Budget Resolutions and Economic Situation
(1 day, 8 hours ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the Leader of the official Opposition.
Mrs Kemi Badenoch (North West Essex) (Con)
Thank you, Madam Deputy Speaker. I would have thanked the Chancellor for advance sight of his statement, but it was so redacted it was like reading it in the dark. The only numbers were the page numbers, quite frankly.
This is Labour’s third Budget in office—[Interruption.]
Madam Deputy Speaker
Order. I apologise for interrupting the Leader of the official Opposition, but if Members are leaving the Chamber, they should leave very quietly and very quickly.
Mrs Badenoch
This is Labour’s third Budget in office, this time with a new Chancellor. I welcome the right hon. Gentleman to his place. I believe there is a term in rugby called a hospital pass, which sums up the inheritance he received from his predecessor, the right hon. Member for Leeds West and Pudsey (Rachel Reeves). Last year, she gave us the Budget for “Benefits Street”; I said that it would be her last Budget, and I was right. The Chancellor may want to blame external events, but Labour’s last two Budgets weakened our economy before any wars. He has got a big job to do cleaning up her mess, and this Budget fails to do it.
The Chancellor is giving this Budget at a time of great economic danger. We are spending more on debt interest than on the Army and schools combined. The rate of interest we pay on our debts is higher than that in Greece, Latvia, Slovakia and even the Socialist Republic of Vietnam. Next year, under Labour, the tax burden will be the highest in our country’s history, and our benefits bill is going up by tens of billions of pounds because this Government have put welfare first. We are overspent, overborrowed, overtaxed and drowning in an out-of-control welfare system, and this is the Chancellor’s answer? It is simply not enough—not good enough, not strong enough, and not bold enough.
Last week, the Government published their resilience plan. I am afraid that three days of baked beans and a wind-up radio are not going to save us. Labour’s Britain has no resilience. There is no household resilience, because families are struggling to make ends meet. There is no fiscal resilience, because we are borrowing just to pay the interest on our debt. There is no economic resilience, because businesses have been taxed so much that they are closing down and shedding jobs, and there is no national resilience, because we are not ready to meet the security threats of today—certainly not after that speech. We all know why the Chancellor has delayed until tomorrow difficult decisions that he should have taken today. It is because the Prime Minister wants to keep the option of an early general election open, putting his party’s interests before the country’s.
There are, however, some things in this Budget that I welcome. Some of the Chancellor’s colleagues—the Deputy Prime Minister, the Defence Secretary and the Energy Secretary—were calling on him to increase capital gains tax. I thank him for ignoring them—they were wrong. Tens of thousands of wealth creators have already fled Labour’s Britain, and if he had listened to his colleagues’ bonkers ideas, many more would be heading for the departure lounge. I am also glad that he has broken Labour’s manifesto pledge on the minimum wage for young people; that pledge was wrong, and breaking it is the right thing to do to help young people get jobs.
I welcome the Chancellor’s U-turn on ISAs. He is reversing his predecessor’s raid on ISAs—thank you—but his new tax on savers will penalise the prudent and all those people who have done the right thing. I am glad that he has agreed with our campaign on the previous Chancellor’s fuel duty rise. Motorists will be pleased—that rise would have inflicted real pain, especially while petrol prices are so high—but those prices will go up in July. Why? We froze fuel duty for 14 years; Labour can do better than that.
I know that Labour MPs probably did not like those bits of the Budget, but can I take a moment to say to the right hon. Gentleman that I have been appalled to see the brutal briefing about him from his own side in this week’s papers? One Labour MP called him “slow”. “A dud.”
“Visibly out of his depth”,
said another. [Interruption.] We have all read it. They are not my words—they are Labour MPs’ words. One of them said it, and another came in after, but I can assure the Chancellor that he will not be hearing that kind of language from Conservative MPs today. With friends like that, who needs enemies?
Most people in the country listening to the right hon. Gentleman’s Budget will be thinking to themselves, “Is that it? Really, is that it?” The Prime Minister came in promising to reverse “40 years of neoliberalism”; instead, we got 4p off gherkins. Unfortunately, just like every other Labour Budget, the headline story is the same: more borrowing, more tax rises and—surprise, surprise—more money on benefits. This Budget does not come close to meeting the moment.
Last week, Labour MPs were asking for a Budget that did no harm. That shows how little ambition they have for this country. Let me tell them: the harm has already been done. Not facing up to the tough decisions we need to take is itself an act of immense harm. Many Labour MPs do not understand that our national debt is now more than £100,000 for every household in this country. They do not understand why it is a problem that a quarter of all working-age adults are now claiming some form of benefits. They do not understand that if Russia launches an attack on NATO in the next three years, as the Government’s own intelligence suggests, we will be at war without the means to properly defend ourselves. [Interruption.]
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. Ms Dawn Butler, Adam Jogee, and Mr Vince—what would baby Patrick say? Behave better than your child.
Mrs Badenoch
Look at them, Madam Deputy Speaker. If war comes, do we want this lot running the country—people so unserious that they do not understand that you cannot have social security without national security? If we cannot defend our country, there will be nothing left to defend. To be honest, I do not blame the Housing Secretary for stocking up on sauvignon blanc. If Russia attacks with these guys in charge, we will all need a drink.
Mrs Badenoch
The Defence Secretary is chuntering; he could not even commit to 3% on TV the other day. He is still not doing his job. The fact is that there are huge problems coming down the road, and this Budget is simply trying to get through today. It is a Budget for getting by, not for getting on.
I was cautiously optimistic when the right hon. Gentleman was appointed Chancellor. This is a man who once seemed to grasp the danger that Britain is now in. I thought that he was putting country before party when he quit as Defence Secretary—he will remember that I said he was a man of principle. Let me remind him what he wrote in that resignation letter in June. He said:
“I am certain that a…date for 3% of GDP on defence in 2030 is what Britain must set.”
[Interruption.] I have not finished—Labour MPs will have to wait for the punchline. They are so slow. He went on to say that if that did not happen, he would be
“forced to make decisions that would…increase the risk to personnel on operations, and could make the country less safe.”
Today is the day he should have set that date. He is the man who has failed to set a plan for 3%. [Interruption.] Today is the day that we should have got the plan.
Madam Deputy Speaker
Order. I am not sure which side is the most noisy. The Defence Secretary will have to have a lie down in a dark room if he carries on like that.
Mrs Badenoch
The Chancellor should have set out a plan for 3% today. Now he is the man who is increasing risk to personnel on operations. He is the man who is making our country less safe. He has failed his own test. This is on him, and no one will ever forget. If he had any decency, he would resign again today. Yes, the Chancellor has funded the defence investment plan, and that is welcome, and yes, there is more support for Ukraine, and that is welcome, but he said himself in June that that was not enough. He has given himself a bit of breathing space until next year. Instead what we have is a plan to have a plan. I bet Putin is really scared now.
We know that finding the money is difficult, but it can be done. On the Opposition Benches, we have found the savings to get to 3%, because we know Britain is facing very serious threats. The defence funding that the Government have announced today relies on more borrowing. Let me explain why that will only make us weaker. The OBR confirmed today that Britain’s national debt is forecast to increase again. We are borrowing just to pay the interest on that debt. The credit card has been maxed out and the Chancellor is taking out new credit cards just to pay the interest on the old ones. The three Labour Budgets will have added more than £260 billion to the national debt. Our great grandchildren will be paying for Labour’s total lack of self-restraint.
Meanwhile, the Prime Minister is fantasising about rejoining the EU. There is just one problem: under Labour, Britain is now borrowing so much that we would not even qualify for EU entry. The Chancellor clings to the IMF’s praise of the Government’s deficit reduction plans, but the truth is that the IMF has to take at face value the idea that Labour will cut public spending massively just before the next election. Really? Are these MPs signed up to the cuts in those plans? These are the same MPs who voted down the most modest welfare reforms in the history of this House. They are never going to cut spending. That is why this month, the IFS described the Government’s plans as “a work of fiction”.
I can tell the House who else is not fooled by Labour’s fantasy figures: the bond markets. Britain is now paying more to borrow than at any point in the past 30 years. Those borrowing costs are hurting people today. Businesses are struggling to afford loans because of rising interest rates. Five-year mortgage rates are now above 6%. Rates are far higher now than they ever were under us. We have the utter cheek of the Chancellor and Labour MPs raising the mini-Budget when Government borrowing rates are far higher now. They are higher than under any Conservative Prime Minister. These are their interest rates; these are their borrowing costs; and this is their mess—they need to own it. The Chancellor knows that next week interest rates are expected to rise again. Only the Labour party would think that the answer is to spend more money. [Interruption.] I know the Education Secretary cannot count, so she thinks this is all fantastic. Come on, have you got something more to add? Can you add?
Madam Deputy Speaker
Order. We have to showcase the best of ourselves. Our constituents are watching. [Interruption.] I really do not need any help. Ms Emily Darlington, you are normally so polite and so well behaved, but today is not a great day.
Mrs Badenoch
They love to dish it out, Madam Deputy Speaker, but they cannot take it. [Interruption.] What was that from the Education Secretary? I am sorry, but I cannot hear her, because the rest of the class are making too much noise.
Inflation is eating away at our standard of living. Labour’s friends in the Joseph Rowntree Foundation have said that this could be the worst Parliament on record for living standards, but Labour has looked after its people. There have been plenty of pay rises for the unions. Benefits will go up. [Interruption.] It is true, there have been plenty of pay rises for Labour’s friends in the unions. Benefits will go up by inflation in April, but private sector wages this year are below inflation. People in the private sector are getting poorer. They can all feel it. Those on benefits are getting an increase, while those going out to work will not. That is not fair.
The problem is that Labour is addicted to spending other people’s money and addicted to welfare. The welfare Secretary said it himself. Talking about Labour MPs, he said:
“Every meeting I have is: ‘Who can we tax in order to pay benefits to others?’”
Since the last Budget just 11 months ago, the equivalent of the entire city of York has signed on to disability benefits. And why would they not, when sickness benefits pay more than the minimum wage? Jobs have been destroyed by Labour, and this Government have made it easier than ever to claim. It is honestly like their policies are designed to get people off work and on welfare. Just because it is called universal credit does not mean that everyone in the universe should be on benefits.
The issue is not just about cutting the benefits bill. This welfare burden is deeply unfair to those who are working hard and making ends meet—those people making tough decisions about whether they can move home or afford to have children. How do Members think they feel when they hear that working-age welfare is now costing every taxpayer £4,000 a year?
Cutting welfare is not just about saving money. A million young people in this country wake up with nothing to do and nowhere to go. Unemployment among 20 to 24-year-olds is now higher in London than in Bulgaria, the second-poorest country in the EU. Labour is creating a lost generation, isolated and powerless over their futures.
Britain is about to collapse under the weight of welfare. We have to start showing people some tough love. Deep down, the Chancellor knows that spending more money is not the answer. He talks about giving people breathing space, but the Government are the ones choking the economy. We have seen £70 billion of new taxes in just two years, and they have put them up again today. He said he would not be putting taxes on working people. That is what the last Chancellor said, too, but he has, because the Government are taxing everything that they can get their hands on. They have taxed jobs, pensions and cars. They have taxed the rental market today. They have taxed savings, investments and homes. He asked me whether I support the action that they are taking today. No, I do not support the action that they are taking today.
The Chancellor also said that this is a Budget for business that will unleash enterprise. That must be why the entrepreneurship adviser quit this week. There is nothing for business here. He wants to charge them more for the union learning fund, was it? Business does not want these random new schemes. Let me tell him: business confidence is negative not just this quarter, and not just the last quarter, but for seven quarters in a row. That has never happened before. In case Labour MPs do not understand what that means, the last time business confidence was positive was when we were in charge.
The Chancellor says that he is helping with the cost of doing business. Businesses need cheaper energy, flexible labour markets and lower taxes. They are getting none of those. Nearly half of businesses say that they have cut employment because of Labour’s jobs tax. There are now fewer vacancies in the economy than at any point in the last 12 years, outside the pandemic. Graduate vacancies are down by almost 50% this year. They were the worst on record last year, and under Labour they are again even worse—the worst on record this year. I was hoping that the Chancellor would do something on plan 2 student loans today, but he has not even done that. When was the last time any of them spoke to a graduate looking for a job? Parents are watching their children receive rejection after rejection. Companies report 140 applicants chasing every job. Unemployment has risen by a quarter of a million people since Labour came in: a quarter of a million people, under this lot.
So let me tell them some home truths. They have made wages expensive with their jobs tax. They have made energy expensive with their net zero policies. They have made capital expensive by increasing the cost of borrowing. What happens when wages, energy and capital are expensive? Nothing gets built. That is why the economy is grinding to a halt. Labour said that it was going to build 1.5 million new homes. I remember when the Housing Secretary first started, and I told her that she had been stitched up. Do you know what she is saying now, Madam Deputy Speaker? She says that now there is a “slim chance” that Labour will build 1.5 million new homes. They are not going to build them. They are not even going to build as many as we did, despite their lofty ambitions. They promised to secure the future of Britain’s steel industry. Now taxpayers are spending £1.3 million a day propping up British Steel alone. They promised to create 650,000 clean energy jobs. Where are they? Nothing has been created except unemployment.
Let me tell you, Madam Deputy Speaker, what has actually happened since last year’s Budget for “Benefits Street”. Inflation—[Hon. Members: “Up!”] Government spending—[Hon. Members: “Up!”] They can join in now on the Labour side, because they know the words—we heard them. Debt interest—[Hon. Members: “Up!”] Mortgage rates—[Hon. Members: “Up!”] Benefits claims—[Hon. Members: “Up!”] Unemployment—[Hon. Members: “Up!”] Welfare spending—[Hon. Members: “Up!”]
The report card is not looking good. They are making the same mistake with banking that they made with oil and gas: tax one of Britain’s flagship industries until it packs up and leaves. The result? The country gets less money in tax. [Interruption.]
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. Mr Gemmell, yowling for so long will be very bad for your throat, so simmer down.
Mrs Badenoch
I see that the Minister for Pensions is leaving. I guess he could not handle the truth.
Everything in our economy is being made more expensive by Labour’s taxes. Next year, under Labour, Britain will have the highest tax burden in our country’s history—higher than in the 1970s, higher than in the second world war, higher than in the Napoleonic wars. [Interruption.] She asks, “Whose fault is that?” It is your fault. She is asleep at the back of the class. The Education Secretary might want to take a look at that student.
What have we learned from the Office for Budget Responsibility today? Growth next year: downgraded. Inflation: up every year until 2030. Real household disposable income: lower every year. We have learned that the Chancellor’s debt interest bill will be £14 billion higher than expected, and the debt will be higher in every single year compared to the previous plan. How is this giving us breathing space?
There is a better way that would actually deliver for the people of this country. There is a logical order to creating growth in an economy. You have to create value, prosperity and wealth first, before you distribute it. That is how it works. Labour is only interested in the distribution; it has no plan to create any value at all. We on the Conservative side of the House want to see Britain richer, more prosperous and thriving—not just a little bit of breathing space. That is why Conservatives are proposing tough love. We will cut spending by £70 billion, including £36 billion from welfare—cuts that are fair to taxpayers, and fair to those who really need support. We would use half of that money to cut the deficit, so that Britain does not go bankrupt and borrowing rates start to come down. That is how we get cheaper mortgages. And we will fund our defence properly, because keeping our country safe should be the first priority of any Government.
Getting the public finances under control and living within our means will allow us to cut taxes, because that is what really gives people breathing space. Scrapping the carbon tax to bring down energy bills, scrapping stamp duty, abolishing inheritance tax on family homes—that is what people want. So let us cut spending, cut the deficit, fund defence, and cut people’s taxes. That is the Budget that the Chancellor should have delivered today. That is the Budget that Conservatives would have delivered. And that is going to be the choice at the next election.
Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
The right hon. Member for North West Essex (Mrs Badenoch) needs to have a tough look at the reputation of her Government. She talks about welfare and she talks about defence, but it was her Government who crashed the economy. Under her Government, welfare spending rose by 0.7% of GDP in the last Parliament alone, and in the last year of the Government in which she served it rose by £33 billion. She knows—we all know—that reform is necessary, and reform is coming, because under this Labour Government we are reforming the social security safety net and ending the scandal of young people on personal independence payments, who, in droves, are being put on a benefit that they are less likely to come off than someone over the age of 55.
As the Prime Minister said earlier, Labour’s approach is a “names, not numbers” approach. There is a lot of thought going in, and I pay tribute to Alan Milburn for his thinking about how to reform the system as a whole. It is easy to talk about numbers and top-slicing, but that takes no account of the human beings at the heart of the benefits system.
Graham Stuart (Beverley and Holderness) (Con)
The hon. Lady is making a typically powerful speech, but, in my 21 years in the House, I have normally found that the person who holds her position gives a somewhat less partisan critique of the Budget, recognising that the primary role of all of us as Back Benchers is to hold the Executive—the Government of the day—to account, rather than just playing to our party political base.
Dame Meg Hillier
I look to the reputation of my predecessor in this role, who took her job very seriously but would still make a point. It would be very difficult for me to stand up and, from the Government Back Benches, not react to those in the Conservative party who crashed the economy in 2022 and left a lot of the mess that we are now dealing with. I am passionate about these issues because I spend a long time looking at public spending and at the waste of the previous Government, as does the Public Accounts Committee, quite rightly. It should challenge this Government on any waste of taxpayer pounds, because taxpayers work hard for their money and they need to be sure that someone is watching the Government to make sure that they are spending it as well as they can. We know that that is not always a simple task.
I look to welfare reform. Yesterday, I was with the Secretary of State for Work and Pensions in my constituency of Hackney South and Shoreditch. We met with Scope, which is doing amazing work with disabled people. Some 72% of the recent cohort supported into work were still in work 26 weeks later—people who had been written off by the system. If we make sure that it is done properly through some of the devolution measures that the Government propose, we can make sure that the “names not numbers” approach is replicated across the country, where there are already good examples.
I welcome the Chancellor’s decision to fund the defence investment plan—again, I looked at this issue for many years as Chair of the Public Accounts Committee. It is right that we stand with Ukraine—a cross-party position—and it is right that we spend the right money on defence. Unfortunately, the last Government reduced the money spent on defence to a ridiculously low level under austerity, leaving us exposed to the challenges we face in the world. I hope that we will have cross-party consensus that we need to increase defence spending and back the Chancellor in that mission.
Chris Coghlan (Dorking and Horley) (LD)
I was very pleased to see the Chancellor announce £5 billion more in the Budget for defence research and development, which—[Interruption.]
Madam Deputy Speaker
Order. Whose phone is going off? Please fix your phone.
Chris Coghlan
Does the hon. Member agree that the announcement of £5 billion more in the Budget for defence R&D through the British Business Bank could have profoundly positive implications for our national security and growth, as I have urged, if the Government scale it further from here?
Dame Meg Hillier
I count the hon. Gentleman as a friend, because he serves on the Treasury Committee and is indefatigable in his attempts to ensure that the Government are listening about research and development in defence and across wider sectors. It sounds as though, between us, the Government have heard that message.
Before I move on to the main thrust of the Budget, I want to address the Leader of the Opposition’s comment about plan 2 student loans. The Treasury Committee looked at this issue, which is having a very big impact on that generation of young graduates—the engine room of Britain, and the people who will be funding and growing our economy in the years to come, and making sure that the ageing population is supported. We need to do everything we can, and intergenerational fairness is a big strand of the Treasury Committee’s concerns, but let us be clear: who set up plan 2 student loans? It was the previous Government.
I talk a lot about slow politics. Governments should make decisions that will stand the test of time in 10 or 20 years, as well as dealing with the challenges of today and the catastrophes that might occur, either globally or locally, next week. Plan 2 student loans were designed by the Conservative Government and left as a ticking time bomb for this generation to pick up. Although I am saddened that we have not seen a change to the threshold at which repayments are made, I hope that the Chancellor will consider that as part of his longer-term plans, to make sure that this generation has one fewer burden. I hope that we will see some talk about that in the weeks to come.
Before the Chancellor rose to his feet it seems that some bank shares increased in value. I am concerned about that and, with the permission of the Treasury Committee, I will write to the Financial Conduct Authority to see if there is any evidence of leaked market-sensitive information that may have led to that movement, because that would be a very serious issue. On that point, I congratulate my right hon. Friend the Chancellor on his very strong clampdown on speculation and leaks ahead of this Budget. He knows, as we all do, that stability is so important. He cannot completely halt wild speculation, but clamping down on leaks from the Treasury and the wider system is very important.
Despite the headwinds, the debt forecast has only slightly worsened. We have seen a Budget that pushes stability, and I welcome some changes in particular. The Treasury Committee looked at cash ISAs and the changes that were proposed in last year’s Budget, and as we said then, it was not the right approach. Building societies use cash ISAs to lend to home purchasers, and they were going to be particularly badly hit. Most people have much less than £20,000 in a cash ISA, and many never get anywhere near £12,000. The average is between £3,000 and £7,000, depending on how we cut the figures, so it is right that the Chancellor has made changes. I look forward to seeing the starter ISA for investors, and the Committee will examine the changes in detail, but the previous proposal had overcomplicated the system. The ISA is a trusted brand, and the Chancellor has taken a good step.
On the subject of building societies and mutuals, in a hidden corner of the Red Book is the announcement that my hon. Friend the Member for Peterborough (Andrew Pakes) has been appointed as the Government’s co-ops and mutuals champion. I commend him for achieving that position following his many years of hard work in this area. As the chair of the Co-operative group of MPs in Parliament, I am delighted that the Government are further leaning into the progress they have already made in supporting co-ops and mutuals. That is important for getting growth and the involvement of people in every community up and down the country, because this is a way of people owning and having a say in the shaping of their services and their outcomes, whether it is a credit union, a food co-op or a childcare co-op—the list goes on. There are many opportunities.
I welcome the reform of lifetime ISAs—again, something that the Treasury Committee produced a report on. The removal of the penalty payment seems like the only just approach to that. We have a challenge when products such as ISAs are created but do not work as well as they could, so I welcome the Chancellor looking at that.
I am delighted to see some changes in housing. In my constituency, house prices are rocketing through the roof, rents are high and thousands of people are living in temporary accommodation, and those in housing are often severely overcrowded. Every weekend I visit people who are living with three children in a one-bedroom flat—a very typical picture—with no freedom or agency to move, because the cost of housing is too high, the cost of rent is too high, and we do not have enough social housing. Indeed, it is cheaper to buy back from a leaseholder who is selling their property than it is to build new houses, so the VAT reduction for housing associations is a welcome first step.
Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)
I am a Member who represents a part of the United Kingdom where government is devolved. Despite the good intentions of this Government, the money that goes north sometimes goes into the tube and what comes out the other end is sometimes rather different, particularly on housing. Is that something the Treasury Committee could look at one day, to see whether what is delivered was the intention of His Majesty’s Government?
Dame Meg Hillier
The hon. Gentleman anticipates a further area of my speech. I believe very firmly in devolution, but there are some caveats. That is something that we may consider. Of course, I chair the Treasury Committee, but I do not make all the decisions for the Committee—it is not an autocracy, unless its members choose to make it that way—so we will discuss that issue.
On housing, there are areas that are too detailed to go into the Budget, but I hope there is some discussion in the forthcoming spending review about system-built housing. In Murray Grove in Hoxton, in my constituency, some millennium products built by Peabody still stand the test of time. They were system-built offsite, which reduces the cost of construction and makes it faster, but we do not have enough throughput in the factories that do this for them to survive and thrive. That is a potential opportunity for us in the UK.
The Chancellor has a huge challenge. We are facing very difficult fiscal circumstances, but the wider picture is that we are seeing some green shoots of hope. According to early estimates, the economy grew by 1.8% year on year in the three months to August—the fastest pace since the country was rebounding from the pandemic in 2022. GDP has grown at an annualised pace of 2.7% so far in 2026, with early estimates indicating that growth has continued into the third quarter, and productivity has grown by more than 1% per worker in every quarter since the end of 2024. There is a degree of hope that if we keep stability and keep focused, we will meet some of the challenges.
Tim Farron (Westmorland and Lonsdale) (LD)
The hon. Member is making an excellent speech, as always. Given that there is some underlying positivity, is she concerned that although there is ongoing support for people with their energy bills, there is nothing for the tens of thousands of people in Cumbria, and the hundreds of thousands across the country, who are off grid and who rely on heating oil? Does she think that the Chancellor had room for a formal cap on energy bills for people who are off grid, whose bills have gone up threefold in the last year?
Dame Meg Hillier
The hon. Gentleman is a good campaigner for his constituency and raises these issues repeatedly, but there has been some support from the Government on that issue. The Treasury Committee will be poring through the detail of what the Chancellor has announced today, so he may take my plaudits today, but we will go through that detail to see how much this delivers cumulatively for a household, which I know is the mission of the Chancellor and the Prime Minister. On that point, we will wait for the detail, but there is a limited pot of money, and it must be targeted at those who need it most, notwithstanding the challenges the hon. Gentleman’s constituency faces. There are choices to be made.
Chris Vince (Harlow) (Lab/Co-op)
The House will be determined to know how this Budget is going to benefit Harlow. Does my hon. Friend agree that the £100 direct payment into the bank accounts of Harlow residents will make a huge difference this winter? By the way, it will help over 39,000 households in council tax bands A to D.
Madam Deputy Speaker
I am surprised that the hon. Member failed to get the Chancellor to use the word “Harlow” multiple times during the Budget statement.
Dame Meg Hillier
I thank my hon. Friend the Member for Harlow (Chris Vince)—I say that just to up his constituency’s mention count. Around 48,000 households in my constituency households will benefit from the council tax rebate for those in bands A to D. I am assuming the Government took this approach because it is a simple way of getting the money into people’s pockets, but how that works will need a lot of unpicking. It is an instructive figure, in fact, because people think that London’s streets are paved with gold, but one in two children in my constituency are living in poverty, it is among the top three for the pensioners deprivation index, and it has a very high level of deprivation overall, while there are also challenges with the cost of living.
Richard Tice (Boston and Skegness) (Reform)
The hon. Lady may not have read the Budget Red Book, but GDP growth is forecast to reduce from 1.6% back in March to just 1% in 2027, and indeed GDP per capita is also forecast to reduce from 1.3% to 0.9%, so the numbers in the forecasts are actually getting worse, not better.
Dame Meg Hillier
As the hon. Gentleman rightly highlights, I have not had time in the moments since the Chancellor sat down to go through every graph in the Red Book or, indeed, the OBR’s forecast. Obviously, the Chancellor laid out the figures very clearly at the Dispatch Box, and we will be raising these issues in the Committee. It is easy to pick one measure that has gone down, but sometimes the figure will go up in a later year, and despite the headwinds, there is some room for optimism.
