Economic and Taxation Policies: Jobs, Growth and Prosperity

Lord Lamont of Lerwick Excerpts

Thursday 13th November 2025 Lords Chamber

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, I congratulate the noble Lord, Lord Elliott of Mickle Fell, on securing this debate and on his thoughtful, interesting and wide-ranging opening speech. I very much look forward to reading his book, once I receive the free copy that I was promised. I also join the noble Lord in his heartfelt tribute to the late noble Lord, Lord Desai.

It has been most enjoyable today to listen to the contributions from so many distinguished noble Lords, and it is a pleasure to respond to this debate. It has been a particular pleasure to hear from noble Lords from the party opposite about how to grow the economy; it is perhaps a pity they did not take their own advice over the past 14 years.

We have heard in this debate from members of the previous Government about how to grow the economy and increase prosperity, despite growth in living standards being one of their greatest failures; we have heard from some of the most prominent supporters of Brexit about how to grow the economy, despite their own disastrous Brexit deal permanently reducing GDP by four percentage points, as mentioned by my noble friend Lord Eatwell; and we have heard from some of the most enthusiastic acolytes of Liz Truss about how to grow the economy—

[Lord Lamont of Lerwick (Con)]

If the Minister will allow me, he spoke about GDP being reduced by four percentage points. I assume he is referring to the OBR’s original projection, which was over the next 15 years. So far, we have not had the 15 years, and he is thoroughly misrepresenting the situation if he is implying that this has already happened.

[Lord Livermore (Lab)]

I do not think I have misrepresented the situation in any way, shape or form. The OBR forecast that around two-fifths of the 4% impact had already occurred by the time the EU-UK Trade and Cooperation Agreement came into force and that GDP will be 2.7% lower by 2025, with the remaining reduction occurring by 2030, meaning the economy will be over £100 billion smaller than it otherwise would have been.

As I was saying, we have also heard from some of the most enthusiastic acolytes of Liz Truss about how to grow the economy, despite the Liz Truss mini-Budget crashing the economy and sending mortgage rates spiralling. I think we have long since abandoned any hope of an apology to the British people from the party opposite for its record on the economy over 14 years, but what is still shocking is its inability to show even the slightest hint of self-awareness for the damage it did to the British economy over the past 14 years or any awareness that that damage continues to scar our economy today, as my noble friend Lord Davies of Brixton clearly set out.

The reality of that record over 14 years is stark, as my noble friend Lord Liddle said. First, there was austerity, mentioned by my noble friend Lady O’Grady of Upper Holloway, which took demand out of the economy at exactly the wrong moment and cut investment, undermining the economy’s ability to grow, and left us ill-prepared for the future. Then a disastrous and tragically misjudged Brexit deal—interestingly, not mentioned by the noble Lord, Lord Elliott, in his opening speech—imposed new trade barriers equivalent to a 13% increase in tariffs for manufacturing and a 20% increase in tariffs for services, reducing total trade intensity by 15%. As a result, as I have said, the economy will be over £100 billion smaller by 2030.

The combined effect of these costly mistakes was devastating. Had the UK economy grown by the average of other OECD countries over those 14 years, it would be more than £150 billion larger today. The previous Parliament was the worst ever for living standards. Inflation hit 11.1% and was above target for 33 months in a row. The noble Baroness, Lady Noakes, mentioned business investment. She may recall that, under her Government, the UK had the lowest private investment levels in the whole of the G7, productivity growth entirely stalled and output per worker grew more slowly than in nearly every other G7 country.

These policy errors, chronic instability and low levels of investment have left deep scars on the British economy, as my noble friend Lord Eatwell set out. As mentioned by the noble Lord, Lord Harper, alongside the forthcoming Budget, the Office for Budget Responsibility will set out the conclusions of its review into the supply side of the UK economy. I will not pre-empt those conclusions today, but the OBR may downgrade the historic assessment of the UK’s productivity and may conclude that the productivity performance we inherited from the previous Government was even weaker than previously thought.