Tax Burden and Economic Growth
Lord Leigh of Hurley Excerpts(2Â weeks, 4Â days ago)
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Lord Leigh of Hurley
To ask His Majesty’s Government what assessment they have made of the relationship between changes in the tax burden and the effect on economic growth.
Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)
Our tax system is very supportive of economic growth. Our tax-to-GDP ratio is in the middle of the pack of the G7, and we have the lowest headline rate of corporation tax in the G7. The UK economy saw the fastest growth in the first half of this year, and the IMF expects the UK to remain the fastest-growing European G7 economy in 2026-27. According to the IMF, this year, for the first time since 2004, we are forecast to be borrowing less than the rest of the G7 on average. Despite the headwinds from the war in the Middle East, there is a lot to be optimistic about.
Lord Leigh of Hurley (Con)
My Lords, the tax burden is forecast to reach its highest level ever. The last two, disastrous Budgets raised taxes by £40 billion and £26 billion respectively; the results can be seen in today’s very disappointing unemployment figures. The manifesto ruled out any major tax increases, but there is still great uncertainty in the UK economy, which is damaging the economy. What evidence can the Government offer that such a historically high tax burden is consistent with promoting economic growth, which is so badly needed in this country?
Lord Wilson of Sedgefield (Lab)
I should just say to the noble Lord that we had quite a big mess to tidy up when we came into government two years ago; I do not think that the Opposition should be allowed to get away with that.
Only on Friday, the ONS estimated that GDP growth increased in July by 0.4%, which was well above expectations. In fact, UK GDP growth is the fastest in the G7. The tax level still sits in the middle of the G7 nations. For example, the effective tax rate for a single individual with no children and on average earnings is one of the lowest in the OECD. I am not pretending that everything is rosy in the garden—there is a war in the Middle East. On the unemployment figures that came out today, I do not know whether the noble Lord is aware of this, but in only two peacetime years out of the past 150 has the average annual employment rate been higher than it was in 2025.
Let us just listen to what businesses have been saying. A representative of the KPMG said that
“businesses are starting to press ahead with investment”
and that
“we are starting to see the data moving in the right direction”.
As I say, there is a lot to be optimistic about.
Office for National Statistics
Lord Leigh of Hurley Excerpts(10Â months, 3Â weeks ago)
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Lord Leigh of Hurley (Con)
My Lords, I believe I am right in saying that some 40% to 50% of all ONS data is produced by survey. What steps are being taken to dramatically reduce that percentage? Surveys rely on the good will of people offering to fill them in, particularly in areas such as immigration; there must be a better way to collect data than surveys.
Baroness Anderson of Stoke-on-Trent (Lab)
The noble Lord raises a genuinely important point about the quality and calibre of our data and how we collect it. As the world moves on, so has our need for data, and how we use and collect it. We expect the ONS to be using all available resources to it. We also need to make sure of the value—especially with regard to the census, for example—of survey-based data, because it is some of the most effective and efficient available to us.