Let me let me be very clear—I think the Chancellor would expect me to say nothing less, as Chair of not only the Treasury Committee, but the Liaison Committee—that Chairs of Select Committees see our role as robust scrutineers of the work of the Government of the day, whichever party is in power and whichever party we are from, as a core part of what we do. There will be nowhere for the Chancellor to hide when he comes before us on 11 November, but I am sure he is robust enough to be prepared and to take on all comers.
Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)
The trend started by my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt) when he was Chancellor of providing £3.5 billion to spend on AI and digital in order to make all Departments, but particularly the national health service, more efficient, was sadly lacking from this Budget. As Chair of the Treasury Committee, could she suggest how Government spending on digital and AI might improve Government productivity?
Dame Meg Hillier
The hon. Gentleman raises quite a detailed point, but we know that AI can add about 0.2% to productivity in the economy overall. I do not have direct figures for the NHS, but my sister Committee—the Health and Social Care Committee, ably led by the hon. Member for Oxford West and Abingdon (Layla Moran)—will no doubt be looking at these issues. As he knows, the Committee corridor is examining the power of AI, covering both the costs and the opportunities, and I am sure the House will continue to discuss the opportunity to improve productivity in various guises and to scrutinise the Government very robustly on that.
What is interesting about the Budget is that some of its measures are for today, but it is clearly rooted in longer-term reforms, which I welcome, because we need to be thinking about the long term. One of those measures is devolution, and I am a firm believer that power should be devolved to the most appropriate level. In fact, when I was a baby councillor with the now chief of staff to the Prime Minister back in 1994, he and I were both responsible for devolving powers to areas within pram-pushing distance. I should say for younger Members that this was before the days of the internet, which perhaps dates me too much. Giving people a say over spending in their own local area can be a really powerful way of engaging people with the decisions that are made—not seeing politics as something distant and remote, but very much part of their communities.
Dame Meg Hillier
I have given way several times, and a lot of Members are waiting to speak.
Whitehall is often just too distant—not just physically and geographically, but in attitude—from communities and towns up and down the country. I always say that we should not make decisions about people without people. However good our civil service is—and I pay great tribute to the many civil servants I have quizzed over the years about public spending—there will still be a challenge if we do not have the right people around the table, and that may be because they just do not know what is going on in a geographical area.
Our mayors have a very important role, but if money is to be devolved to them, there needs to be very strong local accountability. Of course, the last Government abolished the Audit Commission, which I think is a great sadness, and we have seen huge challenges in local government audit. The Mayor of London has the strongest accountability, with 25 London Assembly members able to challenge him openly and regularly about his spending, and powers to delve into the detail, but mayors in other areas do not have that.
I would say to the Government and the mayors that there is very good reason to have very strong accountability. First, a mayor will want to prove to their constituents that they have spent money effectively, and to be transparent about that, so that when they come up for re-election, people know that their mayors are not frittering away their hard-earned tax pounds and that they are delivering the things they want. Secondly, if a mayor spends money well in their area, they might prove to the Government that they can get more bang for the taxpayer pound than Whitehall achieves by doing it from a distance. Dare I say it, but there may even be times when the Government of the day do not give quite enough money to deliver what was promised, and mayors need the figures to prove that they have been short-changed. In all those circumstances, we need a stronger accountability process, and I hope that we do not go so fast in the drive towards devolution that we do not have those checks and balances in place.
I am very pleased about the moves on cheaper energy and clean power. The Chancellor mentioned GB Grid, which is a start, but about 400 projects are needed to upgrade the grid, and I believe that GB Grid covers 10 or 11 of them, so there is still a huge challenge to get the grid up to speed to meet the target of net zero by 2050. I think the pledge to buy and build only when new technologies will lower bills and be connected to the grid may be an important driver in that area. We may want to quiz the Chancellor about that—as, I am sure, our sister Committee, the Energy Security and Net Zero Committee, will want to do with the relevant Ministers in due course. I welcome the energy cost reductions for businesses, because I think all Members across the Chamber have heard that businesses have been really struggling in that regard. I have also been pushing for the closure of the loophole on VAT for online marketplace sales, so I am pleased to see that.
On the face of it, this Budget looks as though it has done a good job, but the devil is of course in the detail, so I again put the Chancellor on warning that we will be looking through that detail over the next few weeks. We have the Office for Budget Responsibility before the Treasury Committee next week, alongside other economists, and we will have the Chancellor himself on 11 November, when we will have had a chance to go through all the figures in detail and can challenge him on what he has promised today and the promises for the future.
Overall, I think we must see cross-party support for the approach to support households in these challenging international times, when a lot of the things that buffet the Government are very difficult for them to control. We must support small businesses. Quite rightly, we all are lobbied a lot by our small businesses. People invest their energy in their businesses, and they need support. We need a long-term vision. Part of our challenge as scrutineers of the Government on the Committee corridor is to hold them to account for their 10-year plan—which we have yet to see—for reshaping the state and devolution. I again warn all Ministers sitting on the Front Bench that the Budget may feel good after the statement today, but we will be challenging them in detail about the money they are spending, whichever Committee they appear before.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the leader of the Liberal Democrats.
Ed Davey (Kingston and Surbiton) (LD)
It is always a pleasure to follow the Chair of the Treasury Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier). I am glad she committed to looking at the devil in the detail of this Budget, because when one looks at the fine print there are quite a few things for her Committee to scrutinise. In particular, I hope that she will look at the very disappointing growth forecasts, because I think this Budget will be defined more by Labour’s red lines on Europe and the Conservatives’ Brexit red tape than by faster growth.
At the root of so much of what has gone wrong in our country—the cost of living crisis, higher taxes, broken public services, empty high streets, and the lack of jobs and opportunity—is the lack of economic growth. Our economy is being held back. British business is being held back. It is being held back above all by the terrible damage of the Conservatives’ Brexit deal: a deal, let us never forget, that was backed by the leader of Reform and voted for by Labour—a deal that put up pointless new barriers to trade, tied up British firms in extra costs and red tape, and pushed up prices on our supermarket shelves.
Sir Bernard Jenkin (Harwich and North Essex) (Con)
Will the right hon. Gentleman give way?
Madam Deputy Speaker
Order. As I said earlier in my introductory remarks, Sir Bernard, we do not intervene on Front-Bench speeches. The odd thing is that we went through this scenario this time last year. [Interruption.] We did, we did—yet here we are again.
Ed Davey
Thank you, Madam Deputy Speaker. I am always happy to talk to the hon. Gentleman in the Tea Room.
As I was saying, our economy is being held back by Brexit, so the biggest single thing the Government could do to fix our economy is to fix our trading relationship with Europe and take us back into the single market and a customs union, giving us the growth and the money to cut people’s taxes. [Interruption.]
Madam Deputy Speaker
Order. Mr Gareth Snell, moving three rows back does not mean I cannot see you or hear you. Let us try to simmer down.
Ed Davey
Thank you, Madam Deputy Speaker.
Unless and until a Government have the courage to do just what I have outlined, I am afraid that any Budget will only be tinkering around the edges, because it will not provide the growth our country so desperately needs.
The Prime Minister, to be fair, has rightly talked about the economic damage caused by Brexit, but in answer to my questions he still refuses to drop Labour’s red lines set down by Keir Starmer more than five years ago. The world has changed so much since then and it is long past time that Labour policy changed with the world. I welcome the Prime Minister talking more openly this week about the need to move forward on Europe, but can I say to the Chancellor and the Prime Minister that it is just too urgent to wait until the next Parliament? Today’s Budget shows why.
I remember when 2% growth was nothing special. When we were in government that was the average, but since we left the EU, it has been less than half that—less than 1% growth a year. Today’s forecasts show things starting slowly to move in the right direction, but they still show growth well below 2% every year for the next five years. What used to be average growth now feels like a pipe dream, so we need a real growth plan with Europe at its heart: a plan that only our party has set out—an economic plan to make Britain richer, safer and stronger.
Our plan would also tackle one of the great hidden tax injustices not just of this Budget, but of every Conservative and Labour Budget since 2021: frozen income tax thresholds. They are a stealth tax rise that has dragged millions of the lowest paid into paying income tax and millions of ordinary people—nurses, teachers, police officers—into the higher 40p tax band. Millions are paying higher taxes for the cost of Government economic failure. I have to say to the Chancellor that this Budget, which freezes the income tax allowance of people in work while raising the personal allowance for some pensioners, is not the answer. Income tax thresholds should rise for everyone—the fairest tax cut possible—letting people keep more of what they earn, rewarding hard work and giving individuals more power in our economy. That is a profoundly Liberal thing to do. If we grow the economy by trading more with Europe, we can afford to do that—a real plan to turn the economy around and cut taxes fairly.
Our plan would also tackle one of the biggest headaches the Chancellor is facing in this Budget: the cost of Government borrowing. We clearly cannot go on spending £1 in every £12 just on interest payments on the national debt. That is money that should be going on schools, on hospitals, or back into people’s pockets. We just cannot go on with the Government borrowing money at interest rates of over 5%. Some of the cost is down to global factors, as the Chancellor talked about, and a lot of it is down to Donald Trump’s war with Iran, but there is no doubt that the bond markets would look more favourably on the UK if our growth prospects were better. Just as for growing the economy, the single biggest thing the Government could do to cut their own borrowing costs, and the interest rates faced by homeowners and businesses, would be to take up our growth plan, and join the single market and customs union.
Just look at the alternative put forward by the terrible twins of British politics, the Conservatives and Reform. They are in a bidding war of unfunded fantasy promises. We have seen where that sort of fiscal irresponsibility ends; Liz Truss’s mini-Budget sent mortgage rates rising. Yet now we face the threat of a Tory-Reform Government doing it all over again. The British people simply cannot afford that.
That brings me back to the cost of living. Why are so many bills going up again? Because Donald Trump chose to start his idiotic war with Iran, which has pushed up our energy bills and hiked diesel and petrol prices to painful levels. When that war began, the Conservatives and Reform were lining up to say that Britain should be backing President Trump. Just imagine if they had been in charge. We would have been dragged into fighting a war that no one wants and paying for it with even higher bills and higher taxes. Britain needs a Government who stand up for British interests, not one who make us ever more dependent on an unreliable, out-of-control American President.
With Donald Trump pushing up petrol and diesel prices, the Chancellor’s freeze on fuel duty is welcome, but it is not enough. I urge him to look again at our emergency transport package, which would cut prices at the pumps by 12p a litre and bring down the cost of travel by bus, train and electric vehicle, too—a real breathing space for families and businesses. With energy bills forecast to rise by more than 25% in January, the Chancellor’s promise to break the link between gas prices and electricity bills cannot come soon enough, but he is right to reject the siren song from those on the Conservative and Reform Benches who want Britain to be even more dependent on dirty fossil fuels and their volatile prices. Once again, they are copying Donald Trump, and their energy plan would be a disaster for our environment, our economy and for everyone struggling with the cost of living. The right answer is to invest instead in clean home-grown renewable power, energy efficiency and battery storage, so that the prices we pay do not depend on Trump’s latest Truth Social post, but instead come down quickly as technology continues to slash the cost of renewable energy and of batteries.
In a world where Trump is deserting Ukraine, praising Putin and selling out on European security, we must move far more quickly on defence. When the Defence Secretary says we must be ready for war within 1,000 days, our armed forces cannot wait years for the investment they desperately need now. The Chancellor’s announcement of some extra funding is welcome as far as it goes, but why has he not taken up our plan for defence bonds to invest £20 billion in Britain’s defence over the next two years? And since he has ruled out joining Canada’s defence bank, will he now take up our plan and push for a European rearmament bank that goes so much further than what he announced today? Instead of signing up to one country’s version, surely the right answer is to bring our allies together behind a shared vision of defence investment to protect our continent from Putin.
The defence of our country needs serious answers like these, not fantasy pledges like the Conservatives’ “iron dome”, which they say is not an iron dome—except when it is. What a shambles! No wonder they left Britain’s armed forces in such a mess, something for which they have not yet apologised.
It will not surprise the House to hear that we on the Liberal Democrat Benches are delighted to hear talk of fiscal devolution. Taking money and power out of a few hands in Whitehall and giving it to communities to make their own decisions is something that we, as Liberals, have always championed. There is a right way to do devolution and a wrong way, so we will have three tests for the Government’s plan as it develops. First, does it give councils enough money to fulfil the responsibilities they are being given? Secondly, does it reach beyond mayors to councils and communities everywhere? Thirdly, is it fair, so that those areas that are already struggling do not find themselves with even less? Done properly, this could be the start of something really big; done badly, it is simply passing the buck.
The same goes for welfare reform. Of course it needs to be done, but it needs to be done right: cutting the bill by helping people into work and giving people the care and support they need so that they can work, like fixing carer’s allowance to help people juggle care with work. I am glad that the Chancellor has listened to carers on the need to scrap the unfair cliff edge of carer’s allowance. As I said to the Prime Minister earlier, this cannot wait another four years, and we cannot see a 100% tax rate on working carers. I urge the Chancellor and the Prime Minister to look at our alternative plan instead, which we put forward to Liz Sayce when she did her review. I hope to bring it to the meeting that the Prime Minister has promised.
Whether on carer’s allowance or other benefits, let us reform welfare right, so that the system helps people into work and then rewards them for working. The country needs this new Chancellor and Prime Minister to succeed, because the livelihoods of everyone in our country are at stake. The Liberal Democrats will work constructively with the Government wherever we can. We will oppose them when they get things wrong, of course, but we will also support them when they get things right and push them to go further when they are too timid.
In that spirit, I say to the Chancellor that this Budget is far too timid. The Government have recognised the scale of the challenge, but like Keir Starmer before them, they still have not risen to it. They have not fixed the terrible damage that they did with their tax rises, from the family farm tax to the jobs tax. I urge them to be bolder—be bolder on energy and defence; be bolder on devolution, and get it right; be bolder on cutting income tax; and be bolder on Europe and growth—because after so many years of pain, so many years of being held back, the British people need real change, and fast.
Daniel Zeichner (Cambridge) (Lab)
It is always a pleasure to follow the right hon. Gentleman, although I am not sure that the Liberal Democrats are always quite so bold when it comes to local decision making.
It is a pleasure to support the measures announced by my right hon. Friend the Chancellor. I have known him for many years, and he certainly knows Cambridge well. The measures on rough sleeping will be strongly supported in the city of Cambridge. They are the right thing to do, because they also help tackle a problem that I have talked about before, which I described as the pauperisation of the public realm. Over the last few decades, too many of our city centres and towns have not had the investment and care that they needed. That goes some way towards explaining how we can be a country that, by international and historical standards, is well off, yet has a general sense of unhappiness.
The fragmentation and privatisation of public services and spaces, widely attributed to decisions made in the 1980s, have come back to haunt us. I was pleased to hear the suggestions in the Chancellor’s speech, echoing the comments made by the Prime Minister over the last few months, that address those points.
David Davis (Goole and Pocklington) (Con)
I am interested in what the hon. Gentleman says—I have been a critic of some privatisation myself—but it does not explain why those same malaises did not apply during the Blair years.
Daniel Zeichner
As I said, I think it goes back over decades, and it needs to be reversed. I thought the most radical measure in the Chancellor’s statement was the fiscal devolution. I am someone who, along with many others in the Chamber, has argued for business rates retention over many years. I look forward to seeing how that plays out.
I represent a young city, and I am confident and optimistic about the future if we can give our young people the opportunities they need. I was pleased to hear about the measures to support innovation and entrepreneurs. At the Innovate Cambridge summit last week, we were told by local people that as an innovation cluster by density, Cambridge ranked second in the world and first in Europe in 2026. Just a few months earlier, the Oxford-Cambridge Supercluster Board published research showing that the growth corridor has produced 740 university spin-outs—almost 70% more than the fabled Bay area in America—and produces more scientific publications per resident than anywhere else in the world.
As we know, all too often we manage to generate tremendous start-ups, but have a problem with scale up. The points in the statement about the National Wealth Fund and the British Business Bank can help us use the Oxford-Cambridge growth corridor to drive prosperity for the whole nation, not just the region. I welcome the announcement of the flexibility that will be offered to the Greater Cambridge Development Corporation, which will allow us to be innovative in the way we use public funds to also pull in private funds.
I welcome the optimism and confidence that the Budget brings, but I add one word of caution. The success and strength of cities such as Cambridge, and of the Oxford-Cambridge growth corridor, is based on the strength of our universities. Colleagues will know that universities are facing acute financial pressures, made more difficult by some of the measures that are being taken to address international students. The changing attitude of UK Visas and Immigration on visa applications is increasing the pressure, while the introduction of the international student levy will increase the financial pressure.
I strongly urge my colleagues on the Front Bench to talk to Universities UK and look at alternative ways to fund maintenance grants. I understand and appreciate that there are long-term structural issues, but it is dangerous to allow universities to get so close to the financial brink, and it potentially undermines the success of the Ox-Cam corridor and cities like Cambridge. We should be optimistic about our future. That we have the talent to succeed is based partly on the fact that we attract talent from across the world. We need to remain competitive internationally.
Innovation and knowledge are things that we are good at in this country. They should be celebrated, and there are measures in the Budget that will be strongly welcomed by innovators, but we need to ensure that they are not undermined unintentionally as the Government seek to address other issues.
Sir Mel Stride (Central Devon) (Con)
The Budget was a whirl of little things. I picked up a road map, a taskforce, a few bob scattered around various organisations, and even a few pence off a jar of gherkins. But it is a missed opportunity. It smacks of managerial incrementalism, rather than the bold and radical reforms that our economy needs if it is to meet the challenges of the future. Those challenges include intergenerational unfairness, an ageing population and—heavens above—the menace presented by Vladimir Putin.
The Budget is based on the somewhat smug false premise that somehow the economy is going broadly in the right direction. It is not. The Chancellor prayed in aid the comments of the IMF on near-term growth and fiscal consolidation. However, the reality is that that should not be the benchmark. We should not be looking at France, which has had so much civil, economic and political unrest that it is heading towards a potential bond crisis. We should be asking a fundamental question: what level of growth does the economy need to address the challenges that I have just set out? The answer is that we need to at least get back to the growth trends that we had before the global financial crisis—at least 2% to 3% per year. We are a very long way from that.
The Chancellor lauded the fact that growth has been revised up for this year; he neglected to mention that from next year the position is very different indeed. He made no attempt to acknowledge the mistakes that this Government have made since they came to office. Huge mistakes by his predecessor, such as massive tax increases predominantly on businesses, have had the effect of lowering investment, raising unemployment, reducing output, and—because taxes are often passed on in higher prices—pushing up the rate of inflation.
We are now in a position where, if my reading of the OBR document is correct, due to the inflationary effect that this Government have in part induced, fiscal drag alone will result in more than 200,000 average days’ work being destroyed. We are left with almost the highest level of unemployment in five years, high and sticky inflation, high interest rates, massive servicing costs on our national debt and huge levels of borrowing.
In its document, the OBR sets out what is happening to real household disposable income across the forecast. If my reading is correct, it is lower now across every year within this set of forecasts than in the forecasts back in March. In other words, hard-working people up and down the country are getting poorer as a direct result of the actions taken by this Government.
Graham Stuart
I received a card from the Joseph Rowntree Foundation yesterday—I do not know whether my right hon. Friend also received one—suggesting that every family in Beverley and Holderness will be at least £440 a year worse off at the end of this Parliament. But today, on top of the points that he has already made, we are going to see not only disposable income being constrained, but debt going up in each of the next five years by more than was previously suggested.
Sir Mel Stride
My right hon. Friend is absolutely right.
That brings me to another point, which is that the Chancellor has taken a conscious decision to reduce the headroom, in the primary target, from around £24 billion to £15 billion. That is a mistake. If he had taken the radical measures necessary to get on top of public spending, particularly the welfare bill, he could have increased the headroom. He talks about the risks ahead—that is the very reason why we have the buffer of that headroom. If we have low headroom, we end up paying a premium on the debt servicing costs to which my right hon. Friend just referred.
The average headroom that Chancellors have come forward with since the instigation of the OBR runs at about 1.4% of GDP. In today’s terms, that would be about £40 billion of headroom. We are now down to £15 billion. Members across the House should therefore not be surprised if the Chancellor comes back at a future date and tells us, just as was the case with his predecessor, that the headroom has entirely evaporated, once again, because of reasons beyond his control. This is a mañana Budget. This is a Budget kicks the can down the road.
When the Chancellor resigned as Secretary of State for Defence, he made it very clear that his resignation from Government was nothing to do with the defenestration of the previous Prime Minister, and was instead a matter of principle: he did not believe that our country was going to be adequately protected as a result of not coming up with the money to fund the 3% of GDP on defence by 2030. He now has his hands on the levers, and he has failed to do even that on this occasion.
Alex Ballinger (Halesowen) (Lab)
The right hon. Gentleman will remember that, in his statement, the Chancellor he did commit to reaching 3% of GDP by 2030. Can the right hon. Gentleman say when the Conservatives reached 2.7% of GDP on defence?
Sir Mel Stride
We will have to look very closely at the wording that the Chancellor used, because my recollection is that he said that the Government would be committed to the NATO target of 3.5% by 2035, with a target to reach 3% by the end of 2030. The word “target” is not the same as the word “commitment” when it comes to reaching that particular figure. I recommend that the hon. Gentleman looks closely at that.
When it comes to this Chancellor and his principles, I am reminded of the late Groucho Marx, who said,
“Those are my principles, and if you don’t like them…well, I have others.”
It seems to me that that is where we are on this particular matter.
The Leader of the Opposition was perfectly correct in identifying the unrealistic expectations and assumptions contained within the numbers the OBR has had to work with. While the OBR sets out its assessment of what various interventions will mean for growth, inflation and so on, it has to take at face value the spending envelope that the Government come forward with, which was inherited from the Chancellor’s predecessor. As we know, that spending envelope sees a very strong squeeze in spending right at the end of the forecast period. In fact, if health spending increases in the spending review next year by 2.7% in real terms, as it did in the last review, and the 3% defence target is met, there will be a black hole of £20 billion in the figures that the Chancellor has just presented.
We have seen the march of the PuFins—public financial institutions—in the Budget measures that have just been announced. We have seen £20.4 billion placed in the National Wealth Fund. Make no mistake: it should be clearly understood that this is additional borrowing. It does not matter whether it falls within the current definition of debt—the public sector net financial liabilities definition—and would have fallen outside the old definition of public sector net debt; the reality is that it is more money that this Government are borrowing.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
On the subject of a sovereign wealth fund, would the right hon. Gentleman comment on the fact that under the Tories we sold off our national treasures in North sea oil and gas? We should compare that with Norway, which put those assets into a sovereign wealth fund and now has £1.7 trillion available for public services, while we do not have anything. That was an absolutely catastrophic mistake for our country.
Sir Mel Stride
The hon. Gentleman should join us on the Conservative Benches, because we are the party that is standing four-square behind North sea oil and gas extraction. We do that for a very important economic reason.
It is right that the national minimum wage not going up by as much as it might otherwise have done will help business. The Leader of the Opposition welcomed that. We have also seen a lowering of business rates for some businesses. The mileage changes with HMRC will no doubt be slightly helpful, particularly for the self-employed.
However, the Chancellor also came forward with a reduction in the business asset disposal relief—he has halved it, making it less of an incentive for people to set up businesses. I looked at the figures in the Red Book, and it seems that there are £5 billion-worth of additional taxes on businesses across this forecast—an increase of £2 billion in additional taxes across inward investment into our economy.
In conclusion, the lights are flashing on the UK economy. We have huge challenges ahead, and it is not good enough simply to rely on saying that we can be steady as we go.
George Freeman (Mid Norfolk) (Con)
Like me, my right hon. Friend represents a very rural constituency. Was he shocked to hear the lack of any relief for rural areas, which are being hammered by disproportionately high energy costs? The Treasury’s own figures show that the risk of fuel poverty in rural areas is 150% higher than in cities. We heard about money for cities, but nothing for our rural areas and rural businesses, which are being hammered, and where we are seeing stagflation and inflation and taxes and interest rates going up. There was nothing for rural areas.
Sir Mel Stride
Absolutely. My hon. Friend is absolutely right. The absence of anything about farmers in the statement was palpable. One might think that the Chancellor might at least have said something about the farm tax, which is still hanging around the necks of our farmers up and down the country.
Noah Law (St Austell and Newquay) (Lab)
Will the right hon. Gentleman give way?
Sir Mel Stride
I am just concluding now.
When Members hear the Chancellor talking about being steady as we go, they should read into that complacency. When we hear him say that we need time to get things right, we should read into that kicking the can down the road. We face huge challenges as a country, and this Budget has been grossly complacent. It is a lost opportunity. It has failed our economy, and it has failed the British people.
Peter Kyle (Hove and Portslade) (Lab)
I notice that you are wearing a Sussex tie today, Madam Deputy Speaker. It is good to be called to speak by somebody wearing a Sussex tie. I am sure that you will be breaking the internet for another year running as a result—you have done so before.
It is a pleasure to follow the right hon. Member for Central Devon (Sir Mel Stride), who was so recently forced to leave shadow Cabinet. There may well be another grouping of Members in the Chamber, alongside that of the Select Committee Chairs; it is very good to be able to speak today from the Back Benches.
The Chancellor’s Budget statement has made real, concrete progress in the areas of the economy that I care about the most and that have the most impact on the people who live and work around our country, including in my constituency. I was very animated by the areas of the speech that focused on growth and innovation, and those are what I will focus my contribution on today. The trading allowance, the entrepreneurship allowance, doubling funding for the British Business Bank, the entrepreneurship scheme for women, and, crucially, the founders’ relief are all measures that we should be extremely grateful for. They will have a direct impact on the growth of our economy, keep innovation here and allow it to scale here.
Founders are quite unique people. They are able to commercialise innovation and tell stories about their products, and they act with such confidence that their charisma carries a lot of weight, which sometimes belies the amount of risk they take on and their hard work and determination on behalf of their company, their employees and our economy as a whole. The relief that has been offered to them is hard-earned.
Sir Roger Gale (Herne Bay and Sandwich) (Con)
I think I am right in saying that the right hon. Gentleman’s constituency, like mine, relies very heavily on the tourist trade. That industry is on its knees gasping for air. It does not need breathing space; it needs help. There was nothing in the Budget for that industry.
Peter Kyle
I am always grateful to hear from the right hon. Gentleman, whose constituency is in the region that I also represent. He may not have heard amid the noise in the Chamber at the time, but the south-east benefited quite considerably. In our part of the country, 47% of businesses in the retail, hospitality and leisure sectors will no longer pay any business rates at all.
Mike Wood (Kingswinford and South Staffordshire) (Con)
Will the right hon. Gentleman give way?
