Reducing Government Spending

Lord Leigh of Hurley Excerpts

Tuesday 24th March 2026 Lords Chamber

Asked by

[Lord Leigh of Hurley]

To ask His Majesty’s Government, further to (1) data released by the Office for National Statistics on 20 March showing that public sector borrowing in February was £14.3 billion, and (2) the increase in 10-year gilt yields, what plans they have to reduce Government spending.

[The Financial Secretary to the Treasury (Lord Livermore) (Lab)]

My Lords, UK markets are of course affected by global developments, but it is long-standing convention that the Government do not comment on specific market movements. Because of this Government’s economic plan, we are more prepared for a more volatile world, with lower inflation and more resilient public finances. This year the deficit will fall by £20 billion, from 5.2% to 4.3% of GDP—its lowest level for six years and the fastest reduction in the G7. Global financial market volatility means that it is more important than ever to have a robust fiscal framework. We will not repeat the mistakes of the previous Government by returning to austerity or cutting public investment. That was a short-term fix that has created long-term problems.

[Lord Leigh of Hurley (Con)]

My Lords, the ultimate judge and arbiter of the Government’s success is the bond market. As of this afternoon, 10-year gilts are at 4.91%, higher than in the famous Liz Truss era, which Members on the opposite Benches are so keen to reflect back at us, and the highest in the G7. The OBR had said that the UK’s fiscal position is vulnerable to external events, and so it proved. Will the Minister explain to us why we are in this position and what steps HM Government are taking to reduce government spend, particularly in welfare?

[Lord Livermore (Lab)]

As I said at the outset, of course UK markets are affected by global developments but it is a long-standing convention that the Government, as an issuer in gilt markets, do not comment on specific market moves. The noble Lord will be aware that the full economic impact of the conflict will depend on its severity and duration, but we enter this period of uncertainty with the fundamentals of our economy strong. The spring forecast showed that this year borrowing falls by almost 1 percentage point to its lowest level for six years, 4.3%. That is the largest fall in the deficit since 2016. Borrowing as a share of GDP will then fall in every year of the forecast, from 4.3% in 2025 to 1.6% in 2030. Borrowing will fall more than in any other G7 economy. This year, for the first time since 2004, we will be borrowing less than the rest of the G7 on average.

The noble Lord asked about welfare. It is right to point out that in the last five years of the previous Government, spending on welfare increased by £88 billion. No one believes that the system we inherited is working: it abandoned too many people to a life on benefits, it wrote off too many people as too sick to work and it condemned too many children to be too poor to eat. That is exactly why we are reforming the welfare system.