A constituent wrote to me recently, saying
‘the nation is living on borrowed time, by living on borrowed money. This must stop now, as the consequences are that governments will be unable to provide for the wellbeing of the nation, whether that’s defence, education, health services, or any of the services which a civilised society requires.’
Like this constituent, like so many, I believe the Labour government should be acting now, urgently even, to correct course.
Britain under Labour is, in reality, living way beyond its means, locked in a doom loop of high spend, high debt, higher welfare and pushing ever higher taxes. This is killing growth, killing jobs and fuelling inflation – seriously weakening our economy. This Labour government is ignoring economic reality and not acting in the country’s best interests, instead choosing to pander to its activist backbenchers, its ideological framework and, of course, the unions. Even more worrying, this expansion of state welfare support, state employment, state regulation and state intervention under this Labour government is being funded by an ever decreasing, under pressure pool of taxpayers. Last week, the Labour government even voted to give itself the power to mandate how pension funds invest people’s pensions.
My colleague is right. This is an unsustainable, unhealthy and, frankly, dangerous position for our country to put be in, especially in these turbulent and uncertain geopolitical times. The Bank of England itself noted the conflict in the Middle East came when ‘growth was below potential’ and there is ‘spare capacity’ – for example, high economic inactivity – in the economy, saying ‘In contrast to the energy price shock in 2022, this shock was occurring at a point when growth was below potential and the economy was operating with a margin of spare capacity’.
Writing about the UK’s national debt, Lord Bridges of Headley, Chair of the House of Lords Economic Affairs Committee, said in September 2024, at the start of this Labour Government’s time in office:
“This report highlights a grim reality: our national debt risks developing on an unsustainable path…If we are to tackle the serious risks we face, muddling through is not an option. To put debt back on a gradual, downward path, tough decisions must be taken in this Parliament. And we need a revised debt rule that has teeth and holds Ministers to account.”
It’s time for tough decisions to tackle our national debt - Committees - UK Parliament
Following the disastrous Labour Autumn Budget 2025, the Office for Budget Responsibility has now forecast that public sector net debt (PSND (the headline measure of the UK’s national debt)) will increase by an average of £121 billion a year each year and reach 97 per cent of GDP by 2028-29. Despite this, under this Labour Government's plans, PSNB (borrowing) will now reach £87 billion a year.
Under the previous Conservative Government's spending plans, public sector net borrowing (PSNB) was forecast to fall to £39.4 billion or 1.2 per cent of GDP by 2028-29, the lowest level of borrowing as a share of GDP since 2001-02.
The Conservative Shadow Chancellor, the Rt Hon Mel Stride MP has, rightly, strongly and consistently criticised Labour’s handling of the national debt as ‘reckless’ since the election, saying an eye-watering sum, over £100bn a year, is wasted on ‘debt interest, nearly double the defence budget...'
The UK’s Government debt is managed by the UK Debt Management Office (DMO), an arms-length body, whose policy and financial framework is set by the Chancellor. Its remit is to carry out the Government's debt management policy of minimising financing costs over the long term, taking account of risk, and to minimise the cost of offsetting the Government's net cash flows over time, while operating in a risk appetite approved by Ministers in both cases.
Borrowing has now reached its highest level since 2010, outside the pandemic, meaning our annual debt interest payments are now forecast to hit £140 billion. Rachel Reeves promised not to ‘fiddle the figures’ but at her first Budget, she announced a new fiscal rule meaning borrowing is expected to reach 97.3 per cent of GDP by 2030-31, the highest level seen outside the pandemic since 2010, with annual debt interest payments forecast to be £137.1 billion in 2030-31.
Borrowing costs have surged, with long-term bond yields climbing to their highest levels since 2008. Yields on 10-year gilts rose to 5.21 per cent – their highest level since 2008 – after the Bank of England warned that inflation could reach 3.5 per cent this year.
Working-age welfare spending is rising to £210 billion in 2030-31. Having scrapped the two-child benefit cap and abandoned welfare reform, working-age welfare spending is projected to reach £210 billion by 2030–31, with sickness and disability benefits alone expected to total £100 billion, according to the OBR.
