Spring Forecast Statement
House of Lords · Lords Chamber · 17 Mar 2026 · 39 speeches · Official Report
Motion to Take Note
Moved by
That this House takes note of the Spring Forecast Statement.
My Lords, it is a privilege to open this debate on the spring forecast and the Second Reading of the finance Bill. I very much look forward to the valedictory speech from the noble Lord, Lord St John of Bletso. On taking office, this Government inherited three major crises: a crisis in the public finances, a crisis in our public services and a crisis in the cost of living. That is why we have repeatedly taken the action necessary to bring stability to the economy. The choices we have made are the responsible ones. The spring forecast showed that the economic plan that we have been driving forward since the election is the right one. In our first Budget, we took action to fix the foundations of the economy by repairing the £22 billion black hole in the public finances left by the previous Government. At the spending review last summer, we stuck to our non-negotiable fiscal rules, keeping a tight grip on day-to-day spending while investing an additional £120 billion in growth-driving infrastructure and getting debt on a downward path. In the Budget last November, we built greater resilience by doubling the headroom against the stability rule and cutting borrowing as a share of GDP in every year of the forecast. Our economic plan is built on three pillars: stability in our public finances, investment in our infrastructure and reform to Britain’s economy. Stability is the cornerstone of this plan because it is the single most important precondition for economic growth. That is...
My Lords, my first point is that the world economic situation now is very different from that existing at the time of the Spring Statement, let alone that in place when the finance Bill was introduced-different and significantly worse. The Middle East war has overturned economic expectations, especially optimistic ones. A major factor in this deterioration is, of course, increased oil and gas prices, which are an inevitable consequence of political instability in the Middle East. This exacerbates the unfortunate effects of the Government’s own policies, which all agree have led to the highest fuel prices in the developed world. The resulting inflation, already mentioned by the Minister, adds to of the elevated levels we have already experienced during the Chancellor’s time in office. That in turn risks pushing interest rates higher, meaning rising mortgage costs for homeowners and greater pressure on household finances. Investors are now pricing in a 70% chance that the Bank of England will increase rates by a quarter point before the end of the year having previously expected two quarter-point cuts this year; unfortunately, gilt yields have jumped here more than in any other G7 country. Public finances are already under severe strain. Borrowing is running higher than forecast when the Government took office, and the country is now spending well over £100 billion a year simply servicing debt. Since this Government came into office, gilt yields are up, growth is down,...
My Lords, it is with a mix of sadness and excitement that I address your Lordships’ House this last time. The sadness is because I shall miss participating in debates, particularly on Africa, and especially participating in the Select Committee work of your Lordships’ House and the APPG work. It has been an enormous privilege. I shall also miss seeing noble Lords who have become great friends over so many years. I had hoped to make my valedictory speech on the Space Economy report by the Select Committee so ably chaired by the noble Baroness, Lady Ashton, but sadly we have run out of time on that score. I am enormously grateful to the doorkeepers, the refreshment department and all the staff of the Palace for the incredible support that they have given me over so many years and continue to give to all of us. I am very grateful to my noble friend Lord Kinnoull for his able stewardship and leadership of the Cross Benches. I have to say that I joined the House of Lords more out of curiosity than desire. I say that because I was just 21 when my father died. I joined your Lordships’ House six months before the Islamic Revolutionary Guard Corps took control in Iran and six months before Margaret Thatcher became our Prime Minister. I joined for one primary reason: namely, I wanted to speak about the opportunities and challenges facing South Africa and southern Africa, and to petition for the release of Nelson Mandela, known as Madiba to all of us. After my health challenges last...
What an excellent speech by the noble Lord, Lord St John of Bletso, the 22nd Baron St John of Bletso-a title that has existed for 460 years. I declare my interest: in the nearly 20 years that I have been privileged to be a Member here, my noble friend Lord St John-Anthony-has been my best friend in this House. My noble friend entered this Chamber at 21 years old, as we have heard-the baby of the House-and he has been here for nearly 50 years. He has been a Lord in Waiting, he has phenomenal expertise in African affairs-in fact, he is the expert on Africa in this Chamber-and he has held positions such as vice-chair of the All-Party Parliamentary Group on Africa, as well as being a member of other committees on Zimbabwe and South Africa. I remember speaking in the tribute debate when Nelson Mandela passed away, and what a brilliant speech my noble friend made. He has had a very successful business career. After going to school at Bishops, the finest school in Cape Town, and the University of Cape Town, and then here at the London School of Economics, and then qualifying as a lawyer, he has brought that real-world international business experience to bear in this House. When I joined, the doorkeepers said, “Ah, there is our James Bond Lord”. My noble friend is merely 68 years old. The average age of this House is 71. He has not even reached it. In my book, you are young until you are 60. He is middle-aged. Old age is from 80 onwards. It is so sad that the hereditary Peers are...
