Autumn Budget 2026

Debate between Lord Bridges of Headley and Lord Pitt-Watson

Thursday 12th November 2026 Lords Chamber

[Lord Pitt-Watson (Lab)]

As I say, welfare spending increased by 0.7 percentage points as a share of GDP during the last Parliament. However, I do want to step back from that and address some of the questions that have been asked.

In many of my discussions and debates with noble Lords, there has been a great degree of consensus, in particular on the Financial Services and Markets Bill. We agreed where we wanted that legislation to go and it has just gone through the Second Reading in the Commons without a vote against it. I pick out in particular the work on child trust funds and—she is nodding—the noble Baroness, Lady Kramer, but also others from across the House. The Financial Services and Markets Bill will mean the release of more than £2,000 each for 60,000 to 120,000 young people, as a result of the Government having listened and found a way round the legal difficulties. This House should be rightly proud of what we have achieved by working together. I have done my political bit, so will see whether I can continue in that spirit.

We live in tough times. As one friend said to me, the only predictable thing about the future is its unpredictability. Even since the Budget, who would have guessed what has happened in Iran and in the midterms, and who would guess where we are going from here? Of course, we cannot wish those economic storms away, but the core of the Budget is sticking to the fiscal rules in full—as I said, for the first time since 2022, and in the third year of the forecast.

But, look, this is good news: more widely, Britain continues to show growth in productivity and investment in the face of these global pressures. We are a wonderful, resilient people, served in the most part by fantastic, honest, creative and caring businesses, growing in the year to date by 1.9%. That is impressive. We are in difficult times, we have fiscal discipline and we have a resilient people, and I think they deserve breathing space.

I was quite taken by the noble Lord, Lord Leigh, saying that he does not want people giving up their seat for him. I have always taught my kids that, when there is an older person there, you should give up your seat for them, and that that is how my grandchildren should be taught as well. Maybe we come from a different sort of background on all that.

The breathing space is in two places: for consumers and for businesses. The noble Earl, Lord Russell, was right in saying that there are lots of proposals here. To the noble Baroness, Lady Wheatcroft, I say that I really was not so sure that all was quite so gloomy. A lot of the things she was talking about, such as tax simplification, are good points, but there is lots in the Budget.

Maybe they are small things, but they matter to people: 20 million getting the household payment for electricity; VAT on domestic electricity still removed until July, as is the 5p on fuel duty; gas standing charges and levy costs on bills coming off; an increased national minimum wage and national living wage; and a higher mileage allowance. It is a small thing, but there is the removal of tariffs on imports of 100 food products. There is also the £2 cap on buses, the support for parental leave and ending the cliff edge for carer’s allowance. Those are not nothing.

Then we come to the measures for businesses. Some 20 million consumers and 70,000 businesses—70,000 small retail and hospitality properties—are being taken out of paying business rates. My noble friend Lord Walker, who said we need a larger high street strategy, is absolutely right; there is a larger high street strategy, which I would very much like to have him involved in. My noble friend Lady Gill also talked about how things would work locally.

For other businesses, there is the freezing of the duty on red diesel and reducing the bills by 25% on eligible businesses through the British industrial competitiveness scheme. My noble friend Lord McTague mentioned that 14 out of 15 deregulatory proposals had been agreed, the Federation of Small Businesses having helped with all that. Some of the things that the noble Lord, Lord Fox, mentioned may be covered in that agreement. My noble friend Lord Pitkeathley talked about business improvement districts, which I think have a huge future.

On tax, I think my noble friend Lord McTague and the noble Lord, Lord Mackinlay, are right: I think this is the right thing to do, but it needs to be introduced with very great care. There are two years to prepare for this, and we are working with stakeholders to think about how we do it. I would be delighted to continue the conversation later with both noble Lords.

We are building for the future, and not just by spending. I sometimes think that economists think that, unless it has a huge ticket by it—and some of the things we are talking about do have quite a big ticket by them—then it will not be significant, and they throw out Keynesian economics. But it is not Keynesian economics; it is institutional and behavioural economics. My noble friends Lady Gill and Lord Smith, and the noble Lord, Lord Docherty, had it: if you can devolve power, that is a potent economic catalyst for what you will be able to do. If you can create incentives for localities, that really will make a difference.

On energy systems, there is the buying and building of new projects when they lower bills and can connect to the grid, getting out of the grip of international gas prices, and ending the practice of putting levy costs on bills.

