Lords Chamber

Thursday 4th December 2025

(began 1 month, 2 weeks ago)

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None Portrait Oral questions: Age verification: access harmful material online Baroness Benjamin (Liberal Democrat)
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Lord's Lord's first Lord's first oral Lord's first oral question.
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None Portrait Oral questions: Use of electronic shock collars on domestic animals Lord Black of Brentwood (Conservative)
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Second oral question. my name on the Order Paper.
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None Portrait Debate: Debate on the Autumn Budget 2025 Lord Livermore, The Financial Secretary to the Treasury (Labour)
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>> Motion for debate. >> Motion for debate. The >> Motion for debate. The Autumn Budget Lord Livermore.

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Budget Lord Livermore. My Lords, it is a privilege to open this budget debate in your Lordships' House and I, and to Lordships' House and I, and to speak alongside so many distinguished and expert noble Lords. I look forward to listening to and learning from all of the contributions today. We should perhaps spare a thought for the noble Lord Lord Bridges of Headley, who, as speaker number 72, has to try to find something new to say. I. I don't doubt that he will succeed.

May I take this opportunity to welcome the right reverend Prelate, the Bishop of Portsmouth, to your Lordships' House? I very much look forward to his maiden speech. Undeniably, this budget has been dominated even more than usual by questions of process before, during and after it was delivered. There were months of speculation and advance. On the day of the budget itself, the OBR made a serious error of releasing significant details before the budget was delivered, and shortly after the budget, the OBR made the decision to publish the timeline of its forecasts.

The OBR were clear in their evidence to the Treasury Select Committee this week that the Chancellor did not mislead. But I am sure many noble Lords may perfectly, fairly choose to focus on these questions during their contributions. Today, in opening this debate, I will focus on the measures contained in this budget and will set them in the context of our wider strategy to build a stronger and more secure economy. As noble Lords will know, we inherited an economy with serious flaws, with the crisis in our public services, a crisis in our public finances, and a crisis in the cost of living, at the heart of this deep malaise had been a chronic lack of investment, both public and private, weighing down on growth and productivity.

Private sector investment was the lowest in the G7, constrained by years of economic instability, a planning system that thwarted projects before they even began, a regulatory system tying businesses in red tape, and a Brexit deal that cut Britain off from our largest market. Public sector investment was no better and was even set to fall again from 2.5% of GDP to 1.7% of GDP. That meant vital infrastructure projects constantly deferred, delayed or cancelled roads, railways and energy projects that didn't get built.

Little wonder the IMF repeatedly warned a lack of investment posed a major barrier to growth. That is why, since day one in government, we have put increased investment at the heart of our growth strategy and made growth our number one priority. In our first budget. Last year, we changed the fiscal rules to enable and protect £120 billion of additional capital investment, the highest level in four decades in housing, energy and transport. The infrastructure that Britain needs to grow. And we have systematically begun to remove the barriers to investment faced by the private sector, with the biggest planning reforms in a generation cutting the cost of regulation, investing in skills and apprenticeships, or reforming our visa system to attract the best global talent to Britain.

Pensions reform to release more capital for investment and resetting our relationship with the EU. All this and more is why, since the election, we have seen an additional £250 billion of private investment committed to the UK. It is why in this budget, the OBR upgraded Britain's growth forecast for this year from 1% to 1.5%. It's why we were the fastest growing economy in the G7 for the first half of this year, and are on course to be the second fastest for the year as a whole.

And it's why, just this week, the OECD upgraded their prediction for Britain's growth next year. But there is clearly much more to do ahead of this budget. The OBR looked back at the productivity performance of the previous decade and concluded that the chronically low levels of investment, together with the effects of Brexit and the pandemic, have weakened the economy by far more than previously thought. This reappraisal of the productivity performance of the past has directly impacted their view of GDP going forwards, driving lower growth forecasts for the remainder of the forecast period.

The OBR have been clear. Their review reflects not what this government has done over the past 14 months, but the legacy of the past 14 years. Nevertheless, it does now fall to us to deal with the consequences. This budget continues that work by taking three deliberate pro-growth choices first, by choosing to maintain economic stability, getting inflation and interest rates down, we are giving businesses the confidence to invest and our economy the room to grow. Second, by choosing to reject austerity, we are protecting the £120 billion of additional investment in growth driving infrastructure.

And third, by choosing to back the fast growing companies of the future, we are supporting the investment, innovation and economic dynamism that will increase growth in the next decade and beyond. Let me take each, in turn, the first pro-growth choice made by this budget was to maintain economic stability in the months leading up to the budget, in countless conversations with businesses and investors, I heard repeatedly that the most important action government could take would be to reduce inflation, helping interest rates already cut five times since the election continued to fall.

A growing economy needs strong foundations of economic stability, with borrowing down, inflation down and investment up. So because of this budget borrowing will fall as a share of GDP in every year of the forecast, from 4.5% in 2526 to 1.9% in 2030 31. Borrowing will fall more than in any other G7 economy. Net financial debt will be lower at the end of the forecast than it is today, and the headroom against our stability rule will more than double to £21.7 billion.

The budget also took more direct action to cut inflation. We have taken £150 off energy bills, frozen rail fares for the first time in 30 years and extended the freeze on fuel duty. All these things together take 0.4% off inflation next year. To put that in context, this is the biggest near-term reduction in inflation due to government policy ever forecast by the OBR at a single fiscal event. The second pro-growth choice this budget made was to protect the £120 billion of additional capital investment we have committed over the next five years, ruling out a return to the austerity of the past.

The OBR have estimated the eventual long term growth impact of this increase in capital investment as adding 1.4% to GDP, cutting this and returning to austerity will be the very worst thing we could do for growth. The very definition of short termism. Yet that is precisely what previous Chancellors with previous fiscal rules have done. In the years following the financial crisis, austerity took demand out of the economy when it was needed most, undermining investment in critical infrastructure, weakening productivity and choking off growth.

Unlike today's Conservative Party, we will not repeat the mistakes of the past, the exact mistakes that led to the productivity downgrade that we must now fix. Instead, our increased investment will deliver new roads, improved transport, new homes and new energy infrastructure. We're investing in the construction of Sizewell C. We're investing in the UK's first small modular reactors. At Wylfa. We're investing in the Lower Thames Crossing, the TransPennine route upgrade and Northern Powerhouse Rail, the third pro-growth choice this budget makes is to back the fastest growing British companies of the future.

The Scale Up Institute described this as a budget for scale ups and those ambitious to scale. And they are right the UK is a great place to start a business, but I've heard for too many years that our companies cannot scale at the same rate as their US peers. As a result, brilliant British businesses are either acquired or choose to go abroad to raise investment or fail. We will change that. We will make the UK the best place to start, scale and to stay because we know today's fast growing firms are tomorrow's engine of jobs and growth.

By doubling the eligibility of our enterprise tax incentives, investing billions of pounds in research and development and delivering reforms to boost the attractiveness of UK markets, we will ensure that these companies can access the capital and talent they need to succeed. For all businesses, large and small, we are maintaining the lowest headline corporation tax in the G7 and the most generous full plant and machinery capital allowances in the OECD, and to incentivise private investment and encourage growth, we're introducing a new 40% permanent first year allowance for main rate plant and machinery from July 2026.

My Lords, in this budget, we did face a choice. We could have made the reckless choice to abandon our fiscal rules and let borrowing and debt increase. Instead, we made the pro-growth choice to get borrowing, debt and inflation down more than doubling our headroom. We could have made the irresponsible choice and return to austerity, cutting public services and undermining capital investment. Instead, we made the pro-growth choice to protect the investment in Britain's infrastructure to build a stronger, more secure economy. But these choices do need to be paid for.

The previous government froze personal tax thresholds from 2021 until 2028. This budget maintains all income tax and national insurance thresholds at their current level for a further three years from 2028. I do accept that maintaining these thresholds is a decision that will affect working people. The Chancellor said that last year, I said that last year and I won't pretend otherwise now, but we have sought to keep their contribution as low as possible by making other fair and necessary reforms to the tax system.

A Blackpool terrace pays more council tax than a £10 million Westminster mansion, so we're introducing a high value council tax surcharge on homes worth £2 million or more, while protecting those on low incomes. We're raising taxes on property, dividend and savings income, which currently face no equivalent of National Insurance by 2% at the basic and higher rate, and by 2% at the additional rate for property and savings income. The cost of pension salary sacrifice was set to almost treble from £3 billion in 2017 to nearly £9 billion by the end of the decade.

So we're capping the amount that can be salary sacrificed into a pension without paying any employee or employer. National insurance at £2,000, protecting low and middle earners while retaining in full pension tax relief worth over £70 billion a year. Alongside this, we're making reforms so that our tax system keeps pace with the fast changing economy by ensuring that motoring taxes cover electric vehicles for our new via a new per mile levy, increasing taxes on online gaming and betting whilst protecting bingo halls and horse racing, and preventing some ride sharing apps from abusing a tax relief intended for coach tour operators in order to undercut black cabs, while also supporting our high streets with permanently lower business rates for over 750,000.

Retail, hospitality and leisure properties funded with higher rates for the most expensive properties, including warehouses used by online giants. These are fair choices, with increases in tax coming most from those households in the highest income decile, and they are choices that underpin and enable our growth agenda of cutting borrowing and debt or refusing to cut investment. On Monday, the Prime Minister set out the next phase of that growth strategy first, to reform the regulation of our nuclear industry to make it easier to invest, and then extending that approach across our entire industrial strategy.

Second, to keep moving towards a closer trading relationship with the European Union, and third, to reform a failing welfare system in the last five years of the previous government, spending on welfare increased by £88 billion. Yet we inherited a system where children couldn't afford to eat, but taxpayers were being asked to subsidise tax breaks on the lease of luxury cars. That is a broken system and we are reforming it. Britain, one of the richest countries on earth, still has children growing up in poverty and a Labour government will always fight the social injustice where children, through no fault of their own, go to bed hungry and cold, their life chances shrinking every day.

Poverty scars our society, but it scars our economy too. It drives down growth and productivity. It heaps pressure on already stretched public services. Children who grew up in poverty earn 25% less age 30 compared to their peers. All this costs our economy an estimated £40 billion a year. I'm proud to have worked for the previous Labour government that cut child poverty by a million over a decade. I was angry when we had to watch the terrible social and economic costs of the conservative government that succeeded us, reverse all our progress and increased child poverty by 900,000.

Now, I'm proud to be a member of a government that, by scrapping the two child limit, is lifting 450,000 children out of poverty in a single step. Combined with other steps we've already taken, including extending free school meals to more families, this government will now be responsible for the largest reduction in child poverty ever achieved in a single parliament. And I'm proud, too, of what this budget and this Chancellor has achieved. Not just cutting child poverty, but cutting energy bills by £150, cutting NHS waiting lists, cutting, borrowing more than any other G7 country, cutting inflation, supporting further cuts to interest rates, rejecting austerity.

These are the right choices for a stronger NHS, the right choices for investment, the right choices for business and for workers, the right choices for Britain to continue building a stronger, more secure economy. I beg to move.
12:04
Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Conservative)
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Yeah. be agreed to. >> My Lords, I also welcome the right reverend Prelate, the Bishop of Portsmouth, and look forward to his maiden speech and to working constructively with him in the months and years ahead. My Lords, we've all had a few days to consider last week's budget and the conclusion the vast majority of commentators have reached is, unfortunately for our country, decidedly negative. The one welcome and significant aspect is the slight increase in fiscal headroom from its low level last year, but this has been clouded over by the flow of misinformation in the run up to the budget.

The negative aspects are numerous. I turn first to the most disappointing area. When Labour took power, they constantly assured us that growth was their number one priority. Less than 18 months later, growth as an objective has virtually disappeared. There are few pro-growth measures in the budget, many that will hinder growth, and there were scant mentions of the subject in the Chancellor's own speech. It seemed that growth had served its political purpose and could be cast aside. The Prime Minister tried to correct this on Monday in an unusual post-budget speech, but he did not spell dispel fears that growth had become less of a priority.

And since then, the OECD has warned that growth will be sluggish and that UK inflation will remain the highest of the G7 countries this year. Now, the Minister has said today, in an attempt to talk more about growth, that there is clearly much more to do on growth. And I agree for growth, we need business and consumer confidence, both private and public investment. A tax system with the right incentives and supply side reforms to lift the burden of regulation.

He is promising the latter, but the government's actions do not match the rhetoric. I turn next to the extraordinary pre-budget shenanigans, which lasted many weeks before the budget was delivered. Vast swathes of it, indeed pretty much all of it was trailed, briefed out, withdrawn and then debriefed by the government itself. And what the purpose of all this activity is meant to serve is mysterious. What is clear is that the whole process, counter to all norms and indeed the rules, was contrary to the national interest.

As one illustration, Andy Haldane, the former chief economist of the Bank of England, was explicit in saying one of the reasons we've had very weak growth is because of budget speculation that speculation was initiated and carried out by the government itself, and on process. The Obr's view of the government's breaking of budgetary conventions are set out clearly for us all to see on page one of their report. In the beautifully understated yet lethal prose of the UK mandarinate led by Richard Hughes, we all suspect he was eased out as much because he authored it as because of the admittedly serious leak of the OBR document on Budget Day.

But I quote it so we can all enjoy the performance. Describing the production of their forecast, the OBR say given the unusual volume of speculation on the subject prior to the publication of this report, the chair has taken the unusual step of writing to the chair of the Commons Treasury Committee to set out the facts concerning the evolution of our forecasts over the course of the last four months. Unusual indeed, my Lords, a devastating indictment of Treasury Ministers behaviour over the budget period by those in the best position to judge the facts.

If this is thought to be insignificant, just look at the turmoil on the bond markets between November the 4th and the day of the budget. A gift for the hedge funds and investment banks with small investors and more conservative funds left out. Indeed, savers were frightened into withdrawing record amounts from the stock market over

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the last few months. Yeah. The Chancellor and the Prime Minister fought the last general Minister fought the last general election with a promise of minimal tax rises. The Labour Party have now increased taxes by £40 billion and £26 billion in successive budgets, taking the total projected budgets, taking the total projected burden to 38% of GDP by 2030, an burden to 38% of GDP by 2030, an all time high. They promised that any tax increases would spare working people.

So how is that fared? Badly is the answer. If we consider the freezing income tax thresholds or the new tax on dividends and landlords, or last year's huge employer national insurance increase, which in time reduced pay, and the hikes in IHT on family business farms and pension savings, which affect many working people, they are still to bite. The Chancellor has delivered a budget not for working people, not for the country, but for the good of her party and her political career.

Last week, the Chancellor refused to rule out future tax rises. The OBR have said that this uncertainty is harming and will continue to harm our economy. Page six of the OBR. We expect quarterly growth to pick up only gradually in the near term, as domestic business and consumer confidence remain subdued, including in anticipation of further tax rises. But why this fear of tax rises? It's because, my Lords, just over a year ago, the Chancellor told business leaders at the CBI conference, we've put our public finances back on a firm footing.

Public services now need to live within their means because I'm really clear I'm not coming back with more borrowing or more taxes. The Chancellor is in the happy position of providing numerous powerful quotes for the opposition. The Chancellor is also shoring up problems for later. Many of our tax rises, notably the increases in thresholds, only kick in between 2028 and 2031. The fall in borrowing depends on this tax tale. Is it realistic that you think this will actually happen in an election year? I think not, it would be remiss of me not to mention SMEs.

What is in it for them? A small positive on apprenticeships but meagre and previously announced reforms to EMI schemes, VC listing reliefs and my Lords massive new pressure on payroll with the threshold freezes, minimum wage hikes and salary sacrifice cap, a tourist tax which will dampen demand, and a hideous mix up over business rates, which is going to lead to the closure of pubs and hotels. More than 5 million people are now receiving out of work benefits with no work related requirements.

And since October 24th, the number of people in Payrolled employment has fallen by 180,000. Yet instead of tackling this, the government have chosen measures that make it worse. The Chancellor has raised the costs of employing people, raised personal taxes and weakened incentives to work. So it is no surprise that the OBR now forecasts that unemployment in 2026 will be 240,000, higher than its expected in March, and the decision to scrap the two child limit compounds this failure. Evidence from the centre for Social Justice shows that moving the cap interacts with the expansion, with the expansion of health and disability benefits, to create benefit entitlements that, for many households exceed typical earnings by a wide margin.

So in taxing people and businesses in order to make it more lucrative to stay at home and not contribute at all, the government have not only produced an unfair budget, but they've reduced a budget for benefit streets, as the Leader of the Opposition has shown us. With such energy and such verve. So what about our national debt now approaching 100% of GDP? Dealing with this is vital since in 20 2526 the OBR expect debt. Interest. Yes, interest to total over 110 billion.

Of course, the underlying debt has been accrued over many years. Unfortunately, we don't have a strong plan to reduce it, and this is not helped by the fact that we now pay more interest on debt than any OECD country by Iceland, and at a rate higher than that pay during the premiership of Liz Truss, whom the government also quickly to criticise. The government have pledged to raise defence spending to 3.5% by 2035. Yet the executive director of the Henry Jackson Society has said the budget talks up defence investment, but the numbers don't match the rhetoric, saying that the OBR shows a 32 billion black hole under its 3.5% defence pledge.

My Lords, if we want to understand the effects of this budget on our economy, we need to look no further than the OBR. Their verdict is crystal clear the government's choices have not improved the economic outlook. They've actually made it worse. First, the OBR has downgraded the UK's rate of growth in productivity to 1% per annum, and because of the decisions taken in the budget, it states this package will have no significant impact on output. Not now, not even by 2030.

Inflation will be higher for longer. Unemployment is forecast to rise. The increases in household disposable income collapses from 3% to 0.25%. Pay more mortgage costs will rise. The real rate of return on investment by business has been downgraded. The forecast for business investment has been cut once again. Public sector net debt rises in most years of the forecast and a sharp fall in addition to housing stock is expected and compared to March, the picture is even bleaker with potential output is down, productivity is down, real GDP is down, corporate profits are down and inflation is up.

The Chancellor asked the country for trust. The OBR has told us why she does not deserve it. She promised a plan for growth. The forecast shows stagnation, contraction and diminishing prospects for working people. She promised to protect households. The evidence shows higher taxes, lower incomes and rising mortgage costs. She promised to support business. The OBR shows investment down, profits down and confidence falling, and she promised to repair the public finances. Yet debt arises in almost every year of the forecast. Now the noble Lord, the Minister, again claimed that our economic problems are all the fault of the last government.

I will simply say that it's time he accepted responsibility for his own and his colleagues failures. My Lords, after all the noise, all the speculation, all the briefs and counter briefs, we are left with this unavoidable truth. This budget does not meet the moment our

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country deserves better than that. Yeah.

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Yeah. My Lords, like the first two speakers, I look forward to the maiden contribution of the Bishop maiden contribution of the Bishop of Portsmouth. Now, the purpose of this debate is to debate the budget. We dealt with the omnishambles of the budget process. In the debate the budget process. In the debate on the statement on Monday, and I do unlike the noble Lords Minister, I do hope that every Tory speaker is not going to repeat what was said then.

Dare I say we'll
12:17
Lord Razzall Portrait Lord Razzall (Liberal Democrat)
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otherwise assume that the repeated and I regard offensive attack personal attacks on the Chancellor are only to deflect attention from their mismanagement of the economy their mismanagement of the economy in recent years. Now there is enough to criticise in the detail enough to criticise in the detail of the budget itself, although I have to say not all of it. We from these benches are happy with the these benches are happy with the removal of the two charge cap. This is the most immediate step that could be taken to reduce child poverty.

We welcome the proposals for energy price reduction, even if they don't go quite far enough, and we are glad that the Chancellor has finally listened to Lord foster and others on our calls for tax. The big line, big online gambling companies. Now, the Chancellor says that the budget is about making choices. We agree with that statement, but we think that she has made the wrong choices, freezing the tax allowances as referred to by the noble Lord. The Minister is deeply unfair to struggling families, taxing the huge windfall profits of the large banks would have been preferable, but I don't think the Chancellor wanted to do that because I think she wanted them to announce investments, which they have subsequently done for struggling, for struggling high streets and small business.

The budget brought little hope. We called for an emergency VAT cut for the hospitality sector, which has been ignored, and the budget is silent on the ticking time bomb of social care. We need an urgent cross-party plan to fix it, without which the National Health Service will never truly recover. But the elephant in the room is our relationship with the European Union. You would expect us to say that from these benches, the respected US National Bureau of Economic Research has concluded that by 2025, Brexit had reduced UK GDP by 6 to 8%.

Investment was reduced by 12 to 18%, employment by 3 to 4% and productivity by 3 to 4%. They say that the original adjustment calculation of 4%, estimated by the OBR was true for the first five years, but underestimated output over a decade. Now. My colleague Al Pinkerton, in another place, who has taken over from Michael Gove as Member of Parliament for Surrey Heath, is tabling a parliamentary bill calling for the UK to renegotiate a bespoke new customs union with the European Union.

The biggest single step we could take to boost our economy. Now. The government's proposed reset with the EU from a youth mobility scheme to a sanitary and phytosanitary agreement, has gone nowhere. But we believe that the EU would welcome a bespoke new deal, which would generate over £25 billion a year for the Exchequer and of course, the other rather different elephant in the room, which nobody has yet mentioned is the impact of artificial intelligence. This is clearly the most significant invention since the internet, and the impact on the economy will be significant.

Many of us suspect that the Chancellor is hoping that the the impact of AI will enable her to reduce the burden of taxation by the time of the next election. Now, whether this forecast assumption is correct remains to be seen. I tend to agree with the American economist JK Galbraith that the only function of economic forecasting is to make astrology look respectable. Let's hope the stars are aligned for the Chancellor.
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Lord Burns Portrait Lord Burns (Crossbench)
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Well done. >> Well done. >> My Lords. From my perspective, the budget has been received about as well as could have been expected in the circumstances. It also seems to have satisfied the bond markets and the government's own backbenchers, which is no small feat. It's been clear for months that the background is going to be challenging, given the slow growth evident across the industrial world, and this left us with a tax base that has not been sufficient to fund planned government spending, and this has been a pattern for some time.

The government's own actions have not helped, of course, the promise not to increase the three main tax rates was never convincing, nor was setting fiscal rules that did not provide sufficient room for manoeuvre relative to the likely scale of forecasting errors. This encouraged speculation, and it made the interaction with the office for Budget Responsibility even more sensitive than usual. Flying so many tax raising kites and the indecision over whether income tax rates should be increased did not help either.

But for me, the big question is whether the action taken in the budget is enough to give us a calmer position for the future, and whether the government can avoid the same damaging speculation before future budgets. Budget margin for the future is considerably larger than that set last year, and for me that is very welcome. The OBR gives us a reasonable chance that the headroom, reasonable chance of seeing us through the next year. However, I'm less sure about the subsequent years when the margin of error around forecasts are inevitably much larger and often underestimated.

There are other potential problems. I would have preferred to see income tax raised, the rates increased. Now freezing allowances may be less visible, but they still bite. They only come into effect in the later years of this Parliament and disproportionately affect those earning under £35,000 a year. There's been also much discussion about the fact that taxes have been running ahead of expectations, suggesting that activity has somehow rather been tax rich. However, I would cautious about this in my own experience in the Treasury, periods of surprise tax buoyancy were often followed by experiences that that was not sustained.

The bigger challenge is the debt is not coming down decisively, either absolutely or as a percentage of GDP. In no year of the forecast is it below the ratio for 20 2425. The best that can be said is that it is essentially flat at around 9 to 10% of total government revenues will continue to be spent on debt interest. The help on prices in some respects is is important because it does impact inflation. But it is important also that this is a short term device.

And if real disposable income grows slowly as forecast, it will still seem like a cost of living crisis. Getting a grip on public expenditure remains a very important issue. Firstly, we have seen very poor productivity performance in government activities in recent years. Secondly, there is the issue of welfare payments and how to ensure that help goes to those most in need. We need to avoid the perverse incentives that keep some people out of the labour market, and we need more robust controls against those who are gaming the system.

Future budgets, for me, should give much more attention to tax reform. We need to iron out cliff edge disincentives. We need to widen the tax base, and we need to close down loopholes. In the absence of a surge of growth around the world, I fear that the job of fiscal retrenchment is not over. We need to make much more progress in reducing the debt ratio during the welcome, calmer periods between crises, so that we're in rather better shape when the next problem arises.
12:25
Lord Bishop of Portsmouth Portrait The Lord Bishop of Portsmouth (Bishops)
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I thank the noble Lords. >> For his opening speech in this debate on the budget, and in this maiden speech, I would like to maiden speech, I would like to thank all noble Lords for their warm welcome to the House and to express my thanks to our Doorkeepers and parliamentary staff for their unfailing kindness, good humour and patience with lost bishops in the support and the support they gave. In the run up to my introduction in late October, by way of introduction as Bishop of Portsmouth, I lead a vibrant, confident community of communities.

The Anglican Diocese of Portsmouth lives from a generous, grounded and corrigible faith. A commitment to collaboration and partnership, and a vision which includes everyone of the common good. Wonderfully, in my view, the motto for the city of Portsmouth is Heaven's Light. Our guide, working in partnership with neighbours within the wider Christian community, the faith communities and with voluntary and statutory sectors, the communities I lead are resolved to serve the people, neighbourhoods and communities of East Hampshire, the City of Portsmouth and the Isle of Wight to find what is good and to strengthen it, and to work with others for the flourishing of everyone.

I also bring to this House a commitment to the flourishing of children and young people in our nation. I chair the governing body of the National Society of Education, established by Royal Charter over 200 years ago. Today, the society is a long standing partner in educational delivery, working with successive governments, and serves the work of nearly 5000 schools, 900 academies and educates today nearly 1 million children and young people. It is engaged at every level of the educational system, from early years to higher education, to inspire a generation of new school and academy leaders, and to work with governments, successive governments in shaping policy, in responding to the budget statement from His Majesty's Government, there are two particular areas I would want to highlight with a couple of questions to conclude.

I'm proud to know that churches, faith communities and volunteers of all faiths and none in my Diocese of Portsmouth have put their shoulder to the wheel in supporting those facing poverty in these years. In the Charles Dickens ward of inner city Portsmouth, over 50% of children live in crushing poverty. In partnership, we serve food banks, warm spaces and outreach projects. But none of this will have the

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impact that the decision made by the government to end the two child limit will have. Yeah.

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Yeah. It has been a leading driver of child poverty for nearly a decade, child poverty for nearly a decade, crushing aspiration, hope and opportunity. I commend the government for this decision, but government for this decision, but hope and pray that this is the beginning of a renewed commitment to investment in a generation of young people. The second area I'd want to highlight, and the two questions relate to special educational needs and disabilities in my routine work and ministry head teachers, trust leaders across the diocese, a wide number of communities and across England share frequently that supporting children with Send and disabilities has become a particularly pressing matter.

I commend the families and teachers who are committed so passionately to work for the inclusion of every child, and as my diocese bridges multiple local education authorities, I've seen at first hand the postcode lottery of send provision as it has played out for families in our communities. I know of looked after children struggling to access education while waiting years for Camhs referrals. We can do better than this, compounding the trauma and adverse child experience that they have already disproportionately shaped their lives.

I note the intention to bring the cost of send provision into the central government spending envelope from 2028 to 9. This will be a relief to councils holding significant deficits, but I am deeply concerned that no indication has been given to date of how the estimated additional cost involved will be covered. According to OBR 6 billion by 20 2829, without causing a significant fall in mainstream funding for schools. I note, too, that from 2028, the government will not expect local authorities to fund future special educational needs costs from their general funds once this statutory over override ends at the end of 27 eight.

And once again, I note and welcome the intention to end the statutory override which keeps send spending deficits off Council's books. But I would welcome from the Lords Minister the noble Lord Minister, some assurance that accrued benefit deficits in local authority spending on send will not be paid off or reconciled by using the mainstream schools budget. And would the noble Lord Minister agree with me that further cuts to per pupil funding risk, widening inequality and constraining further schools ability to deliver outstanding aspirational education, and perhaps especially for our most disadvantaged and vulnerable

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children? Oh my Lord, it's a privilege to

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Oh my Lord, it's a privilege to follow the Right Reverend Prelates inspiring maiden speech. Bishop far inspiring maiden speech. Bishop far from lost, who has already found his feet, I would say in the absence of my noble and gallant friend Lord West of Spithead, it would be remiss of me not to start by mentioning the right reverend Prelate Right reverend Prelate's affinity with the Navy. Portsmouth is also, as he said, marked by considerable area and inequalities and poverty, to which he referred so movingly.

And they are very much, I know, on the government's agenda, as his speech reflected the right reverend Prelate brings to your Lordships' House a a passion for education for children and young people's opportunities, the environment and tackling intergenerational unfairness, all issues which resonate so strongly with our work in this House. So I look forward very much to his future contributions. And they are, as he made clear, also important issues for the annual budget to which I now turn.

My Lords, I know that my Lords, I and I know others shed tears of joy at the announcement of that what was dubbed the worst social policy ever by an eminent social policy scholar is finally to be abolished. The end of the two child limit means that not only will 450,000 fewer children be in poverty by the end of this Parliament, but the depth of poverty will be reduced for many. As one mother responded, finally, all my children will be seen as equals to those who've reacted hysterically and in language that denigrates many thousands of
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Baroness Lister of Burtersett Portrait Baroness Lister of Burtersett (Labour)
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parents, calling it a budget for benefit street paid for by striving benefit street paid for by striving working people, I'd remind them that 3/5 of affected families have that 3/5 of affected families have a parent in work, with an estimated 70% of the additional spending going to this group, and that going to this group, and that raising children on an inadequate income is itself hard work. I'd ask income is itself hard work. I'd ask them, are they really happy to countenance hundreds of thousands of children suffer desperate poverty, testified to by charities and academics and research because of an ideological belief that punishes children? Are they oblivious to the costs of this poverty, not just of children whose childhoods and futures are blighted, but to the wider society and economy? Are they aware of the depth of public concern about child poverty? Polling by public First found that this concern meant that when provided with information about the cost effectiveness of abolishing the limit in reducing child poverty, support for doing so soared.

My Lords, those who conjure up an image of Social Security claimants enjoying some kind of bonanza conveniently ignore the £50 billion a year estimated to be being chopped off the Social Security budget as a result of Tory cuts, freezes and restrictions. The real problem today is not the mythical so-called ballooning welfare budget, but a social security system that fails to provide genuine security for both those in and out of work. One consequence has been growing reliance on food banks, especially among families of children.

As Trussell states in welcoming the budget, a future without hunger will only be possible by building a social security system that works for everyone. Investment in Social Security is top of the agenda for many who have given evidence to the Child Poverty Task Force. I hope very much that it will respond positively in the child poverty strategy, in particular, the impact of the budget announcement on the debts of child poverty will be dampened if the benefit cap continues. An estimated 1 in 12 children escaping the frying pan of the two child limit will be no better off, because it will be caught in the fire of the cap.

It, together with the damaging freezing of the local housing allowances, contributing to homelessness and has a disproportionate effect on domestic abuse survivors and their children. Action on both would therefore contribute not just to the child poverty, but also the homelessness and violence against women strategies. But if the Cap is to be retained, at the very least, could my noble friend pass on to the DWP the message that its level needs to be updated annually in line with Universal Credit, so as to prevent more and more children being caught in it as it is, has only been one increase since 2016, when it was cut.

My Lords, abolition of the two child limit is, as we've heard, the single most cost effective lever to reduce child poverty. But no one pretends it can do the job on its own. Hence the importance of the forthcoming child poverty strategy. Unicef recently warned poverty poisons childhood and our collective future. This budget will draw some of that poison from our society to the

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benefit of children and us all. I congratulate the Bishop of Portsmouth on his engaging, humorous maiden speech, which combined passion with making some

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combined passion with making some very serious points, and we look forward very much to working with him and to his future contributions. Yeah.