Noble Lords
Hear, hear!
The Statement on 3 March focused primarily on presenting the latest OBR forecasts, rather than announcing new policy measures. It forecast growth of about 1.1%, which is very low. It forecast inflation to fall from 3.4% to 2.3% this year. It forecast unemployment to rise to 5.3%, and net migration-which reached a peak of nearly 1 million just recently-to average just 235,000 between 2026 and 2030. But, as the noble Baroness, Lady Neville-Rolfe, brought to our notice, the forecast was prepared before the escalation of the conflict in the Middle East and is already completely out of date. The OBR warned that the wider fiscal context remains difficult. It noted that UK public sector debt as a share of GDP has nearly tripled over the past two decades-it is now close to double the advanced economy average on a comparable basis-and borrowing has remained very high. The Chancellor referred to the growing uncertainty generated by the events in the Middle East, arguing that, in times of international volatility, the Government should prioritise economic stability, infrastructure investment and resilience to external shocks. However, Reuters has reported that economists expect instability. Investors argue that global geopolitical tensions and surges in energy prices are going to have a dramatic effect on the state of the UK economy. Business groups have said that higher taxes and rising operating costs have discouraged firms from hiring. Financial markets have reacted cautiously:...
My Lords, I echo the tribute from the noble Lord, Lord Bilimoria, to the noble Lord, Lord St John of Bletso, and pay tribute to his wonderful public service to this House over many years. This year, I had the great privilege of chairing a Select Committee for the first time, the Finance Bill Sub-Committee, which examined the measures in this finance Bill relating to inheritance tax on pensions and agricultural and business property reliefs. We worked quite hard. We heard evidence from 33 witnesses and accepted nearly 200 written submissions. I thank the fellow members of that committee, one of whom is sitting on the Front Bench opposite, the noble Lord, Lord Altrincham, but I particularly thank the noble Lord, Lord Leigh of Hurley, who is not in his place but who brought up lots of questions that the rest of us might not have thought of. While we were pleased to see that the Government have made changes to their initial proposals on inheritance tax, our report raised significant concerns about how these measures would work in practice for personal representatives, businesses and farms. A particular concern is that about personal representatives as a result of unused pension funds being brought for the first time into the scope of inheritance tax. The Government told us that this would be just an extension of what personal representatives have to do when people die. However, we heard that the reality will be very different. Pensions simply do not fit well in the framework of...
My Lords, I join with others in saying how sad it is to say goodbye to the noble Lord, Lord St John of Bletso. He will be much missed, particularly for his contributions on Africa and the global south, and for his contributions to debate, as his powerful speech showed today. It was quite excellent. I will concentrate my remarks on the Spring Statement. Apparently, the Chancellor wanted this to be a low-key announcement. She need not have worried; it scarcely qualified as an event. For once there were no leaks, as there was nothing to leak. I do not disagree with the Chancellor’s decision that there should be only one fiscal event a year, but, if one closed one’s eyes while listening to the Statement, it was like listening to a party political broadcast in the House. The Chancellor listed ending the two-child benefit cap as one of the Government’s great achievements, forgetting that she was particularly enthusiastic herself about the Government’s initial policy of refusing to abolish it. She attacked the previous Conservative Government on growth and inflation, without ever mentioning Ukraine or Covid. Can we expect the Chancellor or the Minister in future to talk about the economy without mentioning oil or war? Judging by today’s speech, certainly not, but the Government surely ought to judge themselves by the same criteria as they judge others. The Chancellor pronounced that everything that had happened was a great success, while the rapture of the OBR was somewhat more...
My Lords, following a distinguished former Chancellor of the Exchequer and a brilliant speech from the noble Lord, St John of Bletso, I rise with some anxiety to make a speech on the economy. Nevertheless, I want to try to bring a note of optimism into our deliberations, because optimism itself may be part of the solution to the challenges that lie ahead. I congratulate the Chancellor, my noble friend Lord Livermore and the Treasury team for the Spring Statement and the facts set out within it. I know that it came before the conflict began, but growth and retail sales were up, and inflation and interest rates were down. There are grounds there for optimism. Of course, the conflict creates a new situation, but, as we go into that conflict, as a result of the Chancellor’s efforts over the last 18 months, we are better placed to face that storm than we would otherwise have been. I especially welcome the emphasis in the Statement on spreading growth to “every part of Britain”. This is vital. I will emphasise three factors that will help generate growth and spread it across our country, and I will illustrate this with examples from the south-west of England, where I live. I am anxious about that as well, because the noble Earl, Lord Devon, is in the room and his family has been there for 700 years, whereas mine has been there for only 15 years. Nevertheless, it will be good to hear what he has to say about it. I declare an interest as the unpaid Chancellor of Exeter University,...
