Contribution
My Lords, over the course of this three-hour debate, the national debt will have grown by £45 million. That might not seem like a lot of money compared with some of the figures we discuss in this Chamber, but that is 65p of additional debt for everyone in the nation. Interestingly, when we sat for Questions this morning, with the 21 hours of sitting time over the week, £315 million had been added to the national debt. Sadly for us, Britain’s third-largest taxpayer, Chris Rokos, who gave us £330 million in tax last year, is no longer around to pick up the bill.
The growing national debt is not a new problem. In my early 20s, I founded the TaxPayers’ Alliance. In the spring of 2010, we launched a debt clock tour in Parliament Square. A 14-metre Scania truck carried a 1 metre by 7 metre debt clock, which counted up the public borrowing in real time. The truck visited all four countries of the UK on a 1,300-mile tour with the message, “Wake up to the national debt”.
In April 2010, the national debt was hovering at just below £1 trillion. Between 2010 and 2020, it grew by another £1 trillion. We are currently at £3 trillion, and it is set to hit £3.5 trillion by 2030. Crucially, according to the latest analysis from the TaxPayers’ Alliance, this year’s real national debt—the figure taking into account the £1.5 trillion of public sector pension liabilities and almost £7 trillion in state pension liabilities—will be £11.7 trillion, or almost four times the size of the UK economy.
I agree with other noble Lords that our fiscal position is perilous. We clearly need to address our ballooning spending. I will not attempt to provide a comprehensive spending plan in the few minutes I have, but I would like to briefly touch on two important budget lines: welfare spending and public sector pay.
As the Prime Minister told the BBC in July:
“We have to get really serious as a country at getting the welfare bill down”—
not slowing its increase or freezing it but getting it down. He is absolutely right.
According to table 4.6 of the OBR’s report on the Spring Statement, we currently spend £333 billion on welfare, a sum almost as big as the combined GDP of Scotland, Wales and Northern Ireland. It is also a sum that exceeds the £331 billion of income tax that the Treasury hopes to collect in the current financial year. The key to solving this is obvious: we need to help more people transition from welfare into work, because there is no better form of welfare than a good, well-paying job. Sir Charlie Mayfield pointed out in his Keep Britain Working report that a young person out of work costs the state around £1 million, with the same amount of money lost for the young person in lifetime earnings. Alan Milburn also spoke about this powerfully before the summer. He said:
“What is shameful … is that … for every £25 that we spend keeping young people on benefits, we spend only £1 helping them get into work through employment support”.
I commend the Government for commissioning these reviews and I hope they will be acting on them in the forthcoming Budget.
On the question of public sector pay, one statistic that came out during the Summer Recess caught my eye. Last month’s ONS figures show that private sector pay has risen by 2.8% over the past year, compared to a much greater 6.1% rise in public sector pay. Since January, there are now 110,000 fewer private sector jobs, but 42,000 more public sector jobs. Increasing taxes on a shrinking private sector to pay for an expanding public sector is the economics of the madhouse, and we should not fool ourselves that the way to solve the national debt is more tax rises.
Since this Government came into office, we have seen 24 tax rises: increasing employers’ national insurance, increasing both the capital gains tax rates, restricting business and agricultural property reliefs, freezing income tax thresholds, increasing the energy profits levy, increasing taxes on flights and plastic packaging and raising the climate change levy. If raising taxes were the answer to our economic challenges, we would be experiencing the highest growth rate in living memory.
A different attitude to business is required to get more people into work, enabling us to reduce our spending, increase our revenue and create a society with a more comfortable fiscal outlook. I am reminded of Sir Winston Churchill’s comments on business:
“Some regard private enterprise as if it were a predatory tiger to be shot. Others look upon it as a cow that they can milk. Only a handful see it for what it really is: the strong horse that pulls the whole cart”.