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Yeah. My Lords, on taking office. The Prime Minister said that he wanted Prime Minister said that he wanted to put country before party. He actually said on the day he went into Downing Street, he wanted to govern for those who did not vote for him as well as those who did. There was little sign of that in this budget. This was a political

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backbenchers. Yes. My Lords, the government continues blaming everyone but continues blaming everyone but themselves for any problems. No one believes them any longer. The Prime Minister talks about international headwinds as though the previous government hadn't faced massively government hadn't faced massively bigger international headwinds, with both the financial crisis and its consequences, which went on, its consequences, which went on, and also Covid. Covid inevitably inflated borrowing, pushing borrowing up to 14.7% of GDP. But thanks to the efforts of the government, by the time of the election, it was back to 4.2%.

This was no unknown black hole. As Paul Johnson of the IFS said, not so
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Lord Lamont of Lerwick Portrait Lord Lamont of Lerwick (Conservative)
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much an unknown black hole, more a known grey hole. If there was a black hole, it made no sense for black hole, it made no sense for the government to have gone on a spending spree, as it did in the budget last year. The government furthermore stands accused of selective leaking of confidential information. In order to support this false narrative. We shall see. this false narrative. We shall see. People will decide themselves, but whatever the result, it's time for the government to face up to the consequences of its own policies.

It's time to abandon the Alastair Campbell playbook. My Lords, a key mistake last year was not to allow a realistic degree of headroom against the fiscal rules. This compounded the very late budget date. Inevitably, it put the government on the hamster treadmill with unprecedented speculation and uncertainty. As the Baroness Neville-Rolfe pointed out, Andy Haldane, the former chief economist at the Bank of England, said that this was the reason the economy had flatlined because it hit consonants, it hit profits and it hit the property market.

I agree with the Chancellor that putting the finances on a stable footing is the precondition for growth. The question is how is this consolidation to be achieved by tax rises or public spending restraint, or a combination of both? History shows that fiscal consolidation is based on spending. Cuts are more successful than tax based ones. They lead to a more sustained improvement in public finances and do less harm to growth. There are plenty of candidates for saving, of which welfare is the most obvious.

Even the Prime Minister has said the welfare bill is unsustainable. The OBR has said the welfare bill is unsustainable, and yet the government are talking about reform. Do little. They seem powerless to act. My Lord, the Chancellor says there will be no return to austerity. But by imposing so much of the fiscal adjustment on taxpayers, on the private sector, she is inflicting her version of austerity and ordinary people. How so? Disposable income is set now to grow at an average of only 0.5% per year, the second worst period for living standards since the 1950s.

This is half the average of the last decade described by the IFS as a dismal prospect. The question is will the budget, with all its spending increases, front end loaded and tax increases end loaded at the other end just before a general election, will that be finally seen as sufficient to silence doubts about the UK's fiscal credibility? Labour has spent a lot of time camouflaging its character. All the talk about fiscal rules can't disguise the fundamental reality.

This is a high spending, high taxation government and the worst thing is they will

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probably be back for more next year and the British people will pay the price. Yeah. Hello.

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Yeah. Hello. It's a. Pleasure to follow Lord Lamont. As always. And my welcome also to the Bishop of Portsmouth. I welcome the main proposals of this budget, some as important measures to combat inequality and support to combat inequality and support households, others as necessary responses to what remains a very difficult time for the British difficult time for the British economy. As a Social Democrat, I applaud the budget's wide ranging package of cost of living measures, including the reduction in energy bills, the minimum wage increase, the freezing of prescription charges and rail fares, alongside pre-announced expansion in free childcare for working families.

We know this was the most important issue for millions who supported Labour at last year's election, and the government is delivering on those concerns. I also welcome the ending of the two child benefits cap, the single biggest policy driver of child poverty in Britain. I've been disheartened also to hear conservative and reform voices in the past week caricature this move as primarily a move which primarily benefits children in working families as paying for welfare. We know that children who grew up in poverty are significantly more likely to rely on benefits in their adult life.

If you support, work and oppose dependency, you should support the end of the two child cap, not denigrate it. I also strongly welcome the increase in the minimum wage. The government already has a proud record on wage inequality. Wages are up more in the first year of the new
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Lord Wood of Anfield Portrait Lord Wood of Anfield (Labour)
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government than in the first decade. Under the last conservative government in 2015, 20% of all government in 2015, 20% of all employees were low paid. That's earning less than two thirds of the median wage. That figure today is median wage. That figure today is 2.5%. The children's commitment, the children, the Chancellor, excuse me, the Chancellor's excuse me, the Chancellor's commitment to an expanded headroom on her fiscal rules is also welcome. It hopefully gives government more It hopefully gives government more space to consider big decisions based on their merits, rather than operating on the cliff edge of fiscal rules, living in fear of events that cause small changes in fiscal parameters or bond market reactions.

Much has been said about the OBR Treasury relationship, and I just want to make one observation here the process of dynamic scoring, estimating the long term growth and productivity effects of major policy measures is an important part of forecasting, but everyone can see there are clearly issues and tensions in the way this process currently works on both sides. In particular, which measures are considered sufficiently significant to score and using announcement announcements to fish for dynamic scoring from the OBR. I hope this is an area where clearer rules of the game can be worked out in time for the next budget.

I also support the Chancellor's fiscal stance, spending and borrowing more in the early years of the Parliament, increasing taxes and tightening spending growth in the latter years, all while maintaining a significantly more expansive approach to capital spending. Yes, it is a strategy with risks, but taking a more aggressive fiscal stance now to improve growth and protecting long term investment spend is, in my view, the right approach after a decade of stagnation. I also welcome the proposed council tax surcharge on high value homes.

There will, of course, be issues to be sorted out through consultation. Developing a system, for example, that is fair to those who are asset rich and cash poorer, and the challenges of adding a tax system based on current prices of high value homes, on top of a council tax system that is still based on 1991 valuations. Which brings me to one last point on which the budget had less to say long term tax reform. Tax policy is, of course, deeply political. Nothing is more political.

But as the joint proposal from nine think tanks across the political spectrum argued last month, there are many sensible structural tax reforms that could be all parties could endorse and that would increase fairness and revenue, such as addressing punitive marginal tax rates, reforming the VAT tax base up. Down to updating council tax valuations. Equalising tax rates on income from different sources. Labour in opposition spoke positively of such reforms and I do hope we will set up work to address some of these in the remainder of

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this Parliament. I welcome. The maiden speech by the Bishop

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The maiden speech by the Bishop of Portsmouth, and I have to say to the right reverend Prelate, my former constituency of Havant was within the Diocese of Portsmouth, and I recognise the valuable work and I recognise the valuable work that the diocese does. The media story around this budget has been story around this budget has been about the downgrading of the productivity estimates from the OBR, and, as we now know, that downgrade, reducing forecast revenues was offset by a forecast of higher wages than previously expected, boosting revenues in the neat arithmetic of the Treasury, lower productivity offset by higher pay.

In the real world, an economy where we're less productive and also paying ourselves more is not one with the best prospects. That's why it is so important. On raising the growth rate. There are no measures in this OBR that pass the new. I'm looking across at the thinking of the intervention we just had. We now have a definition from the Office of Budget Responsibility of materiality of a measure nought point having effect of 0.1% of GDP. And there are no measures in this OBR that pass that requirement.

Indeed, I rather suspect that the vote in our Lordships' House only a couple of weeks ago, increasing the period from day one rights to six month rights before people enjoy full employment rights, may have done more for youth employment and more for the economic prospects of our country than any specific measure. In the OBR. There's been,
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Lord Willetts Portrait Lord Willetts (Conservative)
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of course, a focus on the growth of benefit spending. It is just worth, however, reflecting on where this however, reflecting on where this growth comes from, of the growths in benefit spending since Covid, of approximately £45 billion, £21 approximately £45 billion, £21 billion is extra spending on pensions and £24 billion is extra pensions and £24 billion is extra spending on health and disability benefits, offset by a £1 billion cut in benefits for families of working age.

Whatever one thinks about the exact size of the welfare and social Security budget is this reshaping of the welfare state, away from families and towards disability benefits and pensioners? The right direction in which we should go? My belief is that we are in a situation where we should focus on where the problem of the growing spending lies and not involve. Expect further sacrifices from families who are clearly not the reason for growth. Increases in growth expenditure in a growth in social security expenditure.

Indeed, even now this year, when there is going to be an uprating of benefits, benefits for families will go up by 3.8%. Benefits for pensioners will go up by 4.8%, despite the fact that pensioners are now less likely to be poor than families, we do at some point need to rebalance this system. Finally, we have been distracted from these issues about the need for economic growth or the balance of the welfare state by a focus on exactly whether the fiscal rule for a balanced budget in 2029 is £10 billion off or not, that is a ludicrous focus for the debate about the state of the British economy and the state of public spending.

I very much hope that the increased headroom that we now see in the budget, the main reason, actually, for the increases in taxes to ensure that this proper headroom means that we are now able to focus on the things that really matter, rather than the micro forecasting of that budget. That is the government's intention, therefore, that there shall be no fiscal measures. When the spring economic forecast is produced. And I would be grateful if the Minister, in his response, could tell the House exactly what the government's plans are for handling the announcement of the spring economic forecast, and whether or not the Chancellor will be giving a statement on that occasion.
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Lord Eatwell Portrait Lord Eatwell (Labour)
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My Lords, the budget contains a >> My Lords, the budget contains a set of measures that reinforce the three pillars that support investment and growth financial investment and growth financial stability, growing demand and institutional reform. Now, financial instability, as many have commented, is the enemy of investment as painfully illustrated in the years since the global financial crisis. That's why the 21 billion headroom is important. Securing confidence in our financial future. Now, given that stable financial framework, growing aggregate demand is the fundamental stimulus to investment.

Happily, the budget commitment to fairness in the removal of the two child cap, the commitment to an increased minimum wage and the mansion tax in itself stimulates demand by transferring income to those with lesser means, those in most challenging economic circumstances necessarily spend every pound they receive, hence boosting demand, while those who are really better off do not. The budget also boosts demand by protecting the growth in public investment foreshadowed in the Spending Review. This is terribly important.

Indeed, public investment is brought forward to accelerate delivery of major infrastructure projects in 2627. The third component of the growth trilogy is the institutional reform needed to provide the resources for growth. We've heard a lot about planning reform, but the lack of equity investment for SMEs is one of the major inhibitions to growth in the UK. Britain lacks the creative venture capital sector enjoyed by the United States. The budget addresses this issue. The National Wealth Fund now has £28 billion available to invest, and the British Business Bank, which is essentially a venture fund, sees its funds boosted from 1.5 billion a year to 2.5 billion a year.

And it's not just financial reform that's needed. New sources of skills are needed, too. So in the budget, 1.5 billion is made available for additional employment and skills support, including fully funded apprenticeships offered by SMEs. These developments in the architecture of financial and labour markets are typically ignored in budget commentary. They are seemingly too technical and perhaps too practical, yet in the long run they'll be far more important than debates over the minutiae of taxes and allowances. However, the budget does embody a characteristic that is unfavourable to growth, as a number of noble Lords have already mentioned, namely adds complexity to the tax system.

As Adam Smith made clear, tax complexity is not only costly and damaging to enterprise, it is also the cornerstone of tax avoidance and evasion. Various attempts have been made to simplify taxation over the years, but they have foundered on the pressing immediacies of political life. The government, in pursuit of the growth objective, should establish now a commission on the simplification of business taxation. The Commission could build on the excellent work done by James Mirrlees in his IFS support, entitled Tax by Design.

For example, Mirrlees argued that the tax system should be designed as a whole, not a patchwork of tax and benefits does that. Is that recognised by noble Lords, a patchwork? Surely noble Lords will recognise how right Mirrlees was, and how the patchwork needs to be turned into a

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coherent design. Yeah. It's always a pleasure to follow the noble Lord Lord Eatwell, but I the noble Lord Lord Eatwell, but I want to give some relief to the noble Lords Minister by not following up the justified following up the justified criticism he's receiving from my noble friends, but by referring to one new policy in the budget which I actually approve of, and which I suspect no one else is going to mention. Namely the move towards mention. Namely the move towards road pricing.

And I declare an interest as an owner of an EV. My Lords, although there had been some speculation about this before the budget, the announcement actually surprised me because on September the 18th, I asked the Minister whether he had any plans to introduce road pricing. He said no, he didn't say it just once. He said it seven times in ten minutes. Now, he could have used the reply that we all grew fond of hearing. Namely,
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Lord Young of Cookham Portrait Lord Young of Cookham (Conservative)
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he couldn't anticipate the budget statement, but he didn't. Now, I once held the job that the noble once held the job that the noble Lord has. Financial Secretary to the Treasury. I'm familiar with the budget process and the long budget process and the long gestation. A radical policy such as road pricing raising over £1 billion a year, involving consultation with a year, involving consultation with the DfT and the DVLA, is unlikely to have been a last minute idea, particularly when read in the consultation document that I quote doing nothing about this.

The loss of fuel duty would be fiscally irresponsible. So, my Lords, I do take with a pinch of salt the statement that some nine weeks before the budget, there were no plans to introduce road pricing, and that fiscal responsibility was discovered at the very last minute. My Lords, there, my welcome for the policy ends because the government has specifically ruled out the possibility of using road pricing to reduce congestion and pollution, or to help motorists in rural areas for whom there is no alternative.

By specifically denying the use of telematics to introduce proper road pricing, the consultation document says this the government has taken an approach that protects motorists privacy. There will be no requirement to report where and when miles are driven, or to install trackers in cars. My Lords, the notion that motorists have privacy is for the birds. All new cars manufactured from 2018 have a system called eCall, which automatically contacts emergency responders with the vehicle's location in the case of an accident. It also enables owners to track a vehicle if it's stolen.

The now between 4 million and 6 million CCTV cameras in the UK, they are ubiquitous. Between 16 and 24 cameras for every square kilometre, one per 11 people. Then 20% of homeowners now have video doorbells that capture passing traffic. Anpr is everywhere and more and more motorists have dash cams. And while some motorists switch off GPS in their car, most matrices have their mobile with them so that can be tracked. So the notion that motorists have privacy does not withstand scrutiny.

Now, no one expects an all singing and dancing road pricing to be introduced in the near future. And a crude pence per mile is a start. But I have doubts about some aspects of the timing. But, my Lords, the UK has a chance to lead the world in this field as all countries grapple with the move away from fossil fuels to EVs and are looking at how best to replace lost revenue. So what the government should have done is to announce a progressive move over time to road pricing for all vehicles based on a smarter charging system using existing telematics.

This would deliver wider benefits on congestion, decarbonisation, network management and improved reliability of journey times for motorists, and would also reflect how other transport modes are priced. By all means, start with this crude pence per mile rate, but please don't rule out a more sophisticated system on wholly illusory grounds of invasion of

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privacy. Interesting. Interesting. Unusual. The Prime Minister made strong

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The Prime Minister made strong welcome statements to NATO allies about the UK's commitment to defence at the summit in The Hague on the 24th of June. He pledged the on the 24th of June. He pledged the United Kingdom to increase spending on defence and wider security to 5% on defence and wider security to 5% of GDP by 2035, with a projected split of 3.5% for core defence, 1.5% for resilience and security. He also indicated by 2027, the UK expects to reach 4.1% of GDP on defence and security.

Combined, this was presented as an historic commitment aligning national security with economic security and signalling Britain's determination to remain a credible and capable partner in NATO. However, my Lord, when we turn to the Treasury's position, as expressed by Ministers in recent statements and in the budget, a different a difference in tone is striking. The Labour Lord Dear Lord Livermore has been all too clear. In March this year he said that the Dispatch Box official of fiscal rules are non-negotiable decisions on major spending, including defence, be taken in the usual way, guided by forecast and fiscal rules.

And again in July, he stated the Chancellor will ask for BR to produce a new forecast in the autumn before the annual budget will take decisions based on that forecast. The Chancellor's budget statement itself is largely silent on defence and security. Yes, there is a conditional set to spend 2.6% of GDP by 2027 is slated, although this is the same as the Prime Minister's 4.1% of GDP on defence and security combined by 2027, it's hard to tell.

Much of this money has been found at the expense of overseas aid. Soft power related to pay for hard power. No. Mentioned by the Chancellor of the intention to reach 3%. Has learned 3.5% of GDP in the next decade. Defence does get a mention in spending to buy, to make, to sell more defence products and to support new team Derby. But this, my Lords, is putting the cart before the horse. Surely the Chancellor should speak in terms of the need for stronger defences than today's world.

This should be have a firmer place in
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Lord Hollick Portrait Lord Hollick (Labour)
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Here the. >> She made economic growth founded upon fiscal stability, her priority to escape the fiscal straitjacket that she'd inherited. She has made a good start by raising and then a good start by raising and then maintaining public investment to 2.7% of GDP throughout the forecast. That's 18% above the trend since 2010, and well above the trend rate of 1.6% over the last 40 years. Our infrastructure and the public realm fails to meet the demands of a growing economy and a population which has grown by 10 million since the turn of the century.

Restoring fiscal stability has, after the battering has taken over the last two decades, is essential. This budget helps to achieve that by increasing headroom to a more realistic 21.7 billion. But the spending, including the welcome decision to drop the pernicious two child benefit, is front loaded. And with fiscal consolidation only achieved at the end of the forecast, the many tax changes include moves to improve fairness through the introduction of mansion tax and the taxing of unearned income nearer to the level of tax paid on earned income.

It is therefore surprising that the Magic Circle lawyers on £2 million a year continued to save 300,000 by avoiding National insurance. But other tax changes have increased the cost of business, which will dampen growth and employment, particularly for the young. The reduction of tax advantaged salary increases to only 2000 will reduce the level of savings and reduce investment into the economy and weaken pension security. Many of the measures have have added to the complexity and unpredictability of our tax system.

The covenant should. The government should publish. As my noble friend Lord Richard said, their strategy to make tax policy fair, simpler and predictable. The OBR is predicting low growth and low activity up to 2030. Radical and bold measures to address the root causes of our economic malaise must be in implemented now. If growth is to be delivered in the near term, the generous triple lock has given pensioners in recent years a 10% real increase increase in income compared with the average worker.

The law has become an unfair intergenerational transfer and an unsustainable cost reform is overdue. The attempts to reform welfare need to be urgently revisited to address the unaffordable rising costs and the growth of worklessness, particularly amongst the young. The Chancellor has announced a welcome improvement offer for under 25 apprenticeships. This should be part of a range of policies to increase training for people of all ages, many of whom will need to retrain. As the adoption of AI sweeps across the workplace, the construction industry construction industry alone has assessed that 1 million additional skilled workers are needed to build 1.5 million homes, and the infrastructure we are building for the 21st century, and there is an urgent need to repair some of the damage from Brexit now described in the Telegraph.

Surprisingly as an unmitigated disaster. The latest forecast of up to 8% GDP and an annual billion of 100 billion of trade loss of 100 billion of trade, means that government must accelerate the negotiations to move us closer to the trading terms of the customs union. The recent commitment of 38 billion into UK research, innovation and AI is welcome move to capitalise on many of the UK's great strengths. The Uber OBR forecast is not able to clue any boost from these exciting growth opportunities, but my forecast is AI will significantly boost both productivity and growth.
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Lord Leigh of Hurley Portrait Lord Leigh of Hurley (Conservative)
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Pleasure to follow Lord Hollick, >> Pleasure to follow Lord Hollick, much of which he said not all, but much of which I agreed. And of course congratulate the right reverend Prelate Bishop of reverend Prelate Bishop of Portsmouth on his excellent maiden speech. There is much to criticise in this budget, which manages to increase both tax rates, tax take and debt all at the same time. As my noble friend Lord Lamont has so eloquently explained. However, let me try and bring out two positive areas in the budget and look at how we may be able to improve them further.

The first relates to eyes and VCT, and I declare an interest as an investor. A small group of us met James Murray when he was extremely Exchequer Secretary of the Treasury, and I'm pleased to see the government has listened to concerns raised and has lifted some of the size restrictions on those investments, essential because there are real difficulties for UK companies trying to raise capital from UK investors right now, and I hope it's a subject we spend more time on. And another another occasion.

I'm sure the noble Lords Minister will be the first to recognise and appreciate. These changes are actually only possible because we've left Brexit. Because of Brexit, we've left the EU. We are no longer restricted by the EU state aid rules other than, of course, Northern Ireland. So because only there have been changes only to the rates but not to other restrictions, and I would urge the no Lords Minister to have a look at restrictions such as the seven year rule and the family restrictions on investing in companies to obtain EIS rates.

This can now be done and as a result of the changes to the VCT, the one would hope that more people go into EIS directly. However, that's not clear that it's going to happen. And there was a survey conducted by the Wealth Club on the 1st December, which reveals that 85% of investors will invest less than of that, 42% no longer invest in VCT, only 13% will go into the admittedly more riskier EIS, which is, of course, what the government wanted.

And so 85% of these investors believe that as a result of the move on VCT, the restrictions, they will decrease their investment. Another area I want to highlight are the changes to the low value import custom duty relief, which the noble Lord, the Minister, will remember. We debated in my oral question on the very subject on the 25th of July, 2025. So many congratulations to the government on listening and acting. Unfortunately. It only comes in in March 2029.

Why is that? I suspect the reason is that given by HMRC that it's all too complicated and difficult, but that is really not acceptable and I would urge the noble Lords Minister to get stuck in again to go back to HMRC and see if we can bring this legislation forward, because it is having a real damaging effect on the small retailers up and down the country. Finally, and not to disappoint Lord Razzall, I have to add my name to the calls for the Chancellor to reflect on what she has done.

She did mislead the public deliberately, and these are not my words. These are the words of Chris Mason of the BBC. And this is not behaviour becoming of her or indeed any public figure, because as a result, it will be very difficult for her to be believed at any future press conference she gives. And that's not a sustainable position for our country. So I'm not expecting the noble Lords Minister to agree with me publicly, but I am hoping that

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he use his position of power and responsibility to deal with this unsustainable position. Yeah, good.

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Yeah, good. My Lords, I'm very pleased to be participating in today's debate participating in today's debate about what I do regret that the noble Lord Alli has continued to noble Lord Alli has continued to vilify unfairly. My hon. Friend, the Chancellor. Last Wednesday, the the Chancellor. Last Wednesday, the Chancellor delivered a budget that eases the cost of living, reduces national debt, brings down NHS
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Baroness Thornton Portrait Baroness Thornton (Labour)
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waiting lists and lists nearly half a million children out of poverty. Therefore, building on the progress Therefore, building on the progress made to date on delivering our plan for change with this Labour budget, for change with this Labour budget, I intend to speak about two matters. My Lords first, cooperative social enterprises and mutuals, enterprises and mutuals, contribution to the regeneration of our economy. And I remind the House that I am a Labour and Co-operative that I am a Labour and Co-operative member of the House, and refer noble Lords to my Register of interests as founding Chair of Social Enterprise UK and a Senior Associate of Social Business International.

And second, I wish to raise a couple of questions on the impact of the budget on women, the manifesto on which my government was elected included a commitment to supporting a diversity of businesses to tackle the growth in the economy. The Co-operative Party is committed to doubling the size of co-operatives in the UK, and it will be clear I am very keen for the growth of businesses with trade for a social purpose, but to achieve this will require change in business development support across the government.

In the budget, we saw for the first time in a generation that co-operatives were mentioned in the Chancellor's budget speech, and I hope that the proper review of business support for co-ops will help to drive this ambition forward. And will this be extended to social enterprises and mutuals, co-operatives and social enterprises are proven to be productive, resilient, long lasting and equitable. They provide business models which do not extract wealth from local places and hold power in the hands of shareholders. An example of that is the profit gouging of companies making excess profits in providing residential care for our most vulnerable young people.

For example, at the moment there is a lack of appropriate and encouraging legislation, regulation and access to financial measures and development support or education for social enterprises and co-operatives. So I raised in my contribution during the King's Speech last year that we see scattered regulation in this sector. Trade DCMS and the Treasury being the main, the main regulators. So financial mutuals, for example, are excluded from the business department's call for evidence on co-op growth because they fall under the Treasury's remit.

Will the Treasury consider launching an equivalent review on their contribution? I turn briefly to the mention to the impact of women of the budget. As my noble friend, the Minister will be aware, women face structural inequality throughout their lives and policy impact policy impacts differently on men and women. Some positive steps, definitely for women, but more ambition needed, said the women's Budget group. And I agree with them. Was there an equality impact assessment carried out on this budget, and if not, will this happen for the future? Was there an assessment of the impact, for example, of freezing personal income thresholds for women? Is it the case that the majority of those who earn under the personal allowance tax band are women, and freezing it means more women will be paying income tax for the first time because of having lower incomes on average.

Does this mean that women will lose a greater proportion of their income through the freezing of this income tax thresholds? And I really appreciate clarification on this from my noble

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friend here, here, here. My Lords, at a time of.

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Profound fiscal pressure, the question before us is not how we question before us is not how we slice the pie, but whether we are expanding it. A responsible budget must be grounded in economic must be grounded in economic reality. Incentives matter, savings
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Lord Hintze Portrait Lord Hintze (Conservative)
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reality. Incentives matter, savings matter. And what truly determines whether our citizens are becoming better off is growth per capita, not headline GDP due to others otherwise is misleading. And to this end, I ask the noble Lord, the Minister, to consider the analysis. We can only think about growth in growth per capita, the 1.5% that he to whom to which he alludes is more like 0.3. If we're lucky, without understanding what the proper economic economic drivers are, we cannot have proper policy formation.

It is not a political point. This is a point for policy. And to that end, I please I ask the Minister to consider that. If we fail to support those who produce, invest and innovate, we endanger the very foundations upon which foundations and opportunity rest. My Lords, allow me to return to economic principles that illuminate this challenge. There are principles we can work with. One of the most influential contributions to modern economic economics comes from the British Nobel laureate, Sir James Smellie's.

The Lord Eatwell talk to him about him earlier, very, very effective in the IFS and looking at British tax policy. 2006 2011. His seminal work in 1971 on the theory of economic transfers and optimal taxation, demonstrates a simple, simple but profound truth. Redistribution changes incentives, incentives matter, redistribution changes incentives. When marginal taxes rise sharply, high productivity individuals reduce effort, invest less, or relocate their activity. Beyond the UK. Recent examples, such as the relocation of wealth creators like Mittal, are not ideological anecdotes in any way, but precisely the behaviour that Mirrlees predicted 50 years ago.

It is a principle. As a nation, we are poorer for these people, leaving not just billionaires but but the young strivers who are leaving these shores to make the UAE and other places in the world richer, not us. Likewise, when transfers become too generous relative to wages, labour participation falls. Anyone attempting to take a train on Sunday and we all do, encounters the resulting shortages, a clear expression of weakened incentives in essential services. And I could go on.

But that. Please think about that. This is economics at work. These pressures are compounded when the state grows beyond its optimal scale. The Scully curve. The Scully curve demonstrated through through strong academic analysis by Gerald Scully in 1989. This is an old piece, strong academic analysis shows the excessive government activity suppresses growth. A larger state requires high taxation, which reduces savings, and that is, and those savings that form the pool of capital for investment and innovation.

When the state crowds out capital formation, it crowds out the future, our children's future. And I suspect what we're seeing in our world at the moment is, is that is that crowding out? So, my Lords, this argument is for fairness, for working people, savers and innovators. But fairness must also protect the fragile in our society. The elderly, the sick and the disabled cannot simply adjust incentives. They depend on the state strong enough to provide support. Yet this is enough to ensure the support is sustainable.

When our growth falters, it is the most vulnerable who suffer first. Thus, the defence of our fragile citizens is inseparable for the for, for the defence of our economic growth.
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Baroness Moyo Portrait Baroness Moyo (Non-affiliated)
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My Lords.

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Today I will centre my remarks on whether the budget will help catalyse economic growth in this catalyse economic growth in this country. In her budget speech, the Chancellor herself referred to Chancellor herself referred to economic growth as the best means to improve wages, create jobs and to improve wages, create jobs and support public services. I would like today to address two persistent choke holds on the economy, namely high energy prices and low private sector investment. To my mind, neither issue has been adequately addressed in this budget.

But my Lords, let us first remember where our economy lies today. The OBR has lowered the UK's economic growth forecast to 1.4% in 2026 to 2026 and stuck at 1.5% in all of the following four years. In September, the unemployment rate for the country stood at 5%. Worse still, more than 15% of young people aged between 16 and 24 are unemployed, not in school or in training, and inflation, although dipped a bit, is stubbornly at 3.6% in excess of the 2% Bank of England target.

Given this backdrop, lowering energy prices and increasing private investment levels are both urgent matters on the cost of energy. I note that the government has cut the green levy to lower household energy bills. However, what this budget does not address is the structural forces behind high energy costs for households, businesses and public services such as the NHS. Britain's high energy costs of $0.40 a kilowatt hour are an international outlier and a distinct disadvantage. France is at $0.28, the US is at $0.18, and both China and India are at $0.08.

Such energy costs in the United Kingdom undermine attempts to build economic growth. As I have noted here in your Lordships chamber before, cutting energy costs is the ultimate noninflationary economic stimulus, one that this country urgently needs. Thus, government policies should embrace all forms of energy, including those that we have in the North Sea on investment. Let me point you to my registered interest as a member of the board of directors of Starbucks and Chevron, and as well as a member of the Oxford University Endowment Investment Committee, all with notable investment interests in the United Kingdom.

A government with a stated mission to pursue economic growth must encourage private sector investment, which supports jobs, innovation and the economy. This budget attempts to do so, but there is, as ever, considerable scope to do much more. The budget outlines constructive measures, such as encouraging ISIS to invest in equities, as well as cash stamp duty holidays in newly listed companies and reforms to the Enterprise Management Incentive Scheme. However, these measures will have a marginal and not a transformative transformational impact, not least because other budget measures, such as higher taxes on dividends for investors will likely offset these.

These benefits. Only a more holistic approach can be catalytic in driving investment. My Lords, we must not lose sight of the growth objective and imperative. Therefore, the budget trade offs in tax and spending and debt need to ultimately stimulate growth. Lower energy prices and higher private investment are not only crucial for

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propelling growth, they are a prerequisite for prosperity. Amen. Very.

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Amen. Very. My Lords, there is no disguising the scale of the economic challenges facing our country, and challenges facing our country, and the budget had commendable clarity in its central objectives. Tackling in its central objectives. Tackling the high cost of living which has hit so many families so hard. hit so many families so hard. Maintaining the investment in our economy and our public services crucial to delivering growth and cutting debt and borrowing to create a more prudent level of headroom.

The evidence for the previous government's economic mismanagement was all around us. When Labour took office in bulging NHS waiting lists, crumbling school buildings, the prison service on the point of collapse and the court system in disarray and with wages stagnant right across the economy. I could go on. But this gave the government a choice to accept the public realm descending further into chaos, or to commit to the sustained investment, alongside key
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Lord Barber of Ainsdale Portrait Lord Barber of Ainsdale (Labour)
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reforms that could begin to restore the vital public services that most of us rely on. They have made the of us rely on. They have made the right choice, and sustained investment is being delivered too. In our infrastructure, our transport system, energy security, our housing. With the 120 billion of capital investment set out in the June Spending Review fully the June Spending Review fully maintained. These will be key factors in driving future growth. In the past, we've seen governments turn off vital capital investment at the first sign of economic strains, but the consequences were predictable damaged confidence and any previous economic momentum hitting the buffers hard.

This government is rightly clear that they will not go down that blind alley. These decisions meant that in some areas, taxes have been increased. And of course, nobody likes that. In a fantasy world, difficult choices can always be sidestepped. But that is not the world this government chooses to inhabit. One of the critical factors that influence the obr's judgements was the relatively poor productivity performance of the UK economy. And of course, there are a number of factors that are crucial to that.

How well do the capital markets work at allocating resources where the growth potential is most significant, and investment in skills is vital too? So I welcome the reforms to the apprenticeships and the increased support to SMEs now to be provided alongside the youth guarantees. Improving productivity will require innovation in so many areas. AI will be a major driver of change and as we meet those challenges, I hope we don't forget about the people we need to carry with us to deliver the changes needed.

