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

Lord Davies of Brixton Excerpts

Friday 25th April 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

It is a great pleasure to take part in this debate. It is a bit like the Economic Affairs Committee 2024-25 reunion tour, with added guest stars. I was a member of the committee, and preparing for the debate gave me an opportunity to reflect on what we achieved—or what I achieved, I suppose. I give great thanks to the chair of the committee, the noble Lord, Lord Bridges of Headley, who was an excellent chair who encouraged the full participation of members. I have no criticism of him at all. The committee was extraordinarily interesting—the members of the committee as much as the witnesses. We received formal evidence from witnesses but not from members of the committee, even though some committee members knew a lot more than the witnesses.

I am happy to add my name to the report, but that does not necessarily mean that I agree with everything in it. Another tribute to the noble Lord, Lord Bridges, is that he was assiduous in making sure that my views were made clear, even if they were not always successful. The key issue for me is that the committee did not say we were facing an inevitable crisis; it said we had a choice, expressed in terms of the state doing less or in increasing taxes. An increase in taxes was not ruled out by the report; it was in the report as a choice and, speaking for myself, that is the choice that I would make. There is actually a third choice that we did not consider, and I regret that we ruled it out: that we should borrow even more. I slightly regret that we did not explore that in more detail. We said, “We’re not interested in listening to the views of people who promote modern monetary theory” and we did not really hear from them. I think they may provide valuable insights, even if I do not necessarily agree with all their conclusions.

A big loss in this debate is, of course, my noble friend Lord Layard, who was a valuable member of the committee. He was assiduous in making the point that, with increasing demand for public services, with people getting older and improvements in medical technology, and with increasing demands for higher standards of public service, there is inevitably going to be an increased role for the state and for public expenditure within the total economic budget. In and of itself, increasing levels of public expenditure is not a cause of concern; it is a reflection of the needs of a modern society.

The standout for me within the evidence we received was from Professor Stiglitz, who raised the issue of investment. We rather kept out of the issue of investment because it was so big, but he asked what counted as investment. He gave the example of nurses’ training. Is that an investment? For the Government it is not, but in fact we need investments of that type and the narrow terms of investment that we see defined in the Chancellor’s letter do not reflect the changing needs of what we need from public services.