This interactive dashboard shows data on economic growth, inflation, trade, employment, government borrowing and debt across the UK.

This interactive dashboard shows data on economic growth, inflation, trade, employment, government borrowing and debt across the UK.

To ask His Majesty's Government what estimate they have made of the cost to the Treasury of the Bank of England's quantitative tightening policies since 2022 in terms of the impact of reimbursed losses on the fiscal deficit and the increased cost of servicing government debt.

To ask His Majesty's Government what estimate they have made of the cost to the Treasury of the Bank of England's quantitative tightening policies since 2022 in terms of the impact of reimbursed losses on the fiscal deficit and the increased cost of servicing government debt.

To ask His Majesty's Government what consideration they have given to using war bonds to fund defence and the impact on public debt.

To ask His Majesty's Government what consideration they have given to using war bonds to fund defence and the impact on public debt.

The public finances include government borrowing and debt. Find the latest data on UK borrowing and debt as well as forecasts for the future.

The public finances include government borrowing and debt. Find the latest data on UK borrowing and debt as well as forecasts for the future.

To ask His Majesty's Government what plans they have to reduce the rates of interest on UK government debt.

To ask His Majesty's Government what plans they have to reduce the rates of interest on UK government debt.

To ask His Majesty's Government how much UK debt is linked to the retail prices index; and what assessment they have made of how this compares to the debt of other G7 countries.

To ask His Majesty's Government how much UK debt is linked to the retail prices index; and what assessment they have made of how this compares to the debt of other G7 countries.

My Lords, this Question about the Government’s interest bill is a really good one: £1 in every £10 of government money is now spent paying interest. There are three elements causing this. One is the overall level of borrowing, and consistent, disciplined fiscal rules that are kept to are, we believe, the right answer. There is also the growth in global interest rates, for example following quantitative easing. We are also living in an extremely uncertain world, particularly in the Persian Gulf. The third element is the premium that the UK now pays over the G7 average—a premium that has been apparent since September 2022. Again, the best remedy for that is sustained fiscal discipline, including respecting the independence of the Bank of England in particular and, of course, the Office for Budget Responsibility.

My Lords, this Question about the Government’s interest bill is a really good one: £1 in every £10 of government money is now spent paying interest. There are three elements causing this. One is the overall level of borrowing, and consistent, disciplined fiscal rules that are kept to are, we believe, the right answer. There is also the growth in global interest rates, for example following quantitative easing. We are also living in an extremely uncertain world, particularly in the Persian Gulf. The third element is the premium that the UK now pays over the G7 average—a premium that has been apparent since September 2022. Again, the best remedy for that is sustained fiscal discipline, including respecting the independence of the Bank of England in particular and, of course, the Office for Budget Responsibility.

My Lords, as most of us agreed in my noble friend Lord Bridges of Headley’s debate last week, we need to be honest about the trade-offs that we face, given the sheer scale of our national debt and the moron premium on our gilts, which the Minister mentioned. I believe that the only way to avoid a financial crisis is to reduce spending. Does the Minister agree?

My Lords, as most of us agreed in my noble friend Lord Bridges of Headley’s debate last week, we need to be honest about the trade-offs that we face, given the sheer scale of our national debt and the moron premium on our gilts, which the Minister mentioned. I believe that the only way to avoid a financial crisis is to reduce spending. Does the Minister agree?

Overall fiscal discipline is the central question. Discipline is really important. The noble Baroness mentioned the moron premium. I do not know whether all noble Lords understand what that term refers to: it was a slight by an economist describing the behaviour of the team responsible for

the September 2022 mini-Budget. To give a sense of the cost, it is £15 billion a year. I think we have learned lessons from that. When I spoke in the debate last week, speakers from across the House agreed that fiscal discipline, independent oversight and not moving the goalposts were critical. The balance of spending on tax might be something on which we disagree, but on fiscal discipline we agree entirely.

Overall fiscal discipline is the central question. Discipline is really important. The noble Baroness mentioned the moron premium. I do not know whether all noble Lords understand what that term refers to: it was a slight by an economist describing the behaviour of the team responsible for

the September 2022 mini-Budget. To give a sense of the cost, it is £15 billion a year. I think we have learned lessons from that. When I spoke in the debate last week, speakers from across the House agreed that fiscal discipline, independent oversight and not moving the goalposts were critical. The balance of spending on tax might be something on which we disagree, but on fiscal discipline we agree entirely.

My Lords, are the Government going to join the defence, security and resilience bank to enable us to borrow money at lower interest rates for defence spending?

