David Cameron’s plans to issue sharia-compliant bonds open the way to Islamic law being enforced at the heart of government, a senior clergyman has warned.
Dr Michael Nazir-Ali, the former bishop of Rochester, said proposals to make Britain the first non-Muslim country to sell a bond that complies with sharia could trigger a series of “unforeseen consequences”.
He also voiced broader fears that Christianity was being increasingly excluded from the administration of law, after one of Britain’s most senior judges said members of the judiciary were “secular” figures serving a “multicultural community”.
Last week the Prime Minister set out plans for Britain to issue a sukuk, a form of debt that is in line with Islamic law, because it avoids the prohibited use of “riba”, or interest.
The bonds, which will be worth around £200 million, would pay a fixed return based on the profit generated by an underlying asset, such as government buildings.
Speaking at the World Islamic Economic Forum in London on Tuesday Mr Cameron said Britain should rival Dubai as one of the “great capitals of Islamic finance”.
The Prime Minister told senior officials and business leaders from Muslim countries it would be a “mistake” for Britain to turn away their money when “Islamic finance is growing 50 per cent faster than traditional banking”.
However, Dr Nazir-Ali, who holds dual British and Pakistani citizenship, said of the plans: “This means that the Government itself will be subject to sharia in its dealings on these bonds.
“At the moment the issue is pretty modest, but how much will it grow? There’s a lot of liquidity out there and it could grow pretty rapidly, and then you may face a situation where a major part of your financial system is governed by sharia-compliant considerations.”
He added: “Before we take these steps that could have unforeseen consequences we do need greater public discussion, greater explanation of what actually is being done and what it is we are letting ourselves in for.”
The bishop said that a public debate on the introduction of the bonds should include whether sharia judges should be allowed to adjudicate in disputes over government-backed investments.
“They must be taking advice already from sharia scholars to put together these products. Has there been any discussion that such advice can be taken and that such adjudication can be acceptable in terms of official policy?”
Even among Muslim scholars the principle of whether commercial interest was prohibited had been called into question, Dr Nazir-Ali said.
In 2008 Lord Williams of Oystermouth, the then archbishop of Canterbury, drew criticism for calling for “a constructive accommodation” with some aspects of Muslim law.
At the time Dr Nazir-Ali said it would be “simply impossible” to have sharia and British laws operating side by side.
Baroness Cox, an independent peer who has tabled a Private Member’s Bill in the Lords to rein in unofficial sharia courts and councils, said: “Any extension of quasi or parallel legal systems is utterly unacceptable.”
Plans for the first government bond compliant with sharia come after as the value of nearly 50 sukuks on the London Stock Exchange has reached £21 billion.
Britain’s most senior Muslim politician Baroness Warsi, the faith minister, who co-chairs the Government’s new Islamic finance task force, told The Telegraph faith “has a role to play in our growth agenda”.
Mr Cameron’s plans were welcomed by the Muslim Council of Britain, which described the announcement as a “very significant milestone for the community”.
Farooq Murad, the council’s secretary general, said: “The issuance of the sukuk would enable all of us to save money using safer instruments that comply with Islamic principles.
“Islamic pensions and investment funds would also be able to use the sukuk to balance their portfolios, leading to greater choice in the market.”
A Treasury source said the bond would comply with British laws “first and foremost”, adding that if investors did not think it was compliant with sharia law they simply “won’t invest in it”.
Dr Nazir-Ali also issued a rebuke to Sir James Munby, the President of the Family Division, who last week suggested that Christianity no longer influenced judicial decisions.
Sir James told family lawyers: “Although this country is part of the Christian West, and although it has an Established Church, which is Christian, we sit as secular judges serving a multi-cultural community of many faiths, sworn to do justice to all manner of people.”
Dr Nazir-Ali disputed whether Sir James’s view was the correct constitutional position. Members of the judiciary sit “as judges of the crown”, he said, adding that the coronation service and oath makes clear that the monarch is required to “uphold the laws of God”.
Dr Nazir-Ali said: “The Queen professes at the time of the coronation to uphold the laws of God and the true profession of the Gospel.
“So, whatever you may feel, you can’t say constitutionally that you are sitting as secular judges in a multi-faith society. He may feel that — that’s fine, it’s up to him to feel it — but that’s not the constitutional position as far as I see it.”