National Debt: It’s Time for Tough Decisions (Economic Affairs Committee Report)

Lord Weir of Ballyholme Excerpts

Friday 25th April 2025 Lords Chamber

[Lord Weir of Ballyholme (DUP) [V]]

My Lords, having now overcome technical difficulties, I belatedly commend the work of the noble Lord, Lord Bridges, and this committee in producing this excellent report, which pulls off the magnificent achievement of containing a thorough level of detail while keeping a focus on the strategic issues facing the United Kingdom of our vulnerability on issues such as quantitative easing, the level of foreign investors and their role in terms of debt, and inflation sensitivity. It also highlights the threats of the trajectory of the rising tide of debt as we move further into the century.

The report highlights the need for a strong fiscal framework. Undoubtedly that is true. However, as a number of noble Lords have highlighted, the political reality is that Governments will always view fiscal rules as a means to an end rather than an end. In an increasingly volatile world, in which we are getting further away from the ill-judged comments of Fukuyama that we were at the end of history, the need to ensure a level of agility in our economy to be able to deal with financial shocks is more pertinent now than it has ever been.

With that constraint in mind, there are two main areas that we need to concentrate on. First, in terms of growth, we need to move beyond the mantra of simply saying that growth is our priority and deliver the action points to ensure that growth is a priority. While we wait for the Government to put some meat on the bones of their planning reforms and indeed their aim of increasing productivity, the first lesson that the Government need to learn is not to score own goals when it comes to increasing the level of growth. In particular, I believe that the national insurance increase on employers is a strategic mistake by the Government which will only deter growth rather than facilitate it. We must also ensure that we have an appropriate energy policy. Energy costs in the United Kingdom are well above those of our competitors, and we therefore need a change in our energy policy. The Government need to move away from some of the doctrinaire approaches they take. We can either have strong growth or we can have the current energy policy, but we cannot have both. Finally in terms of growth, we need a more nuanced migration policy. Migration can play a very positive role in fuelling economic growth, but, as the report highlights, we are currently adopting a strategy which at best is creating a neutral impact.

Secondly, we need to ensure that we have a balanced budget. As the report highlights, there are really only two levers in connection with this: either higher taxation or lower spending by the Government. It seems to me that, as we hurtle towards one of the highest levels of taxation in our history, there is very little elasticity left in the situation of creating higher taxes. Indeed, those who would simply seek higher tax rates do not seem to bear in mind that what is really important is tax yield: simply increasing levels of taxation will not only be likely to be counterproductive in terms of economic growth but will also be unlikely to actually bring in more money into the Exchequer. That means we need a fundamental examination of the role of the state in terms of expenditure. During Covid, we saw, perhaps quite understandably, a large increase in the role of government and the amount of expenditure. We have never recovered from that situation, and we need to look at how much more we can move back towards a pre-Covid situation. That means more than simply targeting the vulnerable or soft targets for some cuts; there must be a more strategic and fundamental examination of the role of the state to see whether we are doing too much.

With all these levers, there is not a single silver bullet: I think we need to take all these measures if we are going to tackle this key strategic aim of reducing our debt burden.

National Insurance Contributions (Secondary Class 1 Contributions) Bill

Lord Weir of Ballyholme Excerpts

Consideration of Commons amendments and / or reasons
Monday 24th March 2025 Lords Chamber

[Baroness Fox of Buckley (Non-Afl)]

My Lords, I rise very briefly to note that the Minister referred to the £22 billion black hole. On occasion when that occurs in these kinds of debates it does feel that the issue is being taken with a certain glib pinch of salt because we have heard that phrase so often. But, if I accept that there is a real problem, one of the things I have been absolutely convinced by the Government on is the need for economic growth to get out of this situation—which is why I cannot for the life of me work out how we have ended up in a situation where the Government are introducing measures that are going to damage growth so substantially. I agree with the Minister that we need to fill that £22 billion black hole, but, as has been argued across the House from a range of people, these measures are not going to do that: they are going to make that hole even deeper.