Workers and their unions want to be partners in shaping lasting economic success, and the Employment Rights Bill will provide positive change in that area. My Lords, we should acknowledge that a corner is being turned. With the forecast for growth now upgraded from 1% to 1.5%, we're on course to be the second fastest growing economy in the G7 group. New deals with important trading partners long sought and now at last achieved, will play their part in driving growth.

Critically, critically, real wages have seen increases after a lost decade and more under the previous government. Falling interest rates will give an additional boost to household incomes. So let's focus on the substance of the budget and not the confected outrage about the communications around it, accompanied by an unhealthy dose of misogyny in the cynical, over the top personal attacks on the Chancellor. Of course, there is more to do, but this budget has not been about flashing the pan gimmicks, but serious and sustained reforms.

It deserves our support.
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Baroness Coffey Portrait Baroness Coffey (Conservative)
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Here. Britain, not only in terms of lack of growth, but in terms of rising unemployment, rising inflation, every angle, pretty much for the every angle, pretty much for the average working household. This is a bad budget. Now, I'm not going to get into process. The only process get into process. The only process I care about is the payslip that people will open next April when they're paying higher taxes, higher taxes, when they were promised by the Prime Minister and the Chancellor that that would not be the case.

They, the Prime Minister and Chancellor, also promised before the election last year that they would not scrap the two child limit because they said it wasn't affordable and wasn't fair. So here we have I completely understand it is open to a government to make different political choices, but to then say that they weren't misleading anybody is simply not the case either. So, my Lords, one of the things that I appreciate that Labour MPs were very keen was about the scrapping of this and I noticed the Liberal Democrats and indeed I think the Reform Party also support this, but I'd be interested to hear from the Minister in terms of we've already seen a rise in the proportion of Workless households since this Labour government came into power.

We've also seen an increase in the proportion of where only one person is working in the household increase. Since Labour came to power, we've already seen over 100,000 more people, unfortunately, join the ranks of the NEETs. Since this Labour government came into power and we have seen the number of people unemployed rise since this government came into power. So in terms of I'd be grateful to hear from the Minister in terms of the 450,000 figure he cites, and I resent actually children just being considered statistics.

They are individual children, but I would be interested to know if this is on relative poverty or absolute poverty, and whether it includes or

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excludes housing costs. Yeah. In terms of in the budget book,

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In terms of in the budget book, it talks at 2.20. We're talking here about where we're starting to see a change in universal credit. see a change in universal credit. It says that these reforms will have a positive impact on the labour supply. My Lords, it's not labour supply. My Lords, it's not true. And that's set out by the OBR true. And that's set out by the OBR zone book in 3.2. Actually, the thing that will increase the number of hours, average hours equivalent into the labour supply by about 26,000 is cuts to benefits.

The actual rise in the standard allowance, which I think is costing over half £1 billion more on its introduction, will actually, according to the OBR, reduce the number of people working. So what is it? What is it that we're hearing from the government? On one hand, the Chief secretary to the Prime Minister, when he was chief secretary of the Treasury, said it was unsustainable to have a welfare system where people got stuck on benefits. But we're starting to see the same behaviour from this government that they deployed in the design of other elements, of whether people will be better off in work than not.

My Lords, the tax credits regime was subsidising low wages, but more importantly, very rationally, people wouldn't work for more than 16 hours unless they were guaranteed a full time job because it would be to their detriment to do any more. This led to employers around the country redesigning jobs in order to try and make sure that they could accommodate more people working solely 16 hours a week. Well, eventually, with the Universal Credit, we've managed to get rid of that ridiculous cliff edge.

But now I'm absolutely concerned that we will start to see similar calculations going on. And it's not just about the numbers. I appreciate the Minister was very proud of the fact that other things were being extended, but as Darren Jones said, we've got to try and encourage people to not just make that decision about being, are they going to be better off in benefits? So is this going to be a case that universal free school meals are going to actually encourage people to work more hours? The answer is no.

We already know there are nearly a quarter of a million households where the household income is over £35,000, who will now get free school meals? In what way is this encouragement for people to do what's best for their children to try and have more, even fewer working households than there are today, but to encourage people to get into work? My Lords, there's a lot to be said in this budget, but this really worries me, actually, about the future of children. It worries me about the future of our economy.

And that is why I regret that the budget passed so many resolutions, including that on the farm tax as well. And therefore I hope that the government will reconsider when it starts to see

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the unemployment figures continue to rise at a ridiculous rate. Hear, hear. I congratulate.

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I congratulate. The Bishop of Portsmouth on his first contribution. I too have a couple of first to record in my couple of first to record in my contribution today. In my 28 years in your Lordships' House, this is in your Lordships' House, this is the first time I've ever spoken in a budget debate, and it's also the first time I've spoken in the same debate as my noble kinsmen, Lord Pitkeathley of Camden Town. I may be in a minority, but I'm recording great and unequivocal satisfaction with the budget announcement.

That is, the announcement that the government is to write a long standing wrong. The Chancellor has set aside £75 million to fix systematic failures, which cause hundreds and thousands of unpaid carers to be hit with huge bills after unwittingly breaching complex and confusing benefit rules. Unpaid carers who look after loved ones for at least 35 hours a week, are entitled to £83.30 a week in Carer's Allowance, provided they are weekly. Earnings from part time jobs do not exceed £196 if they exceed this limit, even by as little as a penny.

Under the cliff edge rules, they must repay the repay the entire week's allowance. So a carer who oversteps the threshold by one penny a week for for a year must penny a week for for a year must repay not £52, but £4,331.60 plus a £50 civil penalty. These draconian penalties were exacerbated by the failure of the DWP to alert all unpaid carers who overstep the earnings limit, even though they had access to real time data. This
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Baroness Pitkeathley Portrait Baroness Pitkeathley (Labour)
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bills. This caused terrible distress, real hardship and even imprisonment. Now, my Lords, this problem was known about for years. problem was known about for years. Carers UK began its campaign to alert the then government to it. In alert the then government to it. In 2018. The National Audit Office in that year published a devastating report on the Dwp's handling of Carer's Allowance, but were assured the problem was under control, even though a whistleblower revealed that this was far from the case.

In April 24th, 2024, a Guardian investigation revealed that tens of thousands of carers were still being asked to repay huge sums, while others were being pursued for fraud claims. Still, the DWP did nothing, although by now 357 million had been paid out in error. It was a great relief when the incoming Labour government launched an independent review led by a much respected disability campaigner, Liz Sayce, and the then welfare secretary pledged to fix the mistakes. And in that year's budget, the earnings limit was hugely raised.

The independent review found a categorical failure by the DWP. It found that the breaches of the rules were not wilful, but honest mistakes made as a result of unclear guidance or administrative errors by the government. There will be a review of hundreds of thousands of overpayment carers going back to 2015, which means scores of carers could be reimbursed and have unjust criminal convictions overturned. This is a huge victory for carers, and the 75 million allocated in the budget will make a start on fixing what the Secretary of State at the DWP has called a mess.

It is a vital step towards addressing the injustices which face carers for far too long. Of course, it is as yet unclear how much of the funding will directly benefit carers, but we shall be keeping a very close eye on how this progresses for the present. I congratulate the government and thank the Chancellor

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for making a start on writing this terrible wrong. Yes sir.

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Yes sir. My Lords, I have a lot of personal regard for the noble Lord. The Minister and I listened to his The Minister and I listened to his speech very carefully. But not a single word did I hear about single word did I hear about unemployment. So allow me to help him. Many of us, sadly, are old enough to remember the government
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Lord Dobbs Portrait Lord Dobbs (Conservative)
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enough to remember the government of Harold Wilson came in and promising white heat and left with more people out of work, which I suppose was unfortunate for a government formed by the party of the workers. It was even more unfortunate when Labour next got in. Wilson and Jim Callaghan. Sunny Jim, decent man. I liked him very much. But once again, when Labour left office, unemployment was up. Then Blair and Brown. Surprise, surprise, after 13 years of the Chuckle Brothers, when they were done, it was up again at nearly 8%.

How can it be that every time in living memory, when Labour gets into power, they leave with more workers out of jobs than when they started? And now, Dear Keir, after just a year and an avalanche of election promises about growth and new jobs and not taxing workers, can you guess it? My Lords, unemployment is up. Come friendly bombs and fall on Slough. They all blew up. I know not how and when I look into the sky, all I see are pigs that fly.

And I hope for Santa's sake this Christmas that the reindeer are going to be able to find it past all those squadrons of flying pigs are. It's really all the fault of the OBR, of course. And so it's boss joins the growing list of those who are losing their jobs under Labour, and he won't be the last. I hope I'm wrong. I hope that the noble Lord, the Minister, will give us an assurance that by this time next year, unemployment will be lower.

I ask him for that assurance, but I fear he won't give it. He he can't. That's why he didn't mention it in the first place. But the last budget we were promised that things were sorted. I'm not coming back for more, the Chancellor said. Well, I bet she wishes the BBC had done one of their special editing jobs and that one, and left great chunks of it on the cutting room floor. Those with the broadest shoulders must carry their fair share of the burden.

A good phrase, but my Lords, those with the broadest shoulders also have the fastest feet. They're leaving, and so are the young. Almost all emigration from this country is made up of people under 35 taking their future and our future with them. Every time Labour gets into power, it puts more people out of work. Now that can't all be the fault of Brexit, can it? My Lords, the working men and women of this country deserve better than they are being given.
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Lord de Clifford Portrait Lord de Clifford (Crossbench)
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Yeah. Well done Michael. Very good. >> My Lords. Firstly I would like to thank the government on behalf of the veterinary sector for confirming in the budget the commitment to a consultation on commitment to a consultation on reform of the 1966 Veterinary Surgeons Act, which is sorely needed as the sector has seen significant structural change in the last 15 years. I wish to note my register of interest, being the operations director and a shareholder of a large independent veterinary practice, which is an SME.

I speak today with SMEs and employees in mind. I think many who own and work in SMEs would accept a tax rise if, even if the the extra funds would, could be used to reduce the national debt and encourage growth. We recognise the need to support people in need, but continued growth in spending on the benefits will not support growth within our economy. I also welcome the announcement today by the Health Minister of a review into mental health over diagnosis to encourage those on benefits back to work and SMEs would welcome them.

This government came in on a manifesto of promises of change to support and encourage growth in the economy. There was an opportunity for the Chancellor to make significant changes to the tax system and simplify it, and these were not taken in this budget. And this budget certainly did not encourage or support NFC. SMEs in investment and growth. The the budget added further tax burdens to both employees and SMEs. Our three requests for the noble Lord, the Minister to take to the Treasury for possible adjustment in the future to reduce these burdens.

The first is to to reconsider the student loan freezing on plan two. Surely this is just not a tax. It's simply a repayment process for students who invest in their future. For an economy to grow, we need inspiring individuals who want to work hard and get rewarded by higher salaries. But by raising this limit, this will reduce their take home pay further at a time when they desperately need funds, funds to fund high housing costs and possibly raise the family. Please will the Chancellor reconsider this change and remove the freeze? This will help our younger generation to aspire into a working life and not feel they are just paying down the country's debt, that they have not benefited from.

The second request is to change the salary sacrifice scheme that takes and take out the pension payments. From this change, businesses employees are encouraged and most do sign up to the auto enrolment scheme to help save for the future and help fund retirement, and not be a burden to the state. This change will take a small amount of money away from amount from individuals saving and their disposable income, as NIC will be charged on auto enrolments, 5% which they cannot avoid and employers employers cannot avoid.

And those employees who are about. And the majority of those payments will be above the median salary. In the UK, which is many. It will bring an additional cost to SMEs employing skilled workers whose salaries are generated over £40,000, also stopping employers who support their staff, saving for the future and increasing costs. That doesn't help productivity or growth. My final request is further consideration of the changes to the IHT charges. Changes to APR and BPR in last year's budget, family, businesses and farms.

We we welcome the small change for the allowance of £1 million to be kept and transferred to spouses in the future. This is welcome, but it does not go further, further, far enough and further. It is needed to protect family businesses with high asset values, such as land and buildings that generate low income. Please could the government look again at a possible increase in the limit further, or even a transitional relief for, say, five years to allow families to move assets to the next generation or dispute among family members to reduce the tax burden on assets that do not generate significant income and so incur unsustainable tax bill to these marginally profit making farms and small businesses, which are vital to our economy.
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Baroness Warwick of Undercliffe Portrait Baroness Warwick of Undercliffe (Labour)
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My Lords, the Chancellor's measures to combat the cost of living crisis, particularly for living crisis, particularly for those on lower incomes, was the touchstone for this budget. The government was right to make this a government was right to make this a priority. The Trussell Trust had to increase its provision of emergency food parcels to 1.4 million between April and September in 2024. That's a shocking 69% increase since 2019. The most unjust and harmful impact of this is on children.

As the Chancellor said, there's the future cost to our economy, in our society, of wasted talent and the welfare system that bears the cost of failure for decades to come. Any responsible government would take action to address this. We know that removing the two child cap is the quickest and most effective way to lift tens of thousands of children out of poverty. The Chancellor's decision to remove the cap is a major victory for anti-poverty campaigners, but more importantly, for the 450,000 children it will lift out of poverty.

But, my Lords, I want to focus on social and affordable homes. One of the most transformative, sustainable and long term ways to tackle cost of living pressures is by delivering a major programme of social and affordable housing, analysis from the National Housing Federation found that sub market rents in general need social housing properties, provide savings to residents of £21 billion per year, compared to what they would have to pay in the private rented sector. That represents a saving of nearly 49%.

Living in social housing saves the average household more than £5,000 per year in rent. This translates to an estimated £13 billion per year saving on support for housing costs through the welfare system. At the Spending Review in June, the government announced transformational package of investment in social and affordable homes. One of its key pillars was a decision on rent conversions, with a consultation over the summer. Certainty and urgency is needed so that housing associations and councils are able to put in strong bids for funding in the new Social and Affordable Homes programme to deliver on the government's house building ambitions.

Any delay to this decision would delay investment and reduce the impact of new homes within this new on new homes within this Parliament. Can the Minister explain why this decision has been delayed, and can he confirm whether the government still intends to implement social rent conversions? Convergence from April 2026? My Lords, can I also put in a plea for supported housing? Many schemes are closing across the country due to many previous years of cuts. Without these homes, more people face homelessness, longer stays in hospital or inpatient mental health units or homes that don't meet their care needs.

Will the Minister assure us that supported housing will feature prominently within the government's forthcoming homelessness and long term housing strategies? My Lords, I want finally to raise a different topic growth in the economy and the vital role of higher education in its delivery. First, can I congratulate the government on its decision to link undergraduate fees to fees to inflation? That was difficult, important and courageous. I am also thrilled at the decision to increase QR in line with inflation and the science Minister's cast iron commitment to curiosity driven research.

So can I therefore ask one final question of the Minister? What impact will the international levy have on the university sector and what is the net result of that

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tax set against those improvements? My Lords. It is a privilege to contribute

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It is a privilege to contribute to this important debate. I will confine my remarks to the budget announcement on funding for special educational needs and disabilities, and in particular, how the annual and in particular, how the annual and cumulative deficits historically borne by local authorities will be funded in authorities will be funded in future when they form part of overall government spending. And as I said in the House yesterday, on this side, we want the government to send reforms to succeed.

However, the government's announcement has caused considerable anxiety. The expected deficit on the dedicated schools grant is projected to be 6.3 billion in the year 2029, with a cumulative deficit of 14 billion by the end of this spending review period. And this isn't just a one year problem. The three years of projected deficits beyond the
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Baroness Barran Portrait Baroness Barran (Conservative)
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spending review set out in the OBR document total more than 20 billion, and I'd be grateful if the Lords Minister could confirm that this is Minister could confirm that this is correct. Assuming no further reform of the system beyond what the of the system beyond what the government has already announced but not yet published, the government has said clearly that this pressure will not fall on mainstream school budgets. But as Tom Josephs of the OBR told the Treasury Select committee following the budget, he described this as a very large pressure, estimated at around £6 billion, being shifted from the local authority sector to central government.

And he highlighted that the government has not yet set out either how this will be funded or where offsetting savings will come from. So in that context, can the noble Lord, the Minister, explain to parents and to schools where the 6.3 billion for 2829 will come from and the 20 plus billion for the three years to 20, 30, 31, if it's not coming from the schools budget. And I appreciate that's been definitively rejected. But the phrase I think that's been used by Ministers is this will be absorbed across government.

And I'm tempted to speculate what the noble Lord would have said to me if I had stood at the despatch box and tried to argue that that much money could be absorbed. Turning to the cumulative £14 billion deficit, can the Minister set out what the government's plans are for dealing with this? The Institute for Fiscal Studies, in a recent article, has raised concerns that writing off these deficits could weaken the financial incentives for councils to control, send spending and suggest that actually, the recent acceleration that we've seen in that spending might indicate that this is already occurring.

And I think it's important that the government sets out how they plan to avoid this risk. I would be very grateful if the noble Lord, the Minister, could address these points when he comes to wind up. But if he runs out of time and I'm sympathetic, that's a high probability. I'd be very grateful if he could write to me to clarify answers to those points. As I said at the outset, there is a genuine wish to see these sent reforms. It's an incredibly complex and a very sensitive area, and one that matters hugely to parents of all children.

But if the government wants to build confidence in its reforms and prioritise outcomes for children, as it has so clearly said, it needs credible answers to these

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questions. And. My Lords. I will focus on the government's.

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I will focus on the government's. Support for. Start ups and. Scale ups. As outlined. In the Entrepreneurial.
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Baroness Bowles of Berkhamsted Portrait Baroness Bowles of Berkhamsted (Liberal Democrat)
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>> Prospectus published with the. >> Budget and. >> On work. >> Needed beyond investment. >> To fulfil.

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To fulfil. The Chancellor's promise of becoming a better customer to innovative procurement. That promise, aimed at achieving revenue for companies, for exports and growth to boost the economy, will remain an illusion until we eliminate Whitehall's Four Horsemen of the apocalypse pestilence, war, famine and death rampaging deep within our procurement and innovation systems, pestilence commandeers intellectual property in grants and contracts, stripping innovative tech businesses of their competitive edge and deterring investors War forces indemnities, demanding fledgling companies shoulder risks impossible for them to bear.

Famine blocks procurement like in the new Department for Transport's technology programme that excludes the very innovators they claim to champion, and death is delivered by exercising the harshest terms in innovate loans, compelling wind up of viable companies and refusing flexibility and extinguishing enterprise. These are not abstract flaws. They are lived realities. Last Wednesday, the times exposed the strangulation trap that innovate activated against Zeno, with a government agency looking more like an asset stripper.

It is not the only example Crown Commercial Services publications show. The new transport technology framework rejected every single start up and scale up applicant companies like Vivacity Labs, with nearly 20 million rays to optimise traffic networks with AI, rejected, Cora, backed by 4 million from Lloyds Bank and contributing to the national parking platform, rejected if Tango Advantage and advancing shared mobility, with 10 million raised rejected. Each rejection is not only lost contracts, it's lost opportunity for Britain's future.

Many others have given up applying, knowing they will be assessed by big company criteria by EBITDA when they don't yet have revenue. That's what they need. The procurement for government role is to be first mover, not a follower. Now, I do commend Lord Vallance for his valiant efforts to reform the IP grabbing terms in innovate UK contracts over this last year since I first raised the matter, but it shows the uphill task and there are all the procurement departments yet to tackle.

So, in line with the prospectus promise, I appeal to the Minister, meet with me, examine the evidence and bring Treasury's weight to bear in all departments to bring rapid change. The Chartered Institute of Patent Attorneys, the scale Up institute which the Minister referenced in his opening remarks, and countless companies have all sounded the alarm on these issues. We are not all wrong. Whatever you are being told, will you stop this? These horsemen from their rampage.
13:58
Baroness Curran Portrait Baroness Curran (Labour)
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May I begin by offering my congratulations to the Bishop of Portsmouth for his inspiring leading speech? And in the short time that I have in this debate, I want to make two key arguments. First, that the government is right to tackle the fundamental challenges that were undermining the British economy, leading to years of sluggish, sluggish economic growth. And secondly, they are also right to invest and innovate through key measures such as building infrastructure, reforming planning, developing new skills, investing in public services and taking measures to tackle the cost of living.

Because, as this government knows, investing in public services helps an economy grow. We have paid a heavy price for the policies of the last government. According to the House of Commons library. Prolonged austerity has weakened UK's economic growth by suppressing demand, reducing investment and eroding public services. And according to the OBR, although I notice that many others have said this is an underestimate, a critical underestimate. But the OBR has said that Brexit has permanently reduced GDP by around 4%.

I firmly contend that in this budget, the government has got the balance right between addressing these legacy challenges and moving forward to growth, stability and economic confidence. And that balance has been brought about by a number of measures. As has been mentioned, the £150 off energy bills to tackle the cost of living, but also crucial investment in skills and apprenticeships. With £820 million set aside for a new youth guarantee of employment and increases in pay after decades of wage restraint, leading to an increase in annual earnings for about 2.4 million workers, thereby stimulating demand.

But going further to encourage innovation and investment opportunities through increasing budgets for UK research and greatly improved regulation of nuclear of the nuclear industry. To open up new development across the country. Now, sadly, this is not an option available for us. For those of us in Scotland, as the SNP government has taken the short sighted decision to block nuclear power development, cutting Scotland off from huge opportunities for investment, jobs and skills skills. I am sure the Minister will know that Anas Sarwar, Labour's leader in Scotland, has vowed to end the seemingly economic free zone of the Scottish Government and has commissioned Professor Anton Muscatelli Muscatelli, the former principal of Glasgow University, to report on how to stimulate growth in the Scottish economy, which has called for greater coherence in policy and design.

Better use of holyrood's levers to support regional strengths, and stronger collaboration between Scotland's governments. I know the Minister will support such collaboration, so can I also ask him to study and consider the recommendations in the Muscatelli report? The Minister has got a lot of asks today and I'm sure he is going through the list, but can I add one more to them? Can he also consider the representations of prosper, an organisation in Scotland that brings together key stakeholders, including industry, seeking to promote economic growth? They have many insights, with some direct requests, for example asking that the UK government directly and UK government departments involve Scottish industries directly in developing targeted sector plans.

So, in conclusion, we should be clear in this House about the achievements of this Chancellor. She has cut NHS waiting lists and child poverty, cut inflation and cut borrowing costs. This government is innovating and reforming the economy to ensure stability and growth from which all citizens can benefit.
14:03
Lord Saatchi Portrait Lord Saatchi (Conservative)
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How they laughed, my Lords, searching for economic growth in Britain, I went to the fount of economic wisdom at the London School of Economics. I asked a roomful of professors if anyone had a brilliant idea for how to get economic growth. How they laughed. It would take a complete change in the entire culture of the society. Inconceivable. Impossible. Undeterred, my Lords, I went to the citadel of economic power, the UK Treasury, seated at a huge mahogany oval table surrounded by gilt framed portraits of great former Chancellors on the elegant oak panelled walls.

This is what I told them. My Lords, you are torturing people with your tax benefit system. You are telling people flat out not to work. Maybe they are sick or maybe they're not. But the one certainty is that they're not stupid. You are telling them their after tax income from a job is less than they get on benefits. No wonder, my Lords, that half the population of Britain is now means tested for benefits. This has to change. People need more incentive to work, not less, or will never get any growth.

So I said the response, my Lords. Just that total silence. The top official then spoke in a stern, grave voice, adopting the tone of a strict headmaster admonishing a child brought before him for unruly behaviour in class. He advised me to regard the enormous table as if it was the universe, the tax system as the solar system, the sun, the stars, the moon and the planets all in their proper place. He moved the coffee cup by one inch and explained that, although that might seem a minor change in one corner of the universe, it could have untold repercussions at the other end.

Therefore, bearing in mind, he said, the danger of unintended consequences, it was best not to upset the balance of God's creation. So there you have it, my Lords. The professors say it's impossible. The Treasury says it can't be done. Is there therefore any hope, my Lords? Of course there is, because we have in our hands the greatest underutilised social and economic weapon of all time. Tax long ago fallen from the ground. Role of social engineering tax has been reduced to the junior role of revenue generation as well illustrated by this budget.

Yet, my Lords, it is on a par, at least with the NHS or the criminal justice system in its impact on the culture of our society. The worst of all worlds, my Lords, would be a continuation of the status quo, where we have to accept as inevitable the present combination of high taxes and inadequate public services. We need someone to emerge, my Lords, someone intelligent enough to match the massed ranks of the LSE professors and the Treasury officials.

I ask you, my Lords, do such people really exist? Can they exist? Of course they do. They can. My Lords, someone like President John F Kennedy, had he ever left Dealey Plaza in Dallas on November 22nd, 1963, he would have gone to Austin, Texas, to give a speech that night. It would have ended. My Lords, we have the words. It would. Addressing America's situation, it would have ended with the words. Exactly the words. There are only six of them. Exactly the words we urgently need now in our country to end Britain's endless economic malaise.

There's only six of them, my Lords, it's not complicated. This is what's required. Conformity and complacency will not do.
14:07
Lord Jones of Penybont Portrait Lord Jones of Penybont (Labour)
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Yeah, yeah. Very good. Wonderful.

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I begin first of all, by. Thanking the Bishop of Portsmouth for his maiden speech. It's always.

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It's always. Nice to get it out of the way. I know that it's a build up towards it, and it's a relief when it it, and it's a relief when it finishes. My Lords, it was my destiny, some might say misfortune destiny, some might say misfortune to spend most of my term as First Minister of Wales dealing with the Minister of Wales dealing with the UK conservative government. Now, there were occasions, my Lords, when there was genuine cooperation. The city deals were an example of that.

But by and large we saw our budgets cut in real terms year after year through the block grant. And each time that happened, we were accused by a government in London of not spending money that we didn't have in the first place. And it is a relief and a joy now to see the money that's been allocated to Wales as a result of this budget. 505 million extra, on top of £425 million. As a result of the reshaping and reconfiguring of the fiscal framework.

This, my Lords, is very welcome news indeed. I'd also like to refer to some of the projects that have been announced in Wales. I sat and watched in the last decade the ending of a subsidy for solar panels. That subsidy was removed in the middle of the consultation. On precisely the same point, I saw the effective banning of wind farms in England. I saw the failure to support the Swansea Bay tidal lagoon, and then on top of that, the failure to support the Wiltshire nuclear power station on Anglesey, a very, very good project with a reputable Japanese company involved in delivering it.

And so I was delighted to see that that project has been resurrected in the form of an SMR. 600 jobs were sustained on the island of Anglesey as a result of their being there, and I hope to see those jobs return to the island. I'd also ask my noble friend, the Minister, to consider whether the site previous site of a nuclear power station could also be considered for an SMR in the future. These are rural areas, my Lords, but they are also areas of strength for the Welsh language.

And it means that without the jobs to sustain young people, those young people have to leave with the consequent detrimental effect on the language. That is very much welcome. I also welcome the announcements regarding Cardiff Parkway station and Cardiff Central railway station. Long overdue. It's one of the most overcrowded stations, I suspect in Britain there are trains that queue to get into that station, so reshaping it and bringing it up to 21st century standards is hugely important. And I welcome that.

And I contrast that with the promise that was made by a previous UK conservative government to electrify the South Wales main line to Swansea, a promise that sadly was never kept. The people of Wales will welcome this investment in their transport network together, of course, with what's been done by the Welsh Government through the establishment and financing of transport for Wales. We've also seen from the budget extra money for the freeports, firstly in Holyhead, not too far from over 25 million there and 4 million for land reclamation at Port Talbot, within the boundary of the Celtic Freeport.

These are all examples of a Labour government in London and a Labour government in Cardiff, delivering for the people of Wales. Also, it was good to see the investment in AI in both north and south of Wales and also, of course, the proposed semiconductor cluster. Wales is one of the world leaders in the production of compound semiconductors, and to see that being taken forward and invested in is hugely important. Many of us on these benches will applaud the lifting of the two child cap.

69,000 children in Wales alone will be taken out of poverty as a result of that, and many, many more will benefit as a result of the lifting of the minimum wage. And so would the noble Lord. The Minister agree with me when I say that Wales is best served when there are governments in London and Cardiff of like mind, that's the best way to deliver. This budget has delivered and I look forward to seeing further delivery from both governments working together in the future.
14:12
Lord Bird Portrait Lord Bird (Crossbench)
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Good. >> Good. >> I'm not here to. Congratulate the government nor commiserate with the government nor commiserate with the opposition. I'm here to talk about what Lord Saatchi has called for, which is not more of the same, which I think is what you're asking for. And I'm not here to do that. I came into the House of Lords, and I'm sorry that I keep repeating this to get rid of poverty, not to make the poor more comfortable, which every administration since the Second World War has been trying to do.

And as a person who comes from that class, I know darn well that if you spend all your efforts on trying to make the poor comfortable, then you will destroy their future because there's no such thing as a future if you are stuck in poverty. I was astonished to hear from the Minister that poverty costs £40 billion. The reason I'm astonished is because if you just put together the fact that half, roughly half of the budgets in our hospitals, our NHS, roughly half according to the doctors that I've spoken to, is spent on trying to keep the poorest amongst us as healthy as possible.

So actually, if you look at the fact that 50% of people who are suffering from cardiac arrests and cardiac illnesses are people who have food poverty in their background, if you look at the prison system, the prison system is almost a poverty system. All right. We've got some middle class and upper class people. You know, we've had the occasional posh person drawing join the prison estate, but it's mainly a gateway from people for people to go into a closed society who themselves have inherited poverty.

Now, what I don't understand about this government, and I didn't understand it about the last one and the one before and the one before is they never, ever stop and say, as Lord Saatchi is asking us to say, it doesn't work. It doesn't work. I developed some years ago, and I'm very proud of it, because it's been used by governments elsewhere and by local authorities. I developed something called The System, and I've spoken about it in the house.

PSC prevention, emergency cure. Why is it that every government has a number of initiatives and projects around prevention that never goes mainstream or cure? Why is it that 80% of the money that this government is spending directly in poverty is spent in the emergency of poverty, it spent in the holding the hands of the poorest amongst us? But when are we going to wake up to the fact that it is a great risk to democracy, and we're going to see it coming down the line? Reform is riddled with poverty, riddled.

The people who are getting on the boats coming over here are riddled with poverty. And yet government after government after government departments after departments, Ministers after Ministers still keep this shambolic governmental system, a Treasury that is hidden from sight on most occasions and doesn't get down into the dirt and look at the damage done by poverty. I'll end there, but I would like to say congratulations on, on on your budget. I would love to see some real serious intervention in this House and the other place around the idea of when are we going to dismantle poverty rather than do these stopgap things.

Thank you.
14:16
Baroness Stedman-Scott Portrait Baroness Stedman-Scott (Conservative)
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You speak in this budget debate, and to be frank, I'm not entirely sure where to begin. There is much to consider and even more to be to consider and even more to be concerned about this budget. At its core, a deliberate political choice, welfare over work. We are asked to believe that this budget strengthens the economy and supports working families. But once you look past the presentation, a very different picture appears rising, inactivity, weakening incentives. A point made by my noble friend Lord Hintze and a welfare system growing far faster than our economy can sustain.

And I hope noble Lords will forgive me if I focus my limited time on that core issue. Politics, my Lords, is about choices, and the choices in this budget are unmistakeable at every turn. The government has chosen welfare over work. Let me be absolutely clear. The we on these benches, and I'm sure all other benches in the House are absolutely clear that help should be given to those who really need it, and it should be given at the time that they need it.

My Lords, we see this most clearly in the decision to abolish the two child limit. We are told this is an act of compassion. But compassion, my Lord, firstly requires honesty and the evidence is clear. Workless households are the strongest predictor of poverty. Removing the cap, which I've no doubt is well-intentioned, will mean more children growing up in families where no one works at a time when the economy has already shed 180,000 payroll jobs in the past year, and when labour supply growth is falling, what makes the choice all the more striking is that Labour once knew this.

