Autumn Budget 2025

Lord Tyrie Excerpts

Thursday 4th December 2025 Lords Chamber

[Lord Tyrie (Non-Afl)]

I agree with a great deal of what I have just heard. I will say a few words about growth, but before I do, I will touch on a couple of other recent controversies. First, the creation of the OBR has given forecasts an air of respectability that no economic forecast should ever have. The one certainty we can be sure of with forecasting is that any forecast will be wrong—usually, seriously wrong.

However, now we have the OBR, we had better make it work. Uniquely among government appointments to senior jobs, and mirroring what is commonplace in the United States, the senior appointments to the OBR, as well as their dismissal, are subject to a veto by a parliamentary committee, the Treasury Committee. That committee should now use that power to help identify good candidates in a way that is capable of helping to restore some confidence to the OBR’s work.

The second quick point directly concerns the Chancellor’s Budget, which is largely a reflection of what happens when a Government become prisoners of their own Back Benches. I have no doubt that the farago over the pre-briefing and the row over the OBR partly owe their origins to a misguided attempt to manage Labour Back-Bench expectations. The Chancellor may have made mistakes here, but I would be surprised if she lied. I know her well. I have worked with her and I found her to be an extremely reliable and likeable counterparty.

The most important question is growth. The main planks of a policy are relatively easy to identify, although very difficult to implement. First, we need to restore our trading links with the EU. There is a huge debate about how much we have lost in GDP terms, but it is several percent, and in the studies that have been done the average estimate is about 5%. Restoring those links will bring back a sizeable proportion of growth. But no party will touch this because Reform is doing so well in the polls.

Secondly, 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 care services need to be filled by facilitating the return of good-quality and relatively inexpensive recruits from abroad. Again, Reform’s polling strength is in action here, blocking much change.

Thirdly, 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. The problem is that, 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. Fourthly, the public finances need to be put on a much sounder footing.

I will end with just one further point. I have said how difficult all those recommendations are to implement, but the Government have had at least two opportunities to create the political space to tackle such an agenda. Their first opportunity came immediately after the election, in using the argument that the legacy was worse even than they thought. They should not have got attached to £22 billion. They should have just said, “Things are worse than we thought and we have got to re-examine our pledges”. The second was 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. Regrettably, the Government remain trapped by their pre-election pledges.