Economic and Taxation Policies: Jobs, Growth and Prosperity

Lord Young of Cookham Excerpts

Thursday 13th November 2025 Lords Chamber

[Lord Young of Cookham (Con)]

My Lords, this debate got off to a fine start with an excellent speech from my noble friend. It is always a pleasure to follow my noble friend Lady Noakes, and I agree with what she said about the complexity of the tax system.

There has been a consensus that we should stick to the fiscal rules. One-third of government debt is held overseas, and more and more of it is held by hedge funds, which owe no loyalty to this country. So we should stick to the fiscal rules, which means that the Government have either to increase taxes or to cut expenditure. This time, it is absolutely clear that they have made their choice: they will increase taxes, which will make the mantra of last year—“Growth, growth, growth”—even more difficult to achieve. Looking ahead, the point I want to make is that they should revisit that decision and look again at expenditure, particularly the ballooning welfare bill, with 1 million more people than a year ago claiming the main out-of-work benefit, without any requirement to look for a job—a point made by the noble Lord, Lord Skidelsky.

Working-age sickness rates in advanced economies have fallen since the pandemic, but here they continue to rise and are forecast to be 4.1 million by the end of this Parliament. What is the view of Ministers—not mine but Ministers’—on this? Last week, Pat McFadden said that the growing costs of welfare are unsustainable, with a city “the size of Leicester” being added to the benefit population each year. The Chancellor has warned Labour MPs that there was “nothing progressive” about a benefit system that left one in eight young people neither in education nor employment. The Prime Minister has said that the current welfare system is “unsustainable, indefensible and unfair”. Our Economic Affairs Committee, which reported on this earlier this year,

“concluded that people without work have incentives to claim health-related benefits; and once in receipt of them they have neither the incentive nor support to … accept a job – work doesn’t pay”.

But the Government refuse to act on their own pronouncements. The terms of reference of the Timms review, which came out last week, say that the review would not

“generate proposals for further savings”.

But why will they not act? They will not act because 123 Labour MPs tabled an amendment to the welfare Bill, which had proposed a modest £5 billion reduction in welfare costs, and that has simply stopped the Government in their tracks.

The only point I want to make today is that there is an overwhelming majority in the other place for welfare reform. My party shares the view of the Prime Minister: the current system is unsustainable, indefensible and unfair. So, rather than continue to stunt growth with proposals for a high welfare bill funded by high taxation, the Government should reach across to find a consensus on welfare reform, as they are planning to do on social care, but hopefully on a faster timescale. At a time when public opinion is polarising at the extremes of the political spectrum, should not the mainstream parties come together to find a solution on welfare reform?