Who will say ‘we can't go on like this'? We need leadership on our disastrous economic state

Telegraph

29-03-2025

Put aside the figures, forecasts and projections in this week's Spring Statement. They all confirm one thing: the United Kingdom is living beyond its means. Spending is too high, growth too low. The risk is growing that we will become overwhelmed by our debt.
The last time our country faced such high levels of debt was after World War Two. The baby boom, the peace dividend and the steady spread of free trade all boosted growth, helping us to manage and gradually reduce debt. Now these trends have been thrown into reverse.
Demographic change means a smaller workforce will have to support a growing, elderly population. Defence needs investment – as does decarbonisation, part of the green transition.
There's dependency – the large number of people whom the state supports via benefits. And then there is debt itself – the servicing of which is going to swallow up £100 billion a year for years to come.
Addressing all these Ds is made more difficult by another one: democracy. Governments need political consent to act. And action will be painful.
Last year the cross party House of Lords Economic Affairs Committee highlighted this in a report on UK debt. Being cross party, its conclusions were balanced to reflect members' deeply held political views.
One conclusion merits quoting in full: 'If we wish to maintain the level and quality of public services and benefits that we have come to expect, we face a choice: taxes will need to rise or the state will need to do less.'
The report adds: 'Addressing this will demand clarity as to the responsibilities and the role of the individual versus that of the state. Muddling through is not an option. If this choice is ducked in this Parliament, the UK risks being on a path to unsustainable debt'.
Since then, Rachel Reeves has made tough decisions – but the wrong ones: higher taxes have suffocated growth. And now she is muddling through. Although the benefits system is going to be changed, during this Parliament welfare spending is forecast to grow by £60 billion to £373 billion.
Taxes look set to rise again, hitting growth further, making it even tougher to service our debt. Labour is testing its tax and spend philosophy to destruction – and sadly the UK will be collateral damage.
So what of the alternative? The state will need to do less. This entails far more than efficiency drives in Whitehall or cutting quangos. It would mean the social contract would need to be revised and revamped, redrawing the line between the responsibilities of the state and the individual.
As things stand there appears to be no public appetite for this. So there are two ways out.
The first is that a politician truly breaks the omertà and tells the truth about the state we are in. After all, the refusal to confront the reality that the Government is living beyond its means has led to today's predicament. Only by being honest about that can we build a credible plan to address today's challenges – all those Ds.
Doing so requires courage, conviction and a plan that answers the fundamental question: what should the state do in the 21st century? By leading the debate and building a consensus around the need for change, a future government could win democratic legitimacy for the action that is required.
The second is that we continue as we are: muddling along, slowly but surely being sucked ever further into the doom loop of still higher taxes, more spending cuts, worse public services – and lower growth.
Change will come, but it will not be led by politicians, but forced on them by 'events'. Instead of having a plan to address the challenges we face in a coherent way, we will continue to tinker here, patch there.
No doubt Sir Humphrey would try to deter Jim Hacker from speaking the truth, using those killer words 'courageous, minister'. It is. But consider the alternative: to know that we cannot continue like this; to wait and watch as the red ink rises; and to hope that when people agree 'we can't go on like this', they will put their faith in you.
'Fingers crossed and hope for the best' is not a strategy. Kemi Badenoch showed her mettle with some plain speaking about net zero. She now needs to do the same on the economy.
Lord Bridges of Headley is a former Government minister; he was Chairman of the House of Lords Economic Affairs Committee between January 2022 and January 2025.