Autumn Budget 2025

Lord Lamont of Lerwick Excerpts

Thursday 4th December 2025 Lords Chamber

[Lord Lamont of Lerwick (Con)]

My Lords, I congratulate the right reverend Prelate the Bishop of Portsmouth on his engaging and humorous maiden speech, which combined passion with making some very serious points. We look forward very much to working with him, and to his future contributions.

On taking office, the Prime Minister said that he wanted to put country before party. He actually said on the day he went into Downing Street that 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 Budget: a Labour Budget for Labour Back-Benchers.

The Government continue to blame everyone but themselves for any problems. No one believes them any longer. The Prime Minister talks about international headwinds, as though the previous Government had not faced massively bigger international headwinds, with both the financial crisis—its consequences, which went on—and Covid. Covid inevitably inflated borrowing, pushing it 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 much an unknown black hole, more a known grey hole. If there was a black hole, it made no sense for the Government to have gone on a spending spree as they did in the Budget last year.

The Government, furthermore, stand accused of selective leaking of confidential information in order to support this false narrative. We shall see and people will decide for themselves but, whatever the result, it is time for the Government to face up to the consequences of their own policies. It is time to abandon the Alastair Campbell playbook.

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 noble Baroness, Lady Neville-Rolfe, pointed out, Andy Haldane, the former chief economist at the Bank of England, said that this was the reason why the economy had flatlined, because it hit confidence, profits and 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, public spending restraint or a combination of both? History shows that fiscal consolidations 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 that the welfare bill is “unsustainable”. The OBR has said that the welfare bill is unsustainable. Yet the Government, while talking about reform, do little. They seem powerless to act.

The Chancellor says there will be “no return to austerity”, but by imposing so much of the fiscal adjustment on taxpayers and the private sector, she is inflicting her version of austerity on ordinary people. Household 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 and was described by the IFS as a “dismal” prospect. The question is: will the Budget, with all its front-loaded spending increases and end-loaded tax increases just before a general election, finally be 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 cannot disguise the fundamental reality: this is a high-spending and high-taxation Government. The worst thing is that they will probably be back for more next year, and the British people will pay the price.