Author of the controversial report published this week on Britain's multi-ethnic future, Bhikhu Parekh argues that we should learn to value our cultural diversity and consign to history attitudes that inspired signs such as 'blacks and Indians should not apply'. Jane Hughes reports

When Bhikhu Parekh was a boy growing up in a small village in India, the House of Lords was a distant place - home to the people who ruled his country. Now Parekh, a professor of political theory at Hull University, is a lord himself.

Parekh, who on Wednesday launched his report The Future of Multi-Ethnic Britain, says he is still getting used to the idea six months after his appointment. "I have been dealing with some very complex emotions," he says. "Many members of the House of Lords ruled over India - some sensibly, some disastrously. I have harboured feelings of gratitude but also of anger and resentment. At the same time, as a colonial native, becoming a lord means a great deal to me."

Parekh's experiences both in an India struggling between the competing concerns of tradition and modernity, and in Britain, where he arrived in 1959, aged 24, have shaped his work. In his latest book, Rethinking Multiculturalism, and in this week's report, produced by the Commission on the Future of Multi-Ethnic Britain, which he chaired, Parekh argues the need for society to foster a common sense of belonging by valuing cultural diversity as a source of new ideas, energies and creativity.

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He suggests that to create a truly plural and cohesive society people must be treated equally but with empathy for real differences of experience, background and perception. We should see Britain as both a liberal and multicultural society, he says, "a community of citizens but also a community of religious, ethnic, cultural and regional groups. Multiculturalism must give us equal rights as individuals and communities."

The commission, which was set up by the Runnymede Trust in 1998, is made up of eminent black and white members drawn from the media, academia, think-tanks, the police and care agencies. While independent of government, Parekh is optimistic that at least some of the report's recommendations will become policy. But he concedes that some of its arguments are too subtle for such a translation and hopes rather that they will encourage people who read the report to change their attitudes. "We want to persuade people to rethink their own history," he says. "Our target is not just the government but the ordinary citizen."

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According to Parekh, the report is the first of its kind to combine a strong theoretical base with detailed recommendations for policy. "We analyse the nature of racism and its different forms, deconstruct the existing vocabulary and try to suggest alternatives," he says. "We also point out that equal citizenship rights do not guarantee common belonging because the latter is an emotional state. If, however, the symbols of national identity are redefined so that Britain is perceived as a multicultural country, it is easier for all communities to identify with it."

One of the report's chief recommendations is for the creation of a single Equality Act and a corresponding equality commission to cover all grounds of unlawful discrimination. It also proposes a human rights commission and rigorous monitoring of employment policy and practice in all sectors of society, as well as of the progress of Asian and black pupils through the education system. The report argues that the economic and cultural impact of blacks and Asians should be underlined through research. In addition, asylum seekers who win their claims should be given as much help as possible in building successful lives in Britain.

Parekh grew up in an "ambience of multiculturalism": his village in Gujarat contained Hindus of different sects and Muslims. His father was a goldsmith and his extended lower middle-class family of 22 lived together in the same large house - an arrangement that, he says, had its own internal tensions. He was the first in his family to go to university, where he relied on study aids to overcome his poor command of English. He also broke the caste system when he married a woman from a higher caste. "Our parents didn't mind, but we had to run away to get married because my wife's grandfather objected."

After studying for an MA in politics in Bombay, he moved to England where, keen to explore ideas of justice and equality, he enrolled at the London School of Economics to conduct his doctoral research into Jeremy Bentham and the utilitarians. He has since edited several books on this group, whose intellectual influence on India was great.

Before arriving in London, Parekh had no anxiety about racial discrimination. "I considered that the two countries were friends. There were stories of great generosity by some of the Englishmen who came to India, and I likened the system of patronage to the caste system," he says. He encountered "not a hint" of discrimination at the LSE - but when he and his wife went flat hunting it was a different story. "The windows had little notices saying blacks and Indians should not apply. If you telephoned in response to an advert, people would recognise your accent and say the place had gone."

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He does not remember feeling bitter: "We simply projected a caste-based consciousness onto British society and articulated it into the language of colour - whites are superior, blacks are not." His sense of injustice came later when he realised that nothing would change unless people began to press for equality. He turned to Marx for alternative perspectives and wrote the book Karl Marx's Theory of Ideology. But still he felt dissatisfied. For Parekh, Marx's reductionist account of politics "lacked the resources to provide a coherent political philosophy".

After spending three years as vice-chancellor of the University of Baroda in India, Parekh returned to Britain and wrote two books - one on Gandhi's political philosophy, the other on the nature of colonial rule. In 1997, he wrote a third book on Gandhi, exploring how his thinking cut across the western dichotomy between conservatism and liberalism and offered an alternative way of conceptualising society. This book reflects Parekh's work on multiculturalism, revealing his distaste for the "arrogance of western liberalism, which argues that its way of life is best".

His dislike of arrogance is not confined to the intellectual. Parekh admits to feeling angry and physically sick whenever he comes across situations "where someone is humiliated or where there is arrogance of any kind". One particular incident sticks in his memory. His father was a moneylender and he remembers a woman from the untouchable caste coming to the house and offering a bracelet in exchange for money to pay doctor's fees for her sick son. "My father said the bracelet wasn't worth what she was asking but the woman wouldn't move and she said to me, 'I have a son like you who is too ill to play.' I went to my father and asked him to help her and he relented and gave her the money she needed."

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He says his father, who now lives in the United States and has set up a foundation to help the poor in India, told him he later felt guilty about this incident, but had been blinded by his desire to fund his family to go abroad. "I realised that the woman was simply the subject of multiple systems of exploitation - the doctor, the chemist, my father and many others," Parekh says.

In Rethinking Multiculturalism, he is again driven by his hostility to arrogance and by a sense of compassion to argue that, even in the case of minority cultural practices, we should try to understand what is going on before condemning. He tackles the practice of female circumcision and eventually comes out against it, but not before examining arguments for and against. "I feel we owe it to people to try to understand why they would do this. We can then criticise in terms that I think even they can be persuaded to share and put pressure on them to change."

Parekh's concerns have spilled into the public arena. Between 1985 and 1990 he was deputy chair of the Commission for Racial Equality, where he persuaded his colleagues of the value of including a question about ethnic origin in the census. He also oversaw several investigations, including one into discriminatory practices at St George's Hospital Medical School.

As a member of the House of Lords, Parekh is glad to be back in the public arena, participating in debate and "saying things from public space that I can expect people to hear and perhaps be influenced by". He finds the quality of debate higher than almost anywhere else in the world and, contrary to his childhood impressions, has discovered that the House is a "very gentle, friendly and warm place".

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The Future of Multi-Ethnic Britain is published this week by the Runnymede Trust and Profile Books, ?10.99. Rethinking Multiculturalism - Cultural Diversity and Political Theory is published by Palgrave Macmillan Press, ?14.99.