Peter Kyle
I will make some progress, because lots of Members want to speak, and I have not even got on to the main argument that I want to make.
There are real benefits from this Budget. In my constituency, the council tax rebate will impact positively on 42,000 homes. The same will be true in the constituency of the right hon. Member for Herne Bay and Sandwich (Sir Roger Gale) and in others around the country.
The Chancellor also mentioned directly the defence dual use investment for companies doing dual-use innovations. When he was Defence Secretary and I was Secretary of State at the Department for Science, Innovation and Technology, we worked together, and it was the first time that the Secretaries of State of those two Departments came together to work on the strategic challenges and opportunities faced in the defence industry. I am really pleased that we now have a Chancellor investing in dual use. It will be based on the conversations and workstreams that we set up when we were those two Secretaries of State. Those two roles should work together going forward.
When Labour came to office in 2024, we inherited a growth emergency. Now we have taken solid steps forward, but we must still have the mindset that we are facing a growth emergency. It is my belief that we are on a motorway heading in the right direction but even now are only travelling at 30 mph.
I believe that the challenge we face is a complacency that was set down in previous times, when we took growth for granted. From the 1997 Government onwards, for a decade before the financial crash, I think it is fair to say that we felt that growth was dependable—that there was a sense of inevitability about growth. We could focus on all the social issues we wanted to tackle based on the proceeds of that growth, but we did not pay enough attention to underpinning growth and making sure that it was sustainable into the very long term.
Graham Stuart
I agree with every word that the right hon. Gentleman just said about the need to focus on growth. The question is: how do we get it? It seems that too many on the Labour Benches believe that it is by Government intervention rather than reducing the taxes that create disincentives for business. Is he as alarmed as I am at the more than £2.2 billion increase in taxes on business today—from writing down allowances to company distributions and business asset disposal relief, as well as the probable more than £6 billion reduction in lending that will result from the £1.5 billion bank tax?
Peter Kyle
The right hon. Gentleman’s intervention was longer than my speech has been so far. When I find that I agree with every word that somebody is saying, I usually sit down and listen to a bit more of it rather than trying to challenge it. Perhaps the rest of my speech will answer the questions that he raises.
In that decade, because of the predictability and certainty of growth, I think that growth policy was seen like any other policy. In other words, if there was a shelf with all the different policies of Government on it, growth would be one set of policies on that shelf. I know that there are a lot of analogies going around these days, and Liz Truss has blown a hole in analogy use as well as in our economy, but it is my belief that we now need to have the mindset that growth is the shelf itself. We cannot have successful social policies delivered in the way that all of us in this Chamber would like unless we have a solid, predictably-growing economy into the long term that provides security and prosperity and from which we can share investment fairly around the country.
We must on both sides of the House be as animated about economic growth as we are about creating prosperity, spending it and challenging the social ills in our society. We must care as much about economic growth as we do about rough sleeping, social care and international development—I say that as someone who spent my early life in international development. Tackling those issues depends on economic growth itself.
Public services are incredibly important. They are enablers of growth. We cannot have growth if people are arriving late to work, are too sick to work or are stuck on a Tory waiting list for treatment. We need to have the right skills in the right places. All of those things are absolutely essential, but we should not kid ourselves that such growth is not built on by private enterprise.
Thanks to the Prime Minister deciding that I could have some time over the summer, I was able to write an essay—now that Tony Blair has brought them back into fashion. I know that many Members will have already read it, making some of my words today obsolete, but let me refresh their minds about what I focused on. I confined the essay to my experience in Government and how we can configure Government more assiduously and dependably to unlock the economic growth that our country needs so much—focusing on what Government themselves can deliver. That experience comes from leading two Departments as Secretary of State. I saw in both those Departments that civil servants can deliver boldly when they have the authority to and when incentives align.
I will use one example—the automotive sector—to illustrate to Members the challenges that the Government face to unlock growth. Delivering support for the automotive sector means aligning energy, trade, regulation and all these different areas of policy. All are held by more than one Government Department, and each of those Departments has its own priorities. As Secretary of State in the Department for Business and Trade, at times I was prioritising the automotive sector and recognising how important it can be for growth. Let us bear in mind, when Jaguar Land Rover suffered its cyber-attack, 0.2% was taken off our GDP. When it was up and running six weeks later, 0.2% was returned to our GDP. The importance of industry is still fundamental. When the Prime Minister and the Chancellor talk about reindustrialisation, hon. Members should not underestimate its ability to deliver growth for our overall economy.
We have another asset when it comes to the automotive sector in our country. When we talk about frontier technology—I am looking for the Minister for Artificial Intelligence, who was in his place a moment ago—we think about the AI labs, most of which are in California, with some in China, but we have a frontier industry here in the UK in the automotive sector, and it is Formula 1, because 11 of the 12 teams do all their research and development and all the deployment of their vehicles right here in the UK. No other country in the world has that asset, and that filters skills through our automotive sector. The ability to grow that sector is huge, but that needs Government to work in an aligned way.
I discovered how different Departments with different priorities have oversight over things like automotive, and how sometimes they can slow down those priority areas. We need the structures and incentives in Government to be much better aligned, because we cannot have all these important sectors depending on Ministers’ ability to WhatsApp each other to sort out problems. We should have a system of Government that is already on the side of making pro-growth choices.
I want to say a few brief words about defence, which has already been raised in the debate. I am grateful to the Chancellor for the statements he has made on this. We focus on the percentage of GDP allocated to defence, but the debate cannot just be about how big a share of our economy we spend on defence; it must also be about how big an economy we have. If we were to achieve five years of 3% annual growth, 3% of our national income on defence would deliver almost the same amount of money as moving to 3.5% in an economy of today’s size.
Stuart Anderson (South Shropshire) (Con)
Will the right hon. Gentleman give way?
Peter Kyle
I will continue.
That is the difference that growth can make to our national security: it does not remove the need for difficult spending decisions today, but it can give us greater strength to sustain our defence into tomorrow.
Stuart Anderson
I agree with the right hon. Member that it would be great to grow the economy to achieve the 3.5% spend, but the Chancellor has today set out multibillion pound in-year cuts this year—we see that in particular in the resource departmental expenditure limit budget at about 0.5% next year—so as it stands there will be far less for training and operations. That is before we even look at whether, in three-plus years’ time, the Chancellor has achieved that growth or not.
Peter Kyle
I agree. I realise that in seeking to make an intervention we stop listening to what is being said, but I did say before I gave way to the hon. Member that that would not be instead. I am not proposing that we look to start investing five years down the line after five years of 3% growth—of course, we must move towards those NATO targets, just as the Prime Minister and the Chancellor have promised—but if the debate is about getting cash into defence, this illustrates how there is more than one way of doing that. Immediately, yes, it is about increasing the percentage, but in the long term, on the back of economic growth of 3% and above, we could do so sustainably, and that would unleash enormous amounts of resource in addition to the reprioritisation that might need to happen.
Of course, the difference is that when the spending comes from growth, other Government Departments’ budgets can grow as well, and working people right across the country will be feeling it in their pockets. That is why growth is one of the driving social justice issues of our time.
It is my belief that government needs to become organised around growth, and that growth needs to become the organising principle of government. In the essay that I published, I give some practical suggestions based on my time in government for what I would do if I had the opportunity.
First, the Government need to adopt a taskforce mentality when it comes to growth. The Prime Minister should back a 90-day plan to unblock investment. Of course, we need Cabinet accountability, but we have these great boards in government—experts on the Board of Trade and non-executives on Departments’ boards—and all sorts of different specialist groups and outside experts coming in and sitting on boards across Government. We should pick from those boards those people who are best placed because of their understanding of Government from the work they are already doing, and jump to a taskforce-based approach to looking at different Government Departments and the opportunities we have to act fast in Departments. They should identify areas that need legislative change, and for that we can introduce a growth Bill, if that were appropriate. I believe that it is.
Peter Kyle
Well, we should certainly legislate to remove the barriers to growth, because some barriers require legislation. Let me illustrate that with one point.
When I was Secretary of State, I visited a fantastic company called Ocean Infinity down in Southampton, which is building and deploying globally—it is a global leader—autonomous marine vehicles. I was taken to see one of its vehicles, which was 36 metres long, being built. These are huge investments, with these vehicles doing extraordinary work autonomously for marine biology and drilling, going to remote marine places on Earth. I was taken one deck below on an autonomous vehicle and shown one room. I was asked, “What do you notice in there?” There was a washing machine and a tumble dryer—in an autonomous boat. Why? Because the law requires any boat more than 34 metres long to have a washing machine and a tumble dryer for its crew.
Conservative Members may laugh at my suggestion of a growth Bill, but there are some things that need to change in the law to unlock the stupidity out there in how we regulate certain sectors simply because of the passage of time. I say to all hon. Members who worry deeply about deregulation or the modernisation of the regulatory landscape that there are absurdities out there that are holding businesses back. If we aggregate that one example of a tumble dryer and a washing machine across our economy, we can start to see the need for real positive action.
Mike Martin (Tunbridge Wells) (LD)
Would the right hon. Member back a national security exemption for regulations such as those he cited whereby, if what is being developed is clearly for our national security, health and safety and other regulations fall away to enable us to get that into the field quickly?
Peter Kyle
I am grateful for that constructive intervention. I am certainly in favour of looking at mechanisms for when we discover absurdities in the regulatory system. We know how long it takes to get legislation through the House or even introduced to the House as there are so many priorities, so we need to be able to act in the interim. We should look at that, and the House should give those powers where needed in such circumstances. Of course, national security is the No. 1 priority of any Government at any moment in time—it certainly should be.
Dr Andrew Murrison (South West Wiltshire) (Con)
Will the right hon. Member give way?
Peter Kyle
I will make some progress.
We also need a tax growth test, with outside experts reviewing all investment, hiring, innovation, revenue and incentives from HM Treasury and judging those against a growth test. That does not mean we would not still redistribute, invest and use tax in ways that are not always conducive to growth, but we do need to know in aggregate form exactly how the incentive landscape and the policy landscape in HMT align with the need for growth.
I am pleased that the Chancellor has made a lot of statements and some good progress on procurement. We should really be using that far more effectively to champion British innovation and support British scale-up companies. In procuring products and services, they have access to over £400 billion of spending, which eclipses investment we can make through Innovate UK, the British Business Bank, the National Wealth Fund or UK Research and Innovation.
I could not understand this as Secretary of State, and I still cannot when looking on. We went through a period, with my encouragement, of taking equity stakes in scale-up companies as part of our scale-up plan. There was all the due diligence that goes into making those decisions and which lead to the British Business Bank, through the independent and thorough work of its investment committee, taking an equity stake. Yet once that is done, there is no preferential access to any other part of Government. That should change.
The Regulatory Innovation Office should be upscaled and there should be local rewards for businesses that are growing fast. I have spoken—I will not speak in any more detail—about my frustration that this economy and the continent of Europe have never produced a $1 trillion company. Some of the wealth from those companies, when it is fairly distributed among their workforces and the communities in which they are sited, is an astonishing vehicle for levelling up. We need to ensure that we understand the reasons why our economy seems to have some kind of glass ceiling. It is a continental European challenge. Taiwan can produce a $1 trillion company that produces the wealth and power that goes alongside it, but there is nothing that Taiwan has that we do not have here in Britain.
Social justice and growth are intertwined. I started by saying that we are on a motorway going in the right direction, but at 30 mph. Fairly distributed growth delivers security, freedom and prosperity. If that is what the destination looks like, why would we not we put our foot down and try and get there faster?
Sir Jeremy Hunt (Godalming and Ash) (Con)
I refer hon. Members to my entry in the Register of Members’ Financial Interests. It is a great pleasure to follow the right hon. Member for Hove and Portslade (Peter Kyle), who was an excellent Business and Trade Secretary and a great loss to the Government when he stepped down. Like him, I have been writing about economic growth—he wrote an essay; I wrote a book. I have absolute confidence that all Members were poring over every word in my book over the summer. The book happens to be called “Can We Be Rich Again?”, in case anyone was interested.
I want to say, in a brief contribution, that doing a Budget since 2022 has become much harder because the invasion of Ukraine caused a spike in energy prices and inflation, which brought to an end over a decade of near-zero interest rates. In that context, rule No. 1 is not to upset the markets. Today they are calm and long may that last. Rule No. 2 is to do no harm. Frankly, after two Budgets that put up taxes, mainly on business, by £66 billion, many will be relieved that today it is “just” a £2 billion tax rise on businesses. I am worried, however, that the bank tax will lead to higher mortgage rates, which will make the cost of living worse for ordinary families.
My concern is about what I might call rule No. 3, which is never to waste a Budget. In the run-up to a Budget, the Chancellor of the Exchequer is, in some ways, the most powerful person in the country. They are sitting on top of the most powerful Government Department and they have the full support of No. 10 Downing Street, which needs Budgets to be successful. The OBR has just downgraded our growth next year to 1%, and there are still formidable impediments to getting back to that 2% to 3% growth that we all know is so important.
Today could have been the Budget that set out plans to get 1 million young people off welfare and into work. We could have found out how it is going to happen, when it is going to happen, where the money is going to come from, and what the impact will be on national accounts. Today could have been the Budget that showed how we are going to enshrine AI into every part of our economy, helping us to become the world’s next silicon valley—that would have been an extraordinarily powerful opportunity for us. There were some things mentioned about bringing down energy prices, but it could have been the Budget that showed how, over three years, we are going to get energy prices for businesses, factories and data centres down to levels in France, where they are 35% less, and it could have shown how that was going to happen. It could have been the Budget, with Ukraine about to go into the most difficult winter, that showed how we are going to get defence spending up to 3% of GDP and how that is going to help our technology sector and our economic growth in the process.
Instead, I fear the Chancellor and the Prime Minister have wasted their political capital by putting off difficult decisions. We are told that we will not hear what is going to happen with respect to those not in education, employment or training until the new year. We are not going to find out about defence spending and the spending review until the end of next year. That is a year away. The problem is that those decisions are going to be harder in a year’s time than they are today, and today could have been a Budget that did so much more.
The Prime Minister likes talking about hope. Young people are leaving school and university with high levels of debt and fewer available jobs—particularly far fewer graduate jobs—and they are worried about their future. They are losing hope. We had lots of so-called breathing space measures and they are welcome in their own right, but they will be forgotten within a matter of months. To really give people hope, we have to be prepared to take difficult decisions.
We need to be completely honest: reforming welfare is really difficult. It was difficult for the Conservatives and it is difficult for Labour—I understand that it is particularly difficult for a Labour party to reform welfare. Controlling public spending is difficult, as the former Chief Secretary to the Treasury, now the Economic Secretary, knows well, and it is very difficult for any Government to deal with the pressures on public spending. Dealing with the reforms that improve public sector productivity, bring down energy prices or sort out vocational education involve very difficult decisions, but today I feel none the wiser as to whether those difficult decisions are going to be taken. That is my worry.
In the end, people need to have a sense of a Government that are prepared to grasp the nettle on all those difficult things. I am afraid that it is not enough to say, “It’s okay because we are not the Tories.” We got a lot of things right, and I am proud of the fact that 4 million jobs were created under 14 years of Conservative rule—that is 800 jobs a day, by the way, compared with 200 fewer jobs a day since Labour came to office—but we also made mistakes. Looking forward, we know that there are lots of difficult decisions that need to be taken. Until we have a Government that are prepared to grasp the nettle on those decisions, our economy will continue to be buffeted by international storms instead of being master of its own destiny.
Bill Esterson (Sefton Central) (Lab)
It is a great pleasure to follow the right hon. Member for Godalming and Ash (Sir Jeremy Hunt). He gave a very thoughtful analysis—when he was not selling his book, but I am not going to accuse him of that being his primary reason. He mentioned breathing space. I do not think he was saying that it was not important to people, and he acknowledged that. The breathing space gives a direction of travel and, to answer some of what he was saying, that is the context for the Budget.
It was very much a Budget for energy and cutting bills. It was very much a Budget for tackling growth challenges and for showing how important growth is, as set out by my right hon. Friend the Member for Hove and Portslade (Peter Kyle), who has left his place. That is for a very good reason: we are in the middle of the second big energy shock in a few years. To the right hon. Member for Godalming and Ash’s concern about mortgage rates, I add my concerns about the impact of inflation if we do not tackle the costs of energy and the impact on prices more widely. That is true for consumers and it is true for businesses and the wider economy. Bringing down the cost of energy had to be a fundamental part of this Budget, and that is exactly what it was.
Progress has been made and will continue to be made. I note in the Red Book that gas now sets the price of electricity 60% of the time. Just two and a half years ago, that figure was 98%, so huge progress has been made. It is also the case that opportunities are available for people to switch to electricity. It is up to nine times cheaper to drive an electric vehicle compared with diesel, and not all of that is due to the exceptionally high prices that we have at the moment.
However, these things point in the same direction: that the energy transition is in our interest, through ending our dependence on the uncertainty, the danger and the threat that we face from having to import oil and gas. I know there are people who will claim later in this debate that it can all be got from the North sea, but it simply cannot. There would not be enough of it, even if we were to increase production. The announcement on Jackdaw is welcome. It will increase by a relatively small amount the amount of gas coming ashore to the UK to be used here, but it is a welcome amount. As well as the challenges around costs, there are huge challenges on how we move on from here, including challenges around how to build out the grid further. The Budget’s announcements mark the start of how to address the challenge, and I will come back to one or two of them later.
The Budget contained a range of measures on bills, and I think they are about more than breathing space. They include the VAT cut that was confirmed by the Chancellor today, and the council tax cut of £100, which will benefit 32,200 households in my constituency alone. We should be welcoming these proposals. The ending of standing charges for gas will help some of the people in the greatest fuel poverty around the country, and I welcome the announcement of something similar to come on electricity standing charges. It must be right that, at this time, in this scale of crisis, the priority is to help people with their energy bills and to use the bank surcharge for a year to do so.
It is also welcome to see no more policy costs on bills, and the announcement of a longer-term commitment there is very much in that vein, too. We heard earlier in the week about the use of loans in the warm homes plan to make it easier for people to take advantage of the technologies in moving to electrification. To the point about the reduction in the amount of time gas sets the price on the system, the increase in renewables on the system is, as the Red Book sets out, closing the gap between electricity and gas prices. It is crucial that it is made as attractive as possible for people to move to electricity, in transport and in home heat, and that is one of the things the warm homes plan will help with. The more people can take advantage of these things, the cheaper it will be for them and the greater will be the opportunities for industry.
The warm homes plan is a confidence builder for industry to invest in the installation of technologies such as solar, storage, heat pumps and other forms of electric heating and, potentially, hybrid heating. My Committee will be looking at that in our inquiry on the subject, which we are about to start. This builds on the £150 off from scrapping the energy company obligation scheme and the moving of the renewable obligation to the Exchequer, as well as the £50 million of help for homes that rely on heating oil for their heating.
On the subject of energy security, there are good commitments in the Red Book on the expansion of renewables, and also on nuclear. I welcome the statement on the need to review and reform the institutions—the National Energy System Operator, Ofgem—the way the Department operates and the uncertainty and confusion over where the networks fit into the picture. This is absolutely essential if we are to roll out the grid faster, to make the most of the opportunities in the new technologies, and indeed to move ahead with nuclear.
I note the recommitment in the Red Book to the application of the findings of the Fingleton review. This is something my Committee has called for, because we need to have certainty on the siting of the next large-scale nuclear power stations after Sizewell C and Hinkley Point C, and also on what comes next after Wylfa with SMR2. There will be good support from the British industrial competitiveness scheme, with 10,000 energy-intensive businesses benefiting. My Committee will also be asking about the cost control framework and the reforms to the market. We certainly need to know more about what they are. As has been pointed out, more detail is needed, and my Committee’s role will be to try to identify exactly what is going to come next.
There is a strong link between the new generation of electricity and cutting bills. There is also a commitment to continuing to break the link between the price of gas and the price of electricity, especially by fixing the price for new renewable projects, which will provide protection against volatile gas prices and the uncertainty that we all face now. I see this Budget as an important next step in the commitment on energy. I see energy as a fundamental part of the growth agenda, as well as recognising the importance of delivering energy security.
The Government have taken a pragmatic approach. We heard an intervention earlier about the energy wealth fund. It is a huge shame that the then Conservative Government did not set up a sovereign wealth fund in 1990 like Norway did, because had they done so, it would now be worth over £1 trillion to this country. However, we now have an energy wealth fund, and it is part of the economic opportunity of the 21st century. We have seen success in the latest auction rounds, commitments on nuclear, rapid progress on renewables and the warm homes plan. Alongside the announcements on procurement and more widely, these present an opportunity to support the economy and develop jobs and growth, as well as keeping down bills. This is a Budget for energy bills and for energy security, but it is also very much a Budget for growth through investment in energy.
John Glen (Salisbury) (Con)
It is a pleasure to be able to contribute so early in this debate. I speak as a former Treasury Minister in the previous Government who sat behind four Chancellors in different scenarios. I acknowledge the enormous challenge that every Chancellor faces in trying to reconcile so many competing pressures, but when I reflect on my experience of listening to this Budget, I am left with a great sense that it has been a Budget of missed opportunities. It has 98 measures where the value of each individual measure is at a record low. It is a Budget that has not taken the opportunity that is necessary for our economy.
All Governments face different circumstances. I was in the Treasury when covid occurred, and we had to make interventions on a scale that had never been seen before, and that obviously resulted in significant scarring to the economy. This Government face different challenges in terms of energy security as well as a fundamentally transformed context when it comes to national security risks. I was left feeling that, as Helen Miller of the IFS says, there has been a lack of a “coherent vision”. It is as if everything has been kicked further down the road. That leads me to conclude that we are warming up for a general election, which will be framed around the need for more taxes to reset the economy.
For a Chancellor to come in with a new Prime Minister and make 98 measures, all of which have a record low level of impact, speaks to a lack of ambition, while a position is held—on the back of £66 billion of tax rises—so that more can be done on the basis of whatever comes out of the summit with the EU next week. That is what I am anticipating. Of course, some of these small measures will be welcome, but when the effects of the tariff changes amount to 40p a week, for most people they will not be significant.
I want to look at some of the tax measures. The increase in tax on savings is not a good thing. That higher level of tax take will risk incentives within the system, constraining economic activity by more than expected. That is what people are saying about this Budget. There is the renter tax—it has been determined that measures in the Budget collectively risk leading to a steady rise in rents, building on the additional taxes of last year.
I take a close interest in financial services, having had some experience in that sector as the Minister. I note what the Chair of the Treasury Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), said about the rise in some share prices this morning. I think those services probably anticipated a larger increase in the surcharge, back up to 8%; the increase to 6%, therefore, and its time-limited nature, were reflected in a bump, as it was felt that that was not as bad as it could have been. However, looking at what UK Finance says about the implications of this change, I note that we need only a modest change—that is, if 7.4% of internationally mobile banking were to leave the UK—for the tax increase to generate zero net revenue. This is not some insignificant industry that is wholly located in London; it is an industry that provides the infrastructure for the wider economy. We will see the impact of that decision on interest and saving rates.
When I was the Minister in this area, I used to have conversations with the CEOs of global banks, and they pointed out the aggregate tax rate—looking at corporation tax, the surcharge, the levy and the national insurance rate—and then compared our situation with others internationally. Our aggregate rate is now going to look really bad, after what has already happened with the national insurance increases.
I want to reflect on what the Budget has not done for small businesses in my Salisbury constituency. I have been particularly impressed by one small businessman who I have got to know over the last few years, Ethan Davids. He is very young—in his early 30s—and has 15 hospitality venues, which are growing rapidly. He says to me that the combined effect of the increase on employer national insurance, the Employment Rights Act 2025 and the previously above-inflation increases in the national living wage, alongside the challenges of a reliable outcome from the planning process, actively discourages him from making investments. I fail to see anything in this Budget that has made a significant impact on the context in which his business operates and on the decisions he will make.
John Glen
Yes, a small measure like that will make some impact, but we need to look at the context—at what we have seen previously. As the hon. Gentleman will know, the manifesto he stood on two years ago implied a modest increase in taxes of about £7 billion, and we actually had increases of £66 billion. The scale of the burden placed on those businesses means they are disinclined to continue to invest.
I want to say a few words about defence. It is a massive part of the world in Wiltshire, including in south Wiltshire. Again, the context is changing, and it is doing so rapidly. The commitment given so far to raise defence expenditure is, of course, welcome, but in June the departing Defence Secretary was pretty explicit in insisting that a date be given by which 3% of GDP would be secured. A date has not been given today. I accept that there is a pathway to 3.5% and that a taskforce to get to 3% has been announced, but that is very different.
I think that we, in this country, are rather complacent about the nature of the risks we face. Just over two years ago, I visited the Nordics in one of my last months as a Minister. In Sweden and Norway, I was struck by the sense of anxiety and readiness over what Russia was capable of doing and how imminent the threat was. Of course I acknowledge the progress made, but the urgency and reality of the situation in which we now find ourselves necessitates a step change in the urgency of the Government’s response.
Luke Murphy (Basingstoke) (Lab)
I respect the right hon. Gentleman’s experience, and the tone in which he is delivering his speech. However, on the point of credibility, I would gently ask him this question. In April 2024, the Conservative Government committed to a target for defence spending in 2030—that target was, of course, 2.5%. A month earlier, they cut national insurance, and they committed to a further cut in national insurance in the manifesto. Will he reflect a little harder on the credibility of the Conservatives on this issue, given their failure to commit to 3% mere months before their party said that defence spending should be 3%, and with no real means to pay for it?
John Glen
Of course I recognise the mistakes and choices made in previous Governments, but as I was trying to indicate, the world has materially changed since the general election—I think that is pretty obvious to most people, given what is happening in geopolitics—and that necessitates a suitable response from the Government. Indeed the Chancellor insisted on that when he left his position as Defence Secretary.
In conclusion, if a party comes into government and secures the massive majority that this Government secured, it is pretty painful for the country to see the lack of ambition in the choices made in the three Budgets so far. The downgrade from 1.6% to 1% growth next year is massive, and it still implies a 2.6% per year spending cut in unprotected Departments from 2028-29 to 2031-32. I do not see that as politically realistic for the Labour party, and that is why I anticipate that the next step after the summit next month will be the call for a general election.
Madam Deputy Speaker
I call the Chair of the Business, Innovation, Science and Trade Committee, after which there will be a speaking limit of eight minutes.
Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)
Well, I am going to start by commending the Chancellor for what I thought was a Budget that is going to leave our country richer, fairer, stronger and safer. It has been my privilege to know the Chancellor for many years, and over the course of those years, he has been a modest man. The truth, though, on the basis of the numbers that he set out to the House today, is that he has nothing to be modest about. He has been able to tell the House today that we have delivered the joint highest growth in the G7. We have had the second biggest uplift to growth in the G7. Whole-of-economy investment is now at the highest rate since 1990. Productivity growth has been upgraded again and is now back in line not just with the growth rate but with the growth achieved by our competitors. One million more people are forecast to be in work between now and the end of the forecast period—that is 550 people back in work every single day. Economic expansion of £200 billion has been forecast for this Parliament—that is twice the level achieved under the last Parliament. GDP growth per capita is forecast to rise by £2,500 over the course of this Parliament—that is 36 times more than was achieved under the last Government.
Liam Byrne
I am not giving way.
Crucially, the OBR says today that GDP growth is now structural, therefore raising the potential for output growth over the course of years to come. Of course, that is helping the Chancellor to deliver the fastest fiscal consolidation in the G20.
I want to use the time I have to make three quick points about the virtue of predictability, about small businesses—a particular interest of our Committee—and about AI. The Chancellor has been able to deliver, and, despite the challenges posed by the war in the strait of Hormuz, he has managed to keep to the fiscal rules. Now, I am old enough to remember when the fiscal rules used to change every couple of years, depending on which faction was uppermost in the Conservative party. We used to zig-zag here and there, and the markets had no predictability. However, the response of the gilt markets this afternoon has been positive; they have respected the buffer that the Chancellor has been able to leave, but above all they have welcomed the fact that, where we have made changes to deliver real help now to the people we come to this House to serve, we have also stepped up and made the difficult decisions about how we are going to pay for those changes. We have not tried to borrow it on the never-never, as the Conservatives sought to do in the past, and that is exactly why we are retaining the confidence of the bond markets.
For Labour, growth in and of itself is never enough, and that is why growth in every postcode is an important political priority for this Administration. But if we want growth in every postcode, then we need enterprise in every postcode, and if we want enterprise in every postcode, then we are going to need surge finance into every postcode. We have got to step further and faster ahead of the proposals the Chancellor has laid out today to back those little engine rooms of growth in each of our constituencies: they are the people who work out of white vans—where I started my working career; they are the people on market stalls, on high streets and in every business park; they are the wealth creators in this economy—the visible economy that employs millions of our constituents.
I welcome the statement from UK Private Capital today that said that the Chancellor delivered “pro-investment” measures that should
“make the UK a more attractive place to invest in and grow a business.”
That is a really important judgment. The Startup Coalition has said that today’s Budget delivered the best news for start-ups and scale-ups that has come out of a Government in years. Those are important credentials.
Of course I would have liked to have seen the Chancellor go further. Today, I am publishing our Committee’s analysis, setting out where we would like to see the Chancellor do more, including further changing the business rate structure; changing VAT thresholds for small business; ensuring there is real accountability to drive Government procurement into the bank accounts of small business; going further to tackle the peril of late payments—not just tackling rogue traders, but tackling rogue customers who do not pay on time; and getting much tougher on high street crime by tackling bogus self-employment that undercuts good and honest traders on the high street. These are all important things that will help our small businesses to grow. Crucially, as a nation, we have got to crack the challenge of investing in ourselves.
The former Chancellor, the right hon. Member for Godalming and Ash (Sir Jeremy Hunt), who is no longer in his place, made some important changes with the Mansion House accord, but the reality is that our country is not short of long-term savings—we have £3 trillion of long-term savings. Our problem is that we invest the lion’s share in other countries rather than in ourselves. Eighty per cent of the long-term savings that we channel into equity investment goes abroad rather than here, yet the Mansion House accord is proceeding so slowly that we are going to miss our target by a decade. That is not good enough.
I would like to see the Chancellor go further and faster on repatriating pension fund investment. The £25 billion that has been announced today for the National Wealth Fund and the British Business Bank is incredibly important, but that now has to be used to leverage in more of our long-term savings in order to expand enterprise in every postcode. We heard evidence at our Committee yesterday that underlines that the enterprise rate in our country is now at the highest level it has ever been. We have doubled the entrepreneurship rate since 1999, but too few of those businesses are surviving for the long term because we are not investing in ourselves. Let us rebuild regional banking, let us put business banking back on the high street and let us couple that with stronger, sharper incentives for our angel investors and venture capitalists. We are making some progress, but it needs to be much faster. We are not short of long-term savings or of genius, but what we have got to do is match the money to the ideas and the entrepreneurs at a completely different scale for the years to come.
My final point is about artificial intelligence. The Chancellor made some very important announcements about investing in artificial intelligence, and in artificial intelligence safety and security for the future. That builds on a number of initiatives started under the last Government, in particular by the former Prime Minister. Again, we have to grasp the fact that the way that we are going to reindustrialise our country is by marrying AI to HI—human ingenuity, the British genius that we have in such abundance on these isles of wonder.
This is the home of the scientific revolution. This is the home of the industrial revolution. We have been inventing the future and making history for 300 to 400 years in this country, but if we are to reindustrialise in the way that the Prime Minister has set out, we have to marry artificial intelligence, traditional engineering and cyber-engineering on a completely new level for the years to come. The IS-8—industrial strategy 8—needs to become the AI-8.
Crucially, we have to recognise that we are not going to spread artificial intelligence through our economy unless people trust it. That means that we will need new regulation to keep it safe and secure for the future, and we will have to ensure that there is a just transition for workers as they go through this new industrial revolution. The Committee will announce important recommendations on statutory safety legislation, which we think is needed in the here and now, and we will have a report out before Christmas about how we think workers should be supported and reskilled for the future. We have a tremendous future ahead of us if we get this right, but if we pretend that we can somehow leave it to the market to decide, rather than building a strategic partnership between the public and private sectors for the future, I am afraid that we will miss the opportunity that lies before us.
This is a Budget that, by and large, will be welcomed by business. More and further reform is needed, which I hope our Committee will influence in the 10-year plan and the CSR next year. The Chancellor should take some pride in having delivered a Budget statement today that leaves our country stronger and fitter for the future.
Helen Maguire (Epsom and Ewell) (LD)
I welcome much of what the Chancellor has shared today, but I believe that the Budget falls short in several areas.
In Epsom and Ewell, hard-working people are being stretched in all directions. One constituent has shared how, even though she is earning more than ever before, she just cannot keep up with the increasing costs of everyday life. That is not a unique experience. Rising costs are making essentials feel like luxuries, and working hard simply is not enough. Food prices are mounting, and energy bills are spiralling. The Chancellor offers a few pennies off a jar of marmalade, which will save households only £21 a year. While Paddington Bear will appreciate the cost of sandwiches going down, that marmalade relief will not help my constituents. We need to bring costs down. No one should have to worry about the cost of energy because of the whims of Westminster or geopolitical instability.
I welcome the £100 cash payment for homes in council tax bands A to D, but if energy bills keep rising, it will only offset the escalation in price. Today, the Government’s tax band checker crashed as people checked to see if they were eligible. That just shows how desperate people are. Instead of offering a one-off reprieve, why not offer a sustainable solution, such as an essential energy guarantee that would save the average family £100 a year, every year?
Epsom and Ewell is home to many hard-working businesses—independent restaurants such as Bamboo Basket and family-run shops such as Fudge & Sons. When I speak to local businesses, one word repeatedly comes up again and again: uncertainty. Only one in six small businesses anticipate growth in the next 12 months. That is a dire assessment, and Labour has only added pressure with its previous jobs tax and national insurance hikes. I welcome the slashing of the endless form filling and pointless paperwork and the introduction of founders’ relief, and I am glad that the Chancellor has finally listened to Liberal Democrat calls to support business and reward entrepreneurial ambition, but more must be done. Businesses deserve a fair deal.
I welcome the efforts to ease business rates, but they do not go far enough. Dawn, the director of Word on the Street bookshop in Ashtead, told me that she fears the changes will not help. Her business is a microbusiness; it has a turnover of less than £1 million, a balance sheet of less than £500,000 and fewer than 10 staff, but her current business rates are more than £6,000. To pay that, she must sell around 1,300 books a year. The current system continues to punish high street businesses and, due to the high rateable value in Surrey, businesses will not benefit from the new exemption. The Government must overhaul business rates now.
Hospitality is on its knees, and the Government have failed to throw businesses a lifeline. Every week, I am told that the cost of doing business is suffocating. Fiona, the landlady at the Marquis of Granby, was forced to increase the price of a pint from £6.50 to £7.15 just in the last year, and now there is a rise in beer duty. Green & Bean coffee shop in Epsom told me that it did not have any hope for this Budget, and quite frankly it was right. Hospitality is not just about pubs, cafés and restaurants; it is a vital entry point into the world of work, giving young people, including NEETs, a chance to gain skills, earn a wage and build a future. When hospitality businesses close, we lose jobs, local growth and the heart of our high streets. We cannot let that happen.
High energy costs put real pressure on small businesses. It seems that big industry gets a discount today, but the high streets get the bill, and Fatima’s Hair Boutique in Epsom is no exception. Hairdressing is energy intensive, and Fatima needs hot water, salon machines and heating. In summer, her salon’s energy bills are around £390 a month; in the winter, they average a staggering £600 a month. The Government have announced that electricity bills will be cut by up to 25% for more than 10,000 businesses through the British industrial competitiveness scheme, but will the Chancellor confirm whether high street businesses are included in that scheme? Small businesses need a cut in their energy bills, not a trim around the edges.
Epsom and Ewell is a strong net contributor to the Exchequer and is home to major businesses such as Aviva, Wates and Slitherine, but that success depends on strong rail infrastructure, and I did not hear anything about that in the Budget today. Cuts to train frequency post-covid are having a huge impact on local businesses. Growth relies on people being able to get to work and contribute to the economy. We must restore train services in Epsom and Ewell to at least four an hour—an investment that would pay dividends back to the Treasury.
I have been in Parliament for just over two years, and in that time I have seen three Health Secretaries come through. What I have not seen is the Government deliver on fully funding the new hospital programme. St Helier is being held together by patchwork repairs, and now we are seeing the result of that chronic under-investment—pipework so old that Legionella and Pseudomonas have been found in the water in St Helier’s maternity ward. My constituents deserve better. The Government must stop dragging their feet and speed up the construction of the new specialist emergency care hospital.
I welcome today’s abolition of the cliff edge on carer’s allowance, but the details are less welcome. It will not take effect for four years, and it will act as a 100% tax rate for working carers. The Chancellor did not acknowledge the crisis in primary care—GP waiting times are through the roof, while dental deserts are the default. It is not good enough. There was also no mention of funding for the national cancer plan. We need action to save lives and increase cancer survival rates. Treatment must begin within 62 days of diagnosis.
The Chancellor resigned as Defence Secretary because, in his own words, the plan fell
“well short of what is required for defence”.
That was an honourable decision, but now that he holds the purse strings, he has failed to set out a clear route for defence spending with the urgency that is needed. With the general public being told to stockpile, it appears that Britain’s kitchens are going to be better resourced than our armed forces. As such, although I welcome much of what has been announced today, for many of my constituents this Budget has not been bold enough. We need real guarantees that support constituents and businesses, because life should not be this hard.
Catherine West (Hornsey and Friern Barnet) (Lab)
It is a pleasure to follow the hon. Member for Epsom and Ewell (Helen Maguire). There is much to be welcomed in today’s Budget speech. For me, it was solid but not flashy—it was from the man who has HP Sauce on his sandwich, rather than pesto alla Genovese or tapenade aux olives. It is a really good Budget for the everyday, supporting households, helping small business and doing all it can for our fantastic start-ups.
Today’s debate takes place in the context of the IMF having said that the fundamentals of the UK economy are solid: unemployment is down by 26,000 among the working-age population and productivity has improved. However, the cost of a barrel of oil today is $114. I do not think any other Budget over the past few years has faced that sort of impact on every single thing we consume as a country, so the timeliness, tone, careful presentation and panache with which it was delivered were a real pleasure.
In my speech on the Budget last year, I reflected on Attlee’s 1945 Labour Government. Labour rebuilt the country, built the welfare state, built the NHS and built council homes up and down the country, but this year, the more appropriate leader to reflect on is the Labour Prime Minister Harold Wilson. He once said:
“I want to show that as a government we are sensitive to little points which may be trivial in the context of government policy but carry a disproportionate weight in people’s minds.”
That is the paternity cover for white-van employees that my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne) mentioned. It is the help that the children at Coppetts Wood primary school are getting with their breakfast clubs, on top of the school meals provided by the Mayor of London and Barnet council.
It is also the use of empty office buildings. Harold Wilson once proposed the nationalisation London’s Centre Point; that building ultimately gave its name to the homelessness charity Centrepoint, which is still going from strength to strength today. What price can we put on bringing somebody in from the cold to be given a night away from those freezing temperatures and served by people in our constituencies? Those people do not necessarily work for the council; they may be from the Museum of Homelessness in Finsbury Park in my constituency, the Muswell Hill community kitchen or the street kitchen on the Harringay ladder. All those volunteers do brilliant work with those experiencing street homelessness, and they have been in touch to say how much they like the style of our Prime Minister and the solid style of our Chancellor. I am pleased to see that £39 billion has been earmarked to deliver 300,000 homes from 2026 to 2036.
I know that there is a bit of gloom around the Chamber, but we can be positive about the fact that when the cost of a barrel of oil was down at $70 a barrel just six months ago, things felt a bit more hopeful. One of the things that is implied in this Budget is the redoubling of effort by the Foreign Secretary to use our might abroad to bring people around the table to talk about the link between conflict and household budgets. Even if we did not see a total cessation of violence, but at least people were talking to each other, we might move towards $70 a barrel again, as compared with $114 today. That would see things turn around, as the fundamentals of our economy are strong.
I welcome the Your First Home scheme, backed by £4.7 billion. Both Haringey and Barnet councils will be pulling out all the stops to ensure that everyone has a safe, secure and affordable home, and they will be working on those ever longer lists of homeless individuals. I also welcome the statements about assisting councils with the fiscal devolution road map, as it is being called.
I look forward to Dame Louise Casey coming forward with her plan. I hope that councils will be pump-priming their adult social care departments so that, together with the NHS and social care partnerships, we can see that national care service become a reality much more quickly. Barnet’s Labour-run council earned dementia-friendly status and has worked with residents on an engagement and co-production charter for adult social care, working closely with Unison and other trade unions. That is the sort of co-operation we want to see.
I have talked about why we need good housing and good social care. The final piece of the puzzle is good, well-paid jobs. I am incredibly pleased to hear that the minimum wage is set to increase once again under a Labour Government for 2.3 million of our lowest-paid workers. We often hear in the media, from different quarters, about the damage that the minimum wage or the London living wage are doing. We rarely hear from people who have had a pay rise, who think, “That really helped me this week.” I welcome that rise, particularly for people in entry-level jobs. They might have hoped to get on a career ladder, but through a twist of fate in their own lives, are on the minimum wage or the London living wage for their entire career until they retire. For those workers, these increases are crucial.
In 1967, Harold Wilson applied for Britain to join the European Economic Community. In my constituency, 81% of people voted to remain in the European Union, and they want me to point out how important it is to the UK economy that we get closer to Europe. We know that Brexit hit our economy, making it 6% smaller, and we all know the importance of allowing the Prime Minister to go to Brussels next month with as free a hand as possible. Let us not hold Britain back. What about our children and young people who want to look forward to travelling abroad and having experiences where they learn a language and meet other people in their region? They will then get to know the difficulties in Europe and understand what it means to defend Europe, and they will appreciate the opportunities that are out there. For our future prosperity and for our children, we need to be at the heart of that European debate.
Finally, today’s Budget speech laid out timely, carefully presented interventions, with families and small business at their heart. I like the style of the Chancellor. It felt safe and it felt like the right thing for today. As we see, I hope, an improvement in the international conflict picture, we will see an improvement due to the good fundamentals that this Labour Government have produced since 2024.
Sir Desmond Swayne (New Forest West) (Con)
It is always a pleasure to follow the hon. Member for Hornsey and Friern Barnet (Catherine West).
I believe that this is the cut-and-run Budget. Indeed, I read in the papers this morning that the Liberal Democrats—currently occupying the two front Benches below the Gangway—have taken the hint as well and are preparing for a December election, such is the electioneering of this Budget. This is Hamlet without the prince.
Mr Toby Perkins (Chesterfield) (Lab)
So is the right hon. Gentleman’s main criticism of this Budget that it is too popular? [Interruption.]
Sir Desmond Swayne
I will certainly address the hon. Gentleman’s question. This Budget is certainly not popular with me—I have interests, which are set out in the register.
The difficulty is that, in the absence of the spending review and any clear appetite to deal with the £3 trillion debt, the burgeoning growth of debt and, of course, our lack of productivity, this Budget lacks any credibility. It is the “Try not to upset too many people” Budget, to get us through to the spring with the Government unscathed. That is the meaning of the “breathing space”—breathing space to get this Government to a position where they can call an election decently, notwithstanding the fact that the Prime Minister assured the people of Makerfield, and indeed has said in terms since, that he has no such intention. That is the reality we are dealing with.
The problem that we have at the centre of our economy at the moment was defined—brilliantly and very candidly, I think—by the Secretary of State for Work and Pensions when he said that, in all the meetings he has, the question he is asked is, “Who can we tax in order to give benefits to others?” That is essentially the issue we are having to deal with. The Chancellor has decided not to address that question. He has made a calculation. He calculates that the pain for the Labour party in addressing that issue is greater than the medium-term financial damage of not addressing it. Of course, the financial damage of not addressing it is that we will all pay higher mortgages and endure higher costs, but his calculation is that he can get to the spring before those particular chickens come home to roost. That is the strategy of this Budget: not to do too much, but to have a few things that make it, in the estimation of the hon. Member for Chesterfield (Mr Perkins), “popular”.
The reality, however, is that there is going to be an election, and we are going to have to face the huge question of the enormous costs that the Prime Minister has pointed to in his ambitions, and how that will have to be addressed. He said today that he is going to soak the banks. Now, that has implications for us all, because it affects the cost of everything. It will affect the cost of our mortgages, it will affect prices and, of course, it affects investment. What a signal to send to investors! “If you’re successful, if you’re doing well, we’re coming for you.” That is the message that investors receive. Little wonder that we are haemorrhaging wealthy taxpayers. According to Bloomberg data, we have lost half the billionaire wealth since 2024, either because it has left the United Kingdom or because its exposure here has been reduced.
We might ask ourselves why. Well, it comes back exactly to the issue raised by the Secretary of State for Work and Pensions. We have terrified those people with mansion taxes and with the international reach of inheritance tax on all their assets, and by merely talking about the prospect of raising capital gains tax. I am very glad that we have not raised capital gains tax, but they can read the runes. Then, of course, we expedite their exit by talking about an exit tax. All those things have consequences. Into this milieu of burgeoning debt and surging unemployment, the Prime Minister hurls his latest grenade: talk of rejoining free movement within the EU. Nothing could be more calculated to be devastating for the prospects of our young people languishing in unemployment than to suck in European labour.
So I say we have that election. Let us go for the election that the Government are clearly building themselves towards, because at least that will give the British people the opportunity to get off this road to penury.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
It is a pleasure, I think, to follow the right hon. Member for New Forest West (Sir Desmond Swayne), but may I challenge a couple of his points? He talked about the risk of higher mortgages. I might remind him that there have been six interest rate cuts since 2024, which will have supported his constituents by bringing down their mortgage bills. He also mentioned productivity. I remind him that the upgraded growth forecast from the OBR is due to productivity gains from investment in AI. There is positive news, and I am sorry that he has missed it so far, but he may want to spend a bit more time looking.
I welcome today’s Budget, because in these tough times we need to put in place the foundations to build the base for a competitive future and prosperity for all. I was surprised by the rather extraordinary response from the Leader of the Opposition, who almost denied the impact of the Liz Truss mini-Budget. Perhaps it may be worth reminding the House that the unfunded £45 billion of tax cuts led to bond prices plunging, sterling falling and the Bank of England having to intervene to prevent a financial stability crisis. It is important that we recognise what happened. That, alongside the fact that the welfare bill rose by £33 billion in the years to 2024, might help bring some honesty to the debate.
Let me speak about today’s Budget from the point of view of three key tests, because it needs to be a Budget for stability, growth and easing the cost of living. The Budget comes amidst unprecedented economic shocks, with conflict in the middle east and Europe, which has disrupted international energy and commodity supplies. The Bank of England identified the energy shock from the middle east as a major source of uncertainty in July 2026, so I welcome the Budget and, in particular, the Chancellor’s determination to combine fiscal discipline with a relentless focus on growth and tackling the cost of living.
Fiscal discipline matters. It is not simply about an accounting exercise at the Treasury; it is about credibility and national economic security. Indeed, the bond markets matter. In 2022 we saw what happens when investors lose confidence in the sustainability of public finances. However, fiscal discipline and growth are not competing objectives. Ultimately, having sustained economic growth, higher productivity, higher investment and more people in good employment is the surest foundation for sustainable public finances.
I am pleased that the UK economy has shown resilience, for which I pay tribute to my right hon. Friend the Chancellor and to the stewardship of the former Chancellor, my right hon. Friend the Member for Leeds West and Pudsey (Rachel Reeves). It is important not to talk Britain down, because we were the joint fastest-growing economy in the G7 in the first half of this year, alongside the US. Borrowing last year fell to the lowest level for six years, the IMF has upgraded our growth to 1.3% for this year, and the IMF’s chief economist has said that we “stand out” on deficit reduction. I know that the Opposition may be disappointed by the OBR’s revision of the forecast.
I welcome the Government’s commitment as a priority to get energy costs down not just today, but for the future. I would welcome more clarity from the Government on whether they are reconsidering the expansion of the British industrialisation competitiveness scheme, which I believe may be coming forward in the 10-year plan. However, with global headwinds from the conflict in the middle east impacting us here and economies throughout the world, it is vital that we have our own plan for growth and for tackling the cost of living.
On growth, I will briefly speak about fiscal devolution and entrepreneurship. Business and industry must be at the heart of our plans for growth. It is important that we have a plan for building the principles of stability, partnership and innovation, with unleashing potential in every corner of the economy in the UK at the heart of our plans. That is why I was pleased to welcome the fiscal devolution road map, which is bold, ambitious and game changing. It recognises that we need to deal with the challenges of today and address the structural challenges to achieve higher growth tomorrow.
For too long Britain has been one of the most centralised major economies in the developed world, with only 5% to 6% of total tax revenue raised locally, while the OECD average is closer to 11%. However, fiscal devolution means more than devolving spending decisions; it is about enabling greater responsibility and stronger incentives to expand local economies and tax bases.
Graham Stuart
We have had devolution since the Blair Government, and Wales has become one of the poorest parts of the whole of Europe, although it has had serious and real fiscal devolution. If it has been so spectacularly painful for the residents of Wales to have such devolution, why does the hon. Lady think it will be so marvellous for people in other parts of the United Kingdom?
Seema Malhotra
I think there is an important debate to be had about how we make sure that fiscal devolution is successful and what the enabling factors are, but it has been successful elsewhere. As the right hon. Member will recognise, I was pleased as a London MP to see today’s commitments to establish a successor to the Elizabeth line business rate supplement and to support transport infrastructure in the future through some of the new mechanisms. It is important that we look at how fiscal devolution can accelerate projects that will unlock homes, create jobs and generate economic growth not just in the capital, but across the UK.
As we devolve—and I am putting this to the Treasury team—it will be important to confront another economic challenge, which is co-ordination. Economies do not stop at administrative boundaries; there are cross-regional economic spillovers. If we do not design institutions to take account of them, ensure appropriate accountability and evaluation, and help successful innovations in one region spread to others, what appears optimal for each region individually may not be optimal for Britain collectively. I look to the Treasury team to update the House on what can be learned from elsewhere about having co-ordination as well as devolution.
I was extremely pleased to see the measures supporting young entrepreneurs and also women entrepreneurs. I championed that in my previous work as chair of the APPG for entrepreneurship. Entrepreneurship is oddly absent from debates about youth unemployment. We celebrate success when people have an initial public offering or attract a big investment, but we do not talk about the preceding journey or the inequality that often characterises it. So I am looking forward to the Government’s measures having an impact in encouraging entrepreneurship among young people across the country.
Let me say a few words on opportunity and the cost of living. I believe that the Your First Home scheme will make a huge difference not just to my constituents in Feltham and Heston, but also across the country. It is vital to have measures such as the 20% equity loan scheme to help first-time buyers, with a minimum deposit requirement of just 2.5%, to ensure the scheme is accessible to those who have a regular income, but have been unable to save for a large deposit. The council tax rebate, removing VAT from domestic electricity bills and the reforms to standing charges, alongside the first rail fare freeze in 30 years that was announced earlier this year and the freeze in prescription charges, are all important measures.
In conclusion, this is a Budget for stability and growth, and one that eases the cost of living. It is designed to raise Britain’s productivity and investment, and to spread opportunity to every part of our country by investing to save and investing to grow. Taken together, fiscal credibility, empowered regions, effective co-ordination and investment in human potential will lead to better growth that is productive, inclusive and sustainable. This is the time and the challenge that we as a nation must rise to.
Kirsty Blackman (Aberdeen North) (SNP)
People desperately need support with the cost of living. They do not need brown sauce, gherkins or marmalade; they need help with the cost of living.
If we look at the documents the Chancellor produced today, he is less likely to hit his fiscal rules than the previous Chancellor was. That is what the back of the OBR book tells us. Real household disposable income is going to drop in the short term. Labour Members will be standing on an election platform saying “vote for us” when household disposable income, a fairly reasonable measure of living standards, is going to drop in the short term. It will rise again only if gas and energy prices do what the OBR hopes they do—the OBR has been very clear that that is not by any means set—but who would like to predict what Donald Trump is going to do next? I certainly wouldn’t. We do not know what will happen. The only way in which people’s living standards will increase is if the international energy markets reduce the price of gas and oil. That is what the Chancellor is pinning his hopes on.
The Chancellor is giving people £100 in this Budget, despite the fact that, as of January, energy bills will be £1,000 higher than Labour promised they would be in their manifesto—£1,000 higher. We have a situation where every single major household bill has increased over the course of this Government—every single one. We are seeing people really struggling with the cost of living, and what does the Chancellor decide to do? He decides to reprioritise capital spending. He decides to pull money from the Acorn project in the north-east of Scotland, which supports hundreds of jobs for carbon capture and storage, and which the Climate Change Committee said was one of the projects needed to get us to meet our climate change ambitions. That is one of the things the Chancellor has chosen to do today.
