Budget Resolutions

Geoffrey Clifton-Brown Excerpts

Thursday 29th October 2026 Commons Chamber

[Mr Reynolds]

I think the hon. Lady will find that there is an anomaly within the Chancellor’s proposals: a 54% tax rate for certain pensioners on certain incomes. I do not necessarily believe that a 54% tax rate for pensioners is the right thing to be doing.

Secondly, Liberal Democrats would make fairer choices about who pays. This Budget goes back once again to savers. Tax on savings and property income go up by another two points. That is on top of the two points that were announced last year. The retired couple who have put money away all their lives and the family who are saving for their deposit will be taxed more. The Government are giving savers a little with one hand while taking with another.

There is a fairer option, though. Because of the high interest rates and the way that the Bank of England’s quantitative easing programme works, the Treasury is handing billions of pounds over to the big banks every year. That is a windfall that the banks did nothing to earn. It is a windfall that they keep, and businesses in our villages and towns are paying the price. Our plan to claw back some of that money would raise £5 billion a year on average. That has never been needed more. As UKHospitality confirms, the hospitality sector pays 82p in business taxes for every £1 it makes. That is the highest amount paid by a sector in our economy and double that of the banks.

In my constituency, we have felt that more than ever. Last month, the Crown at Burchetts Green, ranked among the 50 best gastropubs in the country, closed its doors, with its owner blaming staff costs, rent, business rates and VAT. They said enough was enough. If a pub like that cannot make the numbers add up, what hope is there for cafés, restaurants and pubs across the country? That is why we would use some of the bank windfall tax to cut VAT for the hospitality sector, where it needs it most. The third thing we would do is take our security seriously.

[Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)]

There is a slight irony in what the hon. Gentleman has just said. He wants to cut VAT on pubs, yet he wants to get closer to the European Union, which would not allow us to cut VAT in our own country. Is there not a slight contradiction there?

[Mr Reynolds]

Once again, the hon. Gentleman is confusing rejoining the single market and customs union with rejoining the European Union.

I am glad that the Defence Secretary is in his place, because just days ago, he said that we need to be ready for war by 2030, within 1,000 days. I take that warning seriously, and I hope that his colleagues do, too. Yesterday, the Chancellor set the target for spending 3% of GDP on defence by 2030, and the plan to pay for that will come in next year’s spending review. The money needed for the issues and compromises that the Defence Secretary describes will not come until next year. No Government can meet a 1,000-day deadline on a funding plan that does not exist. That is why we Liberal Democrats have proposed defence bonds. Our plan would raise £20 billion over two years, ringfenced to rebuild our armed forces. That would start now, inside the Defence Secretary’s 1,000 days, and not after them.

Meanwhile, the Government are funding their defence investment plan by cutting budgets across Whitehall. Earlier this year, Departments were told to cut 1% from their capital budgets to pay for the first £10.3 billion of the DIP. For the remaining £5 billion, they must now find another 1% on top of that. As has already been mentioned, we do not know where the cuts will come from. Families right across the country want to know which capital projects are to be cut. Will it be the rebuilding of our crumbling schools or our leaking hospitals? Where will that money come from? We are asked to choose between security and growth, but we need both. The Government urgently need to make the case for defence bonds, so that we have the money to rebuild our defences as soon as possible. If we built that capacity alongside our European partners, every pound would go further, and support skilled jobs and British businesses in the supply chain.

We have also set out how to keep that investment going for the long term: through the digital services tax. We would raise the tax from 2% to 10%, bringing in billions of pounds a year from the tech and social media giants by 2030. They are some of the most profitable companies in the world, and they should pay their fair share. Our plan shows how, and it is fully costed. Defence bonds will provide the money up front, and the higher digital services tax would sustain that amount year after year. Together, they would pay for us to expand British shipbuilding and build more frigates to protect our waters.

Our European neighbours are investing billions in their defence industries, and Britain must be at the heart of that, not watching from the sidelines. We need our new growth and defence partnership with Europe—buying together, building together and defending our continent together—to ensure that British shipyards, engineers and factories win jobs and investments from European contracts. If we are shut out, those jobs go elsewhere.

This Budget is a holding pattern Budget; it is not the growth Budget that we all needed. There is a better way: growth with Europe; fairer taxes that ask the big banks, rather than hard-pressed savers, to pay their share; lower bills for every household; and a serious plan for our security. That is what fiscal responsibility looks like. We need to grow our economy, cut people’s bills and cut people’s taxes.

--- Later in debate ---

[Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)]

Thank you, Madam Deputy Speaker, for allowing me to catch your eye in this important Budget debate. I listened to the Defence Secretary, and thought he absolutely embedded his comedic skills. Some of what he was saying would have been better said on “Have I Got News for You” than in this Chamber.

This Budget was a tragic lost opportunity to fix the fundamentals of the economy. Our debt is at a record level. The tragedy is that we are paying a higher interest rate than Greece on that debt—5.31%. That will add additional interest of £14 billion, just on that debt. If the amount that we are paying to service that debt were a Department, it would be the third largest. The budget for the Department for Work and Pensions is around £344 billion. That does not even cover the amount of income tax we raise in this country in total, which is £330 billion. In other words, income tax does not pay all our DWP bills. The second highest-spending Department has a budget of £226 billion. I welcome the Chancellor saying that he will meet his fiscal rules by the end of this Parliament, but that involves the national debt falling by the end of the Parliament. If I were a betting man, I would doubt very much that he will meet that rule.