Mims Davies MP Statement on Welfare Reform | Mims Davies
At the same time, the tax burden is set to reach a historic high of 38.5 per cent of GDP, eroding hardworking people’s payslips and punishing businesses; the 16-24 youth unemployment rate is 15.8 per cent, up 2.4 percentage points on Labour’s watch; and the unemployment rate is 4.9 per cent, with the OBR having raised the unemployment rate forecast for 2026, 2027 and 2028 in March.
Having inherited an inflation rate from us Conservatives which was bang on the 2.0 per cent target, new figures show it rose by 3.3 per cent in the 12 months to March 2026, meaning inflation has exceeded the Bank of England’s target every month since Labour’s first Budget.
My constituent then asked what my colleagues and I in the Conservative Party were doing to address this problem.
The current Labour Government has a big majority in the House of Commons. So, while we have fought hard, and will continue to fight, to stop the reckless, costly and destructive policies being pushed by Labour, such as the Chagos Bill, the Net Zero policies, levies and subsidies, Digital ID, the refusal to drill the North Sea, crushing business rates rises, immigration and asylum choices and the Family Farm tax … their numbers carry weight. Even so, we have, with the support of the public, secured 18 Labour government policy U turns.
Since the July 2024 Election, we Conservatives have, rightly, put huge amounts of work into diagnosing the problems the country faces, coming up with solutions and using the lesson and time in opposition given to us by the voters wisely. The diagnosis is clear: Britain is being held back by a broken model; one that says that government always knows best; that high immigration is always good for the economy; that puts ideological ambition above economic reality.
At the moment, there are six and a half million working age adults claiming benefits instead of working; one in four in this country self-report as disabled. We cannot keep expecting people to get up and go to work, and pay more and more in taxes, to subsidise millions of others not to work so we will ensure that British benefits are for British citizens and restrict benefits to those with more severe mental health conditions. We will return the welfare system to its founding principle - support only goes to those who really need it.
Conservatives believe that work, in itself, is vital, a force for good and for our wellbeing - that as people work, as they strive, as they provide for themselves and their families, they should not pay more and more of their money in taxes, to a state that provides less and less. So, we need to fix the state. The civil service is a third larger than it was in 2016 and we are going to cut it back to where it was. We will remove the inefficient and ideological spending in our public services, and reverse decisions that stifle, disincentivise and actively destroy farms, businesses, industries and individual ambitions.
The renewed Conservative Plan is to deliver a clear package of savings worth £47 billion to the state over the next Parliament. We will deliver these savings by cutting welfare spending (£23 billion), reducing the size of the Civil Service (£8 billion), cutting spending on social housing for foreign nationals (£3.9 billion), implementing our BORDERS plan & reducing the cost of the asylum system (£3.5 billion), abolishing costly and ineffective Net Zero schemes and subsidies (£1.6 billion) and cutting back on overseas aid (£7 billion).
Crucially, we will introduce our Golden Economic Rule: for every £1 saved in public spending, at least half will go towards reducing the deficit. The remainder will go towards affordable tax cuts and other pro-growth measures.
To reduce the groaning tax burden on working people, the next Conservative Government will abolish Stamp Duty on primary family homes, scrapping business rates for thousands of high street businesses and introduce a £5,000 First Job Bonus, a tax cut paid into a saving account. We will repeal the Family Farm Tax, safeguarding our food security. We will repeal the Family Business Tax to support the makers and risk-takers who drive economic growth. We will repeal the Education Tax, supporting parents who choose to invest in their children’s education. And we will repeal the Energy Profits Levy, backing our energy industry to create jobs and growth. We also, in my opinion, need to tackle the high cost of housing.
We stand ready and willing to make, and take, the difficult and necessary decisions that are in the best interests of our country, our people and our way of life. We cannot go on living on borrowed time, on borrowed money. It’s time to, once again, live within our means and be able to save - to be ready for the inevitable rainy days ahead.
