Lord St John of Bletso (CB)

My Lords, I also thank the noble Lord, Lord Elliott, for moving this incredibly important and topical debate ahead of the forthcoming Budget. This is a time to take stock, and to scrutinise and challenge the direction of travel. As we have heard, the central paradox of the Government’s position has been to make growth the top priority, yet their actions, and the uncertainty they are generating, are in danger of throttling that very growth before it takes root. In June, I welcomed the Government’s new industrial strategy, which aimed to provide the certainty and stability for long-term investment in eight particular sectors. But what certainty is there for a business today? What stability can it plan on? The reality is that the positive signal sent by the industrial strategy has been completely drowned out by the noise and speculation surrounding the upcoming Budget. The prospect of looming tax rises has shattered business confidence, and business leaders have said that they are expecting the worst. That means shortening their planning horizons, cancelling hiring and putting investment on hold. The labour market is already showing signs of strain. As we all know, unemployment is at a four-year high of 4.8%. For young people, this is a deeply concerning dilemma. Prosperity is not built on a foundation of ever-increasing tax burdens; it is built on a dynamic economy where businesses are confident to invest and to create high-quality jobs. Nowhere is the contradiction more starkly illustrated than in the Government’s treatment of the North Sea oil and gas industry. Here we have a sector that should be generating billions in tax revenue, supporting 200,000 jobs and strengthening our energy security. Instead, the Energy Secretary has imposed a ban on new licences and extended the so-called windfall tax until March 2030, even though oil prices have fallen and there is no windfall left to tax. The consequences are devastating: almost a thousand jobs are being lost every day, and Britain’s biggest oil producer has just announced that it is slashing its North Sea investment by half, citing the Government’s punitive tax measures. Industry experts tell us that ending the windfall tax sooner could unlock £40 billion of investment. That means jobs, tax revenue and energy security, all of which we desperately need. The narrative that tax rises are the only solution to the UK fiscal challenge is a false assertion. It ignores the vast potential for savings—savings within the Government’s own spending—and it ignores the revenues that could be unlocked by sensible policy changes. Of the £1.2 trillion budget, £434 billion is spent on the procurement of goods and services. Properly implemented AI and automation could—not shall but could—reduce much of the procurement costs by anywhere between 10% and 20%. With a 10% reduction, we could theoretically be looking at savings in the range of £40 billion or more. With government spending locked at 45% of GDP, we need a smaller state and lower taxes. There is no evidence that you can sustain debt reduction with ever-increasing taxes. The Government should demonstrate that they have exhausted every possible efficiency saving, starting with procurement, before they consider tax rises. They must show that the commitment to growth is not just a slogan.