Economic and Taxation Policies: Jobs, Growth and Prosperity

Lord Davies of Brixton Excerpts

Thursday 13th November 2025 Lords Chamber

[Lord Davies of Brixton (Lab)]

My Lords, we must thank the noble Lord, Lord Elliott of Mickle Fell, for introducing this debate. I welcome the opportunity to have a debate on these important issues; my main question is on what has been missing from it, which is any reference to 14 years of Conservative government.

The economy is heavily path dependent. The economy we have now is the result of that 14 years of Conservative government. My Government have done much that is good in the 16 months that they have been in power, but it is wrong to suggest that there is some magic solution that can overcome the problems that were created, starting with the ill-judged move to austerity, for which the Liberal Democrats should accept their share of the blame. I could run through the whole litany, ending with the last Conservative Chancellor’s ill-judged decision to make the unfunded cut in national insurance contributions, leading to the black hole that I am sure my noble friend the Minister will mention in his reply.

Various issues have been raised that are worth addressing during this debate. The noble Lord, Lord Swire, made a particular point of how much tax was paid by the highly paid. There is a very simple reason why highly paid people pay so much tax: it is because they are so rich. The level of economic inequality in our society is and remains substantial. It is absolutely right that those with the broadest shoulders—whether that includes the noble Lord or not, I do not know—should pay their fair share, and that means they pay considerably more.

The noble Lord, Lord Skidelsky, is not in his place, but I was interested in the issue he raised of the bond vigilantes, saying they should be ignored. I agree with that. In truth, the restriction on what our economy can do is the economy’s productive capacity—not the attitude of the bond vigilantes, as he termed them.

Reference has been made a number of times to the so-called welfare burden. I suggest that everyone reads the recent column by Chris Giles in the Financial Times, in which he stated that there was no need to panic and the costs of welfare are not spiralling; in fact, they have been remarkably consistent over time. Many of the statistics that people quote about increasing numbers in one particular type of benefit are explained by the fact that other forms of benefits are reducing. The overall welfare spend—you can read the article from Chris Giles, not from me—remains constant, and it is actually less than it was when David Cameron was Prime Minister. This idea that we are facing some existential crisis because of the burden of welfare is nonsense. I invite my noble friend’s reply.