My Lords, I shall certainly miss the noble Lord, Lord St John of Bletso, around the place. With his economic and business acuity, he will be sorely missed-a real person in every sense. Today I shall address only the so-called spring forecast Statement. With respect, I cannot ever recall such an empty thing being brought before our House by any Government at any time. It is a monument to emptiness. On reading it, I was reminded inexorably of the Empty Quarter in Saudi Arabia; nothing much happens there, nothing much is seen and nothing comes out of it. It is remote from all reality and totally silent, with one exception-the Saudi Government have brilliantly managed to begin pumping wells in the middle of nowhere, getting on with the vital task of fuel enrichment. If only we had the same determination from the Government to do something about our neglected North Sea assets. The delays are shameful. We can be certain that a substantial amount of public money was spent by the Treasury and its poor civil servants on producing this pointless exercise. This is a serious issue. In the interests of transparency, I ask the noble Lord, Lord Livermore-who is well known in this Chamber for wanting to give the fullest possible answers and maximum transparency, and not ducking difficulties-just how much in real terms it cost to produce. I would not expect him to be able to answer that during his winding-up speech, to which I look forward, but will he pledge to place an answer in writing in...
My Lords, as many noble Lords have pointed out, we have been living in uncertain times, made considerably more uncertain in the last three weeks by the Iran war. Against that, the Spring Statement is creditable. Growth is returning, and that is the Government’s central mission. Inflation and borrowing are predicted to go down. Lots of that is through government action: beginning to balance the books, trade deals, industrial policy, planning reform, creating new sources of finance, training, sensible accounting and direct investment. If I may be a bit cheeky, it has also led to a huge investment in the North Sea in offshore wind. However, growth is not in the Government’s gift. It is not generated principally by Governments but by people, and particularly by businesses. That is what the noble Lord, Lord Bilimoria, and the noble Baroness, Lady Neville-Rolfe, were drawing our attention to. It was also the point my noble friend Lord Barber made in talking about what is happening in Devon and what Luísa Diogo was saying about releasing the music in people in Mozambique. For that reason, I will address my remarks to the role of business. Some of the measures that the Government have taken have been tough on business. One in particular is national insurance. But I have not heard of any businessperson who says they do not want the Government to balance the books. Similarly, we need good working conditions for people. The wealth comes from them. It is hard if you are a businessperson...
My Lords, I enjoyed the speech from the noble Lord, Lord St John, and I regret that I arrived in this place too late to hear more of his Lordship’s wisdom. I wish him every success with his new ventures. The OBR is set up to fail. The Treasury asks it to perform an impossible task. As someone who has in past jobs had to advise and comment on economic forecast models, the one piece of advice I would give is to never have a spot forecast for something as difficult as a deficit or an inflation rate five years out. To make sure the OBR fails, the Government set it the task of forecasting without allowing it to make any variations to policy. We all know that, over a five-year period, there is going to be at least one general election, and sometimes Governments get so unpopular that there can be a very major change of Government, with a change of policy. We also know that, over a five-year period in this impatient world, Prime Ministers often get fed up with their Chancellors, or parties get fed up with their Prime Ministers, so there can be changes of personnel and a series of changes of policy from that as well. So, it is a totally unrealistic assumption. What has the OBR done with its problems this time? The OBR tells us that inflation will be a very timely 2% in every year of the last four years of the forecast. I wish it was so, but experience says it is unlikely. The OBR says that the oil price will gently gyrate between $62 and $67 over the forecast period. I know that...
My Lords, the Economist magazine got it right about the Chancellor’s speech on the spring forecast. It said that the Chancellor “did not announce a single major policy decision that will help Britain break out of its malaise”. The malaise is the OBR’s bleak forecasts for economic growth over the coming years- and that is before the current war in the Middle East. It is no surprise, therefore, that the right honourable Wes Streeting said in one of his WhatsApp messages that the Government had no growth strategy at all. I therefore want to focus my brief remarks today on one subject-the lack of economic growth-and I really want to make just one point. The ultimate driver of economic growth in an economy comes from people who work in business, industry and commerce. That, I think, was the main point made by the noble Lord, Lord Pitt-Watson, earlier on. Yet all those people and those companies-this is where I disagree with the noble Lord-and all those people in business and commerce have been hit by the Government’s stream of anti-business policies. We have had the jobs tax: the increase in employers’ national insurance contributions. We have had the burdens placed on business by the new employment regulations. We have had the tax on private pensions and the tax on private farms. And now-about to hit the self-employed-we have new and complex regulations which mean they have to submit four tax returns every year instead of one. Therefore, the question I ask is: are there enough...
