Economic and Taxation Policies: Jobs, Growth and Prosperity

Lord Wharton of Yarm Excerpts

Thursday 13th November 2025 Lords Chamber

[Lord Wharton of Yarm (Con)]

My Lords, I congratulate the noble Lord, Lord Elliott of Mickle Fell, on securing this debate. The number of noble Lords who are here to contribute is testament to his keen insight into what is interesting in politics right now. Sadly, it is also testament to how much worry there is out there about the direction in which our economy is headed, and about the coming Budget, which is often widely speculated on in the media. Little of that speculation is uplifting or positive in its nature. We all take an interest in this area and, unfortunately, many people have quite a degree of concern—I fear, rightly—about what may be just around the corner. In terms of the Government’s balancing of the rate of tax against the amount that they are going to be able to collect—and the uses to which they can put that money—we are certainly about to reach the wrong end of the Laffer curve. Perhaps we reached it long ago.

We tax things to raise revenue and do good things, but the Government generally tax things to signal that they are bad things. They tax cigarettes and alcohol, which are not very good for people. They tax fuel because, the more people drive, the worse it is seen to be for the environment. Yet we are currently seeing taxes going up on a wide range of things that ought to be good things and of which we need more. We see higher taxes on capital gains, on creating jobs and on businesses that are trying to drive forward our economy and doing the sorts of things the Government ought to and need to encourage if we are to be a success.

I spend a fair amount of time in Gibraltar, which is an interesting place. With its approach to regulation and with much lower taxes than we have in the UK, it seems to be doing really rather well. We should be pleased and proud that British Gibraltar is doing particularly well and is a success, with growth last year at around 3.45%, but we should also learn from that approach. I fear that some of the investment I see when I go there may be being driven there because of the decisions that Governments in the UK are taking here, and the decisions people are taking about their own personal circumstances. We have heard many noble Lords talk of the flight of capital, people and talent that is being caused, in no small part, by the tax system and the direction of travel in which our taxes are headed.

We also have to be aware that the decisions we make in this country will affect what happens in Gibraltar. Only this week, His Majesty’s Government of Gibraltar’s Minister for Justice, Trade and Industry, the honourable Nigel Feetham MP, was in the UK, spelling out to all those who would listen to him the potential impact on Gibraltar of changes to gambling taxation in the UK—standing up for the success of his low-tax, low-regulation territory because of the impact the direction in which this Government are headed could have on its national finances.

There are also rumours, as people have observed the flight of capital, individuals and entrepreneurs, of an exit tax. I take this opportunity to warn in the strongest terms against such an idea because an exit tax is not only immoral and unjust—for people to pay tax yet again on income on which they have already paid their due taxes—but, in effect, discourages people from coming as well. We may—although I suspect it is unlikely if we are to implement a leaving tax—dissuade some people from leaving, but I fear we would certainly dissuade many more people from coming. At a time when we need capital investment, entrepreneurs and to grow our economy, that would be very bad indeed for the UK.