Spring Forecast Statement

Lord Horam Excerpts

Tuesday 17th March 2026 Lords Chamber

[Lord Horam (Con)]

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. The reason is that, in all three countries, which are authoritarian dictatorships, policy and politics have triumphed over economics. They have been able to put through policies because they are dictatorships. In the case of Iran, for example, the policies include expanding Islamism throughout the Middle East and so forth, and funding proxies in various countries. In the case of Russia, as we know, the policies have included invading Ukraine and the paranoia about an invasion from NATO.

In the case of China, rather interestingly, as a result of Xi Jinping’s personal ambition, the policy is that the GDP of China should be the size of America’s by 2035. It is widely thought that Xi Jinping expects to be still alive at this point and therefore able to celebrate the great victory of the Chinese Communist Party—communism by Chinese means—as a result.

All these things are examples of politics triumphing over simple economics. To be fair to our Government, they put in their manifesto the simple point that they want to maximise economic growth. I applaud that. In the situation we face, it is clearly central that we should improve our economic growth. We live in a liberal democracy and, therefore, we should be able to adjust policies in a way that is impossible where you have a dictatorship. The problem is the execution. The execution of that aim has been defective because the Government have not been able to keep out the political problems that they face.

Take one small example, in the wider scheme of things: the Chagos decision. You can argue it either way; the Government argue one way about the legal situation and we argue another, and I quite accept that there are different points of view. What shocked me was that the Government are spending not just £100 million a year over 99 years, which is what is in the popular prints, but £145 million a year in rent plus £45 million a year in development aid. That is some £210 million a year going out from this country to Mauritius unnecessarily. That is astonishing. Why do that in a year when the public sector situation is so tight?

Then there is the question of welfare. The existing situation, with a limit on child benefit of two children, has been like that for several years. It is popular—60% of the population support only two children being supported from child benefit—but, none the less, the Government have just spent £3 billion a year on extending that to all children. As my noble friend Lord Northbrook pointed out, the OBR is pointing to the additional welfare provisions that will follow over the next few years unless something is done.

Lastly, on energy prices, we should take account of climate change. Obviously, it is something that we care about, and young people particularly care about it as an issue. We contribute 0.8% of the international problem, yet, as a result of the policies of Ed Miliband, we have the highest energy costs of any country in the western world. That is astonishing. That degree of zealotry must surely not be of cost-benefit in any sensible way, and it is going to get worse as a result of the failure to exploit North Sea oil.

Our problem, therefore, as the OBR pointed out in its forecast, is that tax will go from a general average of 32% of GDP historically to 38.5%, which is entering a wholly new area. Debt will remain at 95% a year—that will not come down—and, as a result, growth, which averaged nearly 2% for the last decade, will come down to 1.5%. That is really bad and extremely disappointing. Unless there is a change of approach, we will be subject to further disappointment.