything as a nail. That said, strengthening the OBR is helpful insurance against the type of behaviour we saw in the ill-fated mini-Budget of October 2022 (introduced under Truss).”
In September last year, he told the Lords: “Global investors do not care much for domestic political tribalism. In fact, if anything, they are looking for the opposite: predictability, certainty and consistency—the three most coveted words for investor confidence.”
In November he dealt with the consequences of the chancellor’s first budget.
“This disconnect between the Budget rhetoric of promoting business, investment and growth and the projected economic outcomes is stark and has been a recurring theme,” he commented.
“The increase in employers’ national insurance has multiple consequences, proving that the incidence of any tax is different from where it is originally levied. Businesses will mitigate the impact and we should therefore expect lower wage settlements, higher prices, less flexible working opportunities and reduced business investment. Hence, setting restrictive manifesto commitments on taxation which seek to protect certain groups is a red herring and unhelpful to the sound management of an economy.
“For those of us keen on an economic course correction, the Budget almost felt like everything had changed, but nothing has changed. That is not to question the new government’s intent—which is genuine—but reflects the herculean task of turning round the supertanker. If nothing else, this episode provides an early reality check for the new administration, spanning both the handling of the pre-Budget hiatus period, when economic confidence was unnecessarily dampened, and the post-Budget mismatch between reality and expectations.”
Gadhia and wife Angeli have two children, Priyana, 13, and Dev. 10 Like many Gujaratis, he is a vegetarian. His lifestyle comes across as distinctly unshowy.
In between dealing with political and business leaders, he does manage to get a bit of reading done.
“Have just finished reading Water Isaacson’s biography of Elon Musk,” he reveals. “A fascinating insight into the mind of someone of huge current consequence.”
