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

Lord Browne of Ladyton Excerpts

Friday 25th April 2025 Lords Chamber

[Lord Browne of Ladyton (Lab)]

My Lords, it is a pleasure to have the opportunity to participate, albeit briefly, in this morning’s proceedings. I enthusiastically join all previous speakers in congratulating the noble Lord, Lord Bridges, and the wider committee on its report. It provides a forensic, grim and justifiably challenging—drawing on adjectives used by other noble Lords—diagnosis of many of the long-term challenges in which we engage in the interests of economic sustainability.

For reasons of both brevity and modesty, given the superior qualifications of other noble Lords—almost all who have spoken—to engage with the finer points of economic theory, I plan to discuss a couple of specific elements from chapter 4 of the report. First, I should like to mention the opening of chapter 4 and the section on underlying demographic factors.

When the welfare state was created, there were around five workers for every pensioner. Today, that figure stands at around 3.5, and, as other noble Lords have spoken about, ONS figures suggest that that ratio will narrow exponentially from the 2030s onwards. In autumn last year, the Prime Minister rightly told an interviewer that he was not in the business of telling people how many children they should have. However, Dr Paula Sheppard has identified that there is a fertility gap of 0.3% in the UK, meaning that, for every three children wanted, only two are born.

It was in similar circumstances that the previous socialist Prime Minister of Finland, Sanna Marin, commissioned work that was successful in policy adjustments to ensure that women, couples and families who wish to have children do so in a public policy environment that seeks to empower them to realise that wish. France has shown us that family-friendly policies can have a material impact on long-term demographics, and it may be an area of policy that repays further consideration.

Secondly, as paragraph 101 outlines, it is clear that much of the fiscal space that allowed the expansion of social and welfare spending as the welfare state expanded into its modern dimensions was afforded by a dramatic decrease in defence spending from the 1950s onwards. Defence spending, when handled properly, is long term and strategic as well as reactive—a necessarily swift response to geopolitical uncertainty. Nothing in the auguries that I have seen suggests that the current uncertainty and strategic jeopardy that we face is likely to abate in the near future. Modern wars do not end.

This means that we must anticipate at least the possibility of a further expansion of defence spending, and that this will be calculated not to an economic slide rule but to the magnitude of the threats we face. Again, as paragraph 103 of chapter 4 makes clear, this will have consequences for other areas of government spending. Carl Emmerson from the IFS gave evidence to the committee and described the decades-long practice of diverting savings from the defence budget to other, perhaps more electorally appealing, areas of government activity. As we have seen, not least through the determination of the actions of the Prime Minister and the Defence Secretary, this period is now at an end. This will have political and structural ramifications that will continue, certainly over successive Governments.

In closing, I reiterate my welcome for this report, not least because it demonstrates, even if somewhat elusively, the unenviable economic circumstances this Government inherited. I look forward not merely to my noble friend the Minister’s response but to the Government’s continued work to engage these challenges.