Middle East: Economic Update

Lord Clarke of Nottingham Excerpts

Tuesday 28th April 2026 Lords Chamber

[Lord Clarke of Nottingham (Con)]

My Lords, one of the big problems that the Government faced when they took office was an unsustainable level of public debt and a totally unsustainable level of debt interest being paid by taxpayers each year on that debt. The Government saw clearly at the time that one thing they had to do was to stop the welfare budget exploding as it is and increasing so rapidly. They introduced some modest measures, which they then dropped as soon as they faced discontent from left-wing Back-Benchers in the House of Commons.

Do the Government intend to allow the welfare bill to increase by the hundreds of billions of pounds forecast at the moment? Do they intend to do nothing to alter the financial incentives, which they have made better for large families, not to seek work if they have established a good claim to benefits? These are major national problems that really ought to be tackled in the face of this worrying economic position, and the Government, almost two years into office, seem to be slipping into inaction, with a complete lack of leadership, allowing Back-Benchers in the House of Commons to leave the problem to fester.

[Lord Livermore (Lab)]

I am grateful to the noble Lord for his question. We are repairing the public finances. At the time of the spring forecast, borrowing was set to fall more over this Parliament than in any other G7 economy. We are now borrowing below the G7 average, something that was not achieved in any of the 14 years of the previous Government. Just last week, we saw borrowing in the year to February fall by £20 billion compared with the previous year.

The noble Lord is absolutely right, of course, that the welfare system requires reforming. In the last five years of the previous Government, spending on welfare increased by £88 billion so, clearly, reform is necessary. There might not be consensus on what to do about it, but no one would believe that the system we inherited is working. It abandoned too many people to a life on benefits, wrote off too many people as too sick to work and condemned too many children to be too poor to eat. That is not a system that does not require reform, and reforming it we are.

To tackle fraud and error, we are increasing the proportion of face-to-face assessments for PIP from 6% in 2024 to 30%, saving £4.6 billion. We are rebalancing universal credit to incentivise people to work, rather than encouraging inactivity. We are redeploying 1,000 work coaches to support sick and disabled people who were previously left without contact. We are also supporting people to move into work, with £3 billion of investment into the pathways to work employment support and a £1.5 billion investment in the youth guarantee and the growth and skills levy.