My Lords, I am very grateful to my noble friend the Minister for his characteristically clear and cogent introduction to today’s debate on the Spring Statement and the finance Bill, timed also to allow us to take into account the Chancellor’s Mais Lecture, delivered early this afternoon. I very much enjoyed and admired the valedictory speech of the noble Lord, Lord St John, and pay tribute to his service; I also thank him for his friendship. I think he was a veteran aged 24 when I arrived in the House as a new boy of 29. I strongly support the active and strategic state advocated in the Mais Lecture by my right honourable friend the Chancellor, with its three priorities-stability, investment and reform-which have guided her and the Government’s economic strategy since being elected in July 2024. The restoration and promotion of stability has had to be the primus inter pares of priorities for the Government over the past 21 months. The legacy from the Conservatives’ destructive time in office no longer needs enumerating in detail, but a toxic ABC combination of austerity, Brexit, and concealment has presented a formidably challenging starting point from which to rebuild confidence and stability. Just as that task had been substantially achieved, the latest of a series of geopolitical shocks has posed new challenges. The attack on Iran by Israel and the US and the indiscriminate response by Iran, creating a wider conflict in the Middle East, will inevitably impact the global...
My Lords, I too congratulate the noble Lord, Lord St John of Bletso, on his long, stylish and meaningful service to this House. I wish him well in the future, be he in Africa or anywhere else in the world. I stand before your Lordships as a member of the Finance Bill Sub-Committee, ably chaired by the noble Lord, Lord Liddle, in his sub-committee chairing debut. I will restrict my comments to the key findings of the committee regarding the inclusion of unused pensions and death benefits in the scope of IHT from April 2027. That will, as the noble Lord has said, make PRs personally liable for paying any tax due within six months of death or incurring a 7.7% increase for interest, with minimal exceptions. I will confine myself to the practical issues that the Bill raises, which, in the words of one of the witnesses, the noble Baroness, Lady Altmann, speaking in her capacity as an independent pensions expert, will create “massive chaos and misery to so many people, at a particularly difficult time of bereavement”. I recognise and welcome the Government’s changes, but they are not remotely sufficient. Adam Smith outlined four enduring canons of taxation which I will paraphrase as fairness, predictability, ease of payment and cost efficiency. The current implementation plan fails each of these. First, on fairness, after listening to the concerns of the pension scheme administrators, the Government shifted the burden of payment to PRs-not just professional PRs but lay PRs, who are...
My Lords, it is an honour to follow the noble Baroness, Lady Fairhead. I also speak as a member of the Finance Bill Sub-Committee of the Economic Affairs Committee-a lot of words on a business card. It was a delight to serve on it again, and I congratulate our chairman, the noble Lord, Lord Liddle, on his excellent work, and thank the staff and colleagues on the timely production of this report. Sadly, we will not be able to debate the report separately, so I hope the Minister finds some time to comment on some of our proposals today. We were very troubled by the reforms to inheritance tax. We can see that the burden that will be placed on personal representatives, as the noble Baroness, Lady Fairhead, set out-I agree with every word she said-will risk dissuading anyone from accepting this role. I know that I would be extremely reluctant to accept a job as a personal representative, which I have accepted in the past. Taxing pensions with IHT is a retrospective tax because people like me-I declare an interest-have saved money into a pension on the understanding that it would be outside my estate. The Government have reneged on that deal, and it is clear from the Bill that they are there only to support those on defined benefit schemes, which is possibly of benefit to those who drafted the Bill and all public sector employees, not those of us earning and saving from our own resources, who have been hammered by the Bill. The Government have clearly not thought through the...
My Lords, I begin by sharing my tribute to the noble Lord, Lord St John of Bletso. I am a newcomer, so I have not had the benefit of his expertise on southern Africa. I am sorry about that because it is a region I am very optimistic about. I also share the noble Lord’s concerns about the impact of AI on employment. I declare my interest as the chair of Norton Rose Fulbright, an international law firm, although I speak today in a personal capacity. Your Lordships will not be surprised to hear that I strongly support the Chancellor’s Spring Statement and the Finance (No. 2) Bill. Together with today’s Mais Lecture, they represent a clear and disciplined approach to economic management-one that prioritises stability, growth and long-term competitiveness. Over the last decade, businesses have had to navigate an extraordinary succession of shocks: the wars in Ukraine and now the Middle East; the disruption caused by artificial intelligence and new technologies; the societal changes caused by Covid; and the profound economic and constitutional changes triggered by Brexit, which we are still experiencing. In that environment, what globally mobile businesses value above all else is not short-term gimmicks or headline-grabbing announcements but political stability combined with regulatory coherence and fiscal predictability. Regrettably, that is not what the United Kingdom consistently offered in the period after 2016. Multiple fiscal events each year and uncertainty over our...
