King’s Speech

Lord Razzall Excerpts

Monday 13th November 2023 Lords Chamber

[Lord Razzall (LD)]

My Lords, as a number of noble Lords have found, the debate on the gracious Speech provides the opportunity to comment on the current state of the British economy without having to comment on specific proposals. Notwithstanding the Minister’s brave attempt in his opening speech, and the Prime Minister’s remarks, I agree with the noble Lord, Lord Londesborough, that few can doubt that our condition is parlous. Although we may have just avoided a technical recession, we are bumping along at the bottom with little prospect of growth. Commentators now even predict that in 10 years there will be six major trading entities—China, India, the USA, Japan, Russia and the EU—and we will play no significant role.

I fear it is now appropriate, today of all days, to quote from Kipling’s “Recessional”, written in 1897:

“The tumult and the shouting dies;


The Captains and the Kings depart …

Far-called, our navies melt away …

Lo, all our pomp of yesterday

Is one with Nineveh and Tyre!”

I fear that is us—and that the noble Lord, Lord West, who is not in his place, will never get the ships he requires.

Notwithstanding our parlous position, the right wing of the Tory party consistently calls for tax cuts, believing, as the noble Baroness, Lady Noakes, said—although she did not describe it as such—in the Laffer curve, which has never been shown to work. But why, in 13 years of government, have the Tories not reformed the tax system to raise revenue in a growth-friendly manner? The noble Lord, Lord Forsyth, sadly not in his place, produced ideas in 2006 to reform our tax system which have not been implemented.

No one could deny that the tax system itself is a structural mess. Take the major revenue-raising taxes. The VAT system has numerous exceptions and zero-rated items and is a mess. We have two different personal taxes in income tax and national insurance running simultaneously, with strange marginal tax rates for individuals. In addition, business taxes have been on a rollercoaster. Corporation tax was reduced to 19% but is now back to 25%. Why have the Government not sorted out this mess? It is significant that the Government have even recently abolished the Office of Tax Simplification.

Instead of calling for reform of the tax system, many Tories such as the noble Baroness, Lady Noakes, cling to the idea that there is now £20 billion of room for tax cuts in the short term. In the short term, this is because the budget deficit for the first six months of the fiscal year is £19.8 billion lower than the OBR March forecast. However, the deficit is still £15 billion higher than the corresponding period last year, when on the way to a full-year outturn of £128 billion, which is 5% of GDP. No: in my view, advocates of tax cuts should listen to last year’s speaker at the Mais lecture, who said:

“I am disheartened when I hear the flippant claim that ‘tax cuts always pay for themselves’. They do not. Cutting tax sustainably requires hard work, prioritisation, and the willingness to make difficult and often unpopular arguments elsewhere. And it is hard to cut taxes at a time when demands on the state are growing”.


That was not a left-wing economist or a member of the Liberal Democrats or the Labour Party. It was Chancellor Sunak—and I hope Jeremy Hunt is listening.