One of the saddest things about our economy is that inflation is going up. Before Labour Members start to scoff at that, it is one of the most important measures of the lot, because it affects everything; it affects all our cost of living. Everything from our fuel costs to our energy and mortgage costs are affected by inflation, so the one thing we ought to be doing is trying to get the rate of inflation down. One of the saddest things about inflation is that my constituents, many of whom live off the gas grid, have to pay for heating oil, which has gone up by 75% in the last year. Imagine that for someone on benefits. In this Budget, they are getting very little help with meeting those costs.

[Dr Evans]

£35 per person, if they are eligible.

[Sir Geoffrey Clifton-Brown]

My hon. Friend has made his point well. Let us hope that is read into the record. Currently, 13% of 16 to 24-year-olds are not in employment, education or training. We should be focusing relentlessly on creating opportunities for young people and supporting businesses that employ them. Sadly, this Budget does not do that. When sickness benefits pay more than the minimum wage, what is the incentive to work? Sectors such as tourism and hospitality that provide opportunities in every part of the country and in every constituency, but especially in rural areas, face significant economic pressure, and nationally, at least one pub is closing a week. The rates relief offered by the Chancellor in this Budget may help by a minuscule amount, but that is unfortunately offset by the increase in the minimum wage, and the VAT costs that those businesses face.

I want to turn to the kernel of what the Defence Secretary was saying, and to defence. It was solemnly promised by this Prime Minister and the previous Prime Minister that we would not only quickly get to spending 2.7% of GDP on defence, but would have a path to 3%. There is no path to 3%. The only path I can see is that departmental budgets will be cut, and it has not yet been tied down what services will be cut to pay for that 2.3% real cut in Departments. There was no clarity on this in the Budget yesterday. Surely if the Labour party and the Government keep boasting that they will go to 3%, the least they owe the British people is a path to get there—and it is not only the 3%, but the 3.5% in the following Parliament, which is a great deal of money.

Importantly, as General Sir Richard Barrons said recently, we do not own the clock. In other words, we do not know when our adversaries are likely to launch some form of attack on us, and we know that the Ministry of Defence is not able to place the orders it needs. To take the bigger equipment, when will the F-35s come? The Defence Secretary shakes his head. They are still in the queue; they cannot be manufactured for us because we have not given a solid commitment on when we want them. Those delays in procurement particularly affect some of our smaller defence companies, because they do not have the cash flow.

I mentioned artificial intelligence in an intervention yesterday. One of the most important things the Chancellor could have done for this country yesterday was provide a proper path to how every single Department will operate digital and AI more effectively, so that he could increase productivity. The machinery of government changes that the Government have undertaken in the last year do not give the Public Accounts Committee, which I chair, any confidence that the Government have a real policy on digital and AI, and how they will produce mechanisms for using this technology properly.

A year ago, digital policy was in the Cabinet Office. It was then transferred to the Department for Science, Innovation and Technology, but DSIT was abolished. Now it is in the Department for Digital, Culture, Media and Sport—the Department which historically has been used to dealing with sport and culture, not the important matter of AI. Without this priority, it is difficult to see how the Government will make this digital policy work.

When my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt), as I said in an intervention yesterday, gave in his Budget a significant sum of £3 billion to the Department of Health and Social Care—the Defence Secretary’s former Department—to transform their digital equipment, that was the start of what we should have been doing for every single Department. I do not know how the Government will meet their efficiency targets unless they start to introduce proper AI and get rid of some of our legacy equipment, which, as the Defence Secretary knows only too well, is more vulnerable to cyber-attacks.

I turn to local government reform. I was pleased by the announcement this morning that Gloucestershire will be one unitary authority—that is good news—but our local authority will only get any increase in finances if we can come up with devolution. There was no link to how Gloucestershire will move from local government reorganisation into a strategy authority, and we need to have that. Otherwise, we will not be able to take advantage of some of those financial benefits.

On the civil service pension scheme, there is a good news story for which I praise the Government. We have had five hearings on the Public Accounts Committee into the dreadful mess that Capita has left that scheme in—five hearings where every single deadline has been missed. That is not good enough for the poor 1.7 million members of that scheme. The Government have done a good thing. Last week, I wrote to the Pensions Minister about a problem: if Capita did not pay out a lump sum within two years, scheme members would be taxed on that sum at the highest rate. The Minister met me fairly quickly, I raised it on the Floor of the House on Monday and—bingo!—I got a letter yesterday saying that the law was going to be changed in the Budget. I pay tribute to the Government and the Pensions Minister for that quick action. That was the just thing to do. Those pension scheme members will not have to keep worrying about whether they will get their full lump sum.

In conclusion, this is sadly a wasted opportunity, and we look forward to future Budgets actually giving us a path to a better economic future. One of the economic forecasts we had in the Budget yesterday was growth of 1.2%, which all the Government and the Chancellor are crowing about, but historically 1.2% is not enough to keep spending at the rate the Government are. We need more measures to help business and a proper taxation policy, and then this country will start to grow.

[Several hon. Members rose—]