As my noble friend Baroness Coffey already said. The Chancellor herself argued that keeping the cap was the right thing to do. She did it so strongly, in fact, that colleagues were suspended who disagreed with her. My Lords, people respond to incentives and the incentives in this budget are in danger of pointing people firmly away from work. Many on welfare now receive around two, 2500 pounds a month, which is more than someone earning the minimum wage takes home. Meanwhile, the Chancellor is Chancellors inflammatory, inflammatory policies and tax rises are stifling.

Take home pay for those in work. Additionally, new analysis shows that a jobless family on combined benefits will now take home £18,000 more each year than a working family with the same number of children. My Lord, why would you go to work? We're in danger of creating lifestyles that we cannot that are unsustainable through paid work. When the system pays more not to work than to work, people are not being irresponsible. They're responding to the incentives the government has created.

Their choices are rational. It is the government's choices that are wrong. This is not a strategy for growth. It is not a route to higher living standards. It is the story of a country slowly drifting into deeper dependency, and a government content to let that drift continue. We want resilience, not reliance, and we want independence, not dependence.
14:20
Lord Campbell-Savours Portrait Lord Campbell-Savours (Labour)
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Yeah, my Lords. Lord Powell, I can't. >> Hear anything at the moment. Right Lord Campbell-Savours to speak.

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My Lords, whilst I welcome much in the budget, I intend to raise a single issue. The reforms to single issue. The reforms to Council tax on a number of occasions over recent years. I've raised both here in Westminster and in the northern media anomalies and the levying of council tax, the classic example being the levy on a Cumbrian council house being the same as charge on a £60 million house in Mayfair. Harold Pinter would have revelled in all its absurdity.

So how has the this come about? We need to go back not only to the antecedent valuation date Edv, as it's known as set in 1991, but also to the potential for revenue raising available primarily parking revenues. It was that with that in mind that some years ago, I undertook a project comparing local authority charges in the North with charges in a selection of boroughs in the South, all charging lower rates. My findings later at the time was widely disseminated, provoking an avalanche of mail and the use of my data in the house.

My conclusion was simple we need to revisit the system and at the same time introduce new bandings. Earlier this year I proposed new Bandings I, J, K, and L. The government, however, are proposing the use of cash thresholds and I can't quite understand why there would be an explanation, I'm sure, but I await to hear it with interest. Why can't we have new letter banding set? Perhaps at 2 million 3 million, 4 million, 5 million plus? We could then begin the slow but progressive movement down the scale of letter revaluation.

I'm more than aware of the sensitivities, and in dealing with amendments to local taxation, some say that the late Baroness Thatcher lost her leadership over her decision to introduce the community charge in the late 1980s. So I understand we need to act with care. The exercise in establishing council tax liabilities under a 1991 EV is becoming increasingly abused and administratively complicated. At some stage, we're going to have to bite the bullet and reform the system. The question is, can we do it without generating widespread anxiety and an electoral backlash? We have a number of options.

During revaluation transition, we could freeze households to existing bandings for a number of years, let's say 20. We could freeze bandings to current occupancy or or even limited successor occupancy, whatever. We have to deal with a system inherent with problems where levels are often too high and remain unchallenged, and where levels are too low due to factors widely recognised in the House, I believe it's perfectly possible to progressively create a system based on current letter valuation principles, where actual council tax payment levels remain broadly unchanged, yet at the same time, deal with the absurdities in a system that has long past its sell by date.

Thank you.
14:24
Lord Hamilton of Epsom Portrait Lord Hamilton of Epsom (Conservative)
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I'd like to pay tribute to the noble Lord Lord Campbell-Savours. I think he's very courageous in the way that he still contributes to the proceedings of this House, albeit over the internet. My Lords, you don't have to be a rocket scientist to have been able to tell way before the last election that Labour was going to win it. That seems to have been a really pretty well established fact. Long before the general election was held. And it's extraordinary to me.

Of course, we didn't know that the majority was going to be as big as it was, but I think we all knew that Labour was going to win. So why didn't they have a more coherent policy vis a vis the economy of this country? We're now talking as if the unaffordability of the welfare state is something new. No, my Lords, it's been there for a very long time, and Labour should have known it for ages, and should have produced ideas as to how to tackle it.

When they were looking around for policies to follow. Surely they could have done a lot worse than follow many of those of the Blair government. The Blair government was re-elected more than once as a Labour government, and can be put down as one of the successes of Labour governments in this country over the past few years. So why didn't they look at what the Blair government did and think, well, should we be emulating that as a way forward as to how to run the economy? The government has put enormous.

Enormous premium on the whole thing of growth. And that is absolutely right. But the problem with infrastructure growth is it takes a very long time to come through. Orders get disputed the whole time, and we see major nuclear power station, I think in Essex there's a dispute going on because there's a bird sanctuary next door. And they say that a number of rare birds are going to be wiped out if this power station is built. It's the first time I've heard of birds being affected by building power stations.

But anyway, you very much feel that any excuse is better than none to try and stop the progress of building this power station. The Prime Minister himself pointed out that £100 million was spent on a bat tunnel on the HS2, and by reports in the newspapers, none of the bats have actually gone into the tunnel, but the number of bats has actually increased in the meantime. So it seems that we're getting slightly carried away by all these environmental concerns which slow everything down.

So the answer, my Lords, is to look to the private sector and the private sector before the election was very keen to expand. Confidence was growing. But what actually happened was that the government in speculated. My noble friend Lady Neville-rolfe pointed out a lot of budget speculation, which meant that a lot of people might have

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taken the decision to expand their businesses. Said. There's so much uncertainty

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There's so much uncertainty around I'll sit on my hands and wait to see what the budget produced. And to their alarm, the produced. And to their alarm, the budget produced a whole mess of the first budget. I'm talking about whole mass of taxes and were whole mass of taxes and were actually damaging to small businesses, so they not only sat on their hands of that period, they continued to sit on their hands and didn't expand. And that's why the economy is going rapidly slowing down at the moment.

And unemployment is rising. So there was no question of the Blair government ever taking this view towards the private sector. And indeed they've kept most of the reforms of Thatcher in place. And indeed they didn't drive away the non blondes and rich people. Lord Mandelson was a big chief in the Blair government. He went around saying he was very comfortable with the filthy rich. So it's extraordinary that none of the lessons have been learnt from the Blair government. And the result is I don't think this government, because of the mismanagement of the economy, will survive the next election.

My Lords, it's a pleasure to follow the noble Lord, but I will not be discussing the question
14:28
Viscount Stansgate Portrait Viscount Stansgate (Labour)
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of power stations in Essex now on budget day, 2:44 p.m. and six budget day, 2:44 p.m. and six seconds. And I know because I double checked it, the Chancellor spoke the following words, and I spoke the following words, and I quote. Our job is to make Britain the best place in the world, to start up, to scale up and to stay. start up, to scale up and to stay. Now that is a key message in the budget. And there was action to demonstrate the intent, the 38.6 demonstrate the intent, the 38.6 billion that the government have announced for UK research and innovation projects over the next four years will be crucial to the achievement of the primary objective of growth.

And the House should also note that the budget gives solid backing to British based AI. For new AI growth zones spread out within the UK, North East, Oxfordshire, North and South Wales. And there's also 500 million for sovereign AI fund to back promising British businesses. Now, my Lords, is all very welcome, but more must be done. We need a step change in the way in which we fund growth, the growth of science and technology businesses to ensure that they scale up and stay in the UK.

Now I am advancing today. The argument put by your Lordships Committee on Science and Technology, chaired by my noble friend Lord mayor, of which I am a member, whose report published last month was entitled Bleeding to Death The Science and Technology Growth Emergency. Now, this report at heart is an economic report, which is why it's so relevant to today's debate. And the argument can be, very simply put, this country is brilliant at research. This country is good at Start-Ups, but this country is failing at scale.

And as a result, we are losing potentially world class science and technology businesses, often to the USA. As a matter of fact, good example took place while we were conducting our inquiry. The deal formally completed, I think in September. Oxford Ionics, which was a quantum tech company based in Oxford, was bought for $1 billion by an American company. Now some of the research will continue to go into the UK, but the benefits and the the finance will go to the USA.

Now, if we don't find a way to succeed in scaling up science and technology businesses here in the UK to the benefit. So the benefits and the success of felt here in the UK, we will miss out on some of the best prospects for future growth in our economy. Now the Select Committee made a number of recommendations. I can't go through them all, but I will mention a couple. It called for leadership at the top from the Prime Minister and the Chancellor and across government.

In our view, we need to exert this through a new National Council for science, Technology and Growth. We've got a National Security Council now. We need a growth council. It should include all the Ministers from all the relevant departments, DSIT, Home Office, defence, Health and Social Care, DESNZ, DWP and the Department of Education especially, of course, the Minister of State for science, together with key public investment bodies and scientific advisers. Second, we need to do more to encourage institutional investors. There's been a shocking decline in the proportion of domestic pension fund investments in UK equities.

We need the mansion House reforms to succeed and if countries like Canada can amalgamate their pension funds to invest in UK science and technology, then so should we. Third, we need more coordination among the public investment bodies that play such a key part in the growth of science and technology companies. Innovate UK, the British Business Bank and the National Wealth Fund. There's a case for amalgamating them, but there's certainly a case for what you might call a concierge service that guides Start-Ups through the business of trying to get the additional money needed to scale up.

And fourth, we must really start to exploit the power of public procurement because and lock the growth of innovative science and technology companies. And my time is fast running out. I'd just like to say that we should move from grants to contracts, because it better enables businesses to grow, and that we should have mandatory government targets to invest in UK based SMEs. Now my time is up, so I can only say and repeat that. We do need to take this question much more seriously.

And I think in the long run, success in this area is going to be more lasting and more important than any of the transient budgetary headlines of the last week.

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I agree. With a great deal that I've. Just heard. I am also going to say.

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I am also going to say. A few words about growth, but before I do, I want to just touch on a couple of other recent on a couple of other recent controversies. First of all, on the OBR, the creation of the OBR has given forecasts an air of given forecasts an air of respectability, which no economic forecast should ever have. And the forecast should ever have. And the one certainty we can be sure of on forecasting is any forecast will be wrong, usually seriously wrong.

But now we have the OBR. We'd better make it work uniquely among government appointments to senior jobs and mirroring what's commonplace in the United States, the appointments to the OBR, the senior appointments are subject to a veto by a parliamentary committee, the Treasury committee. The dismissal as well as the appointment. I think that committee should now use that power to help identify good candidates and do so in a way that's capable of helping restore some confidence to the obr's work.

A second quick point is that concerns the Chancellor's budget, which is, frankly, directly which is frankly, a reflection, largely a reflection of what happens when a government becomes a
14:34
Lord Tyrie Portrait Lord Tyrie (Non-affiliated)
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prisoner of its own backbenches. I have no doubt that the farrago over have no doubt that the farrago over the Pre-briefing and the row over the OBR both partly owe their origins to a misguided attempt to origins to a misguided attempt to manage Labour backbench expectations. Of course the Chancellor may have made mistakes here, but I just also want to say I'd be very surprised if she lied. I'd be very surprised if she lied. I know her well, I found her, I've worked with her and I found her an extremely reliable and likeable counterparty.

Now for growth. The most important question, of course, is growth. But the main planks of a policy are relatively easy to identify, although of course very difficult to implement. First of all, we need to restore our trading links with the EU. There'll be a huge debate about how much we've lost in GDP terms, but it's several percent of GDP and the average estimate is about 5% of those studies that have been done. Restoring those links will bring back a sizeable proportion of the growth.

But of course, no party will touch this because reform is doing so well in the polls. Then there are the bottlenecks in the labour market which now need to be addressed. Some of the government's measures make this worse. On immigration, the most sensitive issue. The crucial question should never have been how many, but who? The UK must make it easier for firms to recruit from abroad and, at least for a time, bottlenecks in the NHS and in the care services need to be filled by facilitating the return of good quality, relatively inexpensive recruits from abroad.

Again, reforms polling strength is in action here, blocking much change. Third, much greater pace needs to be injected into the reform of planning law. The shortage of houses is a major obstacle to labour mobility and growth. But the problem is by not acting quickly, majorities are beginning to form in former Tory seats now held by Labour MPs, who know that their fragile electoral prospects would be extinguished if they voted for more houses. And fourth, of course, the public finances need to be put on a much sounder footing.

I'll end with just one further point. I've said how difficult it is and how difficult all those recommendations are to implement, but the government has had at least two opportunities to create the political space to tackle such an agenda. Its first opportunity came immediately after the election, by using the argument that the legacy was worse even than thought. They shouldn't have got attached to 22 billion. They should have just said things are worse than we thought, and we've got to re-examine our pledges.

And the second has been provided by President Trump. When he tore up the post-war trading order and replaced it with penal tariffs on much of the rest of the world. Both those opportunities have been missed. Growth will be the major casualty and, regrettably, the government remains trapped by its pre-election pledges.
14:37
Lord Hodgson of Astley Abbotts Portrait Lord Hodgson of Astley Abbotts (Conservative)
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To follow the noble Lord Lord Tyrie, with whom I have made common cause on a number of issues, most cause on a number of issues, most notably the evils of extraordinary rendition. But in my four minutes I want to raise two points. The first want to raise two points. The first is the choices the government has made, strategic choices the government has made in this, in this budget, and how it is going to set the tone for this country's economic performance over the rest of this Parliament.

And picking up the point where my noble friend Lord Saatchi, I'd like to spend a moment on tax. If you talk to experts about tax and I don't just mean economic experts, I mean sociologists and so on, they will tell you that an ideal tax needs to have a clear purpose, be simple to understand, and universal its impact. Raise a sufficiently large amount of money immediately to offset the frictional costs of its introduction, and be progressive in that it would fall more heavily on the broader shoulders.

So when we had, amidst all the ferocious picture before the budget was announced, I heard I thought I heard the Chancellor prepared to undertake a an action of very, very considerable personal, political and economic courage by raising income tax, because that, as my noble friend Lord Tyrie said, would be very simple and very straightforward, and it meets almost all the tests that I've just outlined. But it was not to be. And instead we've ended up with a smorgasbord.

And this has broken nearly every one of those golden rules. And indeed, the noble Lords Minister was good enough to say that it was regressive as far as the thresholds were concerned, though, he didn't say what my noble friend and noble royal Baroness Neville-Rolfe said, which was, of course, that there'll be no money coming from it for several years to come. And as many other noble Lords have said, this is a strange policy choice for a government, for a party that prides itself claims to be in favour of the working man.

Instead, the government fell into the trap of believing, as they say, they can make all sad hearts glad by making a raft of changes to assuage different groups of recalcitrant backbenchers, a policy that I think is bound to fail. Let me quote don't offend this lot. Don't alienate that lot. Eventually you become a vaporous, borderless blur, a grey mush impossible to understand or even defend. Not me, my Lords, not a Tory commentator, my Lords. Andrew Marr, not a friend of the Conservative Party, writing in the New Statesman about this budget.

Now, my Lords, that takes me to my second and final point. And this is about the dog that didn't bark, and that is the failure in the budget to address it in a serious way. The conflict between guns and butter for 80 years, my Lords, certainly, and certainly the last 40 years, we have lived comfortably under the American umbrella and we've been able to eat a lot of butter. But that umbrella is now being withdrawn and slowly dismantled, and we will have to take more responsibility for ourselves.

And at the same time, behind that, we as a medium sized power, can expect to be caught in the backwash of the shifting of the tectonic plates. As the struggle between the US and China as to who will lead the world in the second half of this century intensifies. And nowhere, my Lords, and nowhere in that budget speech did I see any recognition of this strategic challenge, and certainly no suggestion that we might have to draw in our belts and not sure to to to provide funds to address it.

My Lords, let me conclude with the Russian proverb. There is a Russian proverb that the government could possibly study this with advantage. The Russian proverb reads better bread with water than cake with trouble. This is a cake budget and we're going to have some trouble.

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Although. My Lords. I'm. Speaking today to warmly welcome a budget which will ease the a budget which will ease the pressure of the high cost of living, continue the process of fixing the continue the process of fixing the NHS, and make sure that we we see debt falling over the course of this Parliament. These are the priorities of the British people, priorities of the British people, and that is why these are the priorities of this government. When
14:42
Baroness Nichols of Selby Portrait Baroness Nichols of Selby (Labour)
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priorities of this government. When I think about some of the measures contained in the budget, I think about people back home in Selby, those who work extra hours to make sure they can give their children the Christmas that they deserve. Those who work tirelessly to keep our public services running, and those who work long hours in their small businesses to bring employment and growth. They are the backbone of this country. But for too long, working people have been failed by our country's crumbling infrastructure.

When a hard working small business owner hits a pothole with their van costing hundreds of pounds that they can do without. When a young person is signed off sick because they can't get mental health treatment, that's the damaging for them personally and for the wider economy. And when the incomes of working people stagnate or fall like they have done since 2010, that's money no longer being spent in the local economy, which is bad for our high streets and bad for prosperity.

That's why the measures included in this budget give me reason for optimism. The government are investing hundreds of millions in our roads, continuing to reform and fund the NHS with millions more appointments. And we've seen wage rises more in the first year of our Labour government than in the first decade under the Conservatives. Not everyone is feeling this relief yet, and that's why the government has gone further in this budget. It will take £150 off people's energy bills, with more for lower income households, fares, rail fares and prescriptions fees frozen and hundreds lifted.

Out of hundreds of children lifted out of poverty. This budget delivers on the pledge we made to British pensioners, with those on state pensions receiving an almost 5% increase from April, and particularly happy about this budget. What it does for former mine workers in the BC triple s pension scheme. After delivering on the miners pension scheme last year, the Chancellor has committed to doing the same for those recipients of the superannuation scheme who will receive an an average of £100 per week increase.

Doing this because to govern isn't to tinker around the edges. To change some figures in the spreadsheet. We were elected as a Labour government and people wanted to see change. That's why this budget delivers, easing the squeeze on the cost of living while reforming our tax system so it taxes more fairly. Asking everyone who drives on our roads to contribute to their funding. And we'll tax the most expensive homes more, beginning to right the wrong of abandoned property in Blackpool, paying more in council tax than the multi-million pound mansion in Mayfair.

My Lords, some have claimed that this budget punishes aspiration, but there is nothing aspirational about an economic system which sees us spending more servicing government debt than we do on defence, education or investment. And there is nothing aspirational about presiding over public services, which simply don't work for people. Those are the wrongs that this budget writes, and that's why I'm proud to support it.
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Baroness Noakes Portrait Baroness Noakes (Conservative)
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Yes. >> It is good. >> To see so many on the government benches here to support their failing Chancellor and her failing Chancellor and her miserable budget. They are in a very small minority in polling after the budget, only 10% thought that Labour were the best party to run the economy. And that, my Lords, is lower than the score achieved after the Truss Kwarteng mini budget. The run up to the budget was chaotic. Whatever the Chancellor intended, with the constant press briefing and that excruciating early morning Downing Street speech.

The fact is that pretty well everyone was misled about what was going to be in the budget. This chaos was then followed by a budget designed to please fractious Labour backbenchers, rather than sort the economy out. The gilt markets were unimpressed and maintained our position as the advanced economy with the second highest borrowing costs. And since the Chancellor has been appointed, the gap above the average advanced economy, borrowing cost has been growing. The budget confirmed that this is a tax and spend government tax burden will be a record at 38.3% of GDP by the end of the forecast period, while public expenditure will be over 44% way above pre-pandemic levels.

The Minister claimed again today that growth is the number one priority, but the OBR has pointed out that there is nothing for growth in this budget. The Minister bragged about growth in the first half of this year, but he knows that a large chunk of that is down to one off factors. The outlook for growth is, at best, lacklustre. My Lords, businesses are in despair. We have a tax system which is ranked 32nd out of 38 countries in the Tax Competitiveness Index.

1960s style employment laws are about to be imposed on business taxes and inflation are sucking demand out of the economy. It is no surprise that the OBR sees business investment falling away, and working people too, are in despair. Their taxes are rising by stealth, largely to fund an increasing number living on state handouts. The rich and the young are leaving the country every day, which simply compounds the problem. My Lords, the budget dodges some tricky issues which may well derail the budget arithmetic.

And I have some questions for the Minister, like the noble and gallant Lord Lord Craig of Radley. I want to know when the the 3.5% committed to defence will be achieved. It certainly isn't showing up in the current budget numbers. And like my noble friend Lady Barran. Will the Minister say how much is going to be spent on send after 2728? At which budget will pay for it? And what will happen to the accumulated local authority deficits that have been growing while they've been funding? Send the rising send bill over recent years? In addition, my Lords, how many billions of efficiency savings after 2829 are still to be identified? And how, my Lords, will the 1.8 billion bill for the digital ID cards be paid for? Whose budget will that come from? My Lords, one thing is clear.

We need a change of leadership in the Treasury. If we're going to have in the UK any chance of economic success. Yeah.
14:49
Lord Sikka Portrait Lord Sikka (Labour)
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I welcome the scrapping of the >> I welcome the scrapping of the conservative two child benefit cap. Sustained economic growth is the Sustained economic growth is the key objective, but that can't be achieved by eroding the spending power of the bottom 50%. Bottom 50% of the population. There is no justification for freezing the income tax thresholds until 2030 31. This freeze forces 780,000 additional people. That is the poorest to pay income tax for the first time, another 920,000 will be pushed into paying income tax at a higher rate.

24 million people already live below socially acceptable living standards, and the freeze would lengthen queues at food banks. Just one change taxing capital gains at the same rate as wages could have raised around £14 billion and enable the Chancellor to increase income tax personal allowance by more than £1,000 a year and reduce poverty and stimulate economy. But the government chose to appease the rich. There is no increase in the top rate of income tax. Dividends and capital gains will still be taxed at lower rates than wages.

The poorest 20% will pay a higher proportion of their income in taxes than the richest 20%. Just 1% will continue to have more wealth than 70% of the population combined. That is utterly unfair. Energy companies have made £125 billion profit since 2020, directly fuelling poverty. But there are no kerbs on profiteering and no windfall taxes. The big four banks made pre-tax profits of £45.9 billion in 2024, but there are no windfall taxes. Even worse, banks banks receive a hidden subsidy of over £23 billion a year in the form of interest payments on central reserves since 2023, the European Union has mostly stopped paying interest on central reserves to banks.

The budget makes no attempt to kerb corporate welfare payments. Can the Minister explain why the government continues to subsidise banks direct investment by the state in infrastructure remains neutered. Instead, it is channelled through PFI type of arrangements for every £1 of private investment. The government repays £6, a very poor value for money. Such policies guarantee corporate profits but have not stimulated growth. They burdened the public purse and public bodies with extortionate costs, and there are alternative ways of funding these investments.

The UK invests around 19% of its GDP in productive assets, compared to 26% for France, 25% for Germany, 23% is the average for OECD countries. China invests 40.4% and India 30.5%. Despite low investment, there is no reform of corporate governance, no attempt to curtail the ability of shareholders to extract vast dividends, as we have seen in the water industry. For example, inequalities, profiteering, regressive taxation, regressive taxation and neutering of public investment do not provide firm foundations for the economy.

We need a budget for the masses, not just for the super rich bond markets and corporations. It's a

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great pleasure to take part in this debate. And I'd.

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And I'd. Like to thank Lord seeker. We disagree on many things, but disagree on many things, but whenever he speaks, he always raises in my mind that economics is raises in my mind that economics is not just about money, it's about values and principles. And in that values and principles. And in that sense, I think what he's just raised in his speech is a challenge
14:54
Lord Griffiths of Fforestfach Portrait Lord Griffiths of Fforestfach (Conservative)
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to us. I want to. Make my speech about two fundamental issues, which I believe the Chancellor and the I believe the Chancellor and the Treasury took when they drew up Treasury took when they drew up this budget. The first was the refusal to tackle the scale of the refusal to tackle the scale of the problem of public sector debt, and therefore to live with the problem of economic stability or to make it precarious at present, public sector debt, as we've heard, stands at roughly 95% of GDP.

It's twice the average of advanced economies. And the reason our interest rates, ten year gilts are higher than other advanced countries is precisely because of this. Borrowing is set to come down annually, but national debt is not set to condone Lord Woodley. In fact, it's due to increase annually for the next three years. As Lord Burns reminded us. And then it comes down by a very small fraction. It's painful to tackle the problem of national debt.

It's painful in economic terms. It's painful in political terms. Roy Jenkins found it difficult in the 1960s, Denis Healey in the 70s, Geoffrey Howe in the 80s, and my colleague Lord Lamont in the 1990s. But I believe there is no way to tackle the size of our public debt without actually cutting expenditure. Even though debt is rising, there are still spending risks. We don't know really what the outcome of the welfare bill is, because what the demands will be.

We don't know what immigration is. We have no strikes. Will there be more? We have a defence budget, which frankly, doesn't really meet our defence needs. We have public sector wages. The OBR conclusion, despite the greater headroom which is welcomed, it remains a small margin compared to the uncertainties. And they mentioned, firstly our economic forecast. Secondly our fiscal forecast. Thirdly, the uncertain yield from tax changes. And fourthly, fundamental departmental budgets.

There's one element as well in risk, which is to do with the Bank of England. The Bank of England has the difficult task of, on the one hand, fixing interest rates and yet not pulling them down enough in order to deal with the challenges of inflation. The second point I'd like to make is that every successful economy, I believe, every successful economy, I believe, needs a vibrant. Middle class and a vibrant middle class, which creates wealth.

I feel that what we have in this budget is really an attack and a road to a two class system between the very wealthy and workers, but with a shrinking middle class, which, frankly, is not a ground for hope. Through the

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budget. It's a pleasure to follow the noble Lord, Lord Griffiths. My noble Lord, Lord Griffiths. My Lords, I regret that this budget falls short on both process and on falls short on both process and on substance, on process. Yes, there was a major error on behalf of the OBR in publishing their documents OBR in publishing their documents too early on budget day. But my Lords, the real error was in not Lords, the real error was in not publishing the OBR forecasts even earlier, not on budget day, but on the 4th of November.

The letters be in no doubt the 4th of November was a significant fiscal event. The Chancellor updated markets and the public on the public finances and potential policy changes. There were no supporting documents. There was no transparency. There was no rigour. It has damaged confidence. Turning then to the substance, there are my Lords, three areas where I fear this budget falls short. First, the government is rightly committed to what it calls a relentless pursuit of growth. But why is it that the Treasury's own analysis shows that government policies announced in this Parliament, far from driving growth, will actually reduce output in the coming years? Yes, my Lords, I refer you to chart 1.5 on page 18 of the budget documents.

That shows that while there may be some long term benefits to growth, the overall supply side impacts of the government's policies is to reduce output this year, next year and the year after. And we now know, two, that the OECD believe these negative output effects will endure for longer. So far from a relentless pursuit of growth, this will feel to many as a relentless assault on growth. Second, the Chancellor sets out a laudable ambition in the budget to outperform the Obr's economic economic forecast.

And I would love that to be the case. But how can raising taxes on workers and savers to fund U-turns and policy choices on welfare be consistent with that ambition? What we need, my Lords, is a plan to boost employment, support private sector output and grow confidence. And this budget, I fear, does the opposite. Third, the budget again rightly emphasises responsible choices to secure the long term sustainability of the public finances. Yet the government's longer term spending plans seem to be more process than substance reviews, not policies.

The review of the state pension age, the Pensions Commission, the Timms review of welfare, the Chief Secretary's review of value for money across government spending. The strategic review of assets we are yet to see choices, no details and no costings. And even if there were detail on spending, why should anyone have confidence in this government's ability to deliver future action on welfare and spending, given their track record to date? So let me end on this, my Lords. Given the importance of confidence, might the noble Lord, the Minister for whom I have enormous respect, take back to the Treasury the suggestion that in the pursuit of growth and confidence, the Chancellor confirms that should the Chancellor confirms that should the UK economy perform at least in line with the Obr's economic forecast, there will be no further forecast, there will be no further tax increases in this Parliament.

My Lords. My Lords.
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Lord Skidelsky Portrait Lord Skidelsky (Crossbench)
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mentioned this afternoon. It is the ideas of economists which are dangerous, for good or ill. The dangerous, for good or ill. The Treasury and OBR officials, newspaper columnists and market traders who make up today's traders who make up today's conventional wisdom are slaves of recently defunct economists. The recently defunct economists. The OBR gives a rare glimpse into the official mind when it writes. We assume that forward looking assume that forward looking households and firms save some of extra after tax income from the near term fiscal loosening in anticipation of future fiscal tightening.

Economists know this as Ricardian equivalence. There's no such thing as a free lunch. Don't spend more now because you'll have to pay for it later. Lady Neville-rolfe said much the same thing in her speech. So now the Chancellor front loads her rather meagre spending increases backlogs, her much larger tax increases and hopes that something good will turn up. In the meantime, a rare glimpse of sensible dissent comes from the Guardian editorial of the 27th of November. The government can create fiscal space wherever it chooses, and economy will revive when it spends.

Stagnation ends when the government stops starving the system. Now let me just ask two heretical questions. Two questions to expand on this heretical insight. First, what has happened to the 900 billion quantitative easing money printed since 2009? The answer is, I think that a large part of it has stayed in the financial circulation, raising the price of bonds, equities and properties, but doing little to raise current output. Now, Keynes referred to this attitude as liquidity preference. Others call it the financialization of the economy.

The point is that money doesn't just fructify in the pockets of the people. It has to be spent on things which can be produced. Secondly, there's the productivity puzzle. Where has all the productivity gone? A nation's standard of living depends on its productivity, and productivity largely depends on investment. When firms invest in new capital, skills and infrastructure, output per person rises the. The UK is not just the lowest investing country in the G7, but one of the lowest near the bottom of government investment as a share of GDP.

It's the prolonged failure, my Lords of private and public investment, which has trapped us in low productivity and flat incomes. So what's the answer? I don't decry the importance of business, of supply side reforms. But when if businesses see no profit investing, the state has to step in, not step out, producing the additional demand, which will give businesses the confidence to invest. Of course, public investment has to be intelligently done and proper attention paid to distribution. A point made by the noble Lord Sikka.

This was Keynes's message. It's not original to me. It served us well for 25 years, but now claims has been cancelled, leaving the Chancellor in her fiscal straitjacket and the people of this country poorer than they would

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otherwise have been. Not so much about the results of

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Not so much about the results of the election, but about the consequence of the election, and two important features which came up during the course of the debate, namely budget and manifesto. They raised some theoretical questions. Last questions. And I thought I Last questions. And I thought I should share my thoughts with you. Take the first one the budget. Now the budget is an annual event of great importance. Great preparation goes into it. Lot of anticipation about it.

And then at the end of the day, it's there. Now, when it is there, the question is. Why is it so important? Why do you why do you have a budget every year? And
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Lord Parekh Portrait Lord Parekh (Labour)
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the answer obviously, although it is not that obvious, is that this is when the government wants to share his thoughts on what it wants, what it wants from us, and more what it wants from us, and more emotional in public services. And this is the way the government less people know what choices are being made. Or if you want to look at it democratically, this is the way in which people can control how government should spend, spend and and what limits.

I want to suggest that this is outdated. Outdated for the simple reason that in the language itself that we use, we are beginning to realise that budget, largely concerned with economic matters and economic matters, are never confined to the economic life alone. They have political consequences, cultural consequences, social consequences, and therefore you can't have a budget in isolation. If I had time, I would have shown you this budget taking item by item, clause by clause, and showing how it has profound social and cultural consequences, which we recognise and regret.

So I suggest that it might be a good idea to think of the budget as a national event, where we take pulse of the country as a whole and discuss not only economic matters, but also cultural, social, educational and other matters and what progress we are making in these areas. Second point I want to raise, or rather direction, and I would like to touch upon it very briefly, is this debate that we had with the Chancellor on a manifesto commitment, not being respected or respected in the budget? What is the relationship between manifesto, commitment and budget? Manifesto commitment? How does manifesto acquire its own legitimacy so that we can take it as a point of reference and allow us to judge our policies in the light of that? And I think it has that authority because it embodies the party's vision and policies.