My Lords, the Spring Statement has been overshadowed by the escalating conflict in the Middle East. There is “significant chance that the new forecast is already out of date before the ink has dried”, warned Andrew Wishart of Berenberg Bank. However, even before this, the UK economic forecasts were looking grim. Growth was looking stagnant and downgraded to 1.1% for this year. While 2027 and 2028 forecasts were raised, Paul Dales at Capital Economics has warned that this could be overoptimistic. Helen Miller, director of the Institute for Fiscal Studies, said: “The economic outlook, and therefore the outlook for borrowing, could shift more materially between now and the Budget in the autumn. The conflict in the Middle East is already pushing up” commodity “prices and expectations for interest rates. It could yet cause more far-reaching economic disruption”. On the inflation front, Mr Dales also predicted that, if remaining for a medium-term period, “the leap in energy prices will mean UK inflation” will be “higher than the OBR is forecasting”. According to senior OBR official David Miles and the NIESR think tank, the rise in global energy prices, if sustained, will lead to a 1 percentage point increase in inflation. As a result, the Bank of England will have much less scope for lowering interest rates, as this rise will take inflation well beyond its target of 2%. Moving on to the Statement’s comments on taxation, the OBR said that taxes would hit 38% of national income in...
My Lords, I shall focus on the choice we face as a country between investing in economic inactivity versus investing in work, a theme my noble friend Lord Northbrook spoke about. The Work and Pensions Secretary announced yesterday a £1 billion investment to incentivise employers to hire young people from long-term unemployment. That is welcome news, given that almost 1 million people are not in education, employment or training. Each of those NEETs faces losing out on £1 million in lifetime earnings, with a further £1 million cost to the state-that is, to all of us as taxpayers-in welfare payments and lost tax revenue. What struck me is that this £1 billion incentive to employers is far less than the £8 billion increase for non-pension-related welfare payments announced in the Spring Statement. The Government have therefore made an active choice-the wrong choice, in my view-to spend eight times more on paying people to stay out of work than on getting people into work. To put that in context, with £8 billion, the Government could fund almost 900,000 apprenticeships, give a tax break of £10,000 to 800,000 businesses to employ someone out of long-term unemployment, or immediately increase our defence spending to 3%. According to table 5 of the appendix to the OBR’s report, the Treasury will collect £331 billion in income tax in the current financial year, but according to table 4.6 we will spend £333 billion on welfare-a sum that is almost as big as the combined GDP of...
I start by paying tribute to the noble Lord, Lord St John of Bletso. I do not know whether he will mind me mentioning that we recently discovered that we share one thing in common-there may be others-which is that we are both stammerers. He is wonderful testimony to the fact that it is not a life-changing condition. In some ways it can be life-enhancing, because it forces you to do things you might not otherwise do. The first issue I want to raise is in relation to the Spring Statement. A number of speakers have mentioned that, obviously, the war in the Middle East is affecting the figures. Another thing that will affect the figures is the sweeping immigration reforms announced by my right honourable friend the Home Secretary earlier this month to extend the default settlement period from five to 10 years, introduce an asylum visa break and reduce refugee protection grants to 30 months. If they achieve the effects that we are told they will, it is clear that they will have significant implications for the OBR’s projections. The fiscal consequences of lower migration are, on balance, unfavourable to public finances. Oxford Economics, for example, has pointed out that falling migration “threatens growth, strains public finances, and leaves productivity carrying the burden”. More specifically, it estimates that, if net inward migration dips below 100,000-that is its expectation for the current year-the cumulative effect would leave the UK population 1.5 million lower than the...
Noble Lords
Leigh of Hurley.
Yes, the noble Lord, Lord Leigh of Hurley. That was a blind spot: I am sorry. I always listen with great interest to what the noble Lord says. We take part in many of the same debates. I did not really understand his suggestion that widows would be the main people to suffer from this policy. I would be happy to give up 15 seconds of my seven minutes if the noble Lord could clarify that. Is he saying that they are going to have to do the PR work? Is he saying that their pensions are going to be taxed?
As the noble Lord has invited me to intervene, I will. The point is that women live longer than men and it is much more likely that, if a person passes away, it will be the man leaving the woman to be the PR and to pay the tax.