The other problem, for which the Conservatives have a significant responsibility for creating, is the fact that the UK has an incredible level of index-linked debt. I am pleased that the Chancellor is moving towards reducing the percentage of index-linked debt, but only three countries in the OECD have higher levels of index-linked debt: Mexico, Israel and Chile. Moving away from that legacy left by the Conservatives is really helpful in today’s financial climate. However, if the Government do not manage to make that, any slight change in the level of inflation or oil and gas prices could mean that the Chancellor massively misses his fiscal rules. The section on risk in the OBR’s Blue Book very clearly sets out how easily a very small percentage change could mean that the Chancellor will miss his rules. There is only about a 50% chance that is he going to hit the rules anyway—it is only about 52% in the back of the Blue Book. Therefore, given the volatility of the world, we should all be incredibly worried.
We needed something dramatic. We needed something major to ensure that people can survive this cost of living crisis. We had the child poverty strategy earlier in this Parliament. It was deeply, deeply unambitious other than the removal of the two-child limit, which I fought for and entirely welcomed. Other than that, every single thing had already been introduced or announced. In Scotland, we have a much better child poverty strategy and, in fact, the most comprehensive cost of living package in the UK.
People with children are looking at this Budget and thinking, “It does not help us.” Young graduates currently living with their parents up to the age of 25, which they have never done before, are looking at the student loans that they owe in England and thinking, “How can we possibly be paying our student loans until we’re 60, with no chance of a job?” Couples with children are looking at the fact that their parents could afford for one of them to work part time, could afford to have more children, and could still afford to go on an annual holiday. Couples now cannot afford that because they are poorer than the generations before. Folk in their 40s have no end in sight to their mortgage—whereas their parents had paid theirs off by then—because house prices have gone through the roof, and mortgage prices are even higher as a result of some of the decisions taken.
What is the Chancellor doing? He is providing cheaper gherkins—great! Disabled people who are desperate to work, but currently subsisting on universal credit, know that they cannot afford the fuel needed to drive their car to a job. They cannot do that, but what has the Chancellor delivered? One hundred pounds. That is not going to cut it. We have pensioners who are living in terror of their next energy bill. They have lost trust in this Government thanks to the winter fuel cut that came with no warning and what was done to the WASPI women.
The Chancellor has completely failed to recognise the huge number of people living in fear of the next bill dropping through the letterbox. He is living in a different reality from the rest of us. He is providing some changes around the edges. He says he is providing a little bit of breathing space, but it is not going to get people through this winter, never mind to the spending review or the Prime Minister’s wonderful 10-year plan that is supposed to be coming.
We have made different choices in Scotland. We provided the baby box. We provided a cost-of-living package that is the most comprehensive in the UK. We provided no prescription charges. We provided free university tuition. We do not have access to all the levers. We do not have the ability to do what we asked of the Chancellor, which was to cut energy bills by at least £300—not even close to the manifesto pledge but getting there. We asked the Chancellor to make a difference so that people can afford to get through this winter. We asked for the removal of VAT on various things, including petrol and diesel for the duration. We are pleased to hear the changes that have been announced on fuel, particularly on mileage, which makes a massive difference.
A couple of weeks ago when Jackdaw was announced, the Government talked about removing the gas standing charges. We know that this is going to put up the energy bills for those people who use the higher levels of gas. We know that people in Scotland have significantly colder properties because it is colder in Scotland than it is here. What is the differential change? How many people in Scotland will be losing far more, given the extra that they will be spending? How many disabled or elderly people, who spend more time at home, will have to pay more on their gas bills because of the Chancellor’s choices? Has he actually looked at that? Is it in any way a progressive measure, or will it continue to screw over those people who are already screwed over by the current situation? The Chancellor needs to do better.
Mr Toby Perkins (Chesterfield) (Lab)
The Budget will continue to make Britain more resilient, by supporting people and businesses in the current moment and investing in the future. In an increasingly uncertain and changing world, this Government are steadying the ship. The Budget will help families with the pressures they face now and invest in the long term to bring down the cost of living, making life easier and better for working people.
I welcome much of what has been announced. However, while members of the mineworkers’ pension scheme in my constituency are much better off as a result of the measures taken by this Government two years ago—and have seen further improvements with the position that the Chancellor has taken today—there will still be disappointment that the Government have not decided to return all the surpluses from the scheme to its members. Mineworkers paid a large health price for their commitment to keeping the lights on over many decades, and each day of delay means that more mineworkers die without receiving the full fruits of their industry and community’s commitment to our nation.
Turning to the positive news announced today, we have the second fastest growth in the G7, our growth forecast has been upgraded once again by the IMF and, as was generously acknowledged by the former Chancellor, the right hon. Member for Godalming and Ash (Sir Jeremy Hunt), the FTSE has risen modestly. I remember being on the Opposition Benches when Kwasi Kwarteng was delivering his Budget and seeing hundreds of thousands of pounds—millions, even—crashing off the value of the stock market. It is important to acknowledge that those who have an independent view of this, outside of the political sphere, have welcomed this Budget, which is a sure sign that this Government are on the right track.
At every single Budget under this Government, the Conservatives have predicted catastrophe, and yet every time the economic figures have come out, they have been more positive than their predictions. We have seen measures today meaning that 43,800 Chesterfield households will receive £100 towards their energy bills this winter; a £50 reduction because of the changes in VAT; fewer pensioners being brought into paying tax; positive support for self-employed partners; a welcome increase in the threshold for small business rate relief up to £18,000, meaning that 54% of businesses in the east midlands will now pay no business rates; and no rises for the next two years on business rates.
The Government have made that economic progress at the same time as building huge amounts of home-grown renewable energy capacity; holding failing water companies to account; reviving council house building; bringing down national health service waiting times; introducing record increases in the national minimum wage; bringing more people into work than ever before; making record investments in our national health service; and bringing half a million children out of poverty. That is the difference that a Labour Government have made.
Possibly the greatest endorsement of this Budget is how weak the Opposition have been on it. When Opposition Members get to their feet to say, “Well, I think you could have been a bit more ambitious,” we know that they do not really have a line to attack us on. That is a very strong endorsement of this Budget. Of course, there is much more to be done.
I should say that while the Leader of the Opposition was making what we all know to be a difficult speech—apparently some facts were redacted in the copy she received—which is why her critique was so weak, but at least she turned up to make that speech. The leader of the Reform party did not even bother turning up to the Budget. It is extraordinary.
Mr Perkins
I was under the impression that the hon. Member for Clacton (Nigel Farage) was still the leader of the Reform party. Why did he bother seeking re-election? He never turns up to this place. He is mystifying.
There is so much more to be done. Russia’s illegal invasion of Ukraine and Trump’s ill-advised war on Iran have driven up fuel prices, energy prices and the cost of fertiliser, creating a cost of living crisis across the globe to which we are not immune. In that context, I welcome the Chancellor’s priorities of boosting Britain’s resilience and bringing down energy costs for good.
Climate change and biodiversity loss continue to be clear and present threats to Britain’s security and prosperity, with droughts at home and across the globe reducing crop yields and driving up food prices. The Climate Change Committee has been absolutely clear that climate impacts could cost the UK economy £10.7 billion over the next year in lower tax revenue alone because of lower productivity due to extreme heat or disruptions from flooding. Every independent analysis tells us that, because of the cost it will have on our economy, taking action on climate change is far cheaper than not acting.
Just a few weeks after a summer of wildfires and drought, when extreme heat caused more than 3,000 excess deaths in the United Kingdom in May and June alone, we need to be really cautious about anything that can lead to higher emissions. While I welcome the Chancellor’s desire to see data centres here in the UK, we need to be very careful that we do that in a way that does not damage our climate commitment.
Land managers and farmers are central to preparing the UK for the impacts of climate change. Investing in UK farming will also help to protect farmers from global events, in turn helping to shield consumers from rising food costs. Yet just a few weeks ago, the window for applications on the sustainable farming incentive was open for just six hours before it was fully subscribed. It is great that this Government are getting that money out the door and to farmers. It also shows the immense appetite for this funding and for nature-friendly farming. It is important that the Government take every step that they can to provide more support for farmers who are doing things the right way.
In conclusion, this is a Budget of stability and of hope for working people and small businesses. It is a Budget that supports entrepreneurs. It was extraordinary to hear the Leader of the Opposition say that this Budget does nothing for business when it specifically supports entrepreneurs and risk-takers in our economy. This Budget is progressive—it has the most value for those with the lowest income—and it takes the serious decisions to address the collapse in our economy caused by the Conservatives. It continues to deliver growth while reducing, over several years, the debt-to-GDP ratio of our country. For all those reasons, it is a Budget that I am very pleased to support.
Richard Tice (Boston and Skegness) (Reform)
Poorer—that is what every household in the country is, including in my constituency of Boston and Skegness. This year alone, real household disposable income is down 0.8%, and every single year between now and the end of this parliamentary term, the average household’s real disposable income is down compared to what the OBR forecast just six months ago. Let us look at the other main economic data: GDP growth for 2027 is forecast to be down once again—from 1.6% to 1%—under this failing Labour Government; and GDP growth per capita is forecast to be down from 1.3% to 0.9%.
And let us just look at what is up, shall we? Government borrowing in this financial year alone is up almost £20 billion compared to what the OBR forecast just six months ago. Over the lifetime of this Budget book for the next five years, Government borrowing will be over £65 billion more than the OBR forecast just six months ago. This is a Government who are completely out of control in terms of spending. That is why the bond markets are applying what is known internationally as “the moron premium” to the United Kingdom under this Labour Government.
Credit where credit is due, this Chancellor does know where the real problems are and he has tried to do a little bit. He understands that there is a crisis with energy bills, which are now forecast to go up by an extra £466 per household in January, and then by another £200 per household in April—all because of the madness of net zero and the rush to renewables, which is happening as we speak. Every single day, NESO is having to tweak and twiddle the dials and add balancing costs to the tune of some £50 million. That is ten times what it was just a few years ago. Next year, it will cost £200 per household for the balancing costs on the grid alone. This is completely out of control. The Chancellor has shuffled the cards in the pack. He has moved a bit from bills to general taxation, but he has not dealt with the real crux of the crisis, which is that the rush to renewables is driving up all our household energy bills at a catastrophically high rate.
Now, I am constructive sort of guy, so I want to give credit where credit is due, so let me say that the Government have done the right thing in approving Jackdaw—but they need to go further. Ministers know in their heart of hearts that they need to approve the oilfield at Rosebank—the Prime Minister was tempted to confirm it at question time today—and grant many more licences in the North sea, because that is our energy treasure; that is where the jobs are and where the growth is. This Government are completely failing on growth. The energy crisis is getting worse, and everybody needs to understand that. If we use our energy treasure, the bills will come down.
If we look at property and housing—again, credit where credit is due—the Chancellor has eased regulations to try to build more homes on brownfield sites. I think he might have read the teal paper I released in September on how to reduce the cost of construction and get more things built. He is right to remove the need for biodiversity requirements on brownfield sites, but there is so much more to do to reduce the construction cost of the new homes that I think we all agree we need to build. There is a £15,000 to £20,000 increase in the cost of homes because of unnecessary regulations, but again the Chancellor has not grasped the real opportunities to go for it and reduce the cost of building. That is what we need. We all agree that we need more affordable social housing, but to do that we have to reduce and remove unnecessary restrictions and the delays in getting planning consents.
We now know that the Secretary of State for Housing, Communities and Local Government has given up on her 1.5 million target. In reality, we will be lucky to get to half that number—750,000 homes instead of 1.5 million. These are the lost opportunities from a Government obsessed with regulation, obsessed with process and obsessed with bureaucracy. They cannot do the right thing to deregulate and get some growth.
Mike Martin
The hon. Member seems to be extolling the benefits of building houses, so can he explain why the Reform party in Tunbridge Wells is campaigning to restrict house building?
Richard Tice
Far from it—we are actually trying to build more houses on brownfield sites, because that is what we should do all over the country, including in the great town of Tunbridge Wells. We need to make it easier to build on brownfield sites. At the moment, house builders are giving up all over the country because the costs are too high.
I think the Chancellor has been looking at some of our excellent Reform policies, but while he is right to lift the income tax threshold for pensioners, he could have gone much further and lifted it for everybody—up to our recommended level of £15,000—by being more dramatic about cutting the vast amount of wasteful spending on welfare and cutting foreign aid to overseas nations that do not need it. Those are the differences between the right things to do and the lost opportunities of this Government.
I think the Chancellor has listened to another Reform policy, which is to lift the threshold on business rates, but he has not gone far enough. While the £18,000 threshold is better than £12,000, it needs to be much higher. That is another lost opportunity.
We have a nation of voters, and every household who looks at this Budget book and listens to the Budget will say, “No, thanks. Every single year between now and 2030-31 we’re all getting poorer than the OBR forecast just six months ago.” People feel it and they sense it. They know that their money is being wasted on bureaucracy and unnecessary quangos—more taskforces and quangos have been set up during this Budget. It could have been so much better. I feel that this Chancellor has just not had the courage or the strength. He has not risen to the occasion. He has tried, but it is not good enough. We are facing a financial crisis and an energy crisis, and we need a Government who do the right thing—a Government who cut our bills. This Budget is a lost opportunity.
Matt Western (Warwick and Leamington) (Lab)
It is a pleasure to follow the hon. Member for Boston and Skegness (Richard Tice), though I disagree with the vast majority, if not all, of what he said. As we have seen, growth is running at about 2.1%. We have not seen that economic performance for about 10 years, with the exception of 2022, as we emerged from the pandemic. In the 2024 general election, we promised that we would fix the foundations; that cannot be done overnight. We said that we would produce the highest growth rate in the G7 and we have done that.
I am proud of the Government’s record, as, I am sure, are all my colleagues on the Labour Benches. That is not just about what we have heard today; it is about what has happened over the last few years. I want to place on record my thanks to the last Labour Prime Minister and his Chancellor, my right hon. Friend the Member for Leeds West and Pudsey (Rachel Reeves), for their stewardship, because they delivered fiscal discipline, bold economic reforms and good growth.
We face the impacts of global events at home when doing the weekly food shop or filling up at the pumps, with Trump and Netanyahu’s war in Iran set to cost each household £2,500 by the end of 2027. Listening to the Chancellor, today’s Budget looks to build on the fiscal foundations and I welcome the measures laid out. It will give families the breathing room they need by extending the VAT on electricity bills this winter and spring into July next year, taking £50 off; cutting standing charges on gas bills, saving £45 for the average household; knocking green levies off bills; and providing a council tax rebate of £100 to help 20 million households with their energy bills—that will help almost 40,000 households in my constituency of Warwick and Leamington.
Today’s Budget cannot fix the cost of living overnight. Between 2010 and 2024, real weekly average wages rose by just £16, but if we had matched the wage growth seen in Germany, our earnings would be £3,600 a year higher. The extension of the 5p tax cuts on fuel duty to July is welcome, as is holding down red diesel. I congratulate the Chancellor for helping motorists, particularly business users, with the higher mileage rate increasing from 25p to 35p. That will make a significant difference.
The average house price in my constituency 30 years ago was five times the average annual salary. Today, it is 10 times the average annual salary. That is why I welcome the Government’s announcement; it is critical to increase supply to help young people to stay in their areas and to help key workers to locate themselves near their work. That is particularly relevant not just to the businesses in my constituency but to Warwick hospital. When it comes to the delivery of affordable housing and council homes, extending the discounts on the local authority borrowing rate is important, and the introduction of the £4.7 billion Your First Home programme is welcome.
I am delighted to see the Chancellor backing UK businesses by taking more of them out of paying business rates. The raising of the small business rate relief threshold means that 52% of all retail, hospitality and leisure businesses will pay no business rates at all, and the real-terms business rates freeze for eligible businesses will benefit 535 properties in my constituency. The Chancellor also mentioned the relief for family businesses, and the relief for entrepreneurs and founders, which is particularly welcome and innovative. I commend him on that.
On the reindustrialisation programme, the additional investment announced, totalling £20 billion and supporting 100,000 jobs in sectors such as AI, defence and green energy, will strengthen our economic resilience. In Warwick and Leamington, we are very well positioned to take advantage of that, in particular through our advanced manufacturing, automative and defence businesses. Let me highlight just one company, given that we have been talking about innovation and have heard that are no £1 billion businesses in the UK. A company just down the road in Oxford—a spin-out of a PhD project at Oxford University—had zero money in 2009, but by 2019, just 10 years later, it was worth £100 million and was subsequently bought by Mercedes.
To build on the point made by my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne) about pensions, ISAs and encouraging greater investment in the United Kingdom, I believe that there is a lot of money in this country as liquid assets and we have to use much more of those assets, such as those in ISAs, to invest in the United Kingdom. I would like to see more encouragement and more fiscal incentive for individuals to use their savings to invest in the United Kingdom or in the UK’s defence sector.
On devolution, it is welcome that there is transitional growth funding. I agree with the combining of powers—for Warwickshire, Coventry or the west midlands, whichever way we end up—and believe that it is important. I really do hope, though, that areas such as mine will not lose out just because of the mistakes made with local government reform back in the 1970s, when Coventry was hived off from the rest of Warwickshire.
I welcome the long-term thinking that the Prime Minister is bringing to his role and how he sees Government. Working with countries such as Vietnam, we will see the benefits of a long-term plan and the strategy for delivering permanent growth and long-term prosperity for communities.
We must have AI sovereignty, either through strategic leverage of the AI stack or through a sovereign frontier AI model, so I welcome the Chancellor’s announcement on a sovereign AI unit.
I welcome the measures in the Budget, particularly what has been done to help households through this incredibly tough time—a tough time brought on by external events, whether it be the war in Ukraine or the unnecessary war in Iran brought about by Trump and Netanyahu, which has seen energy prices spike dramatically during the past 10 months. These are significant headwinds, and there is only so much a Government can do to battle them, but I really appreciate the measures that this Government and this Chancellor have introduced to address them.
I agree with my colleagues that this Budget has been delivered by a Chancellor who is renowned for his steadfastness, durability and seriousness. He brings all his personal qualities to the role of Chancellor, and his first Budget underlines his vision and the seriousness with which he wants to steer our country through a very difficult time. I look forward to supporting the Budget.
Graham Stuart (Beverley and Holderness) (Con)
It is a pleasure to take part in this Budget debate and to follow the hon. Member for Warwick and Leamington (Matt Western). Like him, I tend to think that this Budget reflects the seriousness and the vision of the Chancellor, but unlike him, I do not conclude from that that the Chancellor has a deep and serious vision of the future for this country. On the contrary, he, alongside the Prime Minister, has come up with a whole series of small measures. In fact, there are more measures in this Budget than in any previous Budget, and their average value is lower than in any previous Budget. In other words, the Chancellor is fiddling. He is playing with little gifts that he can highlight and say, “We are doing this for business. Look, we are we are taking 70,000 businesses out of business rates.” Of course I welcome that, but it is inadequate in a high street that is falling and losing.
The Conservatives have a leader and a shadow Chancellor with a vision, and that is why our policy would take 250,000 high street companies out of business rates so that we can have the shops, the cafés, the pubs and all the other businesses that give chances to young people and give them that first job so that they can learn how to talk to a boss, how to engage with customers, and how to understand tills and money. That first job gives them a chance, whether it is a Saturday job or whatever. I know that Labour Members did not mean to do it, but that door has been slammed in young people’s faces by this Labour Government. That is why we have seen youth unemployment go up.
Graham Stuart
I will happily give way to the hon. Gentleman in a moment. I am sure that, when he meets young people in his constituency, he is exactly the same as me. I am sure he meets more and more young people who feel a sense of hopelessness. They feel that they are further than ever before from getting on the housing market, and some of them cannot even look that far because they are struggling to get that first job—that first opportunity. Today’s Budget shows that this Government still do not get it, but perhaps the hon. Gentleman does. Perhaps we can finally hear a non-partisan Labour intervention from someone who takes deeply seriously the need to get business going in this country.
Noah Law
I thank the right hon. Gentleman for his kind words, but does he appreciate that, in the south-west at least, 56% of retail, hospitality and leisure businesses will be lifted out of the business rates system entirely? Is that welcome news to him? I hope he has some welcome news in his own patch as well.
Graham Stuart
I think—I am not an expert on this, let alone on all those jobs in the hon. Gentleman’s region—that most are already outside of that system and are therefore not being lifted out. UKHospitality has suggested that as few as 10% of these businesses will be affected by the measure. That is my point to the hon. Gentleman, who I know is sincere and wants to properly reflect the serious challenges facing his constituents and his part of the country.
This Government do not get it. Instead of the bold measure we should have had—250,000 businesses being brought out to bring life, dynamism and hope back to his high street and mine—we have a timid Government playing on the margins. That of course is the central problem of today’s Budget, as was laid out far more eloquently and—as Labour colleagues would doubtless say—more reasonably than I ever could by the former Chancellor, my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt).
The Leader of the Opposition said that the Chancellor had received a hospital pass on inheriting the economic situation from his predecessor, but I remember someone once saying to me, “Do you know what the best thing you can ever have in life is, Graham?” I said, “No, I don’t. What is it?” They said, “A lousy predecessor.” On that measure, the Chancellor has been quite fortunate. And yet he comes forward with something this timid, this pallid and this lacking in inspiration, and gives a speech that entirely aligns with those qualities, and he is met with a near rapturous reception from Labour Members who have had to put up with the two previous Budgets, with their disastrous impact on the UK economy.
Why were those Budgets so disastrous? I can tell the House: it is because growth and wealth, which the former Business Secretary, the right hon. Member for Hove and Portslade (Peter Kyle), spoke about so eloquently earlier, come from the private sector. They do not come from a mission-led Government having a tight deadline to go and help rearrange governmental boards and improve the quality of people on them—that is peripheral. It is private business that creates them, but what did the former Chancellor do? She raised taxes on business by £60 billion. [Interruption.] More than £60 billion, I am told. The small businesses that I meet in Beverley, Hedon, Skirlaugh, Withernsea and across my constituency really want to grow and have customers who want to come in, but the tax position has meant that they cannot offer jobs to the young people I also meet outside those shops, standing around listlessly, who want those jobs. That gap has been widened by the £60 billion in taxes.
According to Government Members today, that gap has been narrowed because of this business rates reduction for 70,000 businesses. But that is not telling the whole story, is it? It is a sleight-of-hand Budget as well, which is why I think it is a disappointment. Business taxes have not gone up by another £60 billion—praise the Lord—but they have gone up by over £2 billion through fiddly measures. On top of that, there is the ever-popular call of, “Let’s attack the banks to feed the Labour Back Benchers,” who are so divorced from economic reality. The banks will be paying £1.6 billion in 15 months—that is if we believe that in 15 months, the Chancellor will say to this particular set of Back-Bench Labour MPs, “Oh, I’ve got a great idea. Let’s look forward to the day we take the tax off the banks.” I rather fear that the 15 months will be extended because of those people who have done so much damage before by leaning on their Front Benchers. Anyway, let us assume that it is real and it only lasts 15 months: £1.5 billion or £1.6 billion will be taken out of the banks.
You know, Madam Deputy Speaker, being a long-standing and experienced Member of this House, that the capital of banks has a big multiplier attached to it. When the Government take £1.5 billion or £1.6 billion away from the banks, they are not hitting the rich and helping the poor; they are actually massively reducing the pool of funding available for the very businesses that, if only the Government started to get some of their policies right, might get to a position, as they profoundly want to, where they can offer a job to that young person outside who cannot get one today.
Amanda Martin (Portsmouth North) (Lab)
I thank the right hon. Member for giving way during his discussion about banks. Is he aware that Barclays’ profits are up by 1.6%?
Graham Stuart
I am delighted. Only one thing is worse than fat, greedy, complacent, lazy banks—if that is how the hon. Member wants to characterise them—and that is broke ones, because once we have a bust banking system, the whole of society is stuffed. People cannot get on the housing ladder, start a small shop or get anywhere. That is why I plead with Labour Members, who I know have had little to do with private businesses—they have come from their charities, social work and trade unions, and have no understanding of business. It seems a populist thing to do to attack the banks, but in fact it hurts ordinary people and means that that small shop on the high street cannot take on the unemployed youngster outside.
Graham Stuart
I will not give way if the hon. Member will allow me.
What is happening to business investment next year? According to the Government’s own figures, it is falling. What is happening to the debt of the nation as a result of today’s Budget, compared with the position earlier in the year? It goes up in every year of the forecast—five years of additional debt, and it was already scary. Labour Members such as the hon. Member for Warwick and Leamington (Matt Western), whom I respect a great deal, and the hon. Member for Chesterfield (Mr Perkins) have been trying to say that this is a great Budget for entrepreneurs, but it is not. It is a Budget that allows a listing ship of state and the economy of this country to drift ever closer to the rocks. Year by year we will see debt going up, taxes going up and incentives going down, and without those incentives, those businesses in Beverley, Withernsea, Hedon and Skirlaugh, or wherever they are in my constituency, just cannot offer that job to that person.
To look at the specifics of the Budget, how is some of this being funded? The Chancellor skated over it as best he could, but he is going to tax amusement arcades. As if coastal towns such as Withernsea and Hornsea up the coast are not hurting enough, he is going put up tax on the entertainment of ordinary people going to the amusement arcade. He is an enemy of fun.
Graham Stuart
I will not give way to the hon. Gentleman.
Coastal communities are losing out, and savers are being hit by a £500 million increase in tax—again, I do not think that has come through clearly. Some Members talk about this being good for pensioners, but it is not. Those who have saved and put money away for the future are going to be taxed again and again. We will see tax reach a new peak of 37.9% next year, and according to the Government what is going to happen? It is going to go up again. We will have sky-high borrowing and sky-high tax.
One would have thought that the central challenge for this Chancellor would have been to ensure we had a firm plan for defence spending to reach 3% by 2030. Did he deliver that? No he did not, which suggests that he resigned more to get the job than to do the right thing by defence.
Jim Dickson (Dartford) (Lab)
It is always a pleasure to follow the right hon. Member for Beverley and Holderness (Graham Stuart). He is always very entertaining, and I am always intrigued by how there seems to be an inverse ratio between the number of interventions he makes and the number he takes. I reassure him that on the lousy predecessor test, this Government were truly blessed in 2024 by the former right hon. Member for South West Norfolk and the right hon. Member for Richmond and Northallerton (Rishi Sunak).
Jim Dickson
I welcome the Budget, and it is a pleasure to follow distinguished members of the Treasury Committee from across the Chamber. As others have noted, when the IMF published its most recent forecast, it highlighted how despite the consequences of US military action in Iran, our economy is proving more resilient than expected, with 1.3% growth for this year and similar for next. That is largely underscored by the OBR forecast. I back our Government to exceed those forecasts, as they have done this year, and we wish them well in doing so. We should not underplay the damage done by the conflict, with price rises in important commodities such as oil and fertilisers pushing up inflation, but it is positive that the IMF has upgraded our growth prospects. That, I believe, is a testament to the work of the current and previous Chancellors, and it is welcome that we remain towards the top end of the G7 for growth, even though—as always—Members of the House would want growth to be higher, and we hope very much that it is.