My Lords, are the Government going to join the defence, security and resilience bank to enable us to borrow money at lower interest rates for defence spending?

Let me write to my noble friend to make sure that my reply is accurate. However, I believe that matter is under discussion.

Let me write to my noble friend to make sure that my reply is accurate. However, I believe that matter is under discussion.

My Lords, is not the real problem here our chronic dependency on borrowing? Debts have tripled over the past 20 years in spite of our fiscal rules. Has the Minister found the time to read the insightful report of the Economic Affairs Committee on our fiscal architecture—45 pages, 22 sparkling recommendations and available in all good print offices? It poses the key question: “Is our fiscal framework fit for purpose?”, to which the answer, in brief, is “No, it’s not”. How much does that concern the Minister?

My Lords, is not the real problem here our chronic dependency on borrowing? Debts have tripled over the past 20 years in spite of our fiscal rules. Has the Minister found the time to read the insightful report of the Economic Affairs Committee on our fiscal architecture—45 pages, 22 sparkling recommendations and available in all good print offices? It poses the key question: “Is our fiscal framework fit for purpose?”, to which the answer, in brief, is “No, it’s not”. How much does that concern the Minister?

I have read that document. I point out that, in 2025-26, our borrowing will be the lowest for six years and for the first time since 2004 we are projected to borrow less than the OECD average. As regards external evaluation of the fiscal rules, I will read from the IMF’s 2025 Article IV report, which said that

“the plans that have been put forward by the UK Treasury strike a good balance between providing favorable conditions for growth, and the emphasis on public investment is welcome in that regard and safeguarding fiscal sustainability”.

I have read that document. I point out that, in 2025-26, our borrowing will be the lowest for six years and for the first time since 2004 we are projected to borrow less than the OECD average. As regards external evaluation of the fiscal rules, I will read from the IMF’s 2025 Article IV report, which said that

“the plans that have been put forward by the UK Treasury strike a good balance between providing favorable conditions for growth, and the emphasis on public investment is welcome in that regard and safeguarding fiscal sustainability”.

My Lords, generating growth is the key to paying off interest and reducing the debt. The Government are doing good work on that across the economy. I hope that they will not forget public sector productivity as part of generating growth. As a Government, we spend £3.5 billion every day. Is the Minister encouraging the Treasury to focus on getting value for every one of those tax pounds?

My Lords, generating growth is the key to paying off interest and reducing the debt. The Government are doing good work on that across the economy. I hope that they will not forget public sector productivity as part of generating growth. As a Government, we spend £3.5 billion every day. Is the Minister encouraging the Treasury to focus on getting value for every one of those tax pounds?

My noble friend Lord Barber is absolutely correct on this; indeed, he has huge expertise in the area. Too often all of us, from all parties, announce inputs and do not think about outputs. On the question of public sector productivity, I am not even sure that we measure outputs correctly.

My noble friend Lord Barber is absolutely correct on this; indeed, he has huge expertise in the area. Too often all of us, from all parties, announce inputs and do not think about outputs. On the question of public sector productivity, I am not even sure that we measure outputs correctly.

My Lords, a recent report by the Institute for Public Policy Research projects that debt interest payments will increase from the current 10% of revenue to 20% by 2075. The decisions that we take today about taxation and spending should be taken with regard to our moral obligations to the generation that follows us. What assessment have the Government made of the extent to which today’s debt interest payments transfer the burden of current spending to future generations of taxpayers?

My Lords, a recent report by the Institute for Public Policy Research projects that debt interest payments will increase from the current 10% of revenue to 20% by 2075. The decisions that we take today about taxation and spending should be taken with regard to our moral obligations to the generation that follows us. What assessment have the Government made of the extent to which today’s debt interest payments transfer the burden of current spending to future generations of taxpayers?

There are numbers that can project out for 50 years and which would leave future generations with a potentially very large debt. They are, of course, extremely sensitive figures. The first thing that the Government have to do is to have the fiscal discipline that brings the debt down. As I said, last year we had the lowest borrowing for six years, and for the first time since 2004 we are projected to borrow less than the OECD average. I hope that is at least a start, and we can go on to think about where we go to 2070 as we move forward.

There are numbers that can project out for 50 years and which would leave future generations with a potentially very large debt. They are, of course, extremely sensitive figures. The first thing that the Government have to do is to have the fiscal discipline that brings the debt down. As I said, last year we had the lowest borrowing for six years, and for the first time since 2004 we are projected to borrow less than the OECD average. I hope that is at least a start, and we can go on to think about where we go to 2070 as we move forward.

My Lords—

My Lords—