In this case, when the party becomes the government, the expectation is that the policy is to which it has committed itself would be followed through in the budget. So we start with the. Manifesto translates into budget, and the translation is supposed to be automatic so that you can't question. And I want to suggest that it is never like this. Obviously the government or the party might promise lots of things which it has no intention of doing, and therefore the manifesto commitment is critically important to catch the party, to stop it from misuse.

But the question is, why is it can we can ask it to we can organise it to do this. We cannot allow this kind of continuity. But there are lots of things that can happen once you are in power, where things are not seen. Things were not anticipated, are there? And therefore you have to take decisions on the basis of that information, not the one you had when you were drafting. So I suggest finally, that the relation between a manifesto of a party and the policies it follows is close, but not so close that it cannot be

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superseded. You have. My Lords, and my four minutes. I thought I'd focus on the good, the thought I'd focus on the good, the bad and the ugly of this budget, starting with the good and the starting with the good and the welcome emphasis from the Minister in his opening speech. Some of the measures for growth, raising the measures for growth, raising the threshold for the Enterprise Management Incentive scheme, expanding the limits for the eyes. Stamp duty exemptions for companies Stamp duty exemptions for companies listing in the UK.

And after a little extra effort and persuasion, committing to delivering the nuclear regulatory review. But the problem is that this represented so little of the budget that we're debating today. Which brings me to the bad growth forecasts are down, taxes are going up, hurting working people. As the noble Lord, the Minister, acknowledged, inflation and interest rates will be higher for longer. Business investment will be down, housebuilding forecasts are down, rents are forecast to go up. Living standards are forecast to be lower than they would otherwise be.

And debt and debt interest is going up. And as my noble friend Baroness Noakes and others noted, according to the OBR, not a single measure in this budget will have an appreciable impact on growth. And that brings me to the ugly. As the noble Lord, the Minister acknowledged, there has never been a budget so dominated by speculation. Briefing before, during and after the event. Before last week, the noble Lord, the Minister, valiantly claimed there was nothing unusual in this process.

At least by Monday, he recognised the unique nature of the Chancellor's pre-breakfast pre-budget speech. Unique is one word for it and we don't need to relitigate who said what when. The heart of the matter is that by trailing the expected downgrade to productivity without the more than offsetting unexpected upgrade to tax receipts left people feeling misled, and that is still unacknowledged. That unexpected upgrade is still unacknowledged in Monday's statement. It's still unacknowledged in the minister's speech today, and the reason that matters is for two reasons.

First, we've heard from my noble friend Baroness Neville-Rolfe and others that the speculation damaged growth. But more than this, my Lords, it's damaged people's trust in the government. People were told before the election that every policy was costed and funded. Then in last year's budget, we had record tax rises. But again, the Chancellor and the noble Lord, the Minister told people they had wiped the slate clean and there was no coming back for more. And last week they came back for £20 billion more.

And the reason the government has been tying itself in knots is the attempt to justify this through claiming that the facts and circumstances have changed, but the facts have not changed, my Lords, it's just that this government has changed its mind. They've changed their minds that fairness does not mean taxing working people to fund increased welfare spending. And fundamentally, they've changed their minds that growth was the number one priority. And only once you have that growth can you, to coin a phrase, share the proceeds of that growth.

And that is the reason why I would ask the noble Lord, the Minister, not who said what, when, but whether he can understand why people feel misled by the Chancellor, and if he can acknowledge that the speculation in advance of the budget did do real harm. Because, my Lords, if it cannot be acknowledged, then we cannot hope that the government will learn from the events of this budget and the last. And if the government can learn those lessons, then we can end on a note of hope.

We're only 18 months into this government. It may feel like more, but there is still time to change course, to genuinely focus on growth. We've heard ideas today for tax reform, welfare reform, cutting energy costs and increasing private investment because it's growth that is the means to deliver everything else. Whatever the government determines that to be tax cuts, spending increases, driving down waiting lists, driving up house building. So I hope, my Lords, that the government will return to its number one priority of growth next year.

And that's something in a budget that we can all welcome.

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My Lords, I'm pleased to participate in this important debate on the budget. I have to say, when I was thinking about my contribution, I was determined not contribution, I was determined not to descend into tribal politics because four months wouldn't give me the opportunity to do it justice. me the opportunity to do it justice. So I'll resist the temptation. I do have to say, though, having listened to Lord Dodds contribution,

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listened to Lord Dodds contribution, he nearly drew me in. Yeah. No wonder his view of the Labour Party, which he's entitled to make, was one that I didn't recognise. And you would say, why would he? I was looking for a little bit of humility in his contribution. Alas,
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Lord Hannett of Everton Portrait Lord Hannett of Everton (Labour)
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not to be the case. My Lords, I understand there are many understand there are many contributions about the economy, fiscal responsibility, sound judgement, many coming from different directions, and that tells you the complexity of the difficult challenges that challenge that Chancellors have to make. I want to place on record my want to place on record my congratulations to Rachel Reeves, Lord Livermore and the rest of the Treasury, because in a short time of office, they've also applied something that I think is very important in addition to the finances.

And that's values, policies that matter on the ground. We can use terms in this chamber as we would and should. But out there in the world outside, it's policies that matter. And I'm confident that be it a short time in office, if Labour is successful in achieving a lengthy period of governance, you will see the difference and the contrast, but we have to earn it and I believe we will. I look at the detail in the speech made by the Chancellor and look at the policies, and I realised the challenge we face at the moment, the view of politicians outside isn't exactly one that is a respected view, and we all have a responsibility to connect with the public, and way of doing that is to understand the importance of what matters to them.

Now we don't all start from the same background, do we? Some people have come from a privileged position of good education. Some have even had better economic starts. But we shouldn't forget those people who also contribute substantially to our well-being that require extra help, because that's the fundamental DNA of the Labour Party. Look at the history of the Labour Party. Yes, you may pick out certain times and certain challenges, but look at some of the policy. I served 11 years on the Low Pay Commission, 11 years, and the figure that's been increased for young people is a message to them that young people matter and that work can pay.

And in those 11 years, my Lords, I would say this we reached a unanimous agreement every year. The figure that Rachel Reeves has used for young people didn't come out the aether. It came out of research in the detail of the economy, with economists, with trade unions and with businesses. And it survived since 1999. And it's going well today. I also then look at poverty, such as issues like challenging child poverty. There can be no more important issue than this, because people who are born into poverty have a legacy of deprivation going forward.

And we debate in this chamber many times why the ills of society is such. Or maybe one of the factors is that people don't have the good start in life that they require. And this is why, to me, economic competence and values has to go to the root of what politicians do. There'll be variations on the theme, but don't lose sight of the fact that if politics matters, if it matters about the people at the bottom as those at the top.

Yeah.
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Lord Harrington of Watford Portrait Lord Harrington of Watford (Non-affiliated)
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My Lords, I should mention my entry in the Register of Interests that I'm chairman of make UK, but that I'm chairman of make UK, but that's more than an entry into a register because it's really about what my whole speech is about today. Make represents 26,000 manufacturing companies in this in this country. And people often forget manufacturing is still very important to our economy. It's 2.6 million jobs, 42% of our exports and manufacturing, and 48% of R&D spending is ours.

The Minister Lord Livermore is very aware of this, and he very kindly hosted a reception for manufacturers at number 11 for us earlier this year. However, as anyone would know, manufacturing jobs depends on us being competitive and all the evidence we have shows that there are many aspects that we're not competitive about. Which, and I would hope that in his response, he could perhaps comment on which part of the budget was relevant to that and which wasn't. First of all, we take skills shortages.

I'd like to congratulate the Chancellor on some improvements with the apprenticeship levy, making it easier for smaller businesses to take on apprentices, etc. but still, there are 50,000 skilled vacancies. The noble Lord, the Minister, might be interested to know that amongst those vacancies are toolmakers and perhaps when he's next at number ten Downing Street, discussing with the first Lord of the Treasury, he could perhaps mention why are there so many vacancies? Why have apprentices in manufacturing gone down from 130,000 in 2016 to fewer to about a third of that today? Something really needs to be done about this, because skills are one of the things that are holding back the economy.

And whilst there was something in the budget for it, as I've said, many things weren't in energy prices. We had in June. A huge announcement by Jonathan Reynolds, Secretary of State. We're going to have a British industrial competitiveness scheme for all manufacturers. He thanked make UK for lobbying very hard on this behalf. That was the 19th of June. And today, six months later, it's only just gone out to consultations with no detail as to how as to which business will be affected and how it's going to be funded.

And of course, from a business point of view, all our members want to see is is the price of their electricity and gas bills. It was announced by the Secretary of State. They're not interested in consultations and mechanism. And I'm afraid the budget, apart from announcing the consultation, showed no development of that. I would like to congratulate the government on its increase, that it's money that's being spent on research and development. I think on the access to Capital Point, the manufacturing sector will benefit in future from the British Business Bank and the National Wealth Fund.

I think the government is to be applauded on this, but in the end, this budget was 1% of GDP, extra on taxation and 1% of GDP extra spending on benefits. And I'm afraid to say many manufacturing businesses look at that and they really think, what's in it for me? And how can that really help growth? And the last year has seen significant increases in energy prices. National Insurance minimum wage and threshold, such that many of our members have seen a 40% increase in costs.

How can that help growth? And I know the Minister means very well. He's always very responsive to us. But I think the government has to understand that business engagement, whilst it's a good thing, it's actually listening and acting that's most important to most of the manufacturing sector in

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the UK. Like the financial markets, I'm reasonably comfortable with the reasonably comfortable with the budget overall, with its focus on endeavouring to reduce the cost of living, to improve the living, to improve the circumstances and prospects of children, and on the investment and protection of essential public services. Many of these were neglected by the previous neglected by the previous administrations Brexit, which was not the Labour Party policy, has put up 6%. We have lost 6% in the value of our way of life.

Austerity was lauded as a virtue, but it had its damaging effects on public infrastructure. Yet we've had low productivity and growth under the previous government. But we did have some growth, and here I'll go in a particular area. We had growth in our waistlines and in obesity. The previous government aided these duties on alcohol, were frozen consistently over many, many years. I welcome the government's restoration of the indexing duties with RPI, and I welcome the government's initiatives on gambling, on which the previous government saw great growth in gambling.

That took little action on it. I in particular congratulate my friend, the Financial Secretary, for the work he's taken, the interest he's taken in sugar. And I'm sure those members of the recent select committee that we had on, on, on obesity and diet will be similarly pleased to see so much movement taking place on tackling the problems that we have with sugar. And again, announcements made last week on changes in that area which will be of benefit for the whole of our health and in particular, hopefully benefiting benefit for our children.

I welcome my noble friend Lord woods encouragement to the government to continue looking for other areas to raise funds for public investment. And no matter who is in power, if we are to develop and grow, we need investment and we need money going in. And that means revenue has to be found from as many sources as possible. It may not all be income tax, but there are others which we do not, I believe, explore. I think that we should be looking at the new unaddressed addiction we now new unaddressed addiction we now have with compulsive digital use, scrolling, mobile phone dependency and so on.

This is now having widescale effect on health in a whole variety of different ways, and we don't really have a public framework for digital addiction, nor any related fiscal approach to how the fast is growing. Addiction should be tackled in the UK. It has measurable economic costs and we could tax digital features, features and intentionally engineered those which are intentionally engineered to maximise compulsion. We could consider levies on infinite, infinite scrolling that so many people are now engaging in.

We could look at the autoplay video and bottomless for you feeds, and a whole range of changes taking place there, where there are opportunities for us to raise funds. So could I ask my noble friend, what work is being done in the Treasury in these areas? I'm personally very much in favour of AI, but it has its damaging effects and we must address those. But I believe if the government continues
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Lord Bailey of Paddington Portrait Lord Bailey of Paddington (Conservative)
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want you to be in. No doubt it will be perceived as a benefit budget. The Labour Party has a proud history of trying to represent those who have the least financial power in our society. So Labour Party that has forgotten that the antidote to. Poverty is not welfare, it is work, leaves those poor communities at risk. Let's be very clear. If working does not pay, people will not work. Anybody who has worked in a poor community knows there is more to work than the pay.

At the end of the week. There is the dignity, there is the freedom. Wasn't it your own Prime Minister who said how unfair the benefit system is and how it traps people in benefit, and how he had a lifelong mission to to free people from that. Fast forward two months. He seems to have forgotten that. I hope our Labour colleagues can remind him of that. This budget has been part of building a welfare system with perverse incentives that trap people on welfare.

That is not fair. That is not right. The economic impact both in people's family finances and for the country are unbelievable. Your own Chancellor said that the welfare bill wasn't wasn't sustainable. She seemed to have forgotten that. Please go back and remind her. I now want to comment on the two child benefit cap being lifted. Many colleagues in the House have stood up and said how it will lift lots of children out of poverty. You are wrong. You are very, very wrong.

And I tell you why. Because when you when you, when your Chancellor left those, those, those, those levels in place, that will lift more and more people into paying tax and more people higher up the taxing that will wipe out any saving, any change to their household finances that those benefits may have given a return to my theme make work pay if you want to support poor people. If you want to eradicate things like domestic violence, you have to make work pay.

We have 1.79 million unemployed people, a figure that is growing. It is young people that have bear the brunt of that. We have 111,000 less young people in employment than when you took office. This is something you have to turn around. If young people don't learn the skill of working, they may never learn the skill of working. You have young people who cannot go to university unless they can get a job to finance themselves. At university, you have households where a teenager or someone in their early 20s cannot get a job.

That house is no longer financially stable. One of the noble Lords in hair made a comment about not turning this into party political gesturing. I'll do my level best. But as someone who comes from a poor community, I need my Labour colleagues to remind the people in your executive this isn't about their jobs. Any one of you could fill their jobs. We need a Labour Party that is realistic for poor people. We need a Labour Party that will tell your Chancellor she has done the wrong thing.

So I'd like to ask the Minister what happened to his leaders lifelong passion for freeing people from the trap. That is our benefit system. What will the Chancellor do about making sure work pays for the people at the lowest end of the salary scale? That's what will make a difference

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in this country. That's what will help us replace our economy. That's growth. Yeah, yeah, yeah.

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Yeah, yeah, yeah. Lord Singh the implications of this budget for our arts and cultural sector are significant. cultural sector are significant. While the government has prioritised stabilising the public finances, we must be clear about finances, we must be clear about what this means for a sector that is economically vital, globally respected and central to the
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Lord Freyberg Portrait Lord Freyberg (Crossbench)
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cultural life of communities across the country. There are welcome elements. The continuation of enhanced creative industries, tax reliefs for theatres and orchestras provide stability. The 40% business rates reduction for film studios until 2034 offers long term certainty. The additional funding for school libraries to buy books strengthens early cultural engagement, but these sit against a stark reality. At the June Spending Review, the Chancellor announced the most that most departments will grow in real terms by 1.5% annually to 20 2829, while DCMS will see a 1.4% annual cut at a time when inflation, wage pressures and incomplete post-pandemic recovery continue to strain the sector, culture is the only area scheduled to shrink.

The question is whether we are building a coherent strategy for cultural investment or offering selected support, while underlying infrastructure erodes. I turn first to the tourism levy, the new power for mayors to introduce a modest levy on overnight stays could be transformative. Cities such as New York, Paris and Barcelona reinvest such levies directly into culture and the public realm. Edinburgh's 5% levy is projected to raise 50 million a year. Liverpool expects around 17 million. If well designed, this could provide the stable long term cultural funding.

The National Lottery, designed and delivered a generation ago, concerns from the hospitality sector, as raised by the noble Baroness Neville-Rolfe, must be weighed carefully, but international evidence is clear. Reasonable levies do not deter visitors. The current consultation is therefore welcome and necessary. My Lords, are more urgent. Challenge is the business rates change facing grassroots music venues and equally artists studios and visual arts spaces as Music Venue Trust and UK music warn removing rate relief results.

Effective increases of around 28%, with some venues reporting rises of up to 91% across roughly 600 venues. This is an additional 5.6 million burden after a 7 million increase last year, far exceeding the sector's entire gross profit of 2.5 million. Between 200 and 300. Closures are forecast over the next 4 to 5 years. The same structural vulnerability applies to artists. Studios, small galleries and artist run spaces, as Sivan highlights. And here I declare an interest as a former studio holder, these studios rely heavily on retail, hospitality, leisure relief to keep rents affordable.

Its removal will force rent rises on artists already at breaking point or trigger studio closes, undermining the creative workforce, community provision and the government's own creative industry strategy. These are spaces where new talent is forged. Without them, the pipeline dries up. I therefore ask the Minister what assessment the government has made of these impacts and whether temporary targeted intervention, such as restoring relief or providing bridging support, will be considered until the reformed rate system takes effect. My Lords, the tourism levy offers promise that the crisis facing grassroots venues and artists studios is immediate.

I urge the government to pursue the opportunity while acting urgently to prevent irreversible cultural loss.

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My Lords, this budget continues to build the foundations for a more stable, resilient and ultimately more productive economy. Some noble Lords in this debate have Lords in this debate have questioned whether this was a budget for growth. I'll remind budget for growth. I'll remind noble Lords that restoring fiscal credibility is a precondition for credibility is a precondition for growth, and that is what this Chancellor has done. The Chancellor made the right choices, not least because measures she announced will particularly benefit households on low and average incomes.

Several of my noble friends today have noted noted all the ways in which the budget helps families battling with
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Baroness Carberry of Muswell Hill Portrait Baroness Carberry of Muswell Hill (Labour)
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the cost of living and the poorest households, and I'm not going to run through the list again. But I will emphasise that the lowest paid are going to get a real terms pay increase next April, and that increase next April, and that follows the Low Pay Commission's recommendations for National Living Wage and minimum wage Up ratings. Wage and minimum wage Up ratings. And this continues an unbroken record since 1998 of Chancellors accepting or going further than the Low Pay Commission's recommendations.

And like my friend, my noble, the noble Lord, my noble friend, sorry, John, my noble friend and my personal friend Lord Hannett I served on the Low Pay Commission for many years. The Independent Tripartite Low Pay Commission methodology has demonstrably stood the test of time. And that's why today I ask my noble friend, the Minister, to disregard some of the voices of that are questioning how the UK sets the pay floor. Next. April's uprating meets the government's aim to see the wage floor not drop below two thirds of median earnings, and this target was set by a conservative government in 2020.

This year, the Commission, chaired very ably by the noble Baroness, Lady Stroud, comprehensively considered the available evidence and judged that the recommendations would not damage the labour market or the economy. Noble Lords will know that most minimum wage workers are in small and medium sized businesses, and some of these businesses are struggling, and for some, the minimum wage rises will be challenging. The government must support these businesses and it has done so. The budget supports our high streets are pubs, restaurants and leisure properties will see new lower tax rates for the smallest businesses in those sectors.

Rates will be the lowest in more than 30 years, and these discounts will be permanent and will benefit over 750,000 properties. At the same time, I do acknowledge that some small businesses will be hit in April by increased property valuations because of post-Covid revaluation. These re-evaluations are independent of the government, which is stepping in to cap bills. I welcome the £4 billion support package for small businesses. Most small businesses with property values under £100,000 will have increases capped at 15% or less, or £800 for the smallest.

And my Lords, all this builds on measures introduced last year to help small firms grow, access, finance and survive and survive economic pressures. Pubs, cafes and shops are the heart of our high streets. They provide employment for some of our lowest paid workers. So I would like to conclude by asking my noble friend, the Minister, to ensure that the effectiveness of support for small businesses is kept under

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review. Yeah, yeah yeah.

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My Lords, I would like to focus on two distinct groups in society those on welfare requiring work, those on welfare requiring work, and wealth creators who are vital to job creation. Both groups have to job creation. Both groups have been let down by the budget. The welfare change is not geared towards helping people into work, towards helping people into work, and the tax rises further repel the people who create jobs. First. Welfare to work according to page 65 of the OBR forecast, the government's welfare measures will help just 55,000 people into work over the next four years, a long way off the 2.2 million people who require jobs to get back to 80% employment.

And let's not forget, the Obrs calculations do not factor in the Employment Rights Bill, which even the Resolution Foundation recognises will hinder getting people into work. Sir Charlie Mayfield review into employment for the long term sick is a truly superb piece of work, but its conclusions need to be implemented at pace as things stand to get the number of people on long term sickness down to 2019 levels, we'll have to wait until 2078. This worklessness is a fiscal millstone around the economy's neck, paying for the £34 billion increase in Universal Credit and disability benefits will absorb all the income tax receipts from Scotland, Wales, Northern Ireland, the North East and Lincolnshire.

Combined. That said, the government is having more success in its efforts to reduce the rate of relative poverty. Why is that? With 16,500 millionaires
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Lord Elliott of Mickle Fell Portrait Lord Elliott of Mickle Fell (Conservative)
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set to leave the UK in this year alone, relative poverty is a measure will improve as our economic prospects suffer. These wealth creators take two valuable things with them tax revenue and things with them tax revenue and jobs. The former Labour donor, Lakshmi Mittal, who has previously Lakshmi Mittal, who has previously topped the Sunday Times Rich list, has left for Switzerland. The CEO has left for Switzerland. The CEO of Revolut and the founder of improbable have both left for Dubai, and Taseer has cancelled plans to list on the London Stock Exchange, opting instead for South Africa.

In the words of its founder, we have looked at it from every angle and it just doesn't make sense to stay here. Page 82 of the OBR forecast is right described the predicted £34 billion revenue from last year's non-dom tax changes as being, and, I quote, highly uncertain. The temporary repatriation facility will yield nothing like the sums the government is currently banking on. My Lords, there's a long history of people leaving sclerotic economies to join prosperous ones, whether from East Germany to West Germany, North Korea to South Korea or California to Texas.

The exodus of talent and taxpayers is nothing new. Of the 693 people who left the UK in the past year, sorry, 6 to 93,000 people who left the UK in the past year. A disproportionate number are entrepreneurs, investors, employers, philanthropists and crucially, and this is an important point the wealth creators and job creators of the future. Which brings me back to Worklessness. We need to create an additional 1.4 million new jobs to get the employment rate back up to 80%.

Who will create these jobs if the job creators are leaving? When the Labour Party Prime Minister said at the launch Labour Party manifesto, he said With Labour, those who can work will work. We want more people in work to get the benefits bill down. And he went on to say when I say our number one mission is economic growth, you could say our number one mission is wealth creation. My Lords, I couldn't put it better myself. I hope the government reverts back to the approach.

Not only is what the public wants, it is more importantly, the key to prosperity through growth.

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I do feel ill at ease over on these benches, so I'd like to welcome the right reverend Prelate, the Bishop of Portsmouth, to his the Bishop of Portsmouth, to his place and look forward to his future contributions. This is the second budget of this Labour second budget of this Labour government and I still can't see the vision. It doesn't seem to be the vision. It doesn't seem to be there any direction. It's not clear at all. People voted for change and to fix broken Britain, but this looks more like more of the same and it will do hardly anything to fix our public services or make bills cheaper.

I hear a lot of talk from the government about big projects and growth, but how much
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Baroness Jones of Moulsecoomb Portrait Baroness Jones of Moulsecoomb (Green Party)
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of that is just a taxpayer subsidy for private corporations? I welcome a new generation of local health a new generation of local health centres, but why are taxpayers paying several times over for these via PFI schemes? And I welcome via PFI schemes? And I welcome fixing our neglected sewage system. But why? A private water company is allowed to up their prices by allowed to up their prices by almost half, when water bill payers have already paid for this particular piece of work to be done.

There's waste in the public sector, and that waste is the billions of taxpayer and bill payer money that gets siphoned off into private profits. Around a quarter of our energy bills end up as private profit. The solutions are obvious to anyone who, apart from the corporate lobbyists who infest Westminster, if we want cheaper energy, then take the energy companies into public ownership. If you want lower water bills, then let the water companies fail and take them into public ownership and free the captive consumers.

As for the government's green agenda, I'm afraid this budget does not measure up. Oil and gas companies are due to get taxpayer millions to try out carbon capture and storage, which is simply rubbish, untested idea that waste money that should be spent on insulating homes. We have airport expansion and more pollution, but no tax on aviation fuel, no tax on private jets and no tax on frequent flyers. Instead, my fear is that much of the £1.5 billion being spent moving the M25 to allow Heathrow to expand will end up being funded by taxpayers.

Meanwhile, there are hundreds of bus and rail improvement schemes around the country which get absolutely nothing. The planning system has been changed to allow developers to make a bigger profit with a cash trash for cash approach that will impose schemes on local people that damage nature and don't meet the needs of those communities. The budget is meant to be about growth, but Labour are promoting the unhealthy growth, growth of corporate profits and a growth in greenhouse gases. The Green Party solutions would cut energy bills by enabling consumers to pay for cheap electricity separately, rather than having energy prices linked to expensive and polluting gas.

We would fund any policy measures via tax and reduce energy bills. That way, we would also take the Big six into public ownership and stop the drain of bill payers money to private profits. Water companies would be expected to do their job and if they fail, they lose the licence. Instead of the government signing off higher and higher bills for consumers, we would take them into public ownership and consumers would no longer spend a third of their water bills on paying off debt.

We would bring in local rent controls by giving local authorities the power to control rents, similar to those that have just been granted in Scotland. We would introduce an annual wealth tax of 1% on assets over 10,000,002% over 1 billion. This would raise at least £14.8 billion. We would also align rates of capital gains tax with income tax and close loopholes. This would raise at least £12 billion even after accounting for changes in behaviour. Both these measures are designed to address growing inequality, as well as providing government with the funds to bring down bills for ordinary people.

A green budget would be the beginning of the end for a system of privatised utilities fleecing bill payers and the ultra rich getting away with not paying their fair share. And I just want to ask where

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is Labour? Where is its vision? I welcome this budget. I welcome

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I welcome this budget. I welcome this budget strongly. In particular, I welcome the removal of the two I welcome the removal of the two child limit. And I have to say that the remarks of the noble Lord Lord the remarks of the noble Lord Lord Bailey of Paddington failed to change my mind on the issue. I took his remarks as being the latest iteration of the age old tactic of immiseration of those people who deserve social support for pensions.

Most of my books are devoted to the issue of pensions. I agree again with my noble friend Baroness Nichols of Selby, who's not in her place, but about the action on the British Coal Staff Superannuation Scheme and the fact that the members are going to get full value of the contributions that have been paid on their behalf. I welcome the action that is being taken in relation to the Pension Protection Fund and the. Financial Assistance Scheme, where they will be given credit for the increases that they were in fact guaranteed before 1997.

I welcome the action on salary sacrifice, and I have to say that the concern that's been expressed about the change is, is extraordinary pensions, private pensions get massive tax advantages. Broadly speaking, I support those advantages. Perhaps there should be a proper review of how they work. But taking away less than a 20th of
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Lord Davies of Brixton Portrait Lord Davies of Brixton (Labour)
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those advantages in a way that targets that removal of support to targets that removal of support to those who are on higher incomes, seems to me an entirely appropriate seems to me an entirely appropriate and reasonable measure. And I also and reasonable measure. And I also welcome the action on the problems which arise when you have a which arise when you have a indexing, benefits and frozen tax thresholds. There's a clear problem, and I've been warning of that potential problem since I entered the House about five years ago.

This is the first time that the government, any government, has formally acknowledged that this is an issue which needs to be tackled. I make two points. First, it's already a problem. It's not a problem that when the new state pension overtakes the test, the the tax threshold, that it becomes a problem. It's already a problem because many pensioners have larger than that standard level of pension, and they're already having to pay tax on their pension. Now that's entirely right.

I'm in favour of pensioners paying tax. But at the moment, because the state pension isn't included within the pay system, it creates difficulties. They get a brown envelope in the post saying you've got to pay us a certain amount of money or their tax, their tax codes are adjusted in ways which cause them considerable problems. So this is already an issue. It's going to increasingly become an issue and action was definitely needed. And pleased that the government, my government hasn't explained in detail how this simple assessment is going to work.

I have some fears because whenever a system is introduced as being a simplification, it all too often ends up in making things a lot more complicated. So I welcome an assurance from my noble friend, the Minister, that this will be taken into account when we see what the appropriate solution should be.

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My right hon. Friend, Kemi Badenoch hit the nail on the head Badenoch hit the nail on the head when she described this budget as one sold on a lie. It is a house of one sold on a lie. It is a house of cards built on misleading claims about the public finance to justify about the public finance to justify sweeping tax rises. This is not responsible management. It is politics dressed up as economics. This budget doesn't simply mislead.

It takes the country down a dangerous path, drifting towards the very collectivism policies that history warns us against. And my Lords, I say this not only as someone with a background in economics, but as someone who wants a fluent Russian speaker, travelled to the Soviet Union many times from
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Baroness Meyer Portrait Baroness Meyer (Conservative)
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1965. I saw what happens when a government pursues centralised government pursues centralised control, forced redistribution, the stripping away of private property stripping away of private property rights and the erosion of individual incentive. It produced individual incentive. It produced stagnation, corruption, loss of freedom, and it eventually freedom, and it eventually culminated in the collapse of the Soviet Union. Innovation withered because there was no reward for effort. Bureaucracy flushing flourished because it was the only route to advancement.

While communist elite shop in secret underground luxury stores filled with Western goods, ordinary citizens queued for hours for basic goods. As the old Soviet jokes put it, we pretend to work and they pretend to pay us. In this budget, no one will even need to pretend to work. My Lords, people aspire to wealth for security and a better future for their children. Why else do they buy lottery tickets? Because they dream of being rich. Yet this government fuels resentment towards the rich.

The very people who invest, create jobs and contribute most to the HMRC revenue. Punishing aspiration has never produced growth. It simply drives ambition and talent away. A third before, more than 250,000 people already left the country, with many more. Following companies are relocating operations overseas. Meanwhile, public spending is up, borrowing is up, unemployment is up, productivity is flat, investment is falling, construction is falling, and growth forecasts are anaemic. Milton Friedman put it with typical clarity nobody spends somebody else's money as carefully as he spends his own.

Yet this government demands ever more from the public of the public's money, while showing ever less discipline in how it uses it. My Lords, this is not stability. It is not competence. It is not fairness or compassion. And it is certainly not a responsible plan for growth. It contradicts the government's own manifesto and ignores the most basic principle of economic growth. It expands the state while shrinking the economy. And my Lord, how can this government look at our citizen in the eye and explain to them that families on a full benefit will receive £18,000 more a year than some working family? And I don't mean rich people, I mean hard working family.

My Lords, this budget will make sorry will make families porous, business less competitive and our economy weaker. These policies expose inexperience and overconfident administration, guided not by economic reality but by rigid ideology. May I ask the

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Minister, has this government learnt anything from history? Yes.

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Yes. My Lords, could I first start by congratulating the Right reverend Bishop of Portsmouth on his excellent speech and I look forward to working alongside him on some of the social issues he raised as we consider the government's budget, I want to focus on education, an area
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Lord Mohammed of Tinsley Portrait Lord Mohammed of Tinsley (Liberal Democrat)
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want to focus on education, an area that should form the backbone of our nation's future prosperity, yet one that this budget neglects. Let's look at. Let's begin with said provision. Local authorities across the country will breathe a sigh of relief, be it temporary. On hearing that from 20 2829, the full cost of send provision will be absorbed within central government's budgets? The Liberal Democrats have long called for a national body for send precisely to end the postcode lottery that forces parents to fight endlessly for support that should be guaranteed.

But, my Lords, what we see before us is not a plan. It's just an announcement. Without substance, without clarity and without financial underpinning needed to make it real. The government has identified no offsetting savings, none whatsoever, to cover the estimated 6 billion this shift will require. So may the Minister comment on this when he responds, when he responds to us. Meanwhile, local authorities, as we've heard earlier, are racking up accumulated 14 billion in related deficit related deficits by 2029.

Those deficit deficits do not disappear just because government has centralised sending Whitehall turning to student finance. The budget includes yet another stealth tax. My Lords, the freezing of repayment and interest thresholds for planned to students loans for 2027 graduates, many earning modest wages in an increasingly uncertain job market, will now be asked to pay more simply for having pursued a university education. This is not reform, my Lords. It's a quiet raid on the incomes of young people who are already facing unaffordable rents, rising living costs and shrinking opportunities.