In my view, it remains essential to reassure the markets that we will stick to the fiscal rules, and I welcome the Chancellor’s pledge today to keep doing so. We must ensure that we continue to keep sufficient headroom against those rules, and again the Chancellor has done that.That was recognised by the IMF, which singled out the UK among the G7 for the way that we are managing our debts. As shown in chart 3.4 in the Red Book, which sets out the distributional impact of the Budget, we are doing that while ensuring that those at the bottom end of the income scale do better proportionally than those higher up the income scale. I believe that means this is a proper Budget for working people.
This careful and fair economic management will allow us to ramp up defence spending to meet the spending target of 3% by 2030, after our armed forces, frankly, languished under the previous Government.
Stuart Anderson
I welcome the approach to move forward on defence, but since I have been elected I have even called my own Government out for not providing enough defence funding. Does the hon. Gentleman realise that today’s announcement on defence means that we are making in-year cuts for the next two years on defence because we cannot afford what we currently have in place?
Jim Dickson
I thank the hon. Member for his intervention, but I am very confident that the plans laid out today will take us to 3% by the end of this Parliament, and to 3.5% by the middle of the next decade. That is what we have committed to do and that is what I believe we will do.
Dr Murrison
Apropos the point that has already been rightly made, does the hon. Gentleman really believe that? The Red Book gives a very different story. What we are talking about is RDEL—the resource departmental expenditure limit or day-to-day spend on our armed forces. That means reserves—I am one—not getting their reserve training days, ships that cannot put to sea because of a lack of fuel, no bullets and no exercises. Is that what he wants? What does that say to the brave men and women who populate our armed forces?
Jim Dickson
The situation that the right hon. Gentleman is describing sounds like what pertained for the previous 14 years. We are turning that around.
Since the 2024 election, this Government have demonstrated a clear strategy to get on and fix the foundations of our country, most obviously in public spending, that had fractured under the previous Administration, and that includes defence spending. The Budget is built on long-term investment in infrastructure and crucial new projects. Nowhere is that better illustrated than in my constituency, in north Kent, where the funding for the lower Thames crossing—public funding, supporting big private sector investment of over £10 billion—will make such a difference to Dartford residents once it is complete.
The Chancellor’s announcement that he is expanding support to businesses and infrastructure projects through the National Wealth Fund and the British Business Bank is most welcome, and it has the potential for an investment boost right across the UK. As a tangible, practical example of how investment can make a difference in our constituencies, I commend the spending review that saw the announcement of the structures fund to invest in distressed transport assets across the country that were beyond the capacity of local authorities to repair. In Dartford, we hope to hear that funding has been allocated to repair the collapsed Galley Hill Road, which links Dartford with Gravesend, in the coming weeks.
As the Chancellor made clear, and as other hon. Members have pointed out, another long-term impact of the situation in the middle east is the rise in energy bills, which is likely to affect all of us over this winter. I remain extremely worried about the impact that will have, particularly on the most vulnerable households. Only this week, EDF Energy put out a new forecast that has the average household energy bill rising by more than a quarter, to £2,192 per year in January and potentially even higher in April. Clearly the blame for these price rises should be put squarely on the architect of the conflict between the US and Iran. I welcome all the work that this Government have done since 2024 to begin to transform our energy system.
I welcome very much today’s announcement that standing charges will be removed from gas bills next year, and the additional £100 of support for all those living in homes in council tax bands A to D, which will support over 35,000 households in Dartford over the next year. It may or may not be true, but I heard that Conservative spokespeople were taking to the airwaves following the Budget to say that they opposed the £100 discount. If that is the case, I think it is wrong and disgraceful. However, I hope that Ministers will look further at what we can do to shield the most vulnerable and accelerate the work to break the link between increasingly volatile gas prices and the prices that we pay for electricity.
I have also been among those calling for more support on business rates for small businesses. I am really pleased to hear about the changes that will see many cafés, shops and pubs taken out of business rates entirely, paid for rightly by a rise in machine games duty. I think most of us in this House can support that tax.
In my previous life as a local councillor, I saw the growing levels of homelessness on our streets, as I do now, and the dire consequences for those stuck there. It is therefore right that the Government are putting in place funding for the rest of the Parliament to offer a route off the streets to anyone sleeping rough. We have needed a comprehensive strategy to tackle rough sleeping for the past 14 or 15 years, and we finally have one.
I also support the proposed changes to bring in a first-time buyer ISA to replace the lifetime ISA. I look forward to more details on the Your First Home scheme, which I believe will be a boost to new developments such as those in Ebbsfleet Garden City in my constituency.
I am really pleased to see that the Red Book published along with today’s Budget confirms the formation of either a mayoral or foundation strategic authority for Kent. That is important news for our region. If a foundation authority or a mayor was in place, for instance, they could find the investment to ensure that we bring international rail services back to Kent after they were lost six years ago.
Max Wilkinson
Does the hon. Member think it is right that people in Gloucestershire feel somewhat left out of the devolution agenda? We have been placed on the pause list for local government reorganisation, even though there is local consensus, and we are the only place in the whole of the west and south-west region without a devolution deal, even though there is a consensus on that as well. I say that in the knowledge that a Minister sitting on the Treasury Bench, the hon. Member for Bristol South (Karin Smyth), is from the west of England, and—as I understand it, based on what I hear from local councillors—Gloucestershire would like to have the same as her region. Does the hon. Gentleman agree that Gloucestershire could reasonably feel a bit left out and miffed by what is going on?
Jim Dickson
I believe that the same case is being made strongly to Ministers on exactly that point by Members of all parties, not least Members on the Labour Benches—I have heard it being made myself. That really underscores how important devolution is. Every part of the country needs local powers and the ability to invest, which a foundation authority or a mayoral strategic authority gives. I wish the hon. Gentleman good luck with that, and I hope that it is made available to Gloucestershire as soon as possible. Devolution remains the right thing to do from both an economic and a democratic perspective, bringing decisions closer to people and giving our regions—Kent, in my case, but there are others across the House—more power over our future.
I believe that residents in Dartford will welcome the measures in this Budget, not only for the short-term relief that they bring, but for the promises to keep our economy growing in a sustainable way into the future.
Sir Bernard Jenkin (Harwich and North Essex) (Con)
Let me respond to the hon. Member for Dartford (Jim Dickson) in one respect. Harwich and North Essex is a very rural constituency, and any restraints applied to gas or electricity have limited effect, because a lot of my constituents in rural areas are on kerosene and heating oil—I confess that I am on heating oil. The Government have not even removed VAT on domestic heating oil. Why are the Government doing this pre-election council band A to D manoeuvre, which will benefit mostly their voters, but completely ignoring the interests of rural voters?
Forgive me if I detain the House a little on defence. We are in exactly the same position that we were in when the previous Defence Secretary resigned under Keir Starmer. In fact, the Chancellor said that he set a target date of 2030 for 3%. That is the same target as when the then Prime Minister appeared before the Liaison Committee. The Chancellor said that
“I am getting work under way to get there in a fiscally sustainable way.”
That was the reason the now Chancellor resigned from the Government, so what was that all about? It was obviously not about defence, because nobody can make any plans until the Treasury has signed off figures for increased defence spending, and it has not done so. It is still not going to sign them off until the public spending review, which may be after the next general election.
I am sure that Labour Members know that the next general election is going to be pretty tough for them. Their very large majority was a bit of an electoral accident, so many of them will lose their seats, but they can trust the Prime Minister, because he said on 25 September, “Don’t worry, the election will be in 2029”—just as he said, “We’re not going to reopen all the arguments about rejoining the EU” and, “We’re not going to reopen the argument about free movement.” Hon. Ladies and Gentlemen in difficult seats facing a difficult election next spring can absolutely trust the Prime Minister; he is not going to do that to them. Trust is rather important in a political party. I hope it is not getting too bad within Labour.
Let me say what I really think about this Budget. It is a non-Budget, exactly as my right hon. Friend the Leader of the Opposition and others have said. It is a breathing space. Another £2.2 billion of new taxes on business is by far its biggest effect, and the impact of the two previous, absolutely catastrophic Budgets remains embedded in Government policy. They hammered sectors such as hospitality, and businesses that used to enjoy employing a lot of young people can no longer afford to do so. Take Rix, a farm business in my constituency that is the leading supplier of potatoes and onions to Tesco. It employs mostly low-paid workers—a lot of young people—and its costs have rocketed as a result of the change to national insurance contributions.
Take the Cricketers in Eight Ash Green, a pub that has been virtually driven out of business by the increase in national insurance costs and business rates. By the way, there has been no cut in business rates—this Government put them up. I am very pleased that they have responded to the Conservative campaign to increase the exemption, but as we have just heard from my right hon. Friend the Member for Beverley and Holderness (Graham Stuart), it is a very slight change. As has also been pointed out, all of these 59 micro-measures are minute. What the OBR actually says about national insurance contributions is that
“Sharper falls in employment among lower-paid sectors are consistent with our judgement that these firms would be most affected by the”
increase in national insurance contributions. That is the truth, and the Government have not faced up to it.
On the question of the real public expenditure outlook, let us look at the section in the OBR’s outlook that deals with welfare spending—the Chancellor is announcing £100 million here, £200 million here or £10 million here, but this is the real problem. Paragraph 5.21 says:
“Welfare spending is forecast to rise…by £19 billion (5.7 per cent) to £353 billion or 11.1 per cent of GDP… It is then forecast to rise in nominal terms by an average of £16 billion (4.4 per cent) a year over the rest of the forecast period”.
That utterly dwarfs any other figures that the Government have been talking about.
“This would be 1.3 per cent of GDP higher than its pre-pandemic level of 10.1 per cent of GDP in 2019-20, with 0.5 per cent of GDP of this increase occurring between 2025-26 and 2031-32.”
The Government are still spending on welfare, and they are not committing to spend on defence. That is the reality of this Budget.
Sir Bernard Jenkin
I beg the hon. Gentleman to listen to himself. What he is basically saying is that the reason there will be such gargantuan increases in welfare payments between now and 2031-32 is that it is all our fault—that it is because of what we did. [Hon. Members: “Yes!”] It is not. The Government have not begun to tackle the welfare state problem. We should have done; and they must do so, or we are heading for a fiscal crisis. It is interesting what the Red Book says about the forthcoming fiscal crisis.
Iqbal Mohamed
Will the hon. Gentleman share his assessment of the impact of increasing the retirement age to 66 and 67, with a target of 70, on the availability of junior jobs for young people to get into work?
Sir Bernard Jenkin
If the hon. Gentleman is saying, “If only we were not doing this later retirement thing, there would be more jobs for young people,” I have to say that managing the economy in that way is not very successful. It does not work.
On the forecast, the Government set great store by what the IMF says about the UK’s deficit reduction programme. The Red Book states:
“The IMF forecasts that the UK’s deficit reduction this year will be bigger than any other G20 country.”
I am afraid that there are a lot of lemmings rushing over cliffs in that G20 bloc. It is not a good benchmark for success. In any case, the forecast is based on the forecast that the Government have given to the IMF, and the reduction has not been delivered yet. The Government have not started to deliver the debt reduction programme. The OBR says that debt rises from 95.5% of GDP this year to 97.3% in 2028-29. The headroom is just £15 billion in 2029-30, which is £7 billion less than at the last Budget. The OBR says there is only a 56% chance of meeting the rule. As the bond markets digest this Budget, I am not sure they will be quite as sanguine as they have been.
I will end by responding to a point that we heard from the hon. Member for Hornsey and Friern Barnet (Catherine West). She talked about us getting back into the European Union and said that 60% of the economy is dependent upon trade with Europe. That is rubbish. What proportion of GDP do we export to the EU in goods? The single market is about goods. Incidentally, our record on services exports outside the EU is that there has been a dramatic, massive increase.
Sir Bernard Jenkin
No, I will not give away. Only 5.9% of the UK economy is goods exports to the EU. A much larger proportion goes outside the EU. Incidentally, during our period of membership, the proportion of GDP that we exported to the EU was in steady decline from 1992 to 2021. Other factors have led to the decline in our exports with the EU.
Overall—this is the astonishing thing, and I will end on this point—our economy has outgrown France and Germany since 1992. Leaving the EU has not reversed that trend. I wonder whether Government Members do not understand the irony when they say, “We are the fastest-growing economy in the G7.” That has often been the case, because the EU is not a very efficient market and does not add much value to our economy. In fact, we have grown our exports to the rest of the world.
Sir Bernard Jenkin
No, I am not giving way; I have given way twice. [Interruption.] Members may shout me down, but they do not want to hear the facts. The fact is that our economy is now growing faster outside the EU than it would have done, because of two sectors: financial services, and tech and AI. They are not regulated by the EU. Employment in the City of London has doubled since 2016. All the doom-mongers who told us that the City was finished were wrong.
Andrew Lewin (Welwyn Hatfield) (Lab)
This is a Budget that supports those who need it most through the winter and that ask the banks, which are on course to make record profits, to make a greater contribution. Crucially, it backs young people with the ambition to own their own home and to build a business.
There is lots to reflect on. As the newest member of the Treasury Committee, I intend to get into the detail in the weeks to come, but I will start with the international context. It is crucial that we have an honest debate in this House and in the country about the impact that context has on all of us. It is true that we are spending billions more on debt interest than was projected just a few months ago, but that is not because of extra borrowing by this Government; it is because of the global spike in inflation caused by the war in the middle east. It is also the case that the IMF has praised our Government for taking decisive action on deficit reduction. However, in the 21st century no country and no economy can stand alone.
Mike Wood
The hon. Gentleman will be aware that a key part of the deficit reduction strategy—according to the Red Book—is a reduction of 2% a year in the annual spend on mainstream schools after 2028-29. Will he go into the next general election promising that in his manifesto?
Andrew Lewin
It is news to me that I will be writing the manifesto, but I am always open to a promotion. Our spending review will cover all elements of spending on public services, but this is a Government who have backed public services, unlike the Conservative party.
In a more uncertain world, it is imperative that the UK lives by our values. I have been going through the Red Book, and—this is on page 103—the single biggest increase in investment announced today is in our defence, to fund the defence investment plan. That is a very important statement of intent at such an uncertain time for our country, Europe and the world, which is further demonstrated by the package of £10 billion for additional support in loans to Ukraine.
Before the Budget speech, I was pleased to hear the Prime Minister reassert how important it is to him that we have a stronger economic trading relationship with the European Union. Also—I will be honest—I am slightly pleased by how much it upset the hon. Member for Harwich and North Essex (Sir Bernard Jenkin), because that means we are going in the right direction. It is a sad state of affairs that the Conservative Party has drifted so far away from mainstream business opinion that they are saying they will not countenance any improvement in our deal with the European Union. That is why people in areas such as mine, Welwyn Hatfield in Hertfordshire, are no longer voting Conservative.
Graham Stuart
It is not that we do not wish to see a better deal with the EU. After we left, every day in government was about trying to get the EU to be more reasonable, and that is always a good endeavour. I think the fear—the hon. Gentleman would probably recognise this—is that we have a Government who thought it was a good idea to negotiate the giving away of British sovereign territory somewhere far away and then pay tens of billions of pounds for the privilege. They are not the people we want representing us in Brussels, are they?
Andrew Lewin
I think the right hon. Member is talking about the issue of the Chagos Islands, which has absolutely no bearing on the speech that I am making today, but if the Conservative party wants to hold to its position that the current deal with the EU is a good one, I will take that debate any day of the week.
Andrew Lewin
I will not give way now, but I may do so later. [Interruption.] I am keen to make some progress.
Closer to home, in Welwyn Hatfield, 35,000 households will benefit from the £100 direct payment to help with energy bills this winter. The ending of standing charges on gas bills will particularly help those in smaller homes and flats, and it is unquestionably the right thing to do. I was also pleased, earlier in the week, to see the announcement about the warm homes plan, with low and zero interest rate loans for people who are able to make energy improvements to their properties, and cheaper public charging for electric vehicles. That is an all-round energy package that I believe we can support.
Let me now say a little about the national health service, which has not featured in the debate as much as it might have. Waiting lists have fallen sharply since the election of this Government, and ambulance response times in my region in the east of England have improved markedly in the last year. There is a great deal more work to do—there is no question about that—but this improvement has only been possible because of the investment made in this and previous Budgets. It is striking that £37 billion more is being spent on the NHS under this Government than was spent by the Conservatives.
Dr Danny Chambers (Winchester) (LD)
It was slightly disappointing that the Budget made no commitment to restoring the mental health investment standard. There is an economic imperative in that as well. Millions of people are on waiting lists for mental healthcare, but if we could get them off waiting lists and back into work, that would help to grow the economy. Does the hon. Gentleman agree that we should restore that mental health investment standard?
Andrew Lewin
Mental health support is hugely important—I absolutely recognise that. One of the things that this Government are doing is introducing mental health professionals in every school. I am sure that Members from across the House have had conversations with constituents and seen young people struggling terribly. There is more to do, but we are making progress.
Andrew Lewin
I am going to make some progress.
Today the Chancellor has asked the banks to contribute more via a surcharge, and it is really important that we look at the context in which we are having this discussion. I looked at the figures, and all the major banks that operate in the UK are on course for record multibillion-pound profits. That often happens in cycles in which there are high interest rates, so it is the case that banks can make a contribution via the surcharge and still have an exceptionally good year.
I have to say that I am surprised by the Conservatives. If they want to have an election, whenever it may come, in which they go around saying, “We oppose a slight increase in the surcharge on the banks,” they will find themselves on the losing side of that argument.
In the years to come, we need our entrepreneurs and young people to succeed, which is why I was so pleased to learn of the founders’ relief scheme for British entrepreneurs this afternoon. It is a statement that we will back people with the vision and ambition to build a business here.
I will let you in on a secret, Madam Deputy Speaker: the first conversation that I had with our new Prime Minister in Parliament—actually, the first one was about cricket, but the second was more substantive—was about housing and home ownership. I said to him directly that it is so important that we as a Government make the case for giving people the opportunity to get on the housing ladder, especially those who cannot rely on support from the bank of mum and dad. That is why I am so pleased by the announcement of the Your First Home equity loan scheme this afternoon. It has the potential to change thousands of lives in my constituency and many more across the country. The introduction of a 2.5% deposit means that people living in Hatfield or Welwyn Garden City have a chance of getting on the housing ladder with a deposit well under £10,000, bringing it into reach for many more people.
Iqbal Mohamed
I welcome the Government’s announcement that they will reduce the deposit for first-time buyers. Does the hon. Gentleman agree that the price of housing is so extortionate that, on today’s average wages, someone with a 25-year mortgage will never, ever pay off the debt accrued? Mortgages will end up lasting 30, 40 or 50 years, and young people who get on the housing ladder will end up paying for the rest of their lives. They may not have paid off their mortgages before they retire.
Andrew Lewin
The housing crisis is a multifaceted problem. We have to build more homes of all tenures, but Your First Home is a really important part of driving demand, particularly because young people who are renting at the moment are paying more than they otherwise would if they could get a foot on the ladder. That is why the deposit scheme will make such a difference.
If you need extra support with energy bills this winter, it is coming. If you run a small high street business, business rates are coming down. If you are an entrepreneur, risk will be rewarded and your tax bill will come down in the future. If you are striving to buy your first home, this Government are on your side. The world remains unstable and we are not immune to it, but this is a Budget that I believe can give confidence to people in Welwyn Hatfield and across the country.
Several hon. Members rose—
Madam Deputy Speaker (Judith Cummins)
Order. After Sammy Wilson, there will be a five-minute time limit.
Sammy Wilson (East Antrim) (DUP)
The advantage of this House is that the Chancellor has brought forward a Budget, albeit one that is inadequate. In Northern Ireland, we are seven months into the financial year and the Sinn Féin Finance Minister has still not brought forward a budget for Departments in Northern Ireland, leaving people in the dark as to what money is available for health, education, roads and all the other issues. I welcome the fact that in today’s Budget we have got a £270 million uplift as a Barnett consequential, as well as the £750 million that was available under the review, and I hope that that will stop any further excuses for not having a budget declared in Northern Ireland.
As far as the measures in this Budget are concerned, there are some that I welcome, although I think the Chancellor should have gone further. I welcome the fact that some pensioners at least will not be dragged into paying tax. I also welcome the support for people with their energy bills—although, as for other Members representing rural areas, 60% of people in Northern Ireland will not be impacted by it. They heat their homes using oil, and therefore will not be covered by the relief that has been made available. I think small businesses will appreciate the increase in business rates relief, although it is up to the Northern Ireland Executive as to whether they pass on those changes to businesses in Northern Ireland. The freeze on fuel duty is also welcome.
However, in a place in the United Kingdom that depends greatly on road transport for both getting goods in and getting goods out, the price of fuel is prohibitive. Given that the Government have made billions from the additional VAT on fuel as a result of price increases, I believe they could have gone further.
Jim Shannon (Strangford) (DUP)
My right hon. Friend has rightly outlined the issue for hauliers in Northern Ireland, where we have to transport everything in and everything out. Does he also recognise that farmers—for instance, with tractors—as well as the farming community and the agricultural sector, also need to be considered when it comes to such help and provision?
Sammy Wilson
Of course, any of the big diesel and petrol users would have benefited from greater support from the Government.
On the big challenges that the Government are facing, and which they admit they are facing, there has been very little in this Budget. First, if we are going to get out of many of our economic difficulties, the main issue is to have economic growth. While much has been made today of the micro policies that will affect businesses and encourage entrepreneurs, the fact of the matter is that we are stagnating because we are taxing the life out of businesses. We have the highest tax burden ever, and businesses tell us all the time that the tax on employment stops them recruiting and that the tax on profits stops them investing. If we are going to have economic growth, we must address the issue of the overall burden of taxation, but that has been studiously avoided in this Budget. I am thinking of the farming industry in Northern Ireland. Only yesterday, I met the Ulster Farmers’ Union, which told me that 90% of farmers have now stopped investment plans because of the inheritance tax fears, and I suppose that is true in many other places. With taxation halting people’s investment decisions, that will of course have an impact on economic growth.
Secondly, we have to reduce the debt, yet the Chancellor has told us today that we will actually be borrowing more year on year over the time of this Budget. If we are borrowing more, we are adding to the debt, and if we are adding to the debt, we are adding to the interest we pay on that debt. The Chancellor has even accepted today that £14 billion extra will be required this year just to pay for the increase in the interest we have to pay on the debt. As we continue to borrow, we are not going to get that debt down, and as we do not get that down, we have to tax to pay the interest on it. Again, that has an impact on economic growth, and there does not appear to be a willingness to address it.
Sam Carling (North West Cambridgeshire) (Lab)
May I draw the right hon. Member’s attention to page 22 of the Red Book, which states:
“The IMF also forecasts that the UK will deliver the biggest reduction in borrowing in the G20 between 2025 and 2031 and will have the second lowest government debt in the G7 by 2031”?
Sammy Wilson
We may be improving in relation to other countries in the G7, but the fact of the matter is that we still have a level of debt that, as the Chancellor has said, is absorbing more and more of our tax revenue to pay—and that is to pay only the interest. We are borrowing more and we are adding to the debt.
Thirdly, we have to reduce energy costs. Today’s announcements mean that we are going to shift some of the burden of the policies that have added to the cost of energy in the United Kingdom.
One of the biggest costs has been the Government’s net zero policy, because it has required investment in wind energy, 25-year commitments to paying premium prices for that energy, and increasing the grid network to bring that energy from dispersed sources, as opposed to the single power stations we used in the past. All of that goes on to energy bills, yet the commitment in the Budget today is to continue with that policy. On the one hand, the Government want to reduce people’s energy bills, but on the other hand they continue with a policy that has increased, will increase and will require infrastructure spending that will further increase energy bills.
The next big issue, of course, is defence spending. What have we got, despite the urgency to increase defence spending? We are going to have the review next year and we are going to have a taskforce, but we are not going to address the issue of spending more now. I understand why, because the Government are not addressing, in the first place, the issue of how we get in more revenue to spend.
The last big issue is the welfare bill, which has been well aired in the debate today, and how it is increasing day on day. As the Chancellor said, the increase in the welfare bill and the way we do welfare is condemning a whole generation to no work—to not working, being on benefits and being reliant on benefits—and it is taxpayers who are having to pay for that. Yet that issue has been pushed aside with the Government saying, “Next year, we’re going to have a White Paper”, etc.
The problem is this. We have a Government who know what the problems are. They talk about the problems in this House and they talk about them to the general public, but despite the fact that we have a Government with a majority of 170, they have still been unwilling to take the hard decisions to address these issues. Unfortunately, it seems that we have a Government who, instead of a backbone, have a wishbone. They wish certain things, but they do not have the courage to take the decisions to sort the problems out.
Cat Smith (Lancaster and Wyre) (Lab)
It is a pleasure to follow the right hon. Member for East Antrim (Sammy Wilson) and to speak again in a Budget debate.
Often in debates on the Budget, I have heard announcements, as a Lancashire MP, about pots of money that my area has not been eligible for because we do not have a devolution deal, so I was really pleased to see in today’s Budget that we are now in the final stages of agreeing a devolution deal in Lancashire for a mayoral strategic authority. That opens up the opportunity for my constituents to have the same options as the rest of the north of England, which already has these deals. The indication is that Lancashire will now be able to access good growth funding worth £7.27 million, which will unlock prosperity in my constituency and right across the red rose county.
Leigh Ingham (Stafford) (Lab)
As the MP for Stafford, Eccleshall and the villages, right in the heart of Staffordshire, I too welcome the devolution announcement today. It means that, in contrast to the chaos we are seeing at Reform county council level—we are on to our fourth leader this week, if anyone is keeping count—residents in Stafford will be able to access that devolution funding. Does my hon. Friend agree that putting the power into community’s hands to direct their own future is central to making sure that we have good growth in every postcode?
Cat Smith
I do agree with my hon. Friend, and I wish her well in Stafford with the situation at her local council.
I urge local leaders in Lancashire to get this deal over the line. I hold my hands up and confess that I was perhaps the least enthusiastic of the Lancashire MPs when it came to the prospect of having a mayor, but I recognise that, without that, my constituents will be left behind. Therefore, we all need to work together in Lancashire to make sure we can access this funding.
The biggest issue my constituents raise with me— I was recently out doing street surgeries in Scale Hall in my constituency and was approached by several people who raised this same issue—is energy bills, so I suspect my Scale Hall constituents will be particularly pleased to see the £100 energy support payments, which should benefit over 37,000 households across Lancaster and Wyre in council tax bands A to D. On top of the extension of the 0% VAT on electricity bills until June next year and the abolition of the standing charges on gas, that will come as welcome relief to families right across my Lancashire constituency.