Therefore, I appeal to the Minister to stop digging himself ever deeper into this hole and at least accept that these amendments are modest and give the Government an opportunity to review whether the national insurance contribution increases will do the damage that is alleged. I have been inundated on this issue more than on any other since I have been in this House, by people working in social care, hospices, charities and small businesses.

Everybody is tearing their hair out and all they want is for the Government to listen. These very modest amendments simply call for the Government to have the capacity and flexibility to think again, in case those people worried about the increases are right. If the Government are right, they have nothing to worry about and I suggest they show a little humility over the concerns raised by a wide range of political voices in this House.

[Lord Weir of Ballyholme (DUP)]

My Lords, I too support the amendments in this group; I will speak briefly on them. Like many Members of your Lordships’ House, I share the general scepticism—indeed, hostility—towards the direction of travel of this legislation. Like others, I believe that, if the Government’s central mission is around economic growth as the stimulant, both with respect to the broader economy and from the point of view of public finances, this ultimately takes us very much in the wrong direction.

I appreciate, however, that that wider message is not what is before us today. The amendments before us are more nuanced and modest in their nature. They have been quite cleverly drafted by the noble Lord, Lord Scriven, and others, and are designed not to make a direct challenge to the financial authority of the House of Commons. It is disappointing that the Commons took that approach but, nevertheless, these are respectful and well-drafted amendments that try to deal with this issue. Specifically, the Minister mentioned that one of the key considerations and intentions of this Government is the reform and protection of public services. That stated aim, at least, is one that I think all of us in this House would share.

Central to that is the provision of support for the National Health Service, to ensure that the necessary reforms take place to save it from the crisis in which it has been left. While many pieces in that jigsaw will need to be fitted in, central to any chance we have of improving the National Health Service will be dealing with social care. The two are inextricably linked. In particular, we will need to turbocharge the provisions that can be made on social care and also—as is contained within the amendment—on a range of related topics, from dentistry to pharmacies, so that the pressure can be taken off the front-line services of the NHS, including hospitals.

It is critical, both from a health perspective and an economy perspective, that we ensure the swiftest possible turnarounds in hospital stays. Too many people in our society are bed-blocking. That is not a choice that they wish to make and it is detrimental to our health service, to those individuals and to the economy. Therefore, it strikes me that we should be looking to take all measures that can possibly improve social care and improve support for hospital provision.

It seems to me that the proposed national insurance changes would be deeply detrimental to those sectors. Indeed, we have had warning after warning from people in those sectors about the impact that it will have. Therefore, I believe that these modest amendments at least an attempt to redress that. In their wisdom, the Government will tell us that they believe the change will simply be beneficial; it will bring in additional revenue without in any way damaging the social care system. Perhaps the wisdom of the Government is greater than that of many of us in this House. Therefore, we are not seeking to impose our views but seeking a much more modest proposition, which simply says: let us keep this under review and let us have the opportunity for the Government—should they be proved wrong on this issue—to make a swift intervention. That seems eminently sensible.

Similarly, with the amendment on small businesses—they will be the fuel of our economy and in many ways critical aspects which will impact on growth—the opportunity is there not to challenge the tax rises directly but to ensure that intervention can take place.

On the final amendment, if we are making legislation, ultimately it should be evidence-based, and that means not simply at the time when we are making it. What is the direct impact? To have a range of reviews across a number of sectors to see whether intervention is then needed seems to be an eminently sensible approach.

I suspect that, in an ideal world, many of us would have liked the amendments before us today to have gone much further, but they seem modest and nuanced in their nature and an attempt at an olive branch to the opposition that came from the House of Commons, so I urge the Government to take a common-sense approach and adopt these amendments rather than forcing us into a Division on them.

[Lord Leigh of Hurley (Con)]

My Lords, I have spoken in all other stages of this Bill. I am grateful to the Minister for reminding us of the rationale for it, which is the alleged £22 billion black hole which no independent economist can find. The OBR can find £9 billion—