And then we come to the education budget itself. By 2028 and 29, it will fall by 0.1% in real terms. My Lords, schools are already in crisis. They are expected to fund breakfast clubs, free school meals and teacher pay awards not with new investment, but by carving out even thinner slices from the already overstretched budgets. To put that into perspective, an 0.1 real cut amounts to around 70 million. Shortfall in real terms, value money that simply vanishes before it reaches the classrooms.

This is intolerable. This brings me to the question where would the Liberal Democrats get the additional investment needed to properly fund the education sector? We would raise extra funds by implementing a time limited tax on the big banks levied on the massive windfalls that they have able to make, only thanks to a technical glitch in the financial system. These windfall profits have come, my Lords, due to inflation, interest rates shooting up and our measures would raise around 7 billion a year.

We also know that increasing taxes is not a solution to a stagnant economy, and that's why the Liberal Democrats have consistently called for a new UQ customs union, raising over 25 billion a year. As we've heard earlier, new research by the US National Bureau for Economic Research has revealed that the previous government's Brexit deal is costing British taxpayers, my Lords, 90 billion each year in lost revenue. It's time for the government to resolve this. Under our plans, we would increase co-funding for schools and colleges above inflation year on year.

Teachers pay will teachers pay, and free school meals would be funded properly, not at the expense of the pupils. Learning provision will be managed fairly and consistently through the national body and eliminating postcode lottery, ending the chronic underfunding maintenance grants for further education. Higher education would be expanded without saddling universities with damaging levies. Thank you.

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My Lords. I'm delighted to welcome a budget that puts fairness at the heart of decision making. I particularly welcome the reversal of the travesty of austerity and of the travesty of austerity and lifting our most vulnerable children out of poverty. I welcome children out of poverty. I welcome a pro-growth budget that invests in a pro-growth budget that invests in infrastructure. I led on energy poverty in the European Parliament, so I strongly welcome cutting the cost of living, bringing down the average energy bill and investing
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Baroness Griffin of Princethorpe Portrait Baroness Griffin of Princethorpe (Labour)
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in green energy infrastructure. I strongly welcome our strengthened strongly welcome our strengthened relationships with our partners, economies in the EU, and the economies in the EU, and the beginning of mitigation of the disasters of Brexit. I was particularly moved by the maiden particularly moved by the maiden speech of the Bishop of Portsmouth, We also need to invest more in energy efficiency. After all, the cheapest fuel is the fuel you don't use at all. Talent and potential exist in every town, city, rural, economy and county, but they are not yet evenly matched by opportunities, high GDP, jobs, skills training or indeed adequate transport links, especially in the north.

While I welcome Northern Powerhouse Rail, the government must build upon the budget to enhance city region powers, ignite growth in every region and between northern regions, building a sustainable economy and transport links to eradicate once and for all socioeconomic disparity for communities such as Liverpool, Crewe and Blackpool in the European Parliament. Every time somebody stood and said, what about London? I retorted, what about Manchester, Liverpool and Carlisle? Our economic recovery has to be fully embraced.

The challenges and opportunities of the North.

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Mr. Alive or Dead, recognises

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Mr. Alive or Dead, recognises that a crucial part of an economic government's economic performance, particularly one which is particularly one which is predicated on getting more growth, is to control public spending. Margaret Thatcher although she Margaret Thatcher although she wasn't an economist, she was a chemist, actually recognised this chemist, actually recognised this when she took over spending. Public spending was 45% of GDP. After 11 years, it was 36%. As a consequence, this is not the only factor, obviously, but as a consequence, growth in five years at the end of
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Lord Horam Portrait Lord Horam (Conservative)
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Margaret Thatcher's period of office was 4% a year average, 4% a office was 4% a year average, 4% a year. percentage of this government can only dream of. So the question today, when again, the question today, when again, public spending is 45% of GDP, is were they willing to take the were they willing to take the decisions about public spending and relief and get the private sector relief and get the private sector going, which Margaret Thatcher did? It is obviously not easy.

It is not painless. I remember myself when I was a Cabinet Office Minister under John Major and my noble friend, Lord Heseltine. We had a similar problem. There were five quangos, public sector bodies, which collectively were losing millions of pounds. One of them was the we decided to privatise them. One of them was the Her Majesty's Stationery Office. As soon as this got around, I received a call from Betty Boothroyd, who was the speaker at the time. She had me in and said, Minister, the H.m.s.o includes printing Hansard.

I will not have it. Recognising that taking on Betty Boothroyd in full flight was rather like encountering the Brigade of Guards. I said, Betty, what if we leave Hansard in the public sector and privatise the the rest? I got a beatific smile. The deal was done today. The the Hansard is still published by the public sector, and we saved the taxpayer £30 million by privatising the rest. An extra company called Banner Publications that shows what can be done. It's not difficult.

It is not. It is not impossible. So did the government do that? Know what they went instead? Instead of controlling and eliminating the public sector and the the problems of wealth, welfare and the problems of pensions which we inherit, they instead increased taxation by £26 billion. Well, the verdict is in the OECD yesterday published the forecasts for the economy of this country, the growth forecasts for the next few years, 1.4% this year, 1.2% next year, 1.3% in 2027.

Professor David Miles, giving evidence to MPs on the from the OBR point of view, said that this, combined with inflation, would mean only 0.2% average increase in living standards during the course of the next four years, it is a complete standstill, there is no progress, none of the change which the public are entitled to expect from a government which was elected on change has happened. It's the more the same. It's a policy. It's politics for decline, politics for defeatism.

It really is simply not good enough.

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My Lords, I must begin by making a declaration which, relating to my interests. As in the register. I'm interests. As in the register. I'm a farmer and landowner and a businessman in Cumbria. Now, my Lords, we are today asked to take Lords, we are today asked to take note of the budget. But of course that can't be done as an exercise in textile exegesis because it is in textile exegesis because it is set in the context of the world we live in.

And I believe the government's starting point is government's starting point is right we must have growth. And secondly, the broadest shoulders should bear the heaviest burden. My Lords were living in an economic land of two nations. The first is the West Westminster bubble writ large. The world of university theses, computer models, think tanks and digital technology which handles more or less virtual money
16:09
Lord Inglewood Portrait Lord Inglewood (Crossbench)
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and so on and so forth. The other, My Lords, is rather less glamorous and somewhat grubbier the world of and somewhat grubbier the world of what my children call doing stuff. Much of this happens outside the penumbra of cosmopolitan glitz and many of these businesses and people. As the noble Lord, the Minister As the noble Lord, the Minister told us in his opening remarks, I will use a neutral phrase are experiencing hard times for these businesses? The intellectual elegance of the computer model is a plaything of fantasy.

Many of them are the warp and weft, most of our country at the centre of place, the bedrock of communities. And many, many of them are struggling to pay the wages, keep people in employment and remain solvent and to keep on trading. And that is, of course, where the welfare payments come from, not to say jobs, and indeed because many of them are not branch branch businesses, they contribute pro bono to the communities in which they are set. The budget is compounding their cash flow challenges as the state sucks away their working capital in the way Count Dracula sucked blood from young women's necks.

Their economic shoulder blades are being broken, and whatever the law or a computer might say, badly broken shoulder blades cannot carry anything. My Lords, to survive, their working capital must be kept in situ until it is cashed in. I believe it's as simple as that. Now, I would like to conclude on a more general level and look what might be looked at, what might be called longer term, profound rural Britain. And I hasten to add, I don't mean the Cotswolds, which I hear about with increasing incredulity through the media here.

And I'm particularly thinking of the own the part of North West England I know best businesses. And it's not only agriculture, are ever increasingly being starved of the lifeblood of cash, which threatens their survival, yet they are providing a very large range of valued public goods, for which in many instances they're receiving derisory or no money at all. Agricultural economics has always been a discrete subject of economics more widely, and in the case of the marshallian triangle of land, labour and capital, in agriculture, land and capital the same.

This is the heart of my own local, recently elected MPs, brave and principled, stand in the other place. He's standing up for his constituents, which is what my friends and neighbours sent him there to do. He, like me, sees a dismal picture. It's a dismal prospect, engendered by a dismal science which prioritises policies generated by computers and algorithms and so on over the various realities and actualities faced by businesses and those working in them. The length and breadth of the land.
16:12
Lord Bishop of Manchester Portrait The Lord Bishop of Manchester (Bishops)
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Lord Jay may I begin by congratulating my right reverend friend, the Lord Bishop of Portsmouth, on his excellent maiden speech, not least as our lead bishop on education. I believe he'll have an immediate and valuable contribution to make to the remaining stages of the children, Wellbeing and Schools Bill. He and I first met as opponents on the cricket field many years ago. I'm sure he will build as long and solid an innings here in your Lordships' House as ever he did at the wicket.

I also joined many noble Lords in adding my deepest thanks to the government for bringing the two child limit to an end. I never felt it right, or just to push a child into poverty simply for having too many sisters or brothers. It makes even less sense. We badly need a birth rate that will provide Britain with tomorrow's workforce, without us having to rely on migration to fill the labour market gaps. I look forward now to seeing the wider child poverty strategy, a further welcome move to reduce household energy bills, changes on apprenticeships and the freeze on rail fares.

Gambling addiction remains a blight on our nation, especially online, so I support the increase in tax on the online sites. I Right reverend friend, the Lord Bishop of Hereford, is currently attending on His Majesty and hence not in his seat. I know that he would like attention drawn to the matter of how the budget impacts on the farming community, particularly family farms and the rural economy. I was going to say more, but the noble Lord Inglewood has just picked me to the post and with rather more colourful words than I might have mustered myself.

My Lords, a 19th century Act of Parliament determined that vicars should live in their benefices. Residence assures that parishioners have easy access to them, and the vicar is a visible face on the streets of the parish, not merely another middle class commuter. The modern vicarage is rarely as large and luxurious as some of former times. However, it needs not only to accommodate the priests and their household, but also to host meetings, meet parishioners, and provide study and office space in many parts of London and the South East.

Vocation factors mean that even in a relatively poor parish, the vicarage will have a capital value over the 2 million threshold for what we're learning to call the mansion tax. Few parishes will be able to pay this additional tax, nor can dioceses simply absorb the costs which maintain the important principle of clergy, including those from other denominations living where they serve. I urge the Minister to meet with church representatives so we can discuss how the existing tax exemptions that already apply to the residences of Ministers and religion can perhaps be extended.

And finally, my Lords, places of worship are often anchor buildings on our high streets and village centres. The work is not just on Sunday mornings, but throughout the week activities from pre-school groups to warm welcomes for the lonely, including a growing network of baby banks. Several just started in my own diocese tackling poverty among families with very young children, work to repair and to improve such properties isn't cheap, but is vital if the continue to serve their communities and help sustain flourishing village centres and high streets.

Much needed renovation and improvement work is currently being stalled by the lack of a secure, long term future for the listed Places of Worship repair scheme. So will the Minister commit to reviewing the future of this vital scheme so it can be extended in time and the harmful £25,000 a year limit, which was only introduced recently. That makes many larger refurbishments unaffordable. That that can be withdrawn.
16:15
Lord Kempsell Portrait Lord Kempsell (Conservative)
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My Lords. >> My Lords. >> Myself. Yeah.

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Myself. Yeah. This is quite rightly a very wide ranging debate and there is very much to deal with when it comes to the government's handling comes to the government's handling of the economy. So I'm going to confine myself to two points. One is an area which has been very gracefully elided and skated over by so many noble Lords on the opposite side of your Lordships' House. And that is the question of the process rather than the policy that led up to this budget, because surely the distinctive nature of the budget event was the chaotic handling of the process around it.

The pre-budget period was one that was marked by briefing counter briefing leaks, press conferences and indeed market speculation. It became, I think, noble Lords will agree, a national embarrassment. Even if you put aside the obr's error and accident that is now being employed as a smokescreen by the Chancellor, we now know that ahead of the statement, a very large number of savers withdrew money from their pensions. For many of them, that was a one off, irreversible financial decision.

And I refer noble Lords to the Financial Times this morning, where professional wealth managers are quoted at length on this one, said that there have been elevated withdrawals from pensions as a result of concerns and speculation about the removal of tax free cash. This led hundreds of millions of pounds of additional outflows from our business, another professional wealth manager said. People act on speculation if they take money out of their pension prematurely, they have damaged their pension going forwards.

People's pensions have damaged due to the speculation. My Lords, I previously served as a special adviser in government. I know exactly how the briefings and press conferences emerge, and usually they are political chaff that can be ignored as tomorrow's chip paper. But not in this case, because we know that, without doubt, the political and media activity of Ministers and special advisers ahead of the budget drove market speculation to sky high levels, leading to real world financial consequences for savers.

So could I ask the noble Lord, the Minister, when the Treasury undertakes the investigation, which I know the Chancellor has ordered into budget leaks, whether that investigation will also include consideration of the deliberate media strategy that was run up to the budget and was clearly planned and followed and designed by the department, including the southern breakfast TV appearance by the Chancellor as the prime example. And secondly, in closing, I will just turn to the excellent speech made by my noble friend Lord Bailey of Paddington.

He he adumbrated with great insight and with clear thoughts, the difficulties that are now faced by the most struggling families in our country after this budget. And as one of the youngest members of your Lordships' House, and an aspirational one at that, I would also like to add that this budget did nothing for young, aspirational people across the country, freezing student loan interest rates, the tax threshold freeze, the job creators and entrepreneurs who create entry level jobs all over the country, leaving as quickly as planes can carry them.

The costs of employment going up for the youngest workers and indeed, the ballooning welfare budget. None of that is good for young strivers, the ambitious young families who want to build careers and wealth. So can I ask the noble Lord, the Minister, how the government will

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correct its course for the youngest in our country? Yeah.

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Yeah. It's a pleasure to add my congratulations to the Bishop of Portsmouth on his excellent nature Portsmouth on his excellent nature maiden speech, and I look forward to working with him in the future. to working with him in the future. I speak as a nurse, past president of the Royal College of Nursing and fellow of the Queen's Institute of fellow of the Queen's Institute of District Nursing. In responding to the noble Baroness Jones's challenge about the lack of vision in the budget.

I would like to counter that and say that when I look at the health elements of this budget, I see that it speaks very much to the wider social determinants of health and the impact they have on health outcomes, as well as specific health related investments. Several non-health parts of the budget can boost future health, such as housing, education and environment, and according to government and independent estimates, as we have heard, changes to welfare, including removing the two child limit and boosting support for low income families, will lift 450,000 children out of poverty, rising to around 550,000 with the expansion of free school meals, no mean achievement and together with cutting energy bills, raising the national living wage and protecting pensions, households are more likely to be able to afford food, heating and other essentials which underpin good physical and mental health, both for parents and children.

By reducing chronic financial stress. Turning to health per se, the 300 million capital investment in infrastructure seeks to ensure coordination between primary and secondary care through the NHS app. This is to be welcomed as the tech front door to connecting care through a single user interface. In many ways, this is the digital dream come true and if I understand it correctly, it promises to bring together patient records from different parts of the system that cannot now talk to each other.

It will help patients not only navigate and coordinate their own care, but deal with some of the barriers to care coordination that are growing in complexity. With an ageing population contending with multiple co-morbidities. Government establishment of 250 new neighbourhood health centres across England will help with another one of the government's shifts, bringing care closer to home. These one stop shops bring together a range of services to support more preventative and sustainable healthcare. The programmes will be provided through a combination of public investment and public private partnerships, and I hope these programmes will be informed by lessons from the previous PFI initiatives.

The Queen's Nursing Institute in the Royal College of Nursing have welcomed the investment in neighbourhood health centres, but we must ensure that the Labour Government's NHS Workforce Plan supports these hubs via adequate staffing. The Nuffield Trust notes a staggering 43% decline in district nurse numbers since 2009. Secure staffing is essential if the policy goal of moving care closer to home is to be achieved with the new centres. While the new centres are to be welcomed, they will require such investment to reverse the cuts to public health services such as health visiting and school nursing.

Can my noble friend, the Minister, assure me that the investments to achieve this will be made available? I am sure my noble friend the Minister joins me in supporting the budget's welcome ambition of more nurses. I would welcome some reflections from my noble friend, the Minister, as to how these numbers will be translated into the reality of the NHS Workforce Plan and its implementation.
16:24
Baroness Morrissey Portrait Baroness Morrissey (Conservative)
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Yes, sir. >> My noble friend Lord Kempsell has rightly just spoken about the shambolic orchestration of this budget and the damage that's done, budget and the damage that's done, the erosion of public trust, the damage to business confidence and how it's undermined Britain's credibility abroad. That's particularly important because there are two other major issues that I'm going to focus on, which have created more of a problem as we as we try to move on from the budget. I hope it's fair to suggest that many Britons have an ambivalent relationship with ambition.

Certainly compared with Americans who celebrate success as fulfilling the American dream, there is sadly no equivalent British dreams, although there have been times when the government of the day has encouraged aspiration. I was just 13 when Margaret Thatcher became Prime Minister and I attended the local state school, originally a secondary modern, and I longed for a brighter future. The government's approach then encouraged me to seek and to seize opportunities to be a worker, not a shirker. And that is what my husband and I now encourage in our family.

Nine children. The Bishop of Manchester may be pleased to hear we're doing our bit for the birthright to be contributors to society, to aim high, to be productive and self-reliant. This budget sends the opposite message. It says work hard and will come after the fruits of your labour, succeed and will penalise. You will tax your income, your home, your dividends, your pension, your savings, your inheritance, school fees. If you dare to send your children to private school and we'll give that money to those who don't work, including a million foreign nationals and 9 million working age, economically inactive British adults, this is disastrous for our country's future.

The brain drain of the best and the brightest that my noble friends Lord Elliott of Mickle Fell and Baroness Meyer have referred to, will only get worse as the ambitious and entrepreneurial leave for countries that do offer, as Margaret Thatcher put it, an economic background which enables private enterprise to flourish for the benefit of the consumer, the employee, the pensioner and society as a whole. Without wealth creation, Britain will quickly run out of money. In fact, we already have. We are living far beyond our means.

What's more worrying is we may also quickly run out of road to borrow to sustain this. And that's my second big concern. I was a bond fund manager for 15 years and now chair an endowment fund as set out in my register of interests. In my view, the risks of investing in gilts far outweigh the potential rewards. Now, the gilt market is unusual in two important respects. UK government debt is an average 14 years to maturity, which is much longer than other G7 countries.

France, for example, their figure is eight and a half years, and that means we've now locked in high borrowing costs far longer than other heavily indebted countries. The second idiosyncrasy is a much bigger proportion of index linked bonds, 25% of the total. So stubbornly high inflation as we have today adds more to interest costs. And we couldn't inflate our way out of a debt crisis even if we wanted to. Both factors increase the risk of borrowing crisis. The gilt market initially reacted benignly to the budget because it wasn't as bad as it was as feared, but the harsh reality is that it's a spend now tax later budget, and we are increasingly dependent on the kindness of strangers to keep our credit lines open.

A third of gilts are held by foreign investors. We are walking a borrowing tightrope and without fundamental reform of our welfare system, the only route to the other side is stronger economic growth. That is clearly the government's objectives. Objective, as the Chancellor is fond of repeating. But the reality is her economic policy is dampening growth now and significantly limiting its future potential. This budget makes us dangerously exposed to the next economic crisis, and increases the chances of that happening. It takes Britain backwards at a time when we badly need to reignite optimism, economic activity and ambition and

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aspiration aren't. My Lords, it is axiomatic that

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My Lords, it is axiomatic that if you want to land a difficult message, it's best to start with message, it's best to start with some positives. So here goes. All credit to the government for sticking to its fiscal rules and increasing its safety margin. I increasing its safety margin. I admit I had my doubts this time last year. Secondly, the overall
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Lord Macpherson of Earl's Court Portrait Lord Macpherson of Earl's Court (Crossbench)
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last year. Secondly, the overall budget judgement looks about right supporting the economy this year and next, but tightening policy thereafter. Thirdly, the measures to reduce inflationary pressures in the coming year should help the Bank of England ease monetary policy further. And so I'm not surprised by the positive response of the gilt market. Given the size of the national debt, it will be the interest rate the market demands, which will determine the government's future room for manoeuvre. And so why has the reception of the budget been so negative? Pre-briefing is partly to blame.

There is a reason, over and above market sensitivity, why Chancellors, as different as Nigel Lawson and Gordon Brown, have favoured budget secrecy. It allows them to control the narrative and to tell the economic story on their terms. I have considerable sympathy for the Chancellor on the OBR leak, but the endless briefing and leaking before that point was surely the Treasury's responsibility. In 2013, following a similar leak, I carried out a review in which I recommended that the Treasury introduces a ban on the pre-release of the budget, that is, the economic and fiscal projections, the fiscal judgement and individual tax rates, reliefs and allowances.

The then government, and I think the official opposition accepted my recommendations. Can the noble Lord, the Financial Secretary, confirm the government still accepts this recommendation? I also worry about the budget measures themselves. I, for one, celebrated when we were led to understand that income tax rates would be raised. I know it would have broken the manifesto commitment, but at least it could have addressed the issue of the growing number of people facing high, sometimes penal, marginal rates as child benefit, childcare support and the personal allowance are withdrawn.

I continue to worry about intergenerational fairness. I feel better off pensioners and I speak as one could have contributed more. Not only is my triple lock pension safe, my dividends aren't going to be taxed any the more, and I still don't pay any national insurance on my earnings. I am, I am broadly in favour of abolishing the two child benefit cap. I don't accept the argument. It will work worse than work incentives. That surely is the beauty of the Universal Credit system introduced by the previous government.

But surely this should have been announced at the same time as sickness benefit reform. The better to get the government's backbenchers to accept it. I also worry about the timing of the proposed tax increases. I criticised the last government's Augustinian approach to fiscal policy. The government appears to be adopting the same approach, albeit with different sides of the ledger. More spending today financed by tax increases several years down the line. Given demographic pressures tax, the tax take has to rise, but I fear the government will find it all but impossible to deliver.

There is a reason why the tax take has been so stable over the last 75 years, never going below 28.3% or above 35.2%. Getting revenue in is a difficult business, and the tax base is less buoyant than it was. The optimist in me hopes the economy will grow, that some of the tax increase may prove unnecessary, and the government can cut taxes in the run up to election, as Mr. Healey did back in 1978. But I have to say, I am less than confident.

My Lords, we all know the economy is in a fix. We're spending far more than we can afford taxing at dysfunctionally high levels, so that businesses and people, as laid out very clearly by my noble friend Lord Elliott, are fleeing the country and regulating the economy to death. The future, as is, is a downward spiral of recession, inflation and economic crisis. The solution, as we all know, is economic growth. And as many noble Lords have said, and the government says it's its top priority.

But does our government have any theory at all as to what produces growth? Growth? Growth does not come as so many Lords on the opposite benches seem to have believed from spending more money. It comes from a smaller state. The evidence is irrefutable lower taxes and less regulation. And please, noble Lords, let's stop the economic illiteracy of claiming that had we stayed in the EU, we'd have grown up to 8% more. We've had 8%, 7%, 6%. I'm sure that the noble Minister will want to up his game from his traditional 4%, that he likes to trot out on all occasions when he's summing up that we'd have grown 8% more than Germany, France and Italy, who we've grown at the same rate as since Brexit.

We'd have grown at 8% more than they did had we stayed in the EU. Yes. Noble Lords may not understand and appear not to understand that the papers upon which they rely, so-called doppelganger papers, say that we would have grown that much faster had we grown at the same rate as the United States. Do they understand that, or do they just read the headlines? It's correct. Had we grown at the same rate as the United States, had we adopted their economic framework? Yes, we would have grown that much faster because the United States did so.

Therefore, we need a deeper, not a so-called softer Brexit. If we wanted to grow faster, our poor productivity record, which which all agree in this House, it seems to me, has caused low growth. That poor productivity record is almost entirely in the public sector. The private sector has grown its productivity by 30%. So our noble Lords asserting that had we stayed in the EU, our civil servants would have forsworn their four day weeks, their working from home, their gold plated pensions, their higher and higher salaries.

I don't think they are. Are they saying that that's what would have caused us to grow faster? Because had we gone into the EU, the public sector would have become more productive. I beseech noble Lords to think a little bit harder about the basis of their of their assertions. My Lords, being kind is not going to get us out of this jam. To get back. Just to Tony Blair levels requires some 300 billion less of expenditure. There are many opportunities to spend less.

Our cost of electricity is the highest in the world, four times that of the US. So stop pretending and get rid of net zero. We'd be £220 billion better off had we done so. An out of work family gets some 18,000 a year better off than a working family. That's unconscionable. Unjustifiable work must pay more than unemployment benefits, therefore must be cut by large amounts on regulation. Stop thinking we know best. Nuclear power stations in South Korea cost a 12:45 sixth the amount that it costs here to build nuclear.

Had we done that, we would never have gone
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with solar and wind. The construction industry has collapsed construction industry has collapsed because of regulation. To conclude, my Lords, there is no money until my Lords, there is no money until we're spending it. Some two thirds of the current rate, the economy will get worse. It's a failure of will get worse. It's a failure of leadership not to acknowledge that. We have to tell the electorate. We We have to tell the electorate. We have to settle on how much we can afford to spend, what cuts are needed to achieve that, which taxes should then be reduced, which regulations abolished? Until we have a program that addresses those questions? My Lords, this government is only playing at

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governing here. Yeah. My Lords, it is an honour to

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My Lords, it is an honour to speak in this debate and also to welcome the right reverend Prelate, the Bishop of Portsmouth, to the your Lordships' House. As someone who grew up in Portsmouth, it's great to have more of Pompey in this place. And some of your remarks from your excellent maiden speech. Bishop will be probably speech. Bishop will be probably echoed in in my comments in this speech. Growing up in Portsmouth afforded me many pleasures and privileges. Among these were my first attempts at youth work at a Salvation Army youth club in Southsea.

Now I say that for a reason. This budget marks a welcome shift in us valuing young people in this country, and the Chancellor
16:38
Lord Rook Portrait Lord Rook (Labour)
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deserves recognition for that. Two decisions in particular provide hope. The first is the abolition of hope. The first is the abolition of the two child limit. This is not an expansion of welfare spending. It's fully funded through commitments to fully funded through commitments to reform Motability, reclaim waste, tackle fraud and error, and close tax loopholes. Most importantly, tax loopholes. Most importantly, it's an investment in our long term prosperity. It's quite clear that a prosperity. It's quite clear that a child growing up in poverty is less likely to work, earn far less as an adult, and will rely longer upon the state support.

Child poverty is costly to us as a country. Poverty today reduces productivity. Tomorrow. Less support now results in a higher welfare bill in the future, and ending the two child limit is both a morally and economically responsible choice to take. The second is the creation of the Youth Job guarantee. By replacing benefits for young people who have been unemployed for 18 months with a guaranteed job, apprenticeship or training programme. We reduce the welfare bill, we promote work over dependency and we help young people into good work.

Given the success of the Future Jobs Fund under a past Labour government, I would only ask my noble friend, the Minister, whether young adults might become eligible for the programme slightly earlier, maybe at 12 or 6 months out of work. While this budget provides a way forward, we should not ignore the reasons why we are here. Successive governments have rightly protected and invested in greater security for older people, but at the same time, we have quietly dismantled services for children and young people.

Sure, start closed, youth services, stripped back, statutory youth work disappeared. And when the pandemic struck and experts told the government that £15 billion of investment was needed to support pupils who had fallen behind, only a fraction was provided. The current crisis is not accidental. It is the result of a continual and considerable disinvestment in our own young people, and the consequences are there for all to see a youth mental health crisis. Hundreds of thousands of young adults struggling to find work, more young families relying on food banks than ever before, fraying social cohesion and fractured communities, and a generation increasingly disengaged from civic life.

My Lords, a country that invests in its future citizens, cannot expect the next generation to invest in their nation. While these budget measures are welcome, we can all do more and better. And we must, because it takes a society to raise a generation. It takes schools and colleges, yes, but it also takes charities and employers, volunteers and youth workers, faith communities and millions of good neighbours. So today, my Lords, I want to argue for something ambitious and necessary a grand coalition of the youthful, a coalition not defined by age, but by all of us who aspire to be, have a youthful spirit and an unswerving commitment to the next generation.

A coalition of institutions, leaders and citizens who believe that Britain's national renewal depends on a new deal. For young people. Where no child grows up in poverty, where every young person has a route to work, where every community has safe spaces for young people to gather and belong, where mental health and housing are available when needed. And every young person can discover their vocation not just a job, but a purpose. The future belongs to those who can give the next generation something to hope for.

I hope that we will be a grand coalition that will give the next

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generation a reason to hope. My Lords.

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I'd like to make some. General comments about this budget and then make some suggestions that might help the suggestions that might help the government to generate some growth via the financial sector. And I declare my interest as a director declare my interest as a director of a financial services firm. My Lords, this was a budget for Lords, this was a budget for politics, not economics. Other than restoring some financial headroom. This was a budget for ideology at the expense of the promises made to voters about tax and growth.

It was a reinforcement of the culture of dependency that is slowly but surely strangling the economies of Western Europe. We're living in a society, my Lords, where rights and entitlements are everywhere, but duties and responsibilities no longer seem to matter. Of course, there should be a safety net, but we're now in a position where in many cases it is more remunerative. As many other noble Lords have said today, to stay at home than go to work. This is a disaster for our economy, our culture, and for the development of our children.

As my noble friend Lord Bailey said earlier, the abolition of the two child benefit cap magnifies the problem, and also which has not been mentioned, adds to the pull factors attracting even more immigration to this country, both
16:43
Lord Massey of Hampstead Portrait Lord Massey of Hampstead (Conservative)
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legal and illegal. The dependency culture was illustrated by a radio interview given this week by the interview given this week by the Chief Secretary to the Prime Minister, who described the additional benefits in the budget additional benefits in the budget as, and I quote, an investment in support for poorer families, an support for poorer families, an investment the UK does need more investment, but transfer payments investment, but transfer payments do not add to real growth or competitiveness. What we need is investment in the businesses of the future that can create jobs and wealth.

The government recognises the importance of private sector investment as a noble Lord, the Minister said in his opening speech. And it also recognises the importance of scale ups and sensibly increased the thresholds for qualifying IES and venture capital trusts in the budget. This was welcome, but in the same breath, the Chancellor reduced the incentive to invest in these high risk companies by cutting the income tax relief from 30% to 20%. The last time the government cut relief in this way was in 2007, and this led to a catastrophic reduction in inflows into venture capital.

Inflows actually fell by 80% over the subsequent years, and it took 16 years to recover to the original peak. My Lords investor demand in high risk companies from private investors is understandably very sensitive to levels of tax incentives, and I have to report that we are already seeing a reduction in a substantial reduction in demand for Aim stocks following last year's reduction in the BPR from 40 to 20%. So I would urge the government to look again at the impact of the reduction in tax relief, which may lead to a much sharper decline in investment than they currently envisage.

In addition, it's worth looking at these measures in relation to aim the reductions in the BPR and relief affect listed companies, but not unlisted companies. So EIS and unlisted IHT schemes now have a clear advantage over Aim. This may be an unintended consequence of these measures, as I know the government is keen to promote London public markets as they are so important for scaling up. Another source of potential growth for UK plc is the stock and shares Isa, which attracts over £100 billion of investment from private individuals.

Two thirds of this goes into cash ISAs and the budget reduced the investable limit from 20,000 to 12,000. I understand this decision as cash ISAs do little to generate growth, but I would like to make a suggestion for the future of stock and share ISAs, which constitute a very significant £30 billion of investment. The reality is that most of the investment going into these ISAs ends up in foreign companies, as is the case with our 3 trillion defined benefit pension schemes, where only 4% is invested in UK companies.