I regularly meet the business community, and recently met representatives from the Lancaster business improvement district, who made the case to me about the challenges facing the retail and hospitality sector. I am pleased to see the retail, hospitality and leisure business rates freeze, which is estimated to benefit 638 properties in Lancaster and 640 properties in the Wyre council area of my constituency—hundreds of businesses in my constituency will benefit.
Constituents have also raised with me the challenges on the high street. Increasing small business thresholds and removing eligibility for vape shops and adult gaming centres will go down really well with my constituents. I welcome that; it will mean that high streets, like those in Garstang and Lancaster, will thrive and be places where people want to spend time and money supporting our great local businesses.
There were also announcements in the Budget to cut fertiliser tariffs to give farming businesses more room to breathe. That will certainly go down well with my farming constituents. The rise in fuel prices is disproportionately affecting users of red diesel, so Lancaster and Wyre farmers will welcome the extension of the 3.7p cut to duty on red diesel for a further six months. That keeps the rate at its lowest level for 20 years.
My final contribution to this debate is about a missed opportunity. The economic cost of alcohol harm in England is estimated to cost us £27.4 billion annually. That includes costs to the NHS, the justice system, the wider economy and social services. The financial burden on the NHS alone stands at £4.9 billion, which is enough to pay the salaries of almost half the nurses in England.
The culprit is the very strong, very cheap alcohol that is available everywhere in this country, from supermarkets to corner shops—and increasingly from the delivery services that will deliver it to the door, day and night. This situation often makes vulnerable people drink far more than is safe and creates the ideal conditions for escalating alcohol harm. That harm that can be reduced by introducing minimum unit pricing—something that is already in place in Wales and Scotland, and has seen reductions in harm there.
Millions of people are consuming alcohol at levels that increase their risk of serious health conditions. The severity of harm rises as alcohol consumption increases, and cheap alcohol drives higher consumption. At a time when the NHS is under immense pressure and health inequalities continue to widen, there was a significant opportunity today for the Government to have taken an evidence-based approach to tackle alcohol harms. That approach makes economic sense and would rapidly improve public health and save lives.
I want to stress that minimum unit pricing does not damage pubs, restaurants or the wider hospitality sector. It is specifically designed to target the cheapest, strongest alcohol sold through supermarkets and off-licences—the products most associated with serious alcohol harm. We have to remember that alcohol-related deaths have remained high since the pandemic; they have not been coming down. I believe that we need to take radical action. Introducing minimum unit pricing would benefit the economy and save lives. The measure has support across the hospitality sector, which recognises the distinction and sees cheap off-trade alcohol as a broader market concern.
I leave the Front Bench with the concerns that I have around not addressing alcohol harms, and the benefit that minimum unit pricing could have for the economy and public health. I welcome the Budget overall. It offers breathing space for my constituents in Lancaster and Wyre.
Stuart Anderson (South Shropshire) (Con)
It is interesting to follow the hon. Member for Lancaster and Wyre (Cat Smith), who started by talking about not having a mayor, and then how getting a mayor will open routes to funding. In South Shropshire, we do not have a mayor, and we are not looking to get one; most of what was said today excludes areas like mine that do not have local mayors. That is a big issue. I would categorise this Budget as one that fails rural communities and does not protect our nation, and I will back that up by outlining why.
I will start with the gambling tax. Ludlow racecourse is in my constituency, which Members will obviously all agree is the best in the country; along with the point-to-points, like Bitterley and Eyton races, Ludlow is really going to suffer from the gambling tax. It will have a massive impact, and there is a whole ecosystem around racecourses.
Let me turn to heating oil. As 53% of my constituents are not on mains gas, over half over my constituents will not benefit from those announcements in the Budget.
Alex Ballinger
A few people have mentioned heating oil in the debate. For those who have not looked at the detail of the Budget, there is a 4% reduction in heating oil tariffs among the announcements, and anyone who uses heating oil this winter will be getting £100. There is substantial support for people using heating oil; it is not just about gas.
Stuart Anderson
The price of heating oil is more than double what it was six months ago. I understand that that is because of international headwinds, and I believe that prices will probably go up significantly again because of what will happen over the next few weeks. However, 53% of my constituents do not feel that the support they are getting is comparable to what residents on gas are getting.
Let us look at pubs. The 166 pubs and four great breweries in South Shropshire tell me that the various rate rises they have seen over the past few years are having a massive impact on them. The minimum wage makes it very hard for them to employ young people, whether to give them their first step on the jobs ladder or because they want to earn extra money while at university. It is getting very hard.
Jerome Mayhew (Broadland and Fakenham) (Con)
My hon. Friend is making a very good point. I wonder whether he is aware that since the last election, the minimum wage for 18 to 20-year-olds has risen by 30.1%, which is coincident with youth unemployment rising by 54,000. Does he think there is a link?
Stuart Anderson
My hon. Friend raises a valid point. There is definitely a link; it is getting harder to employ people because businesses are not making a profit.
In my high street survey, to which 4,500 residents contributed, businesses said that it is harder to make a profit on the high street. We have seen the rise of the internet alongside increases in taxes and the cost of employing people. Businesses are not investing—they are not taking the risk. Look at how hard the Government have made it for high streets. The Lib Dem council in South Shropshire decided to bring in what look to be catastrophic parking charges for Ludlow and Bridgnorth, and across the whole area. I stand firmly against those charges, because they are just another tax on my constituents.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
Given that he raised the issue, could the hon. Gentleman set out by how much he thinks the minimum wage should be cut?
Stuart Anderson
I do not think the minimum wage should have gone up by 3.9% or 3.4%—whatever was announced today. I believe it should have been frozen for many years, or for several years. I definitely think we should have left it; I do not believe it should rise, because businesses cannot take it at the moment. We have to make firm decisions. Fewer young people will have work because of these rate rises.
I will turn to farming. The Chancellor spoke for an hour and a half, and there was not one thing about agriculture. Some 25% of my constituents work in agriculture, and the failed SFI26 window was a serious issue. Rural communities really do feel left behind. We have seen an attack on our rural communities, from the shotgun consultation to trail hunting—all those issues are vital to my constituency. This is huge. I think my constituency has the second highest number of shotgun licences in the country. It is a serious sport that is undertaken widely. There is just a continual drip, drip, drip of these policies.
I will finish on defence. The Chancellor resigned when he believed that defence was not funded well enough. In this year, there is a £3.5 billion cut, with a £1 billion cut in each of the next two years—that is in the RDEL figures on page 145 of the Red Book. That means that defence is now getting less funding than when the Chancellor resigned. The target to get to 3% by 2030—[Interruption.] It is! It is on page 145. Look at the in-year cuts. Look at the defence industry’s response to the Budget.
Stuart Anderson
I will not take any more interventions— I have already taken two.
Look at what the industry, from ADS across, is saying about these cuts.
Last week, the House found out that two or three Boxer projects were cut. We found out that DragonFire might not be on the Type 45s next year, as planned. We found out that there are training cuts that happen to have an impact on operational capability. We found out that there is a cut to single living accommodation. Does anybody seriously think that we are funding defence? We are nowhere near doing so.
When we were in government, I had many conversations saying, “This does not work,” and I publicly put it on record with the rest of the Defence Committee. We were facing serious issues, and we were not funding defence enough. I am very happy to say that. The strategic defence review set out almost 18 months ago that we face the most serious times since the cold war—though I believe it is since the second world war. Out of the NATO countries, only Iceland is rearming more slowly than us and it does not have a military.
I travel a lot within NATO countries, and I have been called out to speak on behalf of the UK by other countries’ Defence Ministers. I fed that back to the now Chancellor and he said, “I know; it is embarrassing.” On the international stage, we are nowhere near where we should be. Our approach to defence is seriously failing. This Budget fails rural communities and it fails defence.
Ms Julie Minns (Carlisle) (Lab)
I regard this Budget through two lenses. First, as the Labour Member of Parliament for Carlisle, I am asking what the Budget means for the people, families and businesses that I represent. Secondly, as a member of the Treasury Committee, I am examining whether these measures will strengthen our economy over the long term. I judge the Budget against four tests. Does is it improve the lives of working people? Does it strengthen the British economy? Does it make the UK a more attractive destination for inward investment? Does it help the north?
When assessing any Budget, economic stability must come first. Before entering Parliament—contrary to the view held by some Opposition Members—I worked for businesses that were backed by one of the UK’s largest inward investors. What investors look for is not political knockabout, the likes of which we have sadly heard from those Opposition Members this afternoon, but stability, credibility, infrastructure, skills and a credible long-term plan. On that test, the Budget passes.
Despite global instability, Britain recorded the joint fastest growth in the G7 in the first half of this year, while business investment has risen by 7.5% since the start of this Parliament. The Government continue to meet their fiscal rules, maintain a buffer against future shocks and put borrowing on a downward path. That matters because without stability there can be no sustained investment, no lasting growth and no durable improvements in living standards.
My second test is whether the Budget strengthens Britain’s attractiveness as a place to invest. This Budget backs investment in innovation, skills, infrastructure and artificial intelligence while continuing to support businesses with lower regulatory burdens and greater certainty. Those are exactly the ingredients that international investors look for when deciding where to place their capital.
My third test is whether the Budget improves the lives of working people. Ultimately, growth is not a statistic. It is about whether people feel more secure and have greater opportunity. That is why I welcome the extension of the fuel duty freeze and the 5p cut, which will help motorists and businesses across rural constituencies such as mine. I welcome the permanent increase in tax-free mileage rates, which will help care workers, community nurses and tradespeople who rely on their vehicles every single day. I welcome the expansion of parental pay, including to self-employed fathers and partners.
My final test is whether the Budget helps the north. Economic success cannot be measured solely by what happens in London. It must be measured by whether places like Carlisle share in that success. That is why I particularly welcome the Government’s commitment to devolution and look forward to electing Cumbria’s first mayor next year. I trust that they will be a Labour mayor.
We have in Carlisle ambitious businesses, skilled workers, a strategic location and enormous potential. We have a high street already on the up—one that will be further strengthened by the cuts to business rates. We have great local independent breweries. I welcome not only the £10 million boost in small producer relief but the introduction of a guest beer agreement in England that will ensure that the local breweries in my constituency are able to get their local product into our local pubs.
The Government’s approach to devolution, alongside good growth funds and greater local control, offers an opportunity for communities such as mine to play a greater role in the country’s success. This is a Budget that provides support for households today while laying the foundations for long-term growth. It recognises that when places like Carlisle succeed, the north succeeds—and when the north succeeds, Britain succeeds.
Kit Malthouse (North West Hampshire) (Con)
It is a pleasure to follow the hon. Member for Carlisle (Ms Minns), although she will not be surprised to hear that she and I have very different views about the Budget. I draw the House’s attention to my entry in the Register of Members’ Financial Interests as a business owner and, frankly, to my interest as a father, although that is not because I think I am going to be particularly affected—I do not think anybody will be particularly affected by this rather bland bowl of muesli of a Budget from a Chancellor who was quite obviously decaffeinated this morning.
I am quite exercised about the Budget because, while a number of colleagues have said it is a missed opportunity, I think it is a lot worse than that. In many ways it is profoundly negligent of a Government to produce such a Budget in the face of three distinct emergencies—three distinct fires burning in the basement of the British economy—some of which have been made worse and are forecast to be worse because of the Budget.
The first of those, which a number of hon. Members have raised, is our debt. It is worth remarking, as some have, that the OBR has said that we will borrow even more in every year of the forecast—particularly next year. Combined with the massive downgrade of growth for next year, that is alarming. It is worth colleagues remembering that the OBR has quite a poor record in medium-term forecasting—it is generally optimistic. We can broadly agree that it gets the year 1 forecast right, plus or minus, but after that it is wildly optimistic, and every year it get the forecast completely wrong, particularly on debt. That matters, because the country is effectively running a structural deficit at the moment, and because of some of the measures in this Budget and the previous two, the public sector is basically eating the private sector every year we proceed. The private sector’s ability to support the public sector is reduced as a result, and we find ourselves caught in a weird kind of vice, exacerbated by the second emergency, which I will come to.
Even in some of the measures today, there seems to be no contemplation of that problem. Who does the Chancellor think will pay the bank levy—this 3% extra on corporation tax? Certainly not the international banks—they will manage to retain their return on capital. It will be the businesses, and the consumers who bank with them, who will see higher mortgage rates and higher interest rates on their loans. That money will be extracted from the private sector and sent directly to the public sector to be spent. If we continue on this path, I am afraid that the IMF has forecast that by 2050, well over half our GDP will be spent by the Government. That is a disaster, because once in that vortex it is hard to come out of it.
The second emergency, which is exacerbating the first—there was no talk of it today and, in fact, there were no measures to try to help with it—is our demographic problem. I am afraid we are not having enough children in this country. We are now down to 1.39 children born to every mother, which is below replacement rate, so we have a shrinking body of workers who are having more and more difficulty supporting an expanding body of retirees. The pyramid is inverting, as we have seen in other countries, such as Japan, to disastrous effect. If the public sector and the retired sector suck more and more money out of the private sector, we will find ourselves in a downward spiral, which will be much to our detriment.
The third emergency is one of capital. The Chancellor raised the issue of capital and spoke of trying to set entrepreneurs free. I have been a moderately successful entrepreneur during my life, and I can tell hon. Members that nothing in the Budget has done anything to reverse the assault on the return on risk that, sadly, has taken place over the last 20 years under Governments of all stripes.
Kit Malthouse
I am glad that the hon. Gentleman has raised that point. If he looks at the founders’ relief in the scorecard and puts it against the reduction in business asset disposal relief, he will see that effectively there has been a straight transfer of value from family businesses, high street shops and smaller businesses to the tech bros who are going to benefit from founders’ relief. We have yet to see the detail on that relief, but the scorecard shows a net cost to the Government of about £200 million. That is negligible in the face of an economy the size of ours.
That is a real problem, because we are standing at the bottom of the ellipse of human achievement, the like of which we have not seen since the industrial revolution. This country has got its capitalism wrong in the past. We missed the IT revolution of the ’80s and ’90s because we were too busy worrying about house prices. British capital has kind of stultified and failed to take advantage of these massive advances in technology, much to our detriment in terms of national wealth.
We still live off, to a certain extent, the wealth that was created during the Victorian era. Many of our largest companies came about because of British capitalism—naked capitalism—during that era. The palaces we live in, the Cavendish Laboratory at Cambridge, King’s College, Cambridge, and the NHS—all of that built from the profits of British capitalism. We have neglected it over the last 20 years or so, particularly by attacking the return on risk. The rise in taxation on dividends, the rises in capital gains tax, the reduction in any kind of relief for entrepreneurs, and the complexity of the enterprise investment scheme and the seed enterprise investment scheme—all that is a massive deterrent to anybody who wants to start a business and take a risk. Until we realise that we will not get growth until we set capital free, we will continue to be trapped in this vortex of a demographic pyramid inversion and ever-mounting debts as the public sector consumes the private sector.
The last thing I want to raise is the new powers that are being granted to the Revenue. All Members should beware of what is hidden in the detail of those new powers. We are getting to a situation where our economy is existing to support the Revenue rather than the other way around.
Chris Evans (Caerphilly) (Lab/Co-op)
Thank you, Mr Speaker, for coming especially to hear my speech; I am most grateful to you.
We have seen the rise today of a new political philosophy. It is called miserablism. They are so miserable about everything. The Chancellor could have stood at that Dispatch Box and said anything—he could have awarded £1 million to every single person in the country—and still the Opposition would have complained, because all they ever do is talk about prescription, rather than what they would do instead.
When I first came into this House, all I ever heard about was deficit reduction. I heard Members who have spoken today say, when we were on the Opposition Benches, that we should apologise. We hear no such apology now. The very tenet of miserablism is to ignore the good news, such as the fact the deficit is coming down. The Chancellor has said that we will be back in the black within three years, despite economic headwinds that we have no control over in Ukraine and the middle east. The fact is that, on the ground, people are seeing the change.
I will talk about three things in the limited time I have. First, on small businesses, my constituency is full of independent small businesses run by hard-working, innovative people. They add to our vibrant high streets and town centres, creating a sense of community. Small businesses will find it easier, thanks to this Budget, to serve their communities and provide local jobs. The increase in the threshold required to pay business rates, from £12,000 to £18,000, will lift 70,000 properties in the UK out of paying business rates and will help so many businesses in Caerphilly.
If anybody wants to see the good news in Caerphilly, just look at what has been happening in Caerphilly borough, which in September was announced as having the fastest business start-up rate in the whole of Wales. Caerphilly has experienced a 49% increase in business start-ups during the first eight months of this year compared with the same period last year. That is a testament to Jamie Pritchard, the leader of our Labour-controlled council.
People want to come to Caerphilly to do business because they believe in what we are doing there. Alongside that, the UK Government are channelling investment into south Wales, which has helped to unlock £23 million for Norgine, a leading European pharmaceutical company in my constituency, to develop its Hengoed facility, which is expected to create 44 new jobs.
If I was going to talk about one thing that does affect most people—if I had to take a straw poll in my constituency—it would be energy bills. Extending the VAT cut to July will help so many people. Not just householders will benefit from that. I remember visiting a business in my constituency, Rees Gym, which was worried about energy costs. The new British industrial competitive scheme will cut costs there as well. Gas standing charges will be removed from household bills. There will be a payment of £100 into people’s bank accounts if they are in council tax bands A to D, and the Plaid Cymru-led Welsh Government have already said that they will honour that in Wales, although they have also complained about some sort of cut. Miserabilism has found its way across the channel as well.
I also want to say something about the miners. I come from a mining family. My grandfather was a miner. He was buried under three tonnes of coal and was invalided out of the mines. He was an example of the hundreds of thousands of people who built our society and who sacrificed their life and their health to keep this country moving. That is why I am so pleased that 100% of the surplus of their pensions will now go to them. It is only the beginning, and yes, we need to talk about future bonuses, but I am heartened and I genuinely believe that the Chancellor is a good man. He comes from working-class stock, as I do. He will speak with the National Union of Mineworkers and we will come up with a deal that will be satisfactory to all sides. I want to say to all those ex-miners who live in my constituency: we are on your side, we hear what you are saying and we will continue fighting for you until you get the justice you deserve.
Finally, in the last couple of seconds, I want to talk about defence. It is all very nice and warm to say, “Let’s hit 3.5% of GDP by 2030”, but that only scratches the surface. I am looking at the right hon. Member for South West Wiltshire (Dr Murrison), who was a Defence Minister; he will know the same things that I know. The Ministry of Defence is a uniquely failing Ministry. It is wasting money. If we want an example, let us look at Ajax. The MOD has already spent £5.5 billion on an armoured vehicle that is still not in service. That £5.5 billion could have been used on other things such as training exercises or equipment.
I make this appeal to the Chancellor. When he was the shadow Secretary of State for Defence and I was the shadow Defence Procurement Minister, we came up with a policy that said that the Comptroller had to look at the way the Ministry of Defence spent its money. I hope he resurrects that idea and sends the National Audit Office in to make sure that every penny piece is accounted for, because that is the only way forward.
Mike Martin (Tunbridge Wells) (LD)
It is an honour to follow the hon. Member for Caerphilly (Chris Evans), and I want to pick up his last theme, which was the defence of our country. Specifically, I want to talk about our readiness to fight a war. The Defence Secretary said just last week that we had to be ready within 1,000 days to fight a war against Russia, so this is really about preparing for the war that is in front of us, rather than for a war.
I want to make a slight digression and pick up on something the Chancellor said today. He said:
“In today’s Budget, I am fully funding the defence investment plan”.
I want to compare the figures in today’s Red Book with the figures laid by the previous Chancellor when the DIP announcements were made on 30 June. For 2027, in the DIP, we see a total budget for the MOD of £73.8 billion. In today’s Red Book we see a figure of £72.8 billion, so there is a gap of £1 billion. It is the same for 2028-29. I am sure that those on the Treasury Bench will have heard me, but perhaps the Chancellor would like to clarify his statement, because it does not seem that he is fully funding the DIP, according to the figures that were laid before Parliament.
Going back to readiness, the defence investment plan is, by its very nature, about capital projects. Over the past decade in the MOD, capital expenditure has gone up by about 130%, which is obviously very welcome, but day-to-day expenditure has flatlined in real terms. Looking at the Red Book today, and the RDEL for the MOD in 2027-28, we see that day-to-day expenditure in the MOD is actually being cut by 2%. Day-to-day expenditure in the MOD means spare parts, maintenance, munitions, training and operations.
I chair the all-party parliamentary group on rearmament, and we are currently running an inquiry into the state of the British military. What we are hearing is sobering stuff. We have no submarines that are at sea, which is in part a maintenance problem. We have aircraft that we are unable to disperse around different airfields because we do not have sufficient levels of stocks. We have the Navy cutting training courses for tank commanders. We have not run a submarine course for submarine commanders for many years. We have to send them to other nations to train them. This cut in resource expenditure, in day-to-day expenditure in the MOD, is having a real effect on our ability to be ready for war now, and that has a direct effect on our ability to deter Russia by 2030, which is exactly what the Government tell us we need to be doing.
I always apply the Granny Martin test to these things, which is to look at what people do rather than what they say. The Government seem to be saying that we need to be ready to fight a war by 2030. We have had a whole slew of announcements, with the Defence Secretary and the Security Minister saying that we need to stockpile food. I think we get it: it is a dangerous world and we need to be ready for war by 2030. But then why do we have a defence investment plan in which two thirds of the capital expenditure is after 2030, and that will deliver projects well into the 2030s?
If we really need to be ready for war by 2030, we need to focus on readiness. That means taking some of that MOD capital expenditure and putting it in the day-to-day budget, because that means we can train our forces, maintain our equipment, and have stocks, spares and munitions. Without that, our forces will wither, the training of our people will decline, morale will decline, and we will simply not be able to get ships out to sea or planes in the air.
Last week the APPG ran a session on the RAF, and we heard that for just £50 million we could build hardened shelters on our airbases. At the moment, we have exquisitely expensive planes that are sitting out in the open on the airbases. Do these people watch the news? Do they see what the Ukrainians are doing to Russian airframes? For relatively small amounts of money, we could get ready for the war that the Government say we face. That is what we should be focusing on, rather than projects that deliver after 2030.
Gareth Thomas (Harrow West) (Lab/Co-op)
It is a pleasure to follow the hon. Member for Tunbridge Wells (Mike Martin). Perhaps because of the time limit, he did not dwell on the dismal economic inheritance that the Government were left by the Conservatives, which we are still having to contend with—huge national debt, public services starved of investment, and dismal levels of productivity and growth.
It is encouraging that we are the joint fastest-growing economy in the G7, according to the OECD; that the IMF has lauded this Government’s efforts to tackle the national debt; and that unemployment is down. But the Chancellor is right that, with the war between Iran and the US driving economic uncertainty and pushing up inflation, there is still much more to do to help family finances and tackle more of the long-term challenges our country faces. I welcome, in particular, the Budget’s focus on the cost of living and the support for families with their energy bills.
One of the most pressing long-term challenges that our country faces is how ambitious we want to be in resetting our relationship with our European allies. Made in Europe is the canary in the coalmine—the warning that the more distant we get from Europe, the more vulnerable British jobs dependent on European export orders will become. In the European Union our voices would be louder, our reach would go further and our economic security would be more assured. I recognise that my constituents will want to know the costs as well as the benefits of rejoining, so I very much welcome the Government’s appetite to have that honest debate.
This time, however, there should be a plan B. An “all or nothing” choice to go in or not would be even more irresponsible than the Cameroons’ failure to prepare for the possibility of exit a decade ago. So the reset must deliver more. Greater access to the single market, of the sort the Swiss have, and a uniquely British deal, but one recognisable to our allies in Europe, would bring substantial economic gains, albeit not the full benefits of rejoining.
On some of the specific measures in the Budget, I welcome very much the focus on small businesses and the sensible measures that the Chancellor set out, but we need to go further: to offer better access to capital, to help small businesses find new export markets, and to explore offering tax relief to help SMEs hire those who are not in education, employment or training.
Securing affordable finance to grow a small business remains significantly difficult for many firms. It is a sustained market failure, with a gap of up to £4 billion holding back growth, and it is particularly acute for businesses outside the south-east, and for women, disabled and ethnic minority entrepreneurs. That market failure is made even more acute by high-cost credit firms offering easy-to-get loans without real affordability checks or clarity on annual interest rates, and often those who broker such loans are not open about the commission they charge. This is the payday lending scandal over again, with entrepreneurs and small-business owners being exploited.
The further investment announced for the British Business Bank is welcome, but it needs to drive a sustained expansion of community banks, or community development finance institutions. They must build capacity jointly with big banks such as Santander, Barclays and HSBC, which invest in community banks in the US, but as yet not in the UK.
There is a neglected sector of the business community that exists not to make a profit for shareholders but to serve a social purpose, and it is crucial to delivering sustainable growth in every postcode. Those co-operative and mutual businesses do not charge the highest prices and they often cannot secure traditional bank finance, but they exist to achieve social goals for the communities in which they operate.
Chris Evans
My hon. Friend is making an important point about the mutual sector. Does he agree that credit unions should be part of that, and that managing credit unions to become building societies would be a way of rebuilding our mutual sector in this country?
Gareth Thomas
I absolutely agree with my hon. Friend, who makes an important point about the need to do more to expand credit unions. It is for such businesses, and the communities that would benefit from other co-operatives and mutuals, that Labour Members committed to put in place policies to double the size of the co-operative sector. We now need to see enacted the capital reforms drawn up by the Law Commission, which would unlock significant investment from capital markets, crucially without requiring a co-operative or mutual business to have to sell up and demutualise. We should look at using the corporate tax regime to encourage investment in those third sector businesses. Why cannot the bigger co-operative businesses be allowed to offset some of their corporation tax liabilities if they invest in co-op development funds that help bloody minded co-operative entrepreneurs to bring the hopes and ambitions of their communities to life?
Finally, I welcome the investment in public services in my constituency that the Budget locks in. New investment in primary care in Harrow, for example at Alexandra Avenue clinic, will unlock another 100,000 face-to-face appointments with a GP, nurse or other health professional. A new state-of-the-art GP surgery and, over time, a neighbourhood health centre is coming at the White House in Harrow College in central Harrow. Work is under way to plan further investment in other local medical centres, and more than £27 million has been given by the Government to invest in new special needs places across the borough. Vital funding for electrical and safety repairs has been invested at Rooks Heath high school, Whitefriars school, Nower Hill school, Bentley Wood high school, Hatch End high school and Earlsmead school. It is proof that this Government are delivering for the people of my constituency.
Mike Wood (Kingswinford and South Staffordshire) (Con)
The disappointment of today’s Budget is that, having put on his running shoes for the media earlier this week, the Chancellor spent his statement running away from the big challenges facing the country and ducking each difficult decision. The first big challenge that he ducked was getting a proper grip on the public finances, so that we do not have to leave our children and grandchildren with spiralling national debt. He tells us that everything is under control because the OBR says that his fiscal rules have technically been met, but the public are not fooled by Treasury scorecards, and neither are the markets.
