Middle East: Economic Update

Lord Macpherson of Earl's Court Excerpts

Tuesday 28th April 2026 Lords Chamber

[Lord Livermore (Lab)]

I have the greatest respect for my noble friend Lord Robertson but I disagree with him. Looking at the decisions that the Prime Minister and Chancellor have taken, we are delivering the biggest sustained increase in defence spending since the Cold War. As I have said already, and I am sure will continue to say, the defence investment plan will be published in due course. The noble Lord spoke of the international action that the Prime Minister has led; he knows that the Prime Minister has led global action by convening with the President of France a summit of nations to work together to support freedom of navigation through the strait. He will know that the UK will continue to play its part through engagement with many industries, including the insurance industry, to support shipping when the conditions allow.

[Lord Macpherson of Earl’s Court (CB)]

My Lords, does the Financial Secretary agree that, rather than increasing revenues, an oil price of more than $100 a barrel is far more likely to reduce them because of the wider effect on the economy? Does he agree that, at a time like this, when revenues are likely to be hard to come by, the Government should be very cautious about agreeing to increased spending proposals of the sort we have been listening to today?

[Lord Livermore (Lab)]

I agree with the noble Lord on that point. He is far more expert in these matters than me and was in the Treasury through many more crises than I have been, so he has great experience in this matter. He is absolutely right that the IMF showed last week that the impact on the size of our economy and GDP could be significant. No one quite knows yet what the full impact of this conflict will be; that will depend on its duration and severity. However, we must be agile in responding appropriately at each moment.

The noble Lord is absolutely right that, as we respond to this crisis, we should learn from the mistakes of the past. The previous Government, as I have said already, pushed up borrowing, interest rates, inflation and mortgage costs with an unfunded, untargeted package of support under Liz Truss. That package gave the most support to the wealthiest households: between 2022 and 2024, under the previous Government, households in the top income decile received an average of £1,350 of direct energy bill support. That left us with high levels of national debt and a cheque written then for a bill that is still being paid today. The party opposite talks about the importance of inflation, but we will not tackle inflation through an unfunded, untargeted package of support like we saw in the past.