Why do we provide tax advantages to invest in Microsoft or Nvidia when there are excellent investment opportunities here, which will help grow our economy, given our urgent need for investment? And I think we all agree on this, now is the time for the government to get a return on its tax breaks and require Isa investors to buy UK companies only. The opportunity here is to is to kick start a recovery.

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And I ask the noble Lord to put. His name.

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His name. Thank you. Yeah, this. Is a. Budget that punishes anyone.

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Who tried to do the right thing. I've driven electric cars for ten years now, only to find there is no years now, only to find there is no benefit. And I wouldn't blame anyone now who decided to buy a anyone now who decided to buy a petrol car while they can. Also, the Prime Minister hails the abolition of the two child benefit
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Baroness Deech Portrait Baroness Deech (Crossbench)
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cap as a moral advance towards reducing child poverty. And yet it could equally well be said that it is immoral when working families have to support those who have more have to support those who have more children than they do, without counting the cost or working. This is not the fairest and most is not the fairest and most effective way to tackle poverty. The cap reflected fairness. Taxpayers should not subsidise family size choices that they themselves funded. Critics argue children should not suffer for birth circumstances.

That's true, but welfare generosity has overridden good parenting aims and work incentives. Evidence shows removing the cap could reduce employment incentives by 2026. An out of work family with three children will get more in benefits than a working household on the National Living Wage. The single parents. The gap is equally true. We can all see that work does not pay and there is no disincentive to dependency on benefits, and lifting the cap does nothing to address deeper causes of poverty, consider child maintenance.

As of March, parents owed nearly 493 million in unpaid support, leaving over 300,000 children without legally owed payments. The Child Maintenance Service has failed to enforce compliance with hundreds of millions in arrears. 1 in 5 separated parents failed to pay full child maintenance. Enforcing maintenance payments would move 100,000 children out of absolute low income each year. It is almost taboo to say that government should not be incentivising family break ups and unstable cohabitation arrangements. They need attention and I ask the government to help the child maintenance service get the money for those children.

Child poverty is predictable. Tower hamlets, for example, now records the highest overall rate, 46.5%. Families there have higher birth rates, the lack of extra benefit having no effect. Families from ethnic minority backgrounds are disproportionately affected, with nearly half of children from Black and Asian communities living in relative poverty, compared with a quarter of white children up and down the country. The extra cash will go where these conditions are found, but the lifestyle is unlikely to change for the better.

There are better alternatives. Early intervention, such as more provision of affordable childcare, encouragement to girls to get as much education as possible before starting a family, encouraging women to go out to work. Those who bring long term benefits for health, education and family stability. Strengthening social services and expanding childcare would address root causes more effectively than lifting the cap, and we do more to ensure that child poverty is not handed down generation to generation. My Lords, welfare policy is not just about handing out cash without responsibility.

There's nothing wrong with suggesting to couples that they shouldn't have more children if they can't look after them, and they shouldn't expect others to pick up the tab. Ending the cap may ease hardship for some families, provided the cash is spent on children, but it is a divisive, blunt instrument, seeming more to be set to please party activists than the general taxpaying public, who tend to be not in favour.

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My Lords. Can I. First acknowledge the maiden contribution of the right reverend contribution of the right reverend Prelate, the Bishop of Portsmouth, who I welcome to the House, as well as the rare privilege of speaking as the rare privilege of speaking in the same debate as my noble kinswoman Baroness Pitkeathley. Now, kinswoman Baroness Pitkeathley. Now, my Lords. I could have said, my mum, you are now my Lords. The headroom you are now my Lords. The headroom has pleased the markets, the currency is doing better, and the Chancellor, despite noises around her, will feel that we now have a stable platform to build on.

However, my Lords, as I listen today to today's debate in and outside the chamber, I sense a direction of travel that leads me to a simple challenge. If one's preferred response to our current position is essentially, well, I wouldn't start from here, then 1st May be missing. The salient point. Here is the only place to start from this moment. These constraints, this inheritance, not the one we wish we had. If we get the macro picture wrong, we all know what follows.

And within the limits the Chancellor has to work with. The real question becomes what else does one actually workably do? Far too often, criticism without responsibility is treated as contribution. But if we are genuinely interested in solutions, then our starting point must be the
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Lord Pitkeathley of Camden Town Portrait Lord Pitkeathley of Camden Town (Labour)
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real fiscal and political constraints in front of us. Not a fantasy world where money is fantasy world where money is infinite, trade offs don't exist, and the economics politely steps and the economics politely steps aside, while ideology enjoys itself. We all know the refrain everyone We all know the refrain everyone needs to do their bit. And the reply yes, but why does one of them reply yes, but why does one of them have to be me? We all agree we need new infrastructure and new public Commons.

And the next line? Yes, but does it absolutely have to be near me? And when we discuss tax reform, welfare reform, planning reform, we hear, yes. But must it really apply to people like me? There is always a constituency for change in general and an equal constituency against change in particular. Against this backdrop, building a strong economy is vital. So the projected increase in growth from 1 to 1.5% is welcome. Right? Wages rising is welcome and productivity the eternal British riddle seems finally to be turning, though I acknowledge the OBR, it largely seems to have given up on forecasting significant gains and with likely losses in professional jobs.

As AI adoption accelerates, that caution is understandable. But lower inflation and hope of lower interest rates is a relief. The focus on helping high potential firms to scale and stay is essential. For too long, we have been the R&D lab for the rest of the world. The entrepreneurship policy paper published alongside the budget, which includes increasing limits for venture capital trusts and the Enterprise Investment Scheme. More British bank capital going to key industries and departments using procurement to promote innovation is more welcome news.

Tax cuts for high street businesses are also welcome and should, once the complexities around release reliefs per hereditament. And yes, I do know what hereditament is are understood should reduce bills. For many, though, concerns remain about how large a payers will react and the coinciding business rates, revaluation inevitably makes life harder for some. And London once again asked to shoulder an ever increasing share of the burden, as if this has no consequence for the wider economy. But two difficult truths also deserve stating firstly, Brexit and austerity have been economically unhelpful.

Second, taxing wealth a little more like we tax work is not radical. It is overdue and fair. And where today's debate has been useful, it is where it has been routed, where we actually stand. The question is not what is the perfect solution? The question is what is the best responsible path from here? Because here, with all its imperfections, is where the British economy lives, and it is the only place from which we can build the future we say we want.

And that, it seems to me, is the future the Chancellor clearly has in her sights.
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Lord Ranger of Northwood Portrait Lord Ranger of Northwood (Conservative)
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Amen. My Lords, may I also >> Amen. My Lords, may I also welcome the Right Reverend Wright, Lord Bishop of Portsmouth. I'll get Lord Bishop of Portsmouth. I'll get better on its congratulations on his maiden speech, and thank the Minister and the whole frontbench team and the team at the Treasury. It's hard work delivering a budget and it's hard work for many out there. So this morning, while I was at my son's nativity play and I asked a fellow parent, how did the budget land for him? An investor, an entrepreneur, wealth creator, an employer? He said the damage was done last year.

This year it's just on top. But at least they didn't bring in the exit tax. So the option is still open to me. So there is some silver lining for some people, but my Lords, I will focus on the sector that I've been focussed on in industry and I'm focussed quite now, which is AI, something that is driving UK businesses. I've said it before, I'll say it again, UK businesses are booming and I refer to my register as a co-founder of the business AI Alliance community of over 170 businesses and and independent experts and an advisor to businesses.

And from this perspective, on the surface, this budget offers promise. But in truth, for UK SMEs, it falls short. I recognise my noble friend Baroness Penn and Lord Massey comments on the welcome changes to the expansion of Enterprise Management Incentive Scheme and the boosted limits in the Enterprise Investment Scheme, and the improvements on the Venture Capital Trust Framework will help scaling businesses attract investment. The much needed refocusing and pledges for support through UK research and innovation should broadly provide more support for innovation, including in sectors such as AI.

Yet these measures, while helpful, in no way amount to a comprehensive, sustained support required. As the Prime Minister has said, to make the UK one of the great AI superpowers. So, my Lords, how does the budget fail? UK AI Start-Ups and SMEs in practice? Firstly, the scale of funding is too small, scattered too thinly. The declared support for AI, for example through new growth zones, remains modest compared to the size of the task. The AI growth zones, while laudable in ambition, do not provide sector wide grants, infrastructure investment or access to high end compute for thousands of SMEs hoping to scale.

Many, many promising AI firms will remain outside these zones, left to scrape by without meaningful support. Secondly, there is a lack of targeted support for AI infrastructure and data intensive needs. AI businesses, especially those working in machine learning with large language models, data analytics need robust infrastructure, cloud compute, hardware, data access and high performance chips. The budget's nod towards an advance market commitment for AI chips is a welcome on in welcome on paper, but a one off scheme, even up to £100 million, is insufficient.

It does not guarantee access to the infrastructure. Every AI Start-Up needs to train models, run inference at scale or compete globally, and I appreciate the differences of scale between us. But in comparison to the US Chips act, which offers over $52 billion of subsidies, my Lords, without long term large scale investment in compute infrastructure, the UK risks forcing AI firms to rely on overseas providers, undermining sovereignty, cost efficiency and costing local job creation. My Lords, our tax incentives incentives are too generic.

While expanding EMI, Ise and VCT rules helps broadly, they do not address the unique challenges of AI SMEs. In short, the budget offers shallow support scattered over a few nice to haves. But we need more serious commitment to build a thriving global AI industry in the UK. I hope, my Lords, that to be the player on the world stage, we need to be to attract global capital, to create high paid, skilled jobs. We need more than promises and incremental support. We need a vision.

We must be bold. A long term fiscal strategy to of scale. To scale is what is required.
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Baroness Shawcross-Wolfson Portrait Baroness Shawcross-Wolfson (Conservative)
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Yeah yeah yeah yeah yeah yeah. >> Yeah yeah yeah yeah yeah yeah. >> My Lord, like many previous and much more illustrious speakers, I've had the privilege of being involved in numerous budgets. And as I'm sure the noble Lord, the Minister would want me to point out Minister would want me to point out that some of these have indeed been more successful than others. I personally have never regained my taste for Cornish pasties. Those experiences mean I appreciate how difficult it is to pull together a budget, and I'd also like to pay tribute to the incredibly talented and dedicated officials in the Treasury and the OBR, who work so hard on these events.

I also want to pay tribute to Treasury Ministers. Whatever you think of the choices made in any given budget, the process forces Ministers to spell out their trade offs in a way that very few others in government are required to do so, and it's an essential discipline with that spirit of ministerial transparency in mind. And given the wide ranging and insightful contributions already made on tax and growth, I'm going to concentrate my remarks on the government's spending plans in the budget. Last week, we saw specific policy decisions in welfare policy decisions, increase welfare spending by 9 billion, and the overall forecast for welfare spending in 2009 30, revised up by a total of 16 billion.

Then on Monday, the Prime Minister reaffirmed his moral commitment to go further on welfare reform. And on the same day, the Chief Secretary to the Prime Minister said the government would cut unsustainable welfare spending. I welcome those commitments. I fear that demographics and disability, what the Resolution Foundation describes as an ageing and ailing population, will put continued pressure on the welfare state. So I wonder if the noble Lord, the Minister, could please clarify whether these future welfare reforms will be designed to reduce overall spending, to reduce the growth rate in spending, or simply to maintain the current trajectory.

To put it another way, is welfare spending a forecast the Chancellor wants to beat. Turning to departmental spending, previously, the government planned 1% real terms growth between 2829 and 2930. Now, it assumes no real growth in spending between those years. I'm all for spending restraint, but I question whether the government is going to be able to deliver it. The spending plans published in June had already baked in productivity improvements, so it would be helpful to know what has changed in the last few months to give the government the confidence to go further.

According to the Resolution Foundation, these spending plans imply unprotected departments will have their budgets cut by £6.4 billion in real terms. And that's before taking into account the additional pressures identified by the OBR, including, but not limited to, £6 billion of spending on Send. These are sizeable figures, I fear. I know how the party opposite would have described them. If the situation were reversed, so could the noble Lord, the Minister, confirm to the House that it is indeed his plan to deliver these cuts at the end of the Parliament.

As your lordships know, productivity does not materialise because Ministers mandate it to be so. Sadly, it's not enough to write the numbers in the Red book. It's not enough to publish a white paper. Meaningful productivity improvements require painstaking work, consultation, legislation, capacity building. It all takes time and often comes with upfront costs, so it would be reassuring if the noble Lord, the Minister, could tell us how departments are preparing to go from real terms spending increases to real terms cuts. Is the investment of the next few years earmarked to fund productivity improvement for future years? Will the Treasury oversee this work? My Lords, I believe this budget does present an opportunity to deliver on the Prime Minister's commitment to rewire the British state.

However, I have learned through bitter experience, as I imagine the government has also learnt through its efforts to reform Pip and now send, that making the commitment is the easy bit. If these spending plans are indeed meant to be implemented, we now need two years of sustained technical and political work to make good the Prime Minister's promise to build a more innovative and efficient state. I very much hope that is what we will see.
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Lord Bilimoria Portrait Lord Bilimoria (Crossbench)
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Yeah. Very good. I thought I >> Yeah. Very good. I thought I received a wonderful birthday. >> Present on the 26th of November,

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Present on the 26th of November, the budget, with taxes going up by £26.6 billion, on top of the £40 £26.6 billion, on top of the £40 billion that we had last year, leading to 38% of GDP, the highest level that we have known. The UK economy growth rate has averaged 1.5% since 2024. Inflation, which was 1.7% in 2020 4th September, is now 3.8%. And I was present at the CBI and our chief executive, Ray Newton-smith said the Chancellor's scattergun approach to tax risks, leaving the economy stuck in neutral.

And the good news is the government has listened to this House and the employment rights Bill. They've said that they will have a six month period as opposed to day one, which I think is not as good as two years, but at least the government has listened. There's greater complexity. Deloitte noting 88 new tax measures. The IOD did a survey of business leaders 80% feel negatively about the autumn budget, up from 67% after the 2024 budget. I'm a trustee of Policy Exchange, who described the budget as a transition budget, and then there was a surprisingly positive article from Ambrose Evans-Pritchard in The Telegraph in defence of Reeves.

The future is not so scary. And he says that public investment has averaged 1.6% of GDP since the late 70s, as against 3% of our peers, or 4% for more stellar outperformers. Now, Labour is raising it even more to 2.6% of GDP. We need that investment desperately. And he also says that productivity is about to soar in advanced companies open to AI diffusion. And we have in the UK, the world's third largest AI industry by a wide margin, and the data centre capital of Europe.

And we're a very innovative country. The in Global Innovation Index places us sixth in the world. The IMF says the AI could boost productivity by 1.5% a year if fully adopted, and the French Artificial Intelligence Commission says AI is not just an incremental efficiency gain in how we do things, it vaults to another level. Will the Minister agree with this? I'm chair of the International Chamber of Commerce, the ICC, UK, the largest business organisation in the world with 45 million businesses.

There was no mention of trade in this budget whatsoever. And that's surprising because trade amounts to 60% of the UK economy. We can invest in digital public infrastructure. We should invest in digital trade because companies doing that cut costs by 80%, improve productivity by 60%. And I've just returned from speaking at the B20 in Johannesburg before the the G20, and I was a co-chair of the digital taskforce, and we've managed to persuade the G20 governments to invest in public digital infrastructure.

My Lords, UK hospitality made this point. Many parliamentarians understood from the Chancellor's statement that the budget would ease pressure on high business rates. But the reality with the Minister acknowledged that this relief for when the relief falls away, there's actually a huge increase in the rates and the bbpa and my old, as a founder of Cobra beer, both small and medium sized pubs, will see substantial increases in their rates. Bills driven by higher rateable values applied to only slightly lower multipliers.

Would the noble Lord, the Minister, agree this? Many pubs are facing increased bills and my Lords, I conclude. Brent Hoberman, my friend, the founder of Founders Forum, he has said that the Chancellor promised to listen to UK entrepreneurs and this budget was a first step towards delivering on this promise. Whether it's the EMI scheme reform, scale up, finance, tax relief for companies listing in the UK, this is really good news that the government is listening and there's no exit tax. As was mentioned, the British Business Bank will deploy £5 billion in growth stage funds listing reforms with stamp duty relief.

This is fantastic and there's going to be a review for what more can be done to entrepreneurs. I'm so glad the government wants to talk to us, listen to us because we're ready to help. These are steps in the right direction. And I would quote Brent Hoberman, we need to think bigger, bolder, longer term backing our most ambitious entrepreneurs to drive economic growth.

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It's been an excellent debate. And let me start by saying that actually, I have some sympathy for actually, I have some sympathy for the Chancellor. Her approval ratings are now so low that she's even giving Kwasi Kwarteng a run even giving Kwasi Kwarteng a run for his money. Just 12% give her a favourable rating. And listening to favourable rating. And listening to the benches opposite, my Lords, the entire 12% seem to be here today. entire 12% seem to be here today.

So I congratulate the government Chief Whip for herding them all together. And my Lords, actually, I do agree with some of what those on the other opposite benches have been saying. The Conservatives left office with taxes, spending and debt far too high and growth anaemic. Worse, worse than that, we and the party opposite, we all colluded in a conspiracy of silence about what that meant for the
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Lord Bridges of Headley Portrait Lord Bridges of Headley (Conservative)
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rise or the state would have to do less. And that, my Lords, that is the background to the tragedy that the background to the tragedy that is unfolding before us with its enormous majority. I, like many enormous majority. I, like many others, I had high hopes, high hopes that this government, a Labour government, might be bold in the spirit of other Labour governments and reform the state. Where are those hopes now, my Lords? Where are they? They're dashed. Dashed? This government is a ship adrift in a storm, its captain struggling to stop it from crashing onto the rocks, trying to control his mutinous crew, his Ministers clinging to their lines to take as if they were life jackets.

Now, my Lords, I have some sympathy with this. Like others on this side, I have been in similar situations at that despatch box, so I have some sympathy with the noble Lord, as I know how demanding these moments are. And so I don't want to unnecessarily make life more miserable for him. But I do expect him to clarify how this budget delivers on the ambitions he and his entire government have made, and let me pull together a number of points made by my noble friends.

First, the mission to kickstart growth. Growth. Is it correct that the budget contains no measure that materially improves the Obr's growth forecast, that the rate of productivity growth has been downgraded, and that growth in real household disposable income will fall, fall sharply this year and next. Second, Labour's promise not to raise taxes on working people. Is it correct that the budget's £26 billion tax rise will push 1.7 million more people into higher tax bands, pushing the tax take to a record level? Third, the Chancellor's pledged her budget would ease the cost of living.

Is it correct that despite the measures he mentioned that were contained in the budget, the OBR now expects inflation to stay higher for longer? Fourth, the Chancellor pledged her budget would, and, I quote, reduce the national debt. Is it correct that by the end of the Parliament, debt will be almost two percentage points of GDP higher than in 20 2425, with debt interest higher than today? Finally, the Prime Minister has stated, as others have noted, that the welfare bill is unsustainable, indefensible and unfair.

Is it correct that annual welfare spending will be £56 billion higher at the end of the Parliament than today, that by 20 2829, spending on health and disability benefits alone will be double defence spending and that without further reform, changes will reward dependency, not work. I look forward to his answers. My Lords, let me end by saying this. The government was giving an enormous majority to change this country for the better. Millions of people put their hopes in the Prime Minister and the Chancellor, trusting them to keep their word and meet the economic, social and security challenges Britain faces with credible plans.

Instead, with this budget, the government has not nearly broken its word, but has dragged us all deeper into the economic mire. And that, my Lords,

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is a tragedy for us all here. My Lords. As the first of the winding

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As the first of the winding speakers, let me repeat the welcome to the right reverend Prelate, the to the right reverend Prelate, the Bishop of Portsmouth, and say how much we enjoyed his excellent maiden speech, which I will refer maiden speech, which I will refer to later that year, and to the government. Let me say that not quite in the Apocalypse Now camp, that I hear from Lord Bridges and some of his colleagues, but I really did think that this was going to be and needed to be a budget for growth.

And when we were in that period of endless announcements, U-turns, leaks, chaos, etc. I thought that there
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Baroness Kramer Portrait Baroness Kramer (Liberal Democrat)
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would be a real surprise on budget day. We would get that project, that programme, that vision that that programme, that vision that would drive forward growth. Well, I was wrong now. And as others have was wrong now. And as others have said, that the OBR makes it clear that trend productivity growth is that trend productivity growth is down and we have no proper roadmap for dealing with it. I think Lord Willetts was eloquent on that point. Willetts was eloquent on that point.

The OECD has predicted that the UK will be facing headwinds from the budget and will have the highest inflation rates in the G7. And again, that Lord Rosenfield that's a taught extensively on this issue. The budget contained no compelling argument for investing in UK business, and I wish they had listened to Viscount Stansgate, who was calling for a real step change at this point in time, which is exactly what I think we need. I do want to agree that there were marginal measures in here.

They're marginal, but important to support upscaling. They were described by Baroness Moyo Baroness Penn. That and to some degree by Lord Ranger focusing on AI, my Lords. But these are not easy times for growth. And I do accept that global headwinds are reducing trade forecasts globally, which is not good news for the UK economy. But that is exactly why my party is urging the government to go immediately beyond its lackadaisical reset with the EU and push for a bespoke customs union.

That's and I say to those who don't think that Brexit is a blow that's battering our economy, go and talk to business and talk extensively to business. It's not just the economists, it's the people daily on the ground who are dealing with the consequences. And this of all times, is not a time when we can indulge in the glow of insularity and exceptionalism. Now, my party, using work from Frontier Economics and the Commons Library, had calculated that joining a customs union with the EU would deliver £25 billion a year in additional monies to the Treasury, and that, frankly, dwarfs every tax raising measure in this budget.

And it offsets far more any spending cut that the Conservatives propose. That, and I think we heard concern over Brexit from Lord Hollick, from Lord Tyrie, from Lord Brooke of Alverthorpe that are and my my good, my noble friend Lord Russell referred the government to the private Members Bill being brought forward by the hon. Member for Surrey Heath, which will give an opportunity to capture essentially these issues. My Lords, I take the view and my party does strongly that the government is as Lord Razzall indeed has said before me, that and Lord Lord Mohammed of Tinsley is been absolutely right to lift the two child benefit cap.

My Lords, let me say to Baroness Beech, to Lord Bailey and to Lord Massey, if a safety net is not for children, who is it for? And I think we take a very strong position that poverty undermines children. It doesn't raise them. And now those similar views were expressed by the Bishop of Portsmouth and the Bishop of Manchester. And I want to pick up the issue introduced by the Bishop of Portsmouth, which is his question on where will the funding be coming from to guarantee send provision when it shifts from local authority to central government? Baroness Barran Baron also raised that issue.

And again, my good noble friend, that Lord Mohammed of Tinsley stressed the importance of the issue. And that means I think we must have an important and strong answer on this from the Minister. My Lords, the decision to remove £150 from energy bills is welcome. But as Lord Razzall says, it's less adequate than the the than the Lib Dem proposal. And I would say to particularly Baroness Griffin of Princethorpe, we would not have been part funding that by cutting programs to cut to tackle climate change, as the government has chosen to do, we would have fully replaced that that from central government resources.

Now, when I first heard the budget, I, like others and Lord Bilimoria just said it, thought that huge relief would be given to the hospitality industry through the business rate system. We in our party have proposed a VAT cut and in fact, some people implied this was going to be the equivalent. But we find that UK hospitality estimates that an average pub will pay £12,900 more in business rates over three years. My Lord, Lord Freyberg stressed similar kinds of pressures that's on grassroots venues and this is really a serious problem, and I do want to hear a proper answer from the Minister.

In our case, we would have paid for the cuts in energy bills I referred to in VAT that by pursuing the proposals of the Ippr for a tax on the windfall that major banks are making, not from their efforts, but just the technicalities of QE and the reserves that they're keeping at the central bank, and why the government hasn't seized that opportunity is beyond it. But I do give them credit for seizing the proposals, pushed over and over by Lord foster for a remote gambling tax, which has both not just fundraising but moral outcomes.

But why the government has not raised the digital tax from 2% to 10%. It applies to the mega seven digital companies. Frankly, I just don't understand these Mega seven are serial tax avoiders par excellence, and our own UK digital companies are disadvantaged by the Big Seven's gaming of the taxing system, and that absolutely matters. If we push on digital and AI, my Lord. So let me address the main proposals in the budget, which raise most of the additional £26 billion in taxation and tax tax levels in this country to unprecedented highs.

Taxes will have gone up by 67 billion since the first freezing of tax thresholds. Now Labour is responsible for 13 billion of those taxes and oh my, the Conservatives for 54 billion of those taxes. So sometimes when I hear them talking as a low tax party, I wish they would go back and look at what they actually did. Freezing thresholds is just one of the worst ways to increase taxes on ordinary people. Baroness Thornton raised the question of the impact on women, and I hope the government will answer that.

It's true that many people don't realise what's happening until it's too late. Lord Burns made that point, but we now face the extraordinary prospect that a quarter of employees will be in the high rate tax bracket by 2030 to 31, not become because they've become more prosperous, but simply because their wages are rising just to cover inflation. And indeed, the OBR forecast relies on inflation staying higher for longer. As Baroness Neville-Rolfe said the government hopes, because its additional spending is front loaded and the tax increases are backloaded, that people will have not caught on that by 2030 to 31, they will be paying some 1400 more pounds in tax.

We will have had nine years of threshold freezing. Now the other major tax raiser comes from changes to the salary sacrifice scheme of some 4.7 billion. I am concerned, and I think I heard the same concern from Lord Hollick that combine that with the changes to pensions in the last budget, and we're going to see a move away from pension saving and long term investment by the wage earning middle. And the consequences of that are obviously not good for growth. And I'm going to ask the government to try and get a grip on this issue.

It's trying to get more of pensions, auto enrolment, which is a very small part of the market that's covered by the mansion House compact into UK investing. But the big part of the market is now essentially being that discouraged. That's a a few other comments that the first of all, I wanted to refer to the comments made by my noble friend Baroness Bowles on the government procurement of innovation. It is a really serious issue and I hope the government will take it on board.

It's much wider than sometimes the narrow issue that it's treated as the so-called mansion tax that will raise only £400 million and likely much less. But in London, the revaluation of bands F, G and H will hit social housing. As I understand it, the mansion tax doesn't. The revaluation does that. So perhaps the Minister will confirm that. And I think the answer is the whole of council tax needs a complete rethink. And I agree on that with Lord Campbell-Savours. The timing of the taxing per mile of EVs just seems perverse when we need to accelerate the switch from petrol to diesel.

And I assume, along with Lord young, that this is the beginning of a of an evolution into road pricing. But why on earth are we not given a tax roadmap on this issue? Because without that map, we will begin to see people become inhibited about buying EVs, perhaps unnecessarily, that a road map should have accompanied a significant change on this scale. And one last small comment on the loan charge. Perhaps it's not so small. I thought that the government seeming acceptance of the McCann review, even if it didn't deal with pre 2010 and already settled cases, would largely provide a resolution to this appalling mire.

And then I realised that the discount that the government or the discount that the government is now going to use is capped at £70,000, leaving some 20% of those with open cases still absolutely in the mire. These are people that might once have been high earners, but now typically retired on modest incomes, so little more was needed for this issue and this nightmare to be resolved. And I don't understand why the government didn't take that next step. Lastly, the government was as necessary as increased the fiscal headroom to 21.7 billion.

I mean, we called loudly for such a change. I am slightly taken aback that a third of the increase in the headroom relies on public sector efficiency savings on, frankly, a heroic scale. It's now, sir, I think it was a I think a couple of people here talked about. That's right. Lord Willetts Lord Wood mentioned a Lord Eatwell Baroness Shawcross-Wolfson talked about how questionable that a future public sector savings are, particularly on the kind of scale that's included in the forecast.

The markets are calmed for now, but they won't stay calm if we don't see either that efficiency come through and if we don't see growth. Meanwhile, my Lords, as I wind and finish that the public sector and local government are still on their knees. Ordinary people are still struggling every day with the cost of living. Business's appetite to invest is still muted. That's a there really is only one way to make a step change out of this mess. And I'm going to be back.

Go back to where I started. Will the government please now accelerate the process into resurrecting a bespoke EU customs union relationship, so that we can look forward to a future with resource and choice, and without facing the kinds of constraints that are

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evident in this budget. Well.

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It's always a great pleasure, a great pleasure to follow, my noble friend. She is my noble friend, friend. She is my noble friend, actually, from coalition days and long before I, I'm always long before I, I'm always entertained by her nostalgia for the weekly reports from Earl Attlee Adler in Brussels. But if we can get beyond that, she's a she is a very coherent critic of the government and all governments on economic policy, and I agree with a lot, she said in her remarks.

It's I'd also like to thank the noble Lord, Lord Livermore, for the measured way in which he opened the debate and his exquisite courtesy. Actually, in sitting here all the time during the debate, he has the advantage of he has the advantage of being a bit younger than I am,
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Lord True Portrait Lord True (Conservative)
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my Lord, sir. So I apologise for my short departure now. It's been a short departure now. It's been a compelling debate and compelling in one sense, and the admirable loyalty of so many noble Lords loyalty of so many noble Lords opposite encircling their wagons around this failing economic policy around this failing economic policy and accepting the repudiation of what was a core manifesto. Promise, my Lords, not to raise taxes on working people. But it's also been compelling in the clinical dissection and challenging of that party by of that policy by so many noble Lords, though not all have come at it from the vintage Corbyn Easter direction of the noble Lord, Lord seeker, or indeed agreed with the catalogue of nationalisations and tax increases being demanded by Baroness Jones of Moulsecoomb.

I wondered if she was trying to catch the eye of her new leader. Certainly Lord seeker seemed to me to be being attracted to the Green Party as he listened to the noble Baroness. Now, my Lord, sir, the contribution by my noble friend Lord Bridges of Headley at the end was a challenging and pithy one and one. He was pithy in his honesty, and one of the things he was honest about was that the last conservative government spent, borrowed, and taxed too much.

And it did. We did. But I think some of those who criticise that might for a moment also remember that we did have to confront the savage cost of the Covid pandemic. My Lords, my noble friend Lord Bridges of Headley was also brutal, actually, in exposing how this budget and the last taken together pile more spending on top of overspending, more borrowing on top of over borrowing and more taxation. £66,000 million in two budgets on already overtaxed families and businesses.

And as my noble friend Lord Moynihan of Chelsea said in a brilliant speech that did shoot a few Brexit foxes and you circulate round that round the house, my noble friend, this policy is simply not sustainable. And there's also a glaring absence of serious supply side reform in this budget. When will we see real deregulation? Can the noble Lord tell us now, my Lords, this House likes it very much when it has a Minister who has real influence inside government. And there is one sitting opposite me now, the noble Lord is very much respected.

Sometimes he could lighten up a bit, but we love him when when he smiles at his his, his hands are all over the budget. He was there beside the Chancellor when she held up her red box last week, and I read the words of a loquacious aide who told Mr. Tim Shipman that indefatigable journalist, that he and Torsten Bell actually dined with the Chancellor twice a week in July to plan this budget. We're told that they waved away Treasury officials who came with spreadsheets and scorecards.

They said they weren't interested in numbers. They decided their strategy. Well, my Lords, part of that, as we now find, was £406 billion on welfare by the end of the survey period. And I submit again, it's simply not sustainable. And I hope that noble Lord, when he winds up, will answer the specific challenges on welfare figures and what has been said about it. Mr. Levelled by the noble Baroness, my noble friend Baroness Shawcross-Wolfson. And the other thing I have to refer to it, my Lords, that the Chancellor and the noble Lord planned was that long autumn of Project Fear.

Now the noble Lord complained in his opening remarks about leaks and speculation. But, you know, where did all these leaks and all the speculation come from? Who was talking to whom? And I think my noble friend Lord Kempsell probably knows a thing or two about that. Never. My Lords, we had such a maelstrom of spin. Never have more kites been flown, never have more proposals been leaked. And it culminated in the carefully planned spectacle of the Chancellor herself, weeks before the budget, organising a press conference with all the panoply of the state, the Union Jacks, to tell the world she was going to put up income tax.