On entrepreneurship, there were a lot of excellent contributions. To my noble friend Lord Neri, I say that I can imagine, and I hope, some musical people will take advantage of the fact you can earn £3,000 on a side business. At the other end, to the noble Baroness, Lady Bottomley, on the unicorns, I say that that is what the capital gains founders’ relief is for. I think the noble Lord, Lord Bilimoria, mentioned that, and I know that the noble Lord, Lord Massey, had some questions about it. Again, I would be more than happy to talk about that.

On big numbers, to mobilise private investment there is £20 billion of capital for the National Wealth Fund and the British Business Bank. As the noble Lord, Lord Eatwell, said, this is not crowding out; this is crowding in. It is about primary investment, not secondary investment, and that is a key point. I would be more than happy to talk to the noble Lord and hear his further thoughts on that. It also speaks, I hope, a bit to the questions that were raised by the noble Viscount, Lord Stansgate, about scaling up science companies and keeping them in the UK. I hope that feels like it makes sense.

Before I finish, I will touch on some of the other points. We are funding defence. I do not know how often I need to make this speech. Let me give noble Lords the numbers: 2.7% in 2027, 3% in 2030 and 3.5% in 2035—that is what the Government intend to spend on defence. The point made by the noble Lord, Lord Doyle, about frozen assets and Russia was a good one. In answer to the noble Lord, Lord Howell of Guildford, the numbers, which I have certainly given to the House before, on the defence investment plan are known. This is a huge commitment; it is the biggest since the Cold War. We all agree that it is what we should do, so let us leave it there.

On housing, the right reverend Prelate the Bishop of Manchester talked about council tax bands A to D. There is a fund of £100 million for people who should get that allowance but are unable to get it. I hope that addresses to some extent the issue that he was thinking about. Housing has been disappointing, but we are certainly not giving up on it. I hope that reassures the noble Lord, Lord Jamieson, and the noble Baroness, Lady Nargund. The noble Baroness, Lady Warwick of Undercliffe, asked whether some of the £1.5 billion for social and affordable housing might be available to housing associations. I believe it can be. Again, let us have a conversation about that after we have finished this debate.

In reply to the noble Lord, Lord Altrincham, on welfare, the Prime Minister and the Chancellor have been clear that the bill needs to come down, but it is planned to do this in a sustainable way, following what we learn from the Milburn and Timms reviews. Saying that you have the answer now is just not good management; you need to have the facts in front of you before you make those decisions.

[Lord Bridges of Headley (Con)]

I want clarification on this point. On 29 October, the Chancellor said:

“It’s not correct to say that we’re going to bring this welfare bill down in this parliament”.


Is that statement correct?

[Lord Pitt-Watson (Lab)]

If the noble Lord had been listening to me, I said that we will get the evidence and then transform the welfare system, with the aim of getting the welfare bill down. Until we have the evidence, it is foolish to make those sorts of commitments. They will blow up in your face.

We are continuing to invest in public services. Since 2024, we have aimed to rebuild our public services. We are not there yet, but the investment has begun. The points made by the noble Lords, Lord Liddle, Lord Hollick and Lord Barber, about value for money and public value are critical to all this. It is vital that the Government are thinking about this. I happened to learn that the noble Lord, Lord Barber, was in the Treasury this very morning talking about this very topic—it is an important one. I hope that we have cross-party consensus that it is about not how much you spend but the value that is seen as a result of it. The point from the noble Lord, Lord Babudu, about systemic health and preventive health is a very good example of how money could be spent better.

I think I am allowed a couple more minutes—although the clock is flashing. I have missed lots of points—I apologise in particular to my noble friends Lord Davies, Lord Watson and Lord Sikka, and the noble Lords, Lord Leigh, and Lord Redwood—including on quantitative easing and quantitative tightening. I will be more than happy to try to address the questions that have been raised, either in a discussion or perhaps noble Lords might like to write to me where the issues are complicated, such as those raised by the noble Lord, Lord Redwood.

In conclusion, in the face of the global economic storms, the British economy has done well, with good news this morning: investment is up, productivity is up and there is 1.9% year-on-year growth. That is what the Chancellor meant when he talked about our resilient people and businesses. This Budget is just part of our programme: there is a 10-year plan and a spending review. The key things are that we will stick to the fiscal rules, fund defence and offer breathing space and the prospect of hope for the future. But its success rests not just on what this Government do but on what the British people, British workers and British businesses can do. I hope that, instead of being gloomy, we can add a little bit of realistic optimism to this. It is a Budget based on the belief that, working together, the British people can and will achieve more than they achieve alone.