Tax Cuts: Fiscal Impact

Baroness Wheatcroft Excerpts

Wednesday 13th July 2022 Lords Chamber

[Baroness Penn (Con)]

The noble Lord will know that it is international factors that are driving high rates of inflation, including supply chain disruption after the pandemic and the war in Ukraine. However, he is right that the UK has a combination of factors. It is more exposed to higher energy prices than economies such as the US and it has a tighter labour market than fellow European countries. These put us in a slightly different position. However, people should be reassured that the Government are absolutely determined to tackle inflation. We have a plan that will bring it back under control.

[Baroness Wheatcroft (CB)]

My Lords, the Minister said that the Government have been successful in repairing the country’s finances. However, at the end of April, the net public sector deficit stood at nearly 95.7% of GBP, almost an all-time high for this country. Of course, Covid accounts for part of that, but can she elaborate on how the country’s finances have been rebuilt?

[Baroness Penn (Con)]

The noble Baroness says that Covid accounts for part of that. The Covid pandemic caused the biggest recession that we have seen in a generation. The response was the biggest galvanising of government action, in both our healthcare response and our response to support the economy. We were in a position to do that because we had taken responsible decisions in the lead-up to that period. If we look at how we are coming out of that period, the public finances will be returning to a more stable footing.