Just like his predecessor, the Chancellor promises to bring borrowing down right at the end of the period covered by his fiscal rules, in this case with the hidden promise of 2.6% annual spending cuts, which includes those 2% a year cuts from mainstream schools every year, after the next general election. Those steep cuts will clearly never happen, and the markets know it. In the meantime, he did not say that he was increasing borrowing from 2.9% to 3.4% next year, and from 2.5% to 2.9% the year after—billions in extra borrowing. Like his predecessor, the Chancellor seems to take his inspiration from St Augustine: “Oh Lord, help me to be pure, but not yet.” Every year, the date for that fiscal restraint is pushed back another 12 months and borrowing revised up in the meantime. He speaks of fiscal discipline, but this is fiscal policy on the never-never.
Nowhere is the reason for that fiscal timidity clearer than on welfare. All hon. Members know that public spending cannot be controlled and Britain cannot get back to work without proper structural reform to a ballooning welfare bill, but where we needed action, all we got were yet more taskforces, reviews and procrastination.
That failure on welfare leads directly to the most sorrowful failure in the Chancellor’s entire Budget: national defence. The Chancellor knows the urgent need for an immediate plan to increase defence spending to 3% of GDP by 2030 better than anyone; it is why he said he resigned as Defence Secretary earlier in the year. He knew the Government were playing Treasury accounting tricks—tucking MI5, pensions, the Chagos Islands bills and even £200 million for doing up Barrow-in-Furness high street under the badge of “defence spending” to pad out a press release—but when we strip out those tricks, our armed forces are facing a real-terms cut in their day-to-day running costs over the next three years.
Finally, the Chancellor had the chance today to undo the terrible damage done by his predecessor and inject real, sustainable growth into our economy. Business distress is at a 20 year high. High street names like Poundland are collapsing, and young people have paid the heaviest price of all, with surging numbers of NEETs and a genuine youth jobs crisis. Nowhere feels the triple whammy of high employment costs, punitive business rates and relentless regulation more acutely than our hospitality sector. Our pubs, bars and restaurants are the heart and soul of communities like mine in Kingswinford and South Staffordshire—
Mike Wood
No, we are coming to the end of the debate.
Those pubs, bars and restaurants are the No.1 place where young people get their first foot on the jobs ladder. The Chancellor’s announcement on small business relief will clearly be welcomed by those firms that qualify, but the truth is that it will do little to help most hospitality businesses. Fewer than one in 10 restaurants and licensed premises are set to benefit, with the rest continuing to suffer from Labour’s business rates bill hike.
The Chancellor had a simple, practical lever right in front of him today—a meaningful increase in the alcohol duty differential for draught beer and cider pulled across the bar in a well-run local pub or restaurant, compared with cheap bottles and cans stacked high in supermarket aisles. It would have helped our British breweries, helped save community pubs and protected hospitality jobs for young people. Again, the Chancellor knows that: in opposition, he called for cuts in beer duty, but in the Treasury he is hiking the main beer duty rate. He ignores the cross-party pleas for big reductions in draught beer duty, and instead hammers publicans and brewers once again, with another hike in the beer duty he used to say should be cut.
The Chancellor needed to step up and take the decision needed to help pubs and hospitality. Instead, just like on debt, on welfare and on defence, he ducked it. Our businesses, our young people and our armed forces cannot afford to wait in a holding pattern until this Government discover their courage.
Janet Daby (Lewisham East) (Lab)
Unlike the hon. Member for Kingswinford and South Staffordshire (Mike Wood), I commend and welcome today’s Budget. My contribution will be around cost of living support, care leavers’ support and NHS funding, in particular funding for sickle cell emergency bypass units. I put it on the record that I am chair of the all-party parliamentary group on sickle cell and thalassaemia.
I welcome that the Chancellor and the Prime Minister have prioritised the cost of living. Since Liz Truss’s disastrous mini-Budget, my constituents have faced high prices and rising interest rates. In 2023, an estimated 11.5% of my constituents were in fuel poverty, over 2% higher than the London average. As fuel costs rise, that figure can only increase. That is why I welcome the Chancellor’s confirmation today that he is temporarily removing VAT on electricity bills this in winter. Further, the announcement of the £100 discount for council tax bands A to D means that most of my vulnerable constituents—in fact, over 45,000 of them—will benefit from that funding to help them stay warmer this winter. I also welcome the Chancellor’s help to make bills fairer by scrapping fees added to gas bills. That will all help people to maintain a decent standard of living.
That leads me on to care leavers, who are some of our nation’s most vulnerable young people. Some of them face life’s highest barriers. The Nuffield Foundation found that 40% of care leavers aged 19 to 21 were NEETs, compared with 30% among the same age group in the general population. The Children’s Commissioner found that 25% of care leavers experienced homeless in the first two years of leaving care.
I ask the Treasury to consider care leavers aged 18 to 24 living independently, who receive the same benefit rate as other people aged under 25. Most under-25s live at home, yet both groups receive the same rate of benefit. I ask the Chancellor to work with the Department for Work and Pensions to consider paying care leavers the rate of benefits for the over-25s to support them with their independent living. The other issue is that care leavers who are in work often experience in-work poverty because of the rent and bills that they have to pay. The information from the Chancellor today helps care leavers, but there is still more to do.
I cannot but mention the Bakerloo line, which I was pleasantly surprised to hear mentioned in the Chancellor’s speech. I thank the Chancellor for backing the Bakerloo line coming to south-east London. His announcement will allow the Mayor of London to retain income tax receipts, which will allow him to invest in this vital infrastructure project in Lewisham and south-east London to improve transport links. That will have a positive impact on our economy.
I also welcome the £37 billion spend on our NHS. The Chancellor spoke of spending £37 billion more on health next year compared with the last year of the last Conservative Government, and I applaud that. We need to do more to bring down NHS A&E waiting lists and get rid of corridor care, to name a few things, but I wish to focus on the benefits of funding for specialised health services—namely, sickle cell bypass units. There are currently seven such units in total in London and in the north of England, one of which is at my local hospital in Lewisham. I have spoken to the amazing staff and seen the provision of care there.
Sickle cell disorder is the fastest growing genetic condition in the UK. Around 19,000 people live with it, and roughly 250 babies are born with it each year. It causes sudden and excruciating pain. More needs to be done to ensure that we fund the right provisions and units to ensure that that provision continues for people who have sickle cell disorder. I ask the Government to carry on working to ensure that sickle cell bypass units continue to be provided in those seven places and are more spread out across the country.
Llinos Medi (Ynys Môn) (PC)
This was Labour’s opportunity to show the people of Wales that it is listening, following the Senedd election last May. Instead, it has delivered one of the worst funding settlements for Wales in years. The £450 million over three years announced by the UK Government today is a real-terms cut to the Welsh budget. The Welsh Government needed a further £350 million in one year for a standstill budget. That means a cut to public services. In addition, the capital budget will be cut by 10% in real terms by the end of the decade, because of decisions made here in Westminster.
This Budget should have begun to address the long-standing injustice of Welsh rail funding. Wales has around 10% of the UK rail network, yet it receives just 1% of the rail enhancement spending. To address that, we were promised a £14 billion rail pipeline, but today, Leeds gets £300 million for one station, and the entire Welsh rail network gets £30 million.
The Government should go further to support investment. In north Wales, we are fortunate, and I thank the Labour Government for their decision on Gwyndod. Gwyndod has the potential to reindustrialise north Wales, strengthen our energy security and create thousands of high-quality jobs, but that will only happen if the Government ensure that the manufacturing jobs and supply chain investments from that project are created in Wales. Today’s announcement that the M-SParc science park on Ynys Môn will be supported is a step in the right direction when it comes to supporting economic growth, but we must make sure that Ynys Môn and north Wales benefit fully from Gwyndod.
Dr Scott Arthur (Edinburgh South West) (Lab)
As always, the hon. Lady is speaking very passionately. She has talked about energy security in Wales. Would it not be a lot easier to achieve that if the Welsh Government did not proceed with their plan to ban electricity pylons?
Llinos Medi
I think those conversations will take place in every community where there is a grid connection, and it is respectful to have those conversations. Since being elected to this place, I have been having conversations about having a robust connection, which should include undergrounding, to respect our communities. Communities that are hosting nationally significant energy projects should also be getting energy transmission in a fairer way.
Another measure that should have been announced today is energy support. Wales has some of the oldest and hardest to heat housing stock in western Europe, and official figures show that one in four households are living in fuel poverty. As has been mentioned today, many households across rural Wales remain off the gas grid—including 52% of those on Ynys Môn—with many of them reliant on heating oil. Businesses, too, remain exposed to volatile energy costs, without the protection of a price cap. The Chancellor announced that standing charges on gas will not be removed until the end of 2027, so households will not see the benefits of that decision this winter. The Government have not taken immediate steps to end unfair electricity standing charges, leaving households in north Wales paying the highest standing charges anywhere in the United Kingdom.
The people of Wales deserve better—they deserve a Government prepared to match their rhetoric on fairness with meaningful action. We did not get that fair deal for Wales in this Budget.
Ruth Jones (Newport West and Islwyn) (Lab)
This is the right Budget at the right time. It delivers immediate relief, but also the long-term investment necessary to bring hope back to Britain. I welcome the further steps announced by the Chancellor to provide additional breathing room to households, which is essential. Energy bills will be cut, food tariffs will be slashed, the carer’s allowance cliff edge will be abolished, standing charges will be scrapped, parental pay will be expanded, and fuel duty will be frozen again, because Labour is on the side of working people. We recognise that times are tough, especially with the ongoing energy price spikes driven by Putin’s illegal invasion of Ukraine and, of course, the unnecessary US-Iran war.
This Government’s ability to support hard-working families while continuing to provide up-front investment in our public services is testament to our careful economic management. Our careful stewardship has been commended by the IMF and has allowed us to enjoy the joint highest growth in the G7 while keeping public debt under control. The cost of living relief announced today by the Chancellor only builds on that already announced by the Prime Minister in his first 100 days—taking VAT off energy bills, a £2 bus fare cap, business rates relief, and tackling rogue tradespeople and repeat subscription scams.
I am disappointed, though, that where this support relates only to England, the minority Plaid Cymru Welsh Government have not shown the same ambition or understanding of the everyday pressures facing households. We need to see that £2 cap on bus fares in Wales, as well as the extension of £1 fares for under-21s. I look forward to Plaid Ministers announcing how they will match the UK Labour Government’s reduction in bus fares—let us hope they do it quickly. Barnett consequentials on spending announcements are worth an additional £450 million to the Welsh Government, and I suggest that they spend it wisely, as people in Wales also want to benefit from this Budget for working people.
With my constituency being home to the Welsh semiconductor cluster, and as the chair of the APPG for semiconductors, I am extremely proud of this Government’s commitment to manufacturing. I recognise the role that reindustrialisation can play in bringing well-paid jobs to every postcode, including the £20 million to support UK reindustrialisation and high-value jobs. That builds on the existing strengths of the semiconductor cluster in Newport West and Islwyn.
Boosting manufacturing and the Prime Minister’s ambition to bring good growth to every postcode are particularly important in Wales, where we felt the impacts of 40 years of neo-liberalism at their hardest. Well-paid union jobs in our industrial heartland and coalfield communities disappeared and were never replaced. Despite the damage done by decades of Conservative Governments, Wales remains a proud manufacturing nation. The evidence is clear from my own constituency, with world-leading manufacturers choosing Wales for investment. Advanced manufacturing must be at the heart of a future Welsh economy. This Budget backs that ambition.
This Budget is another big win for reversing 14 years of Tory under-investment in Welsh railways. Last year, we saw £445 million of funding for new stations, and now we have an additional £30 million for the Cardiff Parkway station site. As my constituency neighbours that site, I particularly welcome that announcement. It will provide meaningful alternatives for commuters and shoppers wanting to travel between Newport and Cardiff. I look forward to further announcements at the spending review on the delivery of this Government’s £14 billion commitment to transform Welsh rail infrastructure, including the additional five stations across Newport.
Ruth Jones
I will carry on, because I am conscious that there are others who want to speak.
Labour’s investment-led approach stands in stark contrast to that of the minority Plaid Government, who propose to close a number of the M4 junctions across Newport. That will improve traffic flow by just 3% but will have a massive impact on air and noise pollution for those living in my constituency.
I welcome the Chancellor’s announcement today that tax-free mileage rates will now permanently be set at 55p a mile for the first 10,000 miles, which will go a long way to helping those who drive as part of their work, especially those providing domiciliary care. We need the Welsh Government to show the same ambition in making sure that when we push funding and powers from Westminster, it is not just hoarded in Cardiff Bay but is brought even closer to our communities. In my home city of Newport, we have a bold, ambitious Labour council led by Councillor Dimitri Batrouni that is ensuring that Newport is one of the fastest-growing areas of the UK. Think of what we could achieve by giving more powers and funding directly to local areas. This Budget marks another major step forward in delivering breathing space today and fresh hope for the future, and I support it.
Jerome Mayhew (Broadland and Fakenham) (Con)
I will go out on a limb and say that this is a terrible Budget. It is not just a “steady as it goes” Budget, because everyone in this Chamber knows that we have got some serious problems that have to be addressed by this country, both politically and economically. This will be known as the “kick it down the road” Budget. It has its eyes covered and its fingers in its ears, pretending that these problems are not real and are not now, and that we can afford to push them all down for another 12 to 18 months.
Look at national debt. We have already peaked above £3 trillion of national debt in the past couple of weeks, yet this Parliament is now on course to increase borrowing above what was planned in 2024 by £308 billion. That is an increase of more than a quarter of a trillion pounds in borrowing, with no plan to get it down and no credible plan to reduce welfare spending, which is the next major issue that we have to address.
Welfare dependency now makes it reasonable for 1,000 people a day to apply for the personal independence payment, because they know that they will get paid more on benefits than if they got a job. The Government recognised that needs to change and tried to make a very modest change last year, but that was voted down by Government Members, and it led to the defeat of the previous Prime Minister. What was the Government’s answer? The Timms report, which was created out of the failure of the debate last time round, and part of its objective is not to reduce spending—[Interruption.] I would be grateful if Members listened to the speech being made, rather than making their own from the Government Front Bench.
Welfare dependency has to be addressed, yet we are waiting for a report, and then a response from the Government, and then a White Paper sometime next year, apparently. Then, after that, there will potentially be legislation to go through this House. That is no way to address this issue. This country faces a key and present economic, social and moral danger, and this Government are pretending that it is not there.
Then we come to defence. We are told by this Government that we must prepare for a war within 1,000 days, but do we have a plan to get to spending 3% of GDP on defence by 2030? Not a bit of it. We have a plan for next year, so we are supposed to be satisfied with a plan to get to a plan. This is ridiculous. We have Ministers telling us that we have to stockpile food, but we have capital expenditure that is due to take place after that 1,000-day period. This is back-to-front government, and it is a negligent Treasury that is imposing this on our defence sector.
We have a plan that reduces next year’s economic growth from 1.6%, which is pretty anaemic, down to 1%, and at no point during the forecast period does it get as far as 2%. This is outrageous.
Jerome Mayhew
I will not. I have only a minute left.
We have tax rises being imposed on savers. What a weird argument that is—that increased taxes should be imposed on people who are doing the right thing. As for banks, which are the funders of growth, the CEO of one UK bank is reported to have said:
“Taxing the engines of growth to reduce VAT on gherkins is end-of-Rome level of stupidity.”
It is hard to disagree, is it not?
We have four really serious issues for our country, and a Budget that pretends they are not there. It is a Budget that kicks the can down the road. It is a Budget that says “steady as she goes” is the right answer. I could not disagree more.
Matt Rodda (Reading Central) (Lab)
I warmly welcome the Budget. It offers breathing space for both families and businesses, and, crucially, hope for the future. Although this is a time of really quite severe international headwinds, as we are all very aware, there are real signs of growth in the British economy. We are jointly leading the G7 in terms of growth, and the IMF is welcoming the Government’s measures to reduce debt and deficit.
Let me deal briefly with the key measures that will offer breathing space and support to families and businesses, before moving on to some of the longer-term measures. Many of my constituents live in older properties, in Victorian houses or possibly houses built in the 1930s, and I was delighted to note that they will benefit from a host of measures to reduce their energy bills in what will be a very hard winter for them. That shows a real understanding of the pressures on families at this difficult time. I particularly thank the Chancellor for his offer of £100 paid directly to residents, which I consider very sensible. That, and a range of other measures, will help to reduce the current severe pressure on family finances. The measures to support small businesses, particularly those in our high streets, will also be welcomed in Reading and many other towns and cities. Moreover, 47% of small hospitality, leisure and retail businesses in the south-east will now not pay business rates.
In the time available to me, I want to say something about the longer-term measures, particularly those relating to improved devolution to help businesses and development and regeneration, along with a series of other measures to support businesses and homeowners. When it comes to regeneration, the new mayoralties that have been announced present some real opportunities. I warmly welcome the Thames Valley mayoralty of Berkshire, Oxfordshire and Swindon, and, in particular, the scope for mayors to free up land near railway stations. As many Members on both sides of the House have seen, a huge pool of land is available.
On one side of the railway in my own town of Reading, a £1 billion regeneration project is bringing jobs, growth and new housing to the town centre. On the other side, where there are a series of small, fractured sites where developers are not working with one another, there is no regeneration. One of the significant advances is that bringing in mayors allows the creation of a mayoral development corporation, which can bring together those disparate sites and make them much more attractive to developers. I look forward to hearing more from the Chancellor and the Ministry of Housing, Communities and Local Government about that type of work as the whole mayoral scheme moves forward in the new year.
The support for home ownership, and the support for new council houses, is warmly welcome in my area. We have high house prices, and many people are struggling to get on the housing ladder. The growth of businesses in the Thames valley is partly due to the inward movement of people from across the rest of the UK and around the world, so housing is needed, and these are two important measures to support home ownership and ensure that there are homes for people to rent.
Finally, I warmly welcome the measures to support entrepreneurship, which I hope will significantly support our tech entrepreneurs. Some 300,000 people in Berkshire work in tech or telecoms, and they are driving growth in our county, across southern England and, indeed, across the country as a whole. We have benefited from a number of key infrastructure projects, particularly the Elizabeth line. I look forward to many others in the future, including the western rail link to Heathrow, but the help to support entrepreneurs is important. I warmly welcome that and commend the Treasury for its work.
Thank you, Madam Deputy Speaker; it has been a pleasure to speak today.
Dr Andrew Murrison (South West Wiltshire) (Con)
I could not really make up my mind, when listening to the Chancellor, whether the Budget was a gathering note for an early general election or simply a wasted opportunity. Well, we have been told in the last few minutes that the Prime Minister has said to reporters:
“I can rule out calling a general election in the next 12 months.”
So that has sorted that one. I am sure that many right hon. and hon. Members on the Labour Benches will be heartily relieved.
We are left with a wasted opportunity: a Budget that contains no growth strategy worth the name; nothing on welfare, except for one or two small rises here and there; and nothing on reducing the size of the state. While countries in Europe are giving serious attention to reducing the size of the state following covid, this Government are doing very little indeed, to put it politely. The Netherlands is reducing the headcount in its civil service by 15%, except in the military and the police. If we were to do something even approaching that, it would be the thick end of a headcount of 100,000, freeing up resources for deficit reduction in the interests of generational fairness.
I am particularly focused on good growth in the BA12, BA13 and BA14 postcodes, but my constituents are seeing none of it. What they did see, practically on day one of this Government two and a half years ago, was the cancellation of the A303 improvements. They saw the long-grassing of the north-south strategic study to link the south coast with the M4. That seems to have gone by the board, meaning no Westbury bypass after all these years. We see continuing fiscal encouragement for the much-loathed plan for an incinerator at Westbury. We have seen VAT and charitable rate relief changes for independent schools, which has closed a foreign languages college in my constituency that brought in a great deal of foreign investment. We have also seen the retrenchment of one independent school, and only yesterday we received news that a further school that is very close to my constituency is finally, after over 100 years, closing down as a direct result of Government policy. There is not much growth there.
We have seen the family farm tax. We have seen the family business tax. We have seen the carbon border adjustment mechanism, which was included in the Finance Act 2025. It will come in on 1 January to add to farmers’ woes—something that I had thought the Government might mention in the Budget. It was said earlier that farmers have hardly featured at all in this Budget. Well, CBAM was an obvious thing to look at to reduce the cost of fertiliser. There are farmers in my constituency who are seriously considering not planting this year because of the cost of fertiliser. This was the opportunity to put that right.
My constituency is very military. We heard a deafening silence on spending 3% of GDP on defence by the end of this decade, making a complete mockery of the now Chancellor’s resignation in June. Goodness me—his namesake, Denis Healey, must be turning in his grave. In 1969, he famously said that
“once we cut defence expenditure to the extent where our security is imperilled”
—the grounds on which the current Chancellor resigned in June—
“we have no houses, we have no hospitals, we have no schools. We have a heap of cinders.”—[Official Report, 5 March 1969; Vol. 779, c. 551.]
Yet it is precisely this issue—the welfare of our defence personnel and our ability to protect the state—that the now Chancellor resigned over in June. I have to say that that is quite extraordinary.
Now we find that RDEL will be cut in real terms over the next two years. In the time available to me, let me explain what that means. It means defence personnel’s accommodation will not be kept up to the extent that it should be. It means establishments will not be renovated. It means there will be no fuel for ships at sea. It means dockyard workers will not get overtime, which means ships will be anchored off at a weekend rather than service people being able to get home to their families. It means no exercises. I speak as a reservist, and it means no reserve service days, which means demoralising our reserve. This is catastrophic, and it is no way to behave. It is certainly not indicative of a Government who are halfway serious about the defence of this country.
Leigh Ingham (Stafford) (Lab)
To many hon. Members, it will not come as a surprise that I want to talk about town centres. Stafford, the constituency I represent, is a market town—the clue is in the name—but since 2024, Stafford has not had an actual market. It is really hard to think of a more powerful symbol of what has happened to towns like mine over the last decade and a half. Towns such as Stafford are full of hard-working people who really want to get on. They want a good job, a warm home and a safe community—and it is not a lot to ask for. Under the last Conservative Government, they watched as the foundations of their community life were stripped away. Youth centres disappeared, we had the third worst youth service cuts in the country, important buildings were left to decay and eventually the market closed. The damage that such neglect does to a town is more than financial; it starts to chip away at the heart of a place and changes how people feel about their home.
Stafford has a vibrant, independent business scene. People can get unbelievable hot chocolates in the Monk & Smuggler, bestsellers from That Little Bookshop or incredible vinyls from Double Double records, plus much more. These businesses are investing their own time, money and energy in our town, and they have told me many times that they need their market back. They want Stafford to be a destination once again, and so do I—a place that people choose to visit, to spend time in, to spend money in and to build a future in. That is why I am so proud that this Government have committed £10 million to a brand-new, all-day market hall and events centre in Stafford, which I have been working on for a good while now, as my hon. Friends can attest. This investment says that towns matter, and that my town matters. It is an investment that will support businesses, create opportunities and help breathe life back into our high street.
This debate is obviously about something bigger than one town and one project. It is about who gets the power to shape people’s future, because if we are serious about growth, opportunity and rebuilding Britain, we cannot continue to run every important decision through Whitehall. The truth is that the people who know Staffordshire best are the people who live and work there. That is why the case for a mayoral strategic authority in Staffordshire and Stoke-on-Trent is so strong. We have already seen the difference investment can make in Stafford over the last couple of years. We have seen growth and confidence start to return and investment at a scale not seen for many years.
Of course, there is so much more to do, but this commitment is a clear sign that this Government care about towns like ours, believe in their future and are prepared to back that with action. I look forward to working with Members across the House to make this vision a reality, and to ensure that Staffordshire and Stoke-on-Trent have the powers, the investment—my hon. Friends have talked about that—and the opportunities they need to thrive for generations to come.
Dr Ben Spencer (Runnymede and Weybridge) (Con)
Sadly, this Budget does not tackle the critical national issues that we face. It does not have a plan to reduce spending on welfare. It does not have a plan to increase spending on defence. It does not have definitive interventions to improve growth, tackle our spiralling debt or deal with the record high taxes all of us currently face.
What about locally? How does the Budget score for my constituents in Runnymede and Weybridge? Does it keep Runnymede and Weybridge moving? Well, there is nothing on level crossings and not much on rail or roads. On backing jobs and local businesses, it does not do anything about the catastrophic employer national insurance contributions.
What about defending our green belt and our natural environment? There is nothing on the Environment Agency. On protection from flooding—I am glad that the Minister with responsibility flooding is on the Front Bench—there is no mention of the River Thames scheme in the Budget. The largest infrastructure scheme put forward by the Environment Agency is notably absent, which is deeply, deeply concerning.
How about supporting children and families? Again, there is nothing on special educational needs and disabilities or on childcare.
The scorecard from Runnymede and Weybridge on keeping my constituency moving is nil, nil, nil, nil, nil. Why is that? It is because this Budget is a tomorrow Budget. It is a future Budget, with all the key decisions left until after a review or until this Parliament is over. I have some news for those on the Government Benches and those on the Opposition Benches to the left of me. We know what that means. The fact that the Chancellor and the Prime Minister would rather have a non-Budget and call a general election than make the hard decisions today tells us everything we need to know about this Labour Government. There is another way with the Conservatives, and I am looking forward to it and so are my constituents.
Ordered, That the debate be now adjourned.—(Michael Wheeler.)
Debate to be resumed tomorrow.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
On a point of order, Madam Deputy Speaker. Thank you for granting this point of order. I am seeking some clarity because both this week and last week, the Prime Minister and the Secretary of State for Energy Security and Net Zero indicated that no decision had been taken on whether they were going to grant approval to the Rosebank oilfield. However, the Office for Budget Responsibility’s “Economic and fiscal outlook” publication today states that the Government’s projected oil and gas receipts for the next year, which are now expected to raise £5.1 billion for the Treasury, include:
“production from currently producing fields (including Jackdaw), and the NSTA’s estimate of production from development of new fields, which includes Rosebank, and from future discoveries.”
Madam Deputy Speaker, might you be able to offer some guidance on how this House and the country can get some clarity on whether or not the Rosebank oilfield has been granted approval or will be granted approval, and whether the OBR’s forecast can be trusted at all?
Madam Deputy Speaker (Judith Cummins)
I thank the hon. Gentleman for notice of his point of order. I have received no notice from Ministers that they intend to make a statement on this matter. It is not a matter for the Chair, but Ministers on the Treasury Bench will have heard his point of order.