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

Lord Moynihan of Chelsea Excerpts

Friday 25th April 2025 Lords Chamber

[Lord Moynihan of Chelsea (Con)]

My Lords, I congratulate the noble Lord, Lord Bridges, and his committee on this valuable report and its hard-hitting title, and my fellow Peers in this debate on their many excellent speeches. It is a pleasure to follow the noble Lord, Lord Macpherson of Earl’s Court. I declare my interest as a businessman, investor and author on this topic.

I am concerned, as was my noble friend Lord Forsyth, that the report was published six months after most of the evidence being taken, with this debate being a further seven months later. Despite my noble friend Lord Horam’s good points, its recommendations are dated. Furthermore, as the noble Lord, Lord Macpherson, has just said, they are mostly process- or rules-based rather than action orientated.

I have a few more concerns. First, the rapid growth in debt is not because of economic shocks, Russia’s barbaric war on Ukraine, or Covid. It is because we spent profligately under the previous Government during Covid. No one worried about inflation when increasing the money supply. It is because of our ruinous energy policy, and because our too high spend continues unabated. We could have adopted the Covid policy of Sweden or Florida. We could have avoided inflation like other countries have. We could have reduced our post-Covid spend, but we did not.

The report proposes increasing tax revenues to pay for increased spend, but my somewhat egregiously named Moynicurve says there is a ceiling on how much tax overall a given country’s citizens will cough up. For 10 years I consistently, and so far correctly, predicted that the UK’s overall tax take would not rise much above 36% of GDP. Yet the OBR’s forecast for Chancellor Hunt’s 2023-24 Budget was that tax revenues would rise to 37.7%, almost 38%, well above that 36%. Did they? They did not. Actual tax receipts for that year were 35.7% of GDP.

Now, the OBR predicts that the tax take from Chancellor Reeves’s current Budget will, again, be 38% of GDP. But it will not be—how could it be, with so many business closures and the flood of high-flyers, ambitious youth, enraged millionaires and non-doms pouring out of our country? How long will this misplaced belief that the overall tax take can be goosed up continue? How many more large deficits do we have to see before sense prevails?

Will growth arrive to save us? Both the IMF and the OBR predict growth of just 1% this year. That is no help, and they are overoptimistic—the Government do not understand how to produce growth and that there is no money. Deficit and debt figures released this week support my prediction that our debt-to-GDP ratio will inexorably rise, over some 10 years, to 150% or more if we continue on this path. Nothing extraordinary is required to get this right; we just have to get back to the first few years of Tony Blair’s Government, when, courtesy of John Major’s Government, we ran a surplus and debt levels were reducing. We can do that again.

Our current levels of deficit and debt are unsustainable. Debt service, at 9% of government expenditure and rising, is crippling us. Will the Minister acknowledge that the current level of national debt is entirely unacceptable and commit to bringing it down as a top priority?