Now history will judge the truth of what the Treasury team knew and the B from the OBR. And when I agree with the noble Lord Lord Razzall, we shouldn't waste time on that. We will come to know. But my noble friend Lord Kempsell was quite right to defer to the real life effects of the spin, the uncertainty. And we now know that hundreds of millions of pounds were moved in those weeks. And that is, as the noble Lord Lord Macpherson said, the Treasury responsibility.

And I agree with the noble Lord, Lord Macpherson, and the noble Lord, Lord Burns, with their immense and peculiar experience. This should never happen again, my Lords, we now know that to justify massive tax increases, the Chancellor and the noble Lord dug their own bogus black hole. You can actually see the soil there under the noble Lords fingernails. We now know that they didn't need to tax and borrow so much higher. Tax was a choice, a deliberate choice to take money from the successful, the hard working and the wealth creators and spend it on welfare.

Now, to be fair, they are proud of it. They planned it. And many on the other side have declared that today. My noble friend Lord Lamont of it was the first of many to point out that this was a political budget. It was a labour budget. It's what socialist governments do. And as my noble friend Lord Lord Dobbs reminded us, Labour tax, borrowing and spend policies fail and fail every time. Now, my Lords, I've been struck. How many noble Lords in this debate have drawn attention to continuing black holes in this budget? Take send funding lately referred to by the noble Baroness, Baroness Kramer, the right reverend Prelate, the Bishop of Portsmouth, to who I'm to greatly welcome in his notable maiden speech, was right to ask a fundamental question about how the costs will be met, and this was followed up in more detail by my noble friend Baroness Barran.

Can we please have the answers? The OBR could not have been clearer. Quote. No savings have been identified to offset the estimated 6 billion cost pressure. Where will the money be found? Can the noble Lord tell us in a couple of minutes, please? When he winds up, take the £5 billion negative impact of the Employment Rights Bill, where my noble friend Lord Willetts rightly probably observed that your Lordships' House has actually done more to benefit youth employment by what the Lordships have done to block day one rights than anything in the budget.

But can the noble Lord tell us, has that Bill's effect been scored by the OBR? And can the noble Lord, when he replies, tell us the latest estimate of the cost to the NHS of the recent UK US pharmaceutical deal? They must have that cost. They've signed a deal and even if you're signing a deal with President Trump, you must have some sense of what it's going to cost to the NHS and the country. This is Parliament. Can he tell us what the cost will be and has it been scored? And again, my Lords, what of defence? The noble and gallant Lord, Lord Craig of Radley and my noble friend Lord Hodgson of Astley Abbotts, among others, referred to this to reach the 3.5% commitment.

The OBR calculates the government faces a £32 billion shortfall today. Again, we have no hint in these documents of how that'll be funded. When will we be told? My Lords, the survey period reaches out into the next decade. But while these uncertainties remain, what we are certainly told is that we face a splurge of spending and a boom in borrowing. The borrowing and spending are coming now. But the tax, as the noble Lord, Lord Macpherson said, is only coming later.

Much of it. The noble Lord spoke of a fiscal consolidation that reduces public sector net borrowing by £12 billion in 20 2930. But this figure, of course, relies on £26 billion of tax increases. So can he confirm that borrowing will be higher than the March forecast in four out of the next five years? Does he agree that total borrowing over the period to 20 2930 will be £57,000 million higher than was forecast just eight months ago? The noble Lord, Lord Burns, in a notable speech based, as I say, on a unique experience, gave a sober warning to the House at the outset of the debate about the continued burden of debt.

£110,000 million at the end of the survey period, and this was a theme picked up by many others. The government is also, my Lords, failing on its central claim to be a government for growth, and I think this has been the major area of concern, actually, from all sides of the House. We respect the government's desire to secure growth. The trouble is that their policies are designed to stunt it. There are positives. Things done, things for incentives and start ups, and I hope that the noble Lord will listen carefully to constructive points.

I think that he will agree were made in the debate by noble Lord, Lord Leigh of Hurley, the Baroness Bowles of Berkhamsted, and my noble friend Lord Massey of Hampstead. And there are other considerations, my Lords, which we must have on growth. I think my noble friend Lord Hintze was right to counsel us about the importance of considering growth per capita. We must do that. We don't talk about that. Enough now, my Lords, the noble Lord declares that the OBR has mildly uprated forecasts for growth this year, and then the tape stops.

He skates over the fact that forecasts are revised down for all the succeeding years. The OBR estimate the budget. This budget's policies, and I quote, will have no significant input or impact on growth by 2030. Now, my Lords, as a keen allotment here, I like growing my own vegetables and Britain will need a lot more people like me. If Ed Miliband goes on covering up good farmland with solar farms. And by the way, how right my noble friend Baroness Moyo was to point out the disastrous structural impact of high energy prices in the UK economy.

Collectively, my Lords, across all parties, we must have the courage to address that. But I do have to tell the Lords from my experience that if you plant vegetables and you want them to grow, they don't actually do so. If you keep battering them with a big stick day after day, and this government is mercilessly battering businesses, particularly small businesses, with the big sticks of taxation and regulation, and it cannot succeed. The devastating impact of last year's NIC increases has brutally impacted business confidence and jobs, particularly in SMEs, that many of our Lordships, led by Lord Eatwell in a distinguished speech, so rightly said we need an unemployment, my Lords, is grimly rising every month and it's rising.

Small business, my small business. Place by place, as it ever does. Although it's the big closures that catch the news. And now the hospitality industry is the noble Baroness Baroness Kramer and others said in the high streets, who were told that they should be rejoicing at what was in the large print of the budget, are reeling at the prospect of the business rates stealth tax, which was hidden in the small print today. Their trade body has warned of a further 100,000 jobs at risk in the hospitality sector as a result of the cumulative impact of this government's policies on SMEs and hospitality in particular.

My Lords, taken together, the last two budgets and the Employment Rights Bill have devastated business confidence and the prospect of jobs for young people. The Federation of Small Businesses, the IOD, the CBI, they're all saying it. And frankly, one thing is stark staring obvious, including to the many noble Lords opposite who stayed away from our votes on the Employment Rights Bill. If you penalise employers, you penalise employment. And in the economic and fiscal outlook, the OBR is clear that unemployment is set to go on rising, all without taking into account the effects of the Employment Rights Bill.

My noble friend Lord Dobbs was devastating in his particular idiosyncratic way on on unemployment. We must not go again down that road, my Lords. And then there is the central issue of welfare, where we have heard differences across the House. But as my liberal friend Lord Bridges said, and I agree with him, this government had this huge majority in the other place and a clearly stated will to reform the welfare state, which the Prime Minister has seemed again to be reiterating this week.

My Lords, they misuse that majority and as my leader has said, we will support them in difficult decisions to cut welfare spending. Welfare is increasingly shifting from being a source of temporary support to a form of long term income for an ever increasing number of people, and that stifles hope. Around 5000 people a day are being signed off work and onto long term sickness benefits. It could have been a historic task for the Labour Party, my Lords, to carry out this reform, and it has opportunities on this and on tax simplification which the noble Lord Lord would have Anfield, Lord Eatwell and others referred to to do remarkable things.

And the noble Lord Lord Hollick, in what I thought was a brilliant and balanced speech, pointed out many significant realities, good and bad, which we all collectively have to address. This country is underperforming. It's not because of this government. It's because of systemic problems that we have, but they are being accentuated by mistaken choices now being made. But my Lords, instead of dealing with the welfare challenge, faced with dissent in their ranks, the Cabinet ran away enfeebled prisoners as the noble Lord, Lord Tyrion.

My noble friend, Baroness Noakes said of their own backbenchers panic, panicking at the frailty of a majority in the high hundreds. And now, with this budget, they're leading the stampede further in the opposite direction. My Lords, it cannot go on and it need not, as my noble friend Lord Saatchi, the noble Lord, Lord bird, in their different ways challenged us. Now we on this side have set out carefully costed plans for some initial savings. But we must all agree, surely, that the purpose of the welfare system is to support as many people as possible into work.

We must not create a system as we seem to be doing, where for far too many, being on welfare is an alternative to getting a job. Too often you can be better off. That's the very reverse of what was intended when Universal Credit was introduced, my noble friend Baroness Coffey made a searching and speech with piercing questions on this, and the noble Baroness Baroness Deech made a powerful contribution on family. As my noble friend Baroness Stedman-scott reminded us, and a striking speech by my noble friend Lord Bailey of Paddington.

Also, the best way to tackle poverty is a j o b a job, and the government can help by supporting businesses to open, to hire and grow. That is, I think, what they truly want. But the OBR have made it clear that the government simply has not done this in their budget, and not a single measure is said by the OBR to promote growth, and working people will pay the price. My Lords, the government have given us the first death tax on family farmers, the first death tax on family businesses, the first tax on family homes, the first tax on children's learning.

Shameful worldwide. First that one, the first tax on green electric vehicles. Even the first tax on milkshakes. I wonder who thought that one up in number 11. My Lords hit after hit at the struggling green shoots of growth and at success. And when the Chancellor said she wanted a more innovative economy, we didn't know she meant inventing new taxes. My Lords, this was a fundamentally dishonest budget founded on a bogus black hole of the Chancellor's own digging. The government didn't need to raise the income tax take.

It was a choice. They said they wouldn't tax working people, but they have. They said they wanted to help workers, but they've given us a budget for non-workers. They said they wanted to create growth, but they've pummelled the very businesses and SMEs in particular who create growth. They said. The want of the UK open for business and the noble Lord repeated it. But they've reinvented the brain drain as my noble friends Lord Elliott, Lord Elliott of Mickle Fell and Baroness Morrissey said they even span talk of an exit tax to stem an outflow.

They could see themselves, and the only high streets that are booming are in Dubai. My Lords, the people have been given higher taxes, higher borrowing, and the budget is unserious in its strategy as it was cynical in its spin. Huge costs are being imposed on the private sector with, as my noble friend Lord Lamont observed, a rising toll on

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jobs. My Lords, it cannot and must not go on. Any.

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Any. My Lords, it is a pleasure to close this debate on the budget close this debate on the budget this evening. I have enjoyed. I have enjoyed listening to all 73 have enjoyed listening to all 73 contributions from noble Lords today. May I start by congratulating the right reverend Prelate, the Bishop of Portsmouth, for his excellent maiden speech. I very much look forward to his further contributions to this House. I was struck particularly by one thing he said, and I quote, to find what is good and to strengthen it.

That must be right. Having sat through this debate this evening, though, I'm aware that opinions may differ on how well we are achieving that in this budget, it is also a privilege to speak in a debate with the noble Lord Lord True. I don't often have that pleasure. My noble
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Lord Livermore Portrait Lord Livermore, The Financial Secretary to the Treasury (Labour)
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friend Lord Barber of Ainsdale and Baroness Curran set out the record of his government that we inherited of his government that we inherited the combined effect of austerity, Brexit and the Liz Truss mini budget was devastating to the budget was devastating to the economy. Had the economy grown by the average of other OECD countries the average of other OECD countries over those 14 years, it would be more than £150 billion larger today. The previous parliament was the The previous parliament was the worst ever for living standards.

Inflation hit 11% and was above target for 33 months in a row. The UK had the lowest private investment levels in the whole of the G7. Productivity growth had entirely stalled, with output per worker growing more slowly than in nearly every other G7 country. The need to deal with that inheritance is why we have made growth our number one priority. This budget made pro-growth choices to get borrowing down, increased headroom to cut the cost of living and get inflation down to support Britain's fast growing companies, and most of all, to protect the investment needed to support growth by avoiding a return to austerity.

This is real substance, real policies to get real growth, enabling the British people to lead better lives in the years ahead. It was, though, as I said in opening this debate, a budget dominated even more than usual by process before, during and after it was delivered, a point raised by the noble Lord Lord True Lord Rosenfield Lord Kempsell Lord Leigh of Hurley and noble Baroness Baroness Neville Rolfe, Baroness Noakes and Baroness Penn. Let me address those directly. Let me be clear that the Chancellor was completely honest and consistent with the public in everything that she said.

Professor David Miles, the acting head of the OBR, in his evidence to the Treasury select Committee, on Thursday, confirmed that what the Chancellor said before the budget had not been misleading. The Chancellor said before the budget that her priorities were cutting the cost of living, NHS waiting lists and debt, and borrowing the budget delivered on all of those priorities. The Chancellor was clear that the productivity review would mean lower tax receipts. The OBR confirmed they were £16 billion lower. The Chancellor said she intended to build more headroom.

She built more headroom to £21.7 billion. The Chancellor was clear in the summer that policy choices would need to be paid for. The budget shows those costs £6.9 billion, and the Chancellor was clear that challenging decisions would be needed on tax and spending, and she froze thresholds for further three years. Let me be clear, too, that the government is committed to the independence of the office for Budget Responsibility and its role at the heart of economic and fiscal policy making. The strength of that institution is a vital pillar in the government's commitment to economic stability, as noble Lords know.

And as Lord Rosenfeld, for example, commented, the economic and fiscal outlook was accessed prematurely ahead of the budget. That was a very serious leak of highly sensitive information. The OBR took full responsibility for this and conducted a review into what happened. That report was published on Monday, and following that publication, Richard Hughes, as the noble Lord Lord Dobbs, said that the chair of the OBR resigned. The Chancellor has written to Mr. Hughes to thank him for his many years of public service, and I have previously put my own thanks on record in your Lordships' House.

That decision was a matter for Mr. Hughes, the noble Lady. Baroness Neville-Rolfe suggestion otherwise is categorically untrue. The noble Lord Lord Tyrie spoke rightly about future appointments being subject to approval by the Treasury Select Committee. The noble Lord Lord Lamont criticised the impact of pre-Budget speculation, as did the noble Lords Lord Hamilton of Epsom Baroness Neville-Rolfe and Baroness Penn Lord Macpherson of Earls Court and the noble Lord Lord True. Let me say clearly we do take the budget process very seriously, and we put the utmost weight on budget secrecy, as referred to by noble Lord Lord Kempsell.

A leak inquiry is now underway into the Ft. Reporting on the 13th of November, with the full support of the Chancellor and the whole Treasury team, noble Baroness, noble Lady Baroness Penn spoke about learning lessons. The Permanent Secretary to the Treasury will now conduct a review of the Treasury security processes to inform future fiscal events. We will also work closely with the OBR to ensure robust security arrangements are in place before the spring forecast and for all future forecasts.

The noble Lord Lord Willetts asked about the arrangements for the spring statement, as the Chancellor said in the budget, to support just one fiscal event a year, the OBR will not assess the margin against the fiscal rules in the spring and the government will not make a fiscal response. The noble Lord, Lord Macpherson, asked if the Treasury still accepts his recommendations from 2013. The answer is yes, and I can tell him the current permanent Secretary of the Treasury referred to that review in an email he sent to all Treasury staff.

The noble Lord Lord Skidelsky spoke about the productivity puzzle. Much of the context of this budget was the OBR supply side review, as mentioned by the noble Lords Lord Willetts Lord Bridges of Headley and the my noble friend Lord Hollick, the OBR looked back at the productivity performance of the previous decade and concluded that the chronically low levels of investment, together with the effects of Brexit and the pandemic, have weakened the economy by far more than previously thought. This reappraisal of the productivity performance of the past has directly impacted their view of GDP going forwards, driving lower growth forecasts for the remainder of the forecast period.

The noble Lord Lord True, together with the Baroness, noble Lady Baroness Wolf and Baroness Moyo, both noted all noted its importance, its impact on future growth forecasts. But they all ignored the fact it was the verdict on the previous 14 years, not on the previous 14 months. This review has had both a fiscal impact and a growth impact in terms of fiscal policy. Because of this, budget borrowing will fall as a share of GDP in every year of the forecast, from 4.5% in 2025 26 to 1.9% in 2030 31.

Borrowing will fall faster than any other G7 economy, despite what the noble Lord Lord Bridges of Headley said, net financial debt will be lower at the end of this forecast than it is today, and the headroom against our stability rule will more than double to £21.7 billion, supported, I think, by noble Lords Lord Lamont, Lord Willetts, Lord Macpherson of Earls Court and my noble friends Lord Wood of Anfield and Lord Hollick. The budget also took more direct action to cut inflation.

We have taken £150 off energy bills, frozen rail fares for the first time in 30 years and extended the freeze on fuel duty. All of these things together take 0.4 percent off of inflation. And again, in answer to noble Lord Lord Bridges of Headley. To put that in context, that is the biggest near-term reduction in inflation due to government policy ever forecast by the OBR at a single fiscal event. Some noble Lords said the consolidation is backloaded, including the noble Lady Baroness Morrissey, noble Lord Lord Macpherson of Earl's Court and Lord True.

I don't accept that in the budget we doubled the headroom to the stability rule to £21.7 billion. We've also set out a credible and front loaded consolidation plan that is working. Borrowing this year is set to be the lowest for six years, and falls in every year of the forecast from 4.5% of GDP this year to 3% of GDP in 2027 28 to 1.9% in 2030 31. In answer to the noble Lady Baroness Shawcross-Wolfson, we will deliver a further £2.8 billion in efficiencies and savings in 20 2829, rising to £5 billion in 2030, on top of almost £14 billion announced at the Spending Review.

My hon. Friend Lord Sikka spoke about the distributional impact of this budget. The government's distribution analysis shows tax, welfare and public service spending decisions taken from the Autumn budget 2024 onwards are progressive and benefit households in the lowest income deciles the most. The increases in tax are concentrated on the highest income households. On average, all but the richest 10% of households will benefit from policy decisions in 20 2829. The right reverend Prelate spoke passionately about children with special educational needs, also joined by the noble Ladies Baroness Barran, Baroness Noakes, Baroness Kramer and noble Lords Lord Mohammed of Tinsley and the noble Lord Lord True.

We know and have long said that the system is in need of reform, which first and foremost supports children and families effectively. The OBR have based their estimate on unreformed pressures. They have not accounted for planned reforms to deliver a sustainable system that works better for children and families. The detail of this will be set out in our reform plan early in the new year. The OBR have only used mainstream schools as an indicative example, whereas the government has confirmed that residual pressures will be absorbed within the overall government budget from 20 2829 onwards, the government will not make final decisions until reform plans are confirmed and budgets from 2829 onwards remain subject to the spending review.

In 2027, several noble Lords, including Lord True, Baroness Noakes, Baroness Neville-Rolfe, Lord Craig of Radley and Lord Hodges Astley Abbotts, spoke about defence spending. The UK will spend 2.6% of GDP on defence spending by April 2027. The government has set an ambition to spend 3% of GDP on defence in the next parliament, when economic and fiscal conditions allow, changes to the defence spending envelope will be considered at the next spending review in 2027, the noble Lord, Lord Freyberg, also spoke about the creative industries and I agree with him and their importance to the economy.

We've made creative industries central to our industrial strategy, and he is right that the new discretionary power to introduce a visitor levy would allow local leaders to drive growth in their regions. Let me turn now to growth, and I do disagree with the noble Lady Baroness Penn about the importance that we place on growth. It is without question our number one priority. My noble friends Lord Barber of Ainsdale and Lord Pitkeathley and Camden Town said that in this budget, the OBR upgraded Britain's growth forecast for this year from 1% to 1.5%.

We were the fastest growing economy in the G7 for the first half of this year, and we are on course to be the second fastest for the year as a whole. And just this week, the OECD upgraded their prediction for Britain's growth next year. Just last week, following the budget, J.P. Morgan announced a $10 billion investment in Britain to build their new landmark tower in Canary Wharf, CEO and chair Jamie Dimon said and I quote, the UK government's priority of economic growth has been a critical factor in helping us make this decision, despite what Lord Horam called for.

My noble friend Lord Hollick spoke about the importance of protecting the additional capital spending that we have allocated to the economy. The noble Lord, Lord Lamont, said that previous government had to deal with the aftermath of the financial crisis. And of course, he's right, but I would contend they did so in exactly the wrong way by taking demand out of the economy at exactly the worst moment. The very first thing that we could do now for growth would be to follow the Conservative Party recommendation and return to austerity, cutting investment, just as previous Chancellors with previous fiscal rules have done.

We will not repeat those mistakes of the past, the exact mistakes that led to the

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productivity downgrade that we must now fix. Yes. This government is committed to delivering growth in every nation delivering growth in every nation and region of the UK. My noble friend Baroness Griffin of Princethorpe specifically spoke Princethorpe specifically spoke about growth between northern city regions, and I absolutely agree with her, which is precisely why we have committed to the Northern Growth Corridor, including Northern Powerhouse Rail, to boost connectivity and access to markets connectivity and access to markets across the north more widely.

This budget transfer significant new fiscal powers into the hands of local leaders. Noble Lord, Lord Russell, together with the noble Lady Baroness Kramer, spoke about the importance to growth of moving closer to the European Union. As they know. I agree the noble Lord Lord Tyrie also supported this point, as did my noble friend Lord Brook. The Prime Minister said the same in his speech on Monday of this week. The noble Lady, Baroness Meyer and Lord Harrington of Watford are right to say that there is much more to do elsewhere, and they rightly identified the importance of reducing energy costs for businesses, which must of course, be a priority going forward.

My noble friend Baroness Warwick of Undercliffe spoke about housing. She asked specifically about social rent convergence. The government remains committed to implementing social rent convergence, but we must take the time to get the details right and take into account the benefits to the supply and quality of social affordable housing. The impact on rent payers and affordability will respond to the consultation on this issue in full, and announce a decision about how social rent convergence will be implemented in January. She also asked about supportive housing, as she mentions the government will shortly publish a new cross-government homelessness strategy.

I can't speculate on the context of that right now, but we will be working closely with mayors and local councils to get us back on track to ending homelessness. My noble friend Baroness Thornton raised the issue of cooperatives. The government is progressing a number of measures to support the growth of the mutual sector, including modernising the Building Societies Act. We've endorsed the industry led Mutual and Co-operative sector. Business Council and the Department for Business and Trade has announced a call for evidence, which will explore business support for cooperatives.

Several noble Lords, including noble Lady Baroness Wolf and the noble Lady Baroness Kramer Lord de Clifford. Lord Russell spoke about the importance of small businesses. I agree with all of them in terms of the importance of small businesses to the economy, as my noble friend Baroness Carberry of Muswell Hill said, for small and medium sized businesses, the budget supports high streets with permanently lower tax rates for 750,000 retail and hospitality properties backs entrepreneurs by doubling eligibility for tax breaks that make it easier for fast growing start ups.

To scale and stay in the UK. Makes the training for under 25 apprenticeships completely free for SMEs, and maintains the lowest rate of corporation tax in the G7. Baroness Noble, Lady Baroness Wolf and the Noble and Baroness Kramer and noble Lords Lord Bilimoria and Lord Razzall spoke specifically about pubs. Most pubs are protected by a £4.3 billion business rate support package, capping bills and saving a typical independent pub £4,800 next year, compared to what they would pay without intervention.

The government has also cut the business rates tax rate paid by small retail, hospitality and leisure properties to the lowest level since 1990 91. My noble friends Lord Hollick and Baroness Curran mentioned the importance of apprenticeships, particularly given the infrastructure commitments that we have made a point also mentioned by the noble Lord, Lord Harrington, and I pay tribute to his work at make UK. The government is making more than £1.5 billion available over the spending review period for investment and employment and skills support.

This includes £725 million for the Growth and Skills Levy, to help support apprenticeships for young people, and fully fund SME apprenticeships for under 25. We will also introduce new reforms to simplify the apprenticeship system and make it more efficient when short courses are introduced. From April 2026, my noble friend Baroness Curran spoke about the importance of growth in Scotland and I will of course look carefully at the report she mentions. The budget does invest in Scotland's economic potential, supporting Scotland's energy industry, driving up economic growth across Scotland and investing in important projects that she mentioned.

My noble friend Lord Jones of Penybont, also far more expert in this matter than me, spoke about the importance of growth in Wales and as he said, we are supporting Wales energy industry by announcing that Wylfa will pioneer the UK's first small modular reactor, supporting up to 3000 jobs. We're also investing to deliver growth in Wales by establishing AI growth zones in North Wales and South Wales, each backed with £5 million investment in local AI adoption and skills. Let me turn to tax, which of course so many noble Lords mentioned in this debate.

We did, of course, face a choice at the budget. We could have made the reckless choice to abandon our fiscal rules and let borrowing and debt increase, but instead we made the pro-growth choice to get borrowing, debt and inflation down more than doubling our headroom. We could have made the irresponsible choice and return to austerity, cutting public services and undermining capital investment. Instead, we made the pro-growth choice to protect the investment in Britain's infrastructure to build a stronger, more secure economy. But as I said at the outset, these choices do need to be paid for.

The noble Lady, Baroness Neville-Rolfe raised the the impact of that on working people, as did several other noble Lords. In the course of this debate, the Chancellor made very clear in her budget that maintaining the tax thresholds at their current level would impact working people, but we have sought to minimise that by establishing certain other necessary tax reforms. Several noble Lords did touch on the subject of tax reform. The noble Lord, Lord Burns, initially supported by my noble friends Lord Wood of Anfield and Lord Eatwell also and Lord Hollick, also spoke about the importance of tax reform.

I recognise that perhaps this budget has not gone as far as they would like, but I do think it has made a start in terms of reforming some important tax reliefs within the system. And my noble friend Lord Davies of Brixton asked about the impact of tax thresholds on pensioners paying tax on the state pension. We gave a clear commitment to this in the budget. We are exploring now the best way to achieve this, and we'll set out more detail early next year.

My noble friend Baroness Thornton raised the impact of budget on women. Increases in the national minimum wage, for example, will specifically benefit women more. And to specifically answer her point, alongside the finance bill, impact assessments will be published in relation to the each individual measure and their impacts on women. My noble friend Lord Campbell-Savours spoke about the high value Council tax surcharge, a point also raised by the noble Lady Baroness Kramer. The Valuation Office will identify homes which will need to pay the surcharge through a targeted revaluation.

The new charge will ensure that those with the most valuable properties pay their fair share. Several noble Lords mentioned the importance the impact of salary sacrifice measures, including my noble friend Lord Hollick Lord de Clifford, who expressed some concern about that. But I do personally agree with my noble friend Lord Davies of Brixton that that the measures were proportionate. The government rightly provides generous tax relief for people paying into a pension, relieving income tax on all contributions. This budget makes no changes to those reliefs or to the tax free lump sum.

But salaries sacrifice for pensions, which was intended to be a small part of our pension pension system, is now forecast to treble in cost from under £3 billion to £8 billion in 2030, for the most benefit going to higher earners. Lord Elliott of Mickle Fell spoke about non-dom reforms. I think I have justified that policy in the past, so I won't do so now. The noble Lord, Lord Leigh of Hurley. I was pleased to see the issue he has campaigned on for so long.

Make progress in terms of low value imports. I know he expressed concern about how long that is taking, and obviously we will do what we can to speed up the implementation of the reforms, as he calls for. Lord Young of Cookham spoke very expertly about electric. I believe I was correct to say we were not introducing road pricing, since electric Ved does not mean motorists will be charged based on when or where they drive, nor will there be any new national charges to drive on specific roads.

And electric Ved only requires a vehicle's mileage to be estimated. I'm grateful to several noble Lords, including the Lord Leigh of Hurley and Baroness Penn and Lord Massey of Hampstead, for their support about further scale up measures that we introduced. I'm grateful to their support for the expanding the Enterprise Management incentives, the Enterprise Investment Scheme and the venture capital trust investment limits, and I will happily take away the suggestions from Lord Leigh as to how we might go further in that regard.

I'm also grateful to my noble friend Viscount Stansgate for what he said in terms of his support for the measures to help ensure fastest growing businesses in our country start, scale and stay, particularly backing breakthrough technologies and regional clusters. With £7 billion of UK re funding and a new 130 million Growth Catalyst fund to help frontier firms scale. I agree with a lot with what the noble Lady Baroness Bowles of Berkhamsted spoke so passionately about in terms of the need for procurement reforms.

The noble Lady, Lord Lord Lamont of Lerwick and Baroness Penn Lord Bridges of Headley spoke about the impact of living standards as they'll know the real household disposable income fell by 1.8% in the last Parliament, making it the only parliament since records began in which living standards fell. This fall has already been reversed. RHD per capita was £800 higher in the first year of this parliament, compared with the final year of the previous parliament. The OBR forecast growth to continue, with RHD per capita projected to grow by 2.9% over this Parliament.

They also forecast that as a result of the action taken by this government, RHD per capita will grow by a further 0.2 percentage points in in 2026 2027. Many noble Lords spoke about the importance of tackling welfare reform. Lord Burns Lord Willetts Lord de Clifford Lord Saatchi Lord Hamilton of Epsom the noble Ladies Baroness Coffey Baroness Stedman-Scott Baroness Shawcross-Wolfson. Last year we delivered the largest fraud and error package in recent history, saving £4.3 billion in 20 2930. This budget goes further to ensure that our welfare system is sustainable for the long term.

It increases face to face assessments for health benefits and offers 18 to 21 year olds who have been on Universal Credit and looking for work for 18 months, instead of paying work instead of benefits, it ensures that people living abroad can no longer be able to buy a state pension on the cheap, and it reforms the Motability schemes tax reliefs, saving the taxpayer over £1 billion across five years. Our new Youth Guarantee will also offer 18 to 20 year olds paid work rather than benefits, and we will examine extending it.

As my noble friend Lord Lord Rook asked, we recognise the need to do more, which is why the government will continue to look at other reforms, including through the Timms Review, the Milburn Review and the Pensions Commission. As my noble friend Lord Rook said, we have raised taxes on gambling companies and launched a crackdown on tax evasion to pay for the scrapping of the two child limit, and I am still amazed at the party opposite oppose these measures. When three quarters of households impacted by this change have at least one parent or carer in work, not only is reducing child poverty a moral imperative, it's also an investment in the country's future.

Under the Conservatives, child poverty rose by 900,000 and yet still they oppose action we are taking to tackle child poverty. The cost to the economy of child poverty is some £40 billion a year. It damages the life chances of the children affected, and it hits growth because children grow up in poverty and 25% less age 30 compared to those who do not. The right reverend Prelate, the Bishop of Portsmouth, described how 50% of children in his one of his wards live in poverty.

Removing the two child limit will lift 450,000 children out of poverty in the final year of this Parliament. Yet Baroness Neville-Rolfe, on behalf of the official Opposition, opposed it. When combined with other measures announced this year, this will lift around 550,000 children out of poverty. Baroness Coffey asked about this measurement and it is relative child poverty after housing costs. The noble Lord Lord Bird spoke rightly about the intergenerational nature of poverty and that we should be preventing poverty in the first place.

Child poverty does make it harder for children to get on in life, and it hurts our economy in the long term. Reducing child poverty will help increase educational outcomes, attainment and therefore improve economic outcomes. Finally, my noble friend Baroness Pitkeathley also spoke passionately about carers. As my noble friend said, 26,000 carers will now have their overpayment debt written off or reimbursed. My Lords, we will continue to rebuild the economy after 14 years of failure from the party opposite, where they delivered the slowest projected growth in the G7.

Our growth in the first half of this year was the fastest in the G7, where they presided over the worst parliament ever for living standards. Living standards have already increased by 2.1% since the election, where they oversaw the worst pay growth in a century. Real wages grew more in the first ten months of this government than in the first ten years of the previous government, and where they continually cut capital spending and deterred investment. We are investing for the long term with £120 billion extra over the next five years.

Now in this budget, we are going further, not just cutting child poverty, but cutting energy bills by £150, cutting NHS waiting lists, cutting borrowing faster than any other G7 country, cutting inflation, supporting further cuts in interest rates, a budget that rejects austerity, a budget for a stronger, more secure economy. A budget for Britain built for all.

**** Possible New Speaker ****

Yeah. My Lords, the question is that this motion be agreed to, as many of that opinion will say, content. Contrary, not content. The contents have it.

**** Possible New Speaker ****

have it. My Lords, I beg to move that the House do now adjourn.
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