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

Lord Weir of Ballyholme Excerpts

Friday 25th April 2025 Lords Chamber

[Lord Weir of Ballyholme (DUP) [V]]

My Lords, having now overcome technical difficulties, I belatedly commend the work of the noble Lord, Lord Bridges, and this committee in producing this excellent report, which pulls off the magnificent achievement of containing a thorough level of detail while keeping a focus on the strategic issues facing the United Kingdom of our vulnerability on issues such as quantitative easing, the level of foreign investors and their role in terms of debt, and inflation sensitivity. It also highlights the threats of the trajectory of the rising tide of debt as we move further into the century.

The report highlights the need for a strong fiscal framework. Undoubtedly that is true. However, as a number of noble Lords have highlighted, the political reality is that Governments will always view fiscal rules as a means to an end rather than an end. In an increasingly volatile world, in which we are getting further away from the ill-judged comments of Fukuyama that we were at the end of history, the need to ensure a level of agility in our economy to be able to deal with financial shocks is more pertinent now than it has ever been.

With that constraint in mind, there are two main areas that we need to concentrate on. First, in terms of growth, we need to move beyond the mantra of simply saying that growth is our priority and deliver the action points to ensure that growth is a priority. While we wait for the Government to put some meat on the bones of their planning reforms and indeed their aim of increasing productivity, the first lesson that the Government need to learn is not to score own goals when it comes to increasing the level of growth. In particular, I believe that the national insurance increase on employers is a strategic mistake by the Government which will only deter growth rather than facilitate it. We must also ensure that we have an appropriate energy policy. Energy costs in the United Kingdom are well above those of our competitors, and we therefore need a change in our energy policy. The Government need to move away from some of the doctrinaire approaches they take. We can either have strong growth or we can have the current energy policy, but we cannot have both. Finally in terms of growth, we need a more nuanced migration policy. Migration can play a very positive role in fuelling economic growth, but, as the report highlights, we are currently adopting a strategy which at best is creating a neutral impact.

Secondly, we need to ensure that we have a balanced budget. As the report highlights, there are really only two levers in connection with this: either higher taxation or lower spending by the Government. It seems to me that, as we hurtle towards one of the highest levels of taxation in our history, there is very little elasticity left in the situation of creating higher taxes. Indeed, those who would simply seek higher tax rates do not seem to bear in mind that what is really important is tax yield: simply increasing levels of taxation will not only be likely to be counterproductive in terms of economic growth but will also be unlikely to actually bring in more money into the Exchequer. That means we need a fundamental examination of the role of the state in terms of expenditure. During Covid, we saw, perhaps quite understandably, a large increase in the role of government and the amount of expenditure. We have never recovered from that situation, and we need to look at how much more we can move back towards a pre-Covid situation. That means more than simply targeting the vulnerable or soft targets for some cuts; there must be a more strategic and fundamental examination of the role of the state to see whether we are doing too much.

With all these levers, there is not a single silver bullet: I think we need to take all these measures if we are going to tackle this key strategic aim of reducing our debt burden.