Spring Forecast Statement

Lord Lamont of Lerwick Excerpts

Tuesday 17th March 2026 Lords Chamber

[Lord Lamont of Lerwick (Con)]

My Lords, I join with others in saying how sad it is to say goodbye to the noble Lord, Lord St John of Bletso. He will be much missed, particularly for his contributions on Africa and the global south, and for his contributions to debate, as his powerful speech showed today. It was quite excellent.

I will concentrate my remarks on the Spring Statement. Apparently, the Chancellor wanted this to be a low-key announcement. She need not have worried; it scarcely qualified as an event. For once there were no leaks, as there was nothing to leak. I do not disagree with the Chancellor’s decision that there should be only one fiscal event a year, but, if one closed one’s eyes while listening to the Statement, it was like listening to a party political broadcast in the House. The Chancellor listed ending the two-child benefit cap as one of the Government’s great achievements, forgetting that she was particularly enthusiastic herself about the Government’s initial policy of refusing to abolish it.

She attacked the previous Conservative Government on growth and inflation, without ever mentioning Ukraine or Covid. Can we expect the Chancellor or the Minister in future to talk about the economy without mentioning oil or war? Judging by today’s speech, certainly not, but the Government surely ought to judge themselves by the same criteria as they judge others.

The Chancellor pronounced that everything that had happened was a great success, while the rapture of the OBR was somewhat more modified, with growth higher this year but lower in future and the same over Parliament as a whole. Unemployment is heading to over 5%, with, as my noble friend on the Front Bench said, a worrying rise in youth unemployment and a welfare budget ballooning to £407 billion. I am pleased that the Chancellor stuck to her fiscal rules and I welcome the increased headroom. But, of course, public sector net debt still remains at 90% of GDP and the 4.75% 10-year gilt yield is the highest in the G7, showing that the markets are not convinced that our fiscal position is under control or that it is robust enough for the potential challenges ahead. The Chancellor claimed that people would be £1,000 a year better off by the next election. The Resolution Foundation, the Rowntree Foundation and the IFS cast great doubt on this forecast. The Rowntree Foundation thinks it will be more like £40 than £1,000.

There can be different views about the Statement, but what is clear is that it is now totally irrelevant. No one knows how long the conflict will last, as the Minister said. President Trump has said that it will be short. Qatar’s energy minister, who presumably knows a thing of two, has warned that the Middle East crisis could

“bring down the economies of the world”.

He predicted that all exporters in the Gulf will have to call force majeure, and European nations will feel significant pain as Asian buyers bid against them for whatever gas becomes available. If the crisis is prolonged, obviously it will bring higher inflation, higher interest rates, rising unemployment and even lower growth.

The Chancellor has indicated that, when the price cap expires in June, she wants to protect families, or is open to doing it, and she has said it will be on a targeted basis. I agree that, rather than doing something across the board, if it is necessary, it would be far better to target help where it is most needed. But where to draw the line is not easy, as the Chancellor herself found out when she tried to strip millions of people of their winter fuel payments.

Households are in a far weaker position today than in 2022. Then, the total amount of unpaid debt owed to energy companies was just over £2 billion. Today it is around £5 billion, and it is expected to reach £7 billion by the end of this year. The reality is that middle-income households now also struggle to pay their bills: that is the new normal. As the noble Lord, Lord Bilimoria, said, the Government need to end their war on the North Sea. If Britain is serious about energy security, we should use more resources from the North Sea, compatible with other policies. As President Trump pointed out, it makes little sense for the UK to be importing gas through pipelines from Norway, which extracts fossil fuels from the very same North Sea gas fields that fall inside British waters.

According to the OBR, the tax burden is forecast to reach 38.5% of GDP by the end of the decade, up from 36.3% this year and higher than the record burden in 1948. With fiscal drag, millions of taxpayers are dragged towards the painful cliff edges of the tax system. Families who get pay increases perhaps turn them down because they leave them worse off. David Miles of the OBR said that both the extent and the design of additional taxes matter. He said:

“Tax increases that increase marginal rates are likely to act as a disincentive”.


We are in “unchartered territory” with the level of taxes. Taxes are now 5% higher than before Covid. It would be a bold person to be confident that this will not hit even the modest growth rates forecast in the Statement.

Alarming as all that is, the IFS has forecast that the Chancellor may be forced to put up taxes even further. Higher inflation will increase welfare spending and the funding cost to government, forcing the Chancellor to find new measures to balance the books. If this happens, stagflation will stalk the land. For all the bluster and boasting, alas, we are far from being in the best position to weather the storm ahead.