Tax Burden and Economic Growth
Debate between Lord Wilson of Sedgefield and Lord Macpherson of Earl's Court(2Â weeks, 4Â days ago)
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Lord Wilson of Sedgefield (Lab)
As I have said, we have one of the most productive tax regimes in the world. We can see that by the amount of money that is raised and the number of people who are in employment. There have been only two years in the last 150 years that have seen a higher figure. We are in a position where we have to raise taxes to help solve the problems that we were left with two years ago. We will press on to make sure that the economy is as productive as it can be.
Lord Wilson of Sedgefield (Lab)
The noble Lord raises a very important point. We always have these taxes under review. No doubt when we have the Budget at the back end of October some statements will be made by the Chancellor reflecting what we need to do to ensure that the economy grows into the future. We will continue to do what is in the best interests of the British people.
Lord Macpherson of Earl’s Court (CB)
My Lords, does the Minister agree that a bigger obstacle to growth than the tax burden is the level of public debt across the world, which is reflected in higher interest rates across the OECD countries? Therefore, can he restate the Government’s commitment to the fiscal rules and to fiscal consolidation in general?
Lord Wilson of Sedgefield (Lab)
The new Chancellor has said that we will stand by the fiscal rules that were laid out at the start of this Parliament. The noble Lord is absolutely right about the debt servicing costs that we have to meet. One of the upsides—not of the debt but of what is happening—is that while borrowing was stuck at about 5% of GDP for the previous four years, it has fallen by 1% to its lowest level for six years, at 4.2%, in 2025-26. 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. We all know about the conflict in the Middle East and the impact that is having on debt not just in this country but around the world. However, we are setting a plan to ensure that we can lower that debt burden.