Sure, but that is true only if the widow does not get a pension. My whole point is that that arrangement should be providing pensions and not providing capital sums to the widow. If the deceased does not want to place that burden on their widow-or widower: it works both ways-they have to ensure that the money is not unused but is used to provide the dependant, the spouse, with a pension. It is only lump sums that will be taxed in this way. To me, that seems right and proper because it is part of the deceased’s estate, and there are of course the normal tax-free allowances. We are here because pensions are the purpose of these arrangements. They are not for the purpose of estate planning, and yet, since the introduction of freedom of choice, that is what they have become. I want to pick up a point made by the noble Lord, Lord Elliott of Mickle Fell. He mentioned the total welfare bill. Of course, the main part of the welfare bill is pensions. I was not entirely sure whether he was suggesting that we take the pensions away from pensioners and advise them to get a job. Was that his suggestion?
I pay tribute to the noble Lord, Lord Davies, and to the noble Lord, Lord St John of Bletso, who made an excellent valedictory speech. I had no idea that both of them had a stammer. I might mention that Nye Bevan had a stammer as well. That is a rather high level of eloquence to aspire to, but none the less he did: I heard him speak once upon a time. During this extraordinary period of history we are living through, these very troubled times, the three authoritarian regimes we face-I am thinking of Iran, Russia and China-all have extremely serious economic problems. In the case of Iran, for example, it is not simply that it has pauperised its population, which has been revolting, as we know. It cannot pay its revolutionary guards, which apparently is an even more serious problem than revolt among the ordinary people. Russia has also pauperised its population outside Leningrad and Moscow, but now 40% of the public sector is consumed by war means, and prices are rising between 20% and 40%. We in the UK have a debt that is 95% of our GDP. In China, debt is 340% of GDP. China is trying to grow at a rate of 5% a year. Most economists think that it can manage only 2%, but to achieve 5% it is producing stuff such as solar panels and electric cars, which no one wants and they cannot sell locally, so they are having to dump them overseas. As a result, no fewer than 40 countries throughout the world have imposed tariff restraints on Chinese imports. These are unsustainable situations....
My Lords, the eloquent speech this evening by the noble Lord, Lord St John, reminded me yet again of what this House is losing by chucking out its hereditary Peers. I want to take advantage of the slightly longer time allowed to Back-Benchers to make a technical point about language, before going on to the question of policy. Whether intended or not, most of the OBR’s prose is unnecessarily unintelligible to the ordinary person. For example, paragraph 1.12 says: “Labour market conditions continue to loosen”, with entrants into the labour force facing “subdued hiring demand”. What this means is that unemployment continues to rise, with school leavers finding it harder to get jobs now. Why not say that? What is meant by “subdued hiring demand”? What is unsubdued hiring demand? Even in this august House, I doubt whether many Peers would be able to give an accurate answer to what unsubdued hiring demand means. There is a whole battery of theoretical assumptions behind that sort of phrase which need to be unpicked. My general point is that the OBR should spell out its theoretical positions so that the reader can grasp intuitively whether they make sense to them. There is another issue here: the problem of forecasting, to which the noble Lord, Lord Redwood, and other noble Lords have referred. This arises from the obfuscation in OBR prose of the distinction between risk and uncertainty. In OBR-speak, those two terms are identical, but actually they are not. Risk gives you a set of...
My Lords, the key takeaway from the Chancellor’s speech is that the great plan for growth has now been supplanted by the more modest objective of stability. However, there are a couple of claims in the speech that need challenging. The Chancellor claims that inflation is down but does not provide a timeframe; the reality is that inflation is higher today than when Rishi Sunak left office-3% versus 2%. She also says that interest rates are down, referencing the six cuts in base rates, which is true, but if we look at longer-term gilt prices, as my noble friend Lord Redwood mentioned, a very different picture emerges. The 10-year gilt when Sunak left office was 4.1%; it is now 4.5%-and this was prior to the Iran war. The 30-year gilt is now trading at 5.3%, higher than in the aftermath of the Truss mini-Budget, when the long gilt hit 5%. The market’s message is clear: it is more worried about long-term inflation and debt levels today than under Liz Truss, and much more worried than under Rishi Sunak. Since July 2024, it is indeed the case that inflation is up, longer-term interest rates are up and unemployment, which was barely mentioned in the Chancellor’s speech, is at the highest level since Covid. It is surprising that unemployment was referenced only once in the speech as it is becoming a major issue worthy of more extensive consideration, especially the worrying growth in youth unemployment, mentioned by many speakers. Overall, unemployment has risen by 400,000 to 1.9...
