Autumn Budget 2025

Baroness Coffey Excerpts

Thursday 4th December 2025 Lords Chamber

[Baroness Coffey (Con)]

My Lords, I cannot welcome this Budget. It is a bad Budget for Britain, in terms of not only lack of growth but rising unemployment and inflation. Looked at from pretty much every angle, it is a bad Budget for the average working household. I will not get into process; the only process I care about is the payslip that people will open next April when they are paying higher taxes, having been promised by the Prime Minister and the Chancellor that that would not be the case.

The Prime Minister and the Chancellor also promised before the election last year that they would not scrap the two-child limit because they said it was not affordable or fair. I completely understand that it is open to a Government to make different political choices, but if they then say that they were not misleading anybody, that is simply not the case. I appreciate that Labour MPs were very keen on scrapping it, and I notice that the Liberal Democrats and, I think, the Reform Party also support that.

Since this Labour Government came into power, we have already seen a rise in the proportion of workless households, we have seen an increase in the proportion of households where only one person is working, we have seen more than 100,000 more people, unfortunately, join the ranks of the NEETs and we have seen a rise in the number of unemployed people. On the 450,000 figure that the Minister cites—I resent children just being considered statistics; they are individual children—I would be interested to know whether that relates to relative poverty or absolute poverty and whether it includes or excludes housing costs.

Paragraph 2.20 of the Budget book, which relates to the increase in universal credit, says:

“these reforms will have a positive impact”

on the labour supply. But that is not true, as is set out in box 3.2 of the OBR publication, which says that the cuts to benefits will increase the labour supply by about 26,000 in average hours equivalent. According to the OBR, the rise in the standard allowance, which I think will cost more than £500 million more on its introduction, will reduce the number of people working.

And what are we hearing from the Government? On the one hand, the Chief Secretary to the Prime Minister, when he was Chief Secretary to the Treasury, said that it was unsustainable to have a welfare system where people got stuck on benefits. But we are starting to see the same behaviour from this Government that they deployed in the design of other elements relating to whether people will be better off in work than not.

The tax credits regime was subsidising low wages but, more importantly, people very rationally would not 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 to make sure that they could accommodate more people working solely 16 hours a week. Eventually, with universal credit, we have managed to get rid of that ridiculous cliff edge, but I am concerned that we will now start to see similar calculations going on.

It is not just about the numbers; I appreciate that the Minister was very proud of the fact that other measures are being extended. But, as Darren Jones said, we have to try to encourage people to make that decision not just on whether they will be better off on benefits. Will it be the case that universal free school meals will encourage people to work more hours? The answer is no. We already know that nearly a quarter of a million households with a household income of over £35,000 will now get free school meals. In what way is this an encouragement for people to do what is best for their children and to try to have even fewer working households on benefits than there are today and to encourage people to get into work?

There is a lot to be said on this Budget, but it really worries me for the future of our children and our economy. That is why I regret that so many Budget resolutions were passed, including that on the farm tax. Therefore, I hope that the Government will reconsider when they start to see the unemployment figures rising at a ridiculous rate.