Spring Budget 2024

Lord Sherbourne of Didsbury Excerpts

Monday 18th March 2024 Lords Chamber

[Lord Sherbourne of Didsbury (Con)]

My Lords, it is a great pleasure to follow my noble friend Lord Tugendhat. I echo many of the remarks made by other Members of the House, including the noble Lord, Lord Lamont, a former Chancellor of the Exchequer, the noble Lord, Lord Macpherson, a former head of the Treasury, and many others, in being very optimistic at the start of my speech.

The economy, which was so badly hit by the pandemic, the war in Ukraine and so on, is now beginning to show signs of recovery. Inflation is falling, interest rates look set to fall and the prospects for growth are good. There has been a positive reaction to the Budget. I have some quite interesting figures which show popular reaction to those proposals; the approval ratings range from 56 %, 63 % and 76 % to 81 %. I can only hope that it will not be long before these figures are reflected in more important opinion polls in the country.

There was an optimistic theme running through the Chancellor’s speech, and it was the same in the published Budget Report—the Red Book—although all 36 paragraphs of the executive summary had so upbeat a theme they were almost Panglossian: the best of all possible worlds.

However, I was struck by one other thing in the Budget Report. The text was not in black but in light grey—making it slightly more difficult to read. It is as if the Treasury were trying to tell us, “Well, it is not all black and white. The pale grey is sending a subliminal message that what we, the Treasury, say is nuanced with cautious subtexts”.

I will take one example: government borrowing. The Chancellor, in his speech, and my noble friend the Minister in her speech this afternoon, talked about falling national debt. It is forecast to fall every year from now until 2028-29. That, of course, is national debt, not the annual deficit, but what determines the national debt is the deficit—or surplus, if we ever get back to those days—and the deficit depends on two variables: revenue coming into the Government and spending by the Government. Both are highly variable.

Public spending depends on many events outside the control of government. We have seen already, as I have said, the pandemic, the war in Ukraine, and the oil and energy crisis. On the home front, much of the public spending is also outside government control. Here is something that the OBR says, which I think everybody in the House knows, and which should worry us all:

“The number of inactive working-age adults is … 9.3 million … 700,000 more than before the pandemic … Around one third of the working-age inactive population cite long-term illness as their principal reason for not being in the labour force”.


This should set alarm bells ringing, not just about the cost to the public purse, but about the nature and causes of these illnesses and the economic loss to the country. This requires serious analysis because, ultimately, it is unsustainable.

For these reasons and many others, the forecasts of public spending and borrowing are bound to become ever more speculative with every future year, which is why we need a substantial contingency reserve. This year, it is forecast to be £9.2 billion. Is this enough? Is it based on the recent experiences of the crises we have had?

Even without the predicted pressures on public spending there will be increasing further demands on the health service and, as my noble friend has said, on defence. Looming ahead there is one other horror, if there were a Labour Government—the rolling back of the trade union reforms brought in by previous Conservative Governments, which were broadly accepted by the Blair/Brown Governments but which would be repealed by a Starmer Government. I wonder whether the noble Lord, Lord Livermore, who served in No. 10 when Gordon Brown was Prime Minister, is a whole-hearted supporter of his party’s proposals to ditch these trade union reforms.

Finally, and quite separately, I make two simple pleas to the Treasury. First, despite the voluminous information published in the OBR report and in the Chancellor’s Budget Report—or perhaps because of it—it is sometimes difficult to find the most basic information. Hardly anywhere is there a table setting out clearly, side by side, government revenue and government spending. The nearest you get to it are the two pie charts stuck away in an appendix on the very last two pages of the Budget Report—pages 93 and 94. We need more of a plain man’s guide to help the general public understand the basic realities.

My second plea echoes what my noble friend Lord Horam said. It may be just me, but I am losing track of Budget Statements, Autumn Statements and Spring Statements. Again, this seems to make it more difficult for lesser mortals to understand the relationship between public spending and taxation. Surely it is possible to have just one Budget Statement a year setting out public expenditure, tax rates and government borrowing.

Autumn Statement 2023

Lord Sherbourne of Didsbury Excerpts

Wednesday 29th November 2023 Lords Chamber

[Lord Sherbourne of Didsbury (Con)]

My Lords, it is always a great pleasure to follow the noble Lord, Lord Desai. He always makes everything sound so seductive and simple.

This afternoon, we have heard many speeches from noble Lords welcoming the excellent provisions in the Autumn Statement. I therefore hope that the Minister, whom I also welcome warmly to the Treasury, will forgive me if I do not go down that avenue, because I want to focus on one point this evening, and that is the national debt that we have in this country. We are, at present, paying £100 billion a year servicing the debt. That is £100,000 million, or 10% of government revenue, and it does not pay for a single service. It is more than we spend on education, twice as much as we spend on defence and five times as much as we spend on local government, housing and communities. Of course, government spending is still outstripping government revenue, so each year we go on adding to our total national debt.

Imagine you have built up a huge credit card bill and that you cannot pay the interest, so you have to borrow to pay. That adds more to your debt and eventually the bank is going to say that you cannot go on borrowing. Germany is already in some difficulty. It has a constitutional court which constrains it, of course, but there may well be an emergency budget in Germany, and that may well put at risk its coalition Government. On Monday, here in the UK, the chief executive of JP Morgan described America’s fiscal stimulus as “drugs in the system”. He is reported as having said:

“we’re now spending a lot of money … That money is like heroin”.

There are only two ways to deal with overspending: more borrowing, which the Government are committed to reducing; or more taxation, and we should not pile more taxes on business or individuals. The answer has to be control of public spending. That means that this Government, and any Government, must sometimes say no. It is not easy, especially for Ministers in this House, because they are then given a very hard time by Members opposite. If there were to be a Labour Government —I hope there will not be, but if there were to be—we would soon see what stuff Labour Ministers in charge of spending departments were made of. I suspect they would be under enormous pressure to give in, and we would end up with higher taxation.

I want to make two observations about public spending. First, I believe that recent decisions to ring-fence the spending of certain government departments is unhelpful. Economic circumstances change. Priorities change. Giving some government departments protected status means that they are let off the hook in having to argue their case against competing and often more deserving demands from other government departments. My second observation is that it is very easy to call for efficiency savings, but these rather glib words conceal the deep-seated and complicated workings of public bodies. Take, for example, the health service. Yes, for millions of patients, NHS nurses and doctors provide outstanding care, but talk to them and they will often complain about lack of executive grip and lack of accountability, despite—or maybe because of—the layers of management. I accept that public bodies have a real difficulty because they are not subject to the market and competitive pressures, which should keep a commercial company on its toes.

Another problem is the difficulty which public bodies often have in letting go people who, decent and honourable as they may be, are not really up to the job. Only today, the National Audit Office is reported as saying that one in five government departments did not know how many underperforming workers they had, and that a majority did not know what happened to staff who were told to improve. If public bodies are to become more efficient and to manage resources better, there will have to be fundamental changes in administration, in personnel and in culture, and that cannot be done quickly. It will take time. The public sector needs executive managers with the right business experience and expertise. We already have some, but we need more, we need to retain them and we need to attract them. Of course, rewarding people of talent at all levels costs money, and public services cost money, so if we are going to cut borrowing and avoid further taxation, we will soon have to answer one of the toughest questions of the next Parliament: what should the state do and what should the state not do?