My Lords, this year’s spring forecast is not just an economic and accounting exercise; it provides clarity, alongside the latest forecasts from the OBR. It is encouraging to see the forecasts of steady growth and falling inflation, resulting in the UK having the fastest growth of any G7 country in Europe. This will give households and businesses greater confidence for the coming years. However, in a world facing real turbulence and uncertainty, with the wars in Ukraine and the Middle East that have implications for energy prices, inflation and global trade, it is particularly important that this Government are focusing on sustainable growth, meaning that we will be sheltered from the worst of energy shocks. Building on the Government’s successes in entering trade agreements with India and the US and resetting our relationship with the European Union, it shows that by working constructively together with our nearest neighbours and other partners, the UK is in a much better place than many others. The Chancellor has already outlined in the other place the foundations on which this Government are building a responsible and strong economy, the main components of which are: stability in our public finances, investment in our infrastructure, and emphasis on the growth agenda. These are already reforming Britain’s economy. She has clearly set out plans that support working people and children, encourage investment and keep our public finances sustainable. The Chancellor’s focus on...
Well, here we are again, my Lords; another spring, another Statement. In autumn 2024, the OBR forecast that 2025 GDP growth would be 2%. The reality ended up at 1.3%. Never mind: in spring 2025, the OBR forecast 2026 GDP growth would be 1.9%. In autumn 2025, it downgraded that to 1.4%, and now it has reduced it again to 1.1%. Actual growth in January, seasonally adjusted upwards, was 0%. In the unlikely event that the OBR’s forecast of 1% growth for 2026 is actually achieved, do we understand how appalling that is? It would mean that GDP per capita growth would be near to zero, which is a dog-eat-dog world. Each individual in this country can become better off by the end of the year only at the expense of someone else becoming worse off. Year after year, the OBR waxes confident about what the future brings: always jam tomorrow, as my noble friend Lord Redwood pointed out, yet none today. Why does the OBR predict growth in 2027, 2028 and 2029 will be better than it has been for the last few years and this year? Does it, or do the Government, have any validated theory of what creates growth? Numbers are not the Government’s strong suit. The Chancellor says that increasing people’s wages is the number one mission. She claims that wages are up in the past year: well, to an extent. Public sector wages went up because the Government gave them lots more of our money. Did wages rise in the private sector? No. Inflation adjusted, wages in the private sector went down last year....
My Lords, what a heroic task this Chamber has undertaken in us having seven minutes to explore 560 pages of the Finance (No. 2) Bill, 481 pages of Explanatory Notes, 131 pages of related OBR analysis and 152 pages of Treasury statements and related policies. On top of that, there is a Spring Statement and its related documentation-and if you can get through the legalistic jargon, you are doing very well. I welcome the abolition of the two-child benefit cap but would like to see greater emphasis on lifting parents and families out of poverty. Sustained economic growth cannot be achieved without good purchasing power for the masses. The perpetuation of the Conservative policy of freezing annual income tax personal allowances for another three years will actually create more poverty. The number of basic rate taxpayers has increased from 26.6 million in 2021 to 30.4 million in 2025-26. These are the very people facing a cost of living crisis. The number of people over state pension age paying income tax has jumped from 6.47 million to 8.72 million. Some 25.3 million individuals live below the minimum living standard. There is no such thing as trickle-down economics. The rich have gobbled it all up and people at the bottom just buy worry beads; that is about all they can do. Some 120,000 people a year die in fuel poverty. Despite the triple lock and pension age benefits, almost one in six pensioners die in poverty. It would be helpful to hear the Government’s plans for the...
My Lords, I think the Minister ought to get my noble friend Lord Sikka a job in HMRC. I have some connections there too. However, I start by paying great tribute to my good friend and associate, the noble Lord, Lord St John, with whom I have spent many hours together over the years. I wish his club Chelsea well, and I wish him and his family a long and happy enjoyment of many years ahead. I thank him greatly for the service he has given to the House. I am pleased that the Spring Statement was low key and that, to a degree, we have achieved some stability, compared with where we were in 2024. We still have a lot left to do, without any doubt. With the Middle East and Trump, as the noble Lord, Lord Skidelsky, inferred, and with a great many people unemployed-if you count the total who are in part-time employment-we have a whole series of problems facing us. Unemployment could grow to be much bigger than we have seen. In any event, the noble Lord, Lord St John, referred to AI and the changes that are coming to employment with AI. There are changes in attitude already taking place with younger people, many of whom do not want to be going into work. If you spend time with them, substantial numbers of them have an entirely different view of life from what we had. We are going to have to start looking at the issues from a quite different angle, but for the moment we look at what we have. Contrary to the great criticisms the Minister has had to bear, I am going to say a few words of...
