Economic Growth: Public Spending

Lord Clarke of Nottingham Excerpts

Wednesday 12th February 2025 Lords Chamber

[Lord Livermore (Lab)]

I am sorry that the noble Lord is not able to support the increases in the national minimum wage; that is a shame to hear. I do not know whether he was able to read the monetary policy report that was published alongside the growth forecast last week, but the Bank of England said that the combined effects of the measures in the Autumn Budget are expected to boost the level of GDP by around 0.75%.

[Lord Clarke of Nottingham (Con)]

The biggest mistake the Government made was during the general election, which they were obviously going to win, when they promised not to raise the basic taxes—income tax, VAT, national insurance for employees and so on—which are the normal toolbox of a Chancellor, so that when they inherited a fiscal crisis, they raised quite the worst possible tax on employers and employees. At the same time, they borrowed billions of pounds more, saying it was not more spending but investment. After this disaster, will the Minister now agree that the new Government have made a financial crisis even worse than it was when they were elected? Will they turn the March Statement into a mini-Budget to try to begin to repair the damage they have done?

[Lord Livermore (Lab)]

With the greatest respect to the noble Lord, I completely disagree with what he says. His contention is that we should have taxed working people after a cost of living crisis, and after the previous Government froze income tax thresholds and raised taxes on working people by £30 billion. I completely disagree; if that is his contention, I think he is wrong. He also says we were wrong to increase investment in the economy. The IMF has said that the lack of public investment in the economy was one of the major constraints to economic growth, and we have rectified that—so, on that point too, I think he is wrong.