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

Lord Liddle Excerpts

Friday 25th April 2025 Lords Chamber

[Lord Liddle (Lab)]

My Lords, I start by saying what an excellent and challenging report this is. It is exactly the kind of thing that the House of Lords exists to do and which political parties find very difficult to address. I congratulate the noble Lord, Lord Bridges of Headley, whom I have always seen as one of the stars of the Benches opposite, on his excellent introduction to this debate. I did not agree with some of it, but it was challenging, and he asked a lot of the right questions.

I suppose that the side of the argument that we should not be as worried about this question of debt, as the noble Lord, Lord Bridges, lays out, is that we are in the middle of the international pack. That is some reassurance. However, we live in a very unstable world—goodness knows what is going to happen in the United States. As the noble Lord pointed out, we have very particular vulnerabilities. We are dependent on the kindness of foreigners to fund our borrowing. We do not have the high domestic savings levels that countries such as Italy and Japan have. I do not want to get back into the European arguments that I have always made, but it is worth pointing out to the House that Greece now pays a lower interest rate on its debt than we do, because it has the power of the European Central Bank behind it. That is my view.

I also agree with the noble Lord, Lord Bridges, that really big challenges are coming down the track. My worry is that we must not set a debt rule that rules out investment in growth. If the interest rate is higher than the growth rate, we are in deep trouble, so we have to find a way of raising the growth rate, which requires a very strong policy of public investment, which the Government are doing. Things such as the Oxford-Cambridge link and the developments around it are very important. My own favourite development would be a massive transformation of urban connectivity in the north of England, which would have a very beneficial effect on productivity.

On spending, we must be really tough. We have to attack bureaucracy, as we are now doing in the National Health Service. We have to take on vested public interests. This is very difficult for people on our side of the House who have a lot of friends in the public sector trade unions, but we must be prepared to have a policy of reform. In addition to that, and to being tough on things such as PIP and SEND, which have got ridiculous in terms of their growth, we must be fair. I end on one this point. Being fiscally tough does not rule out fairness. One thing that I would like to see in future is a redistributive package which addresses child and pensioner poverty.