My Lords, let us examine the Chancellor’s Statement from a slightly different perspective. We are told that welfare spending will increase by roughly £18 billion. If I understand the figures correctly, that is approximately 0.63% of GDP. We need always to think about things relatively, and 0.63% of GDP is serious. I would be grateful if the Minister could confirm the precise number for the House. We hear much from the Government about total GDP growth, which I suspect is political expedience, but total GDP, important though it is, does not tell us whether the people of this country are becoming more successful and resilient. For that, we must look at GDP per capita. If overall growth is 1.1% but population growth is 0.7%, then GDP per capita is rising only by 0.4%. That is the figure that matters for living standards and that is the figure that the current Government prefer not to dwell upon. If prosperity per person is rising by only 0.4% while welfare spending alone is increasing by something closer to 0.6% of GDP, then we are entitled to ask whether the country is moving forward at all or merely moving sideways. The House deserves a serious answer. I ask the Minister now: why do the Government speak so often about the gross size of the economy yet say so little about the prosperity per head? Do they not accept that the true test of economic policy is whether living standards are rising? Are we, in fact, entering a transfer economy or a growth economy-an economy that...
My Lords, I join the tributes to the noble Lord, Lord St John of Bletso. We do not often get to speak in the same debate, so I am delighted that he could not speak in the space debate and has joined us today. His speech was both gracious and extremely profound, and his is a voice that we are very much going to miss in this House. I thank the noble Lord and wish him all the best from all on these Benches. This has to be one of the most frustrating debates I have participated in-I say that despite there being so many good speeches. We are talking about the Finance (No. 2) Bill, but of course we cannot amend it, and today the Chancellor made her Mais speech setting out political strategy, but too late for us to do any significant analysis of it. I did pick up one thing, which I will raise with the Minister: the Chancellor apparently told graduates burdened with a crisis in student loans that they were going to be at the back of the queue for a rescue. If that is true, it is frankly a bad decision. It is a different scheme, and the noble Lord, Lord Wilson, should go back and look. Then we are left with the Spring Statement. We cannot blame the Chancellor for the fact that the Iran war broke out on that day, but it has obviously thrown a wrench into the programme that she tried to lay out in her Spring Statement. I am going to do my best in starting with the Spring Statement, because we might as well deal with the world as it was prior to the Iran war-we have no clue what it is...
My Lords, I thank the Minister for his patience and care in listening to this debate. I declare my interest as a director at South Molton Street Capital. I thank the noble Lord, Lord St John, for speaking in our debate this evening, and for his work for this House and our country. We are privileged to have the Minister with us, because he has been central to the Government’s economic policy and his words carry weight. He has been extremely active from the beginning of this Session. I remind everybody that the first Bill of the Session was to strengthen the powers of the OBR-that was before my noble friend Lord Redwood joined us, when the OBR was quite popular with the Government and possibly with Parliament, though maybe that is not so true anymore. We took that through as the first Bill of the Session. The timing of this evening’s debate is quite interesting because we are towards the end of the Session and we can take a view among us on where the Government’s economic strategy is. It will be particularly interesting to hear the Minister’s responses to the questions and topics raised this evening. You do not need to be in this debate in the House of Lords to know that unemployment is moving up quite a bit. All noble lords will have family members-children, grandchildren, nephews and nieces-and maybe friends and neighbours, and will know that people in their 20s are seeing a dramatic fall away in jobs at the moment. We might start there. Some of that is part of the NEETs...
My Lords, it is a pleasure to close this debate on the spring forecast and the Second Reading of the Finance (No. 2) Bill. I am grateful to all noble Lords for their contributions, which I have enjoyed listening to. I pay tribute to the noble Lord, Lord St John of Bletso, for his valedictory speech and his service to your Lordships’ House over many years. It was a wide-ranging speech spanning Nelson Mandela, energy policy and AI, among other issues. In this, it was a perfect representation of the experience he has brought to our debates. I wish him very well for the future. On taking office, this Government inherited three major crises: in the public finances, in our public services and in the cost of living. That is why we have repeatedly taken the action necessary to bring stability to the economy, as welcomed by my noble friend Lord Barber of Chittlehampton. The choices we made were the responsible ones, and the spring forecast showed that the economic plan we have been driving forward since the election is the right one. I agree with the noble Lord, Lord Sherbourne of Didsbury, that growth comes from businesses and investors. That is why our economic plan is built on the three pillars, as my noble friends Lord Chandos and Lady Gill reminded us, of stability in our public finances, investment in our infrastructure and reform of Britain’s economy. My noble friends Lady Bi and Lord Brooke of Alverthorpe rightly spoke about the importance of having just one fiscal event a...
Motion agreed.