Conduct of the Chancellor of the Exchequer Debate
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Mel Stride
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Conduct of the Chancellor of the Exchequer
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Sir Mel Stride (Central Devon) (Con)
I beg to move,
That this House calls on the Chancellor of the Exchequer to apologise for misleading the country about the state of the public finances, rolling the pitch for raising taxes, breaking her promises and increasing welfare spending, including her claim on 4 November 2025 that the OBR would be downgrading their productivity forecast which, as the Chancellor said, had ‘consequences for the public finances too, in lower tax receipts’, when in fact on 31 October 2025 the OBR had submitted its forecast to the Chancellor that showed tax receipts would be £16 billion higher than previously thought, resulting in the Government’s current balance target being met by a margin of £4.2 billion; further calls on the Chancellor to apologise for breaching the trust of the OBR, whose forecasts are shared in strict confidence until the Chancellor has given her Budget Statement; also calls on the Chancellor to apologise for the misleading briefings and leaks from HM Treasury in advance of the Budget Statement which caused uncertainty for families, businesses and investors; and calls on the Chancellor to apologise for breaking her promise after the last Budget that the Government was not going to raise taxes again, instead raising taxes in the 2025 Budget by £26 billion.
I will, of course, heed your remonstrations and remarks, Madam Deputy Speaker.
It is said that astrologists are there to make economists look good and second-hard car dealers are there to make politicians look good. It is inconceivable that anywhere in the world there is any trade or career that could possibly make this Chancellor look good. Indeed, one need only look at the polls. The Ipsos poll on the Chancellor’s approval rating shows that she has achieved minus 60%. That is a record low for a poll that was first commenced in the 1970s. A recent YouGov poll stated that the Chancellor was the least trusted on the economy, even more so than Jeremy Corbyn and, yes, Liz Truss—
Sir Mel Stride
You are quite right, Madam Deputy Speaker; I meant to say the right hon. Member for Islington North and Liz Truss. The Chancellor is not so much the wilting lettuce as a complete liability. How could this possibly have occurred? We have a Government who came to power with one of the largest majorities in the history of our country. One could almost see their majority from the moon. This has happened because of a huge failure on their part.
Let us take unemployment. Unemployment is now at a five-year high, back at a level last seen during the pandemic. The latest forecasts from the Office for Budget Responsibility show unemployment higher in every single year than in the forecasts from back in the spring. The International Monetary Fund tells us that inflation will be at the highest level of the G7 this year and next year too. Looking beneath the headline figures, the rate of inflation for food is at almost 5%. For a party that claims and professes to stand up for the poorest in our society, that is a disgrace.
When it comes to growth, we know from the OBR’s latest forecasts that, for every year going forward, growth will be lower than the spring forecast set out. Our borrowing costs not so long ago reached a 27-year high, and we are now paying more on our borrowing than Greece.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
I congratulate the shadow Chancellor on finally working out what apologies are; I know he is demanding them from this side of the House. Before he carries on, will he apologise for the 15% spike in interest rates under Liz Truss, the thousands of pounds that were put on mortgages under Liz Truss, the billions that were cut from local governments under his Government and the fact that he ruined the health service under his Government? If people make mistakes they should apologise. When is he going to start?
Sir Mel Stride
I have had many things to say about the mini-Budget, both at the time that it happened and subsequently—and more recently too. Can I remind the hon. Gentleman that on the day of the general election, we had a near record level of employment and a near record low level of unemployment? We had the highest growth in the G7, and we had inflation bang on target at 2%. It is almost double that at present. The reason this Government have failed can be distilled to just two words: one is “deceit” and the other is “incompetence”. In the run-up to the last general election, the Labour party said that it would not put up taxes left, right and centre, and yet, within a few short months, they were to roll out £40 billion-worth of tax increases, including £25 billion by way of increased national insurance contribution taxes on employment.
Graham Stuart (Beverley and Holderness) (Con)
Will my right hon. Friend give way?
Graham Stuart
My right hon. Friend is right to put his finger on the issue of trust. It is not the 280,000 people who are not employed now compared with last year; it is not the lost opportunities for so many young people in hospitality or, indeed, the so many other areas of failure, such as the reduction in numbers of teachers. The issue that is most corrosive for this Government is a loss of trust, because we can see their mendacity from Mars.
Sir Mel Stride
My right hon. Friend is right. To be more accurate, we can see it even from Pluto. He is also so right about the loss of jobs in hospitality; about 90,000 jobs have been destroyed, many of them the first opportunity to get on to the career ladder that young people would otherwise have had. That is as a direct consequence of the increase in national insurance. It was not just an increase in the rate; it was a reduction in the threshold at which that tax cuts in. That disproportionately affects those on lower income, in particular women, part-time workers and, yes, young people.
Sir Mel Stride
I will in a moment.
We have seen the consequences of that up and down our country. I have spent a lot of time speaking to employers—from the large employers down to those on the high streets. They are all struggling and they do so because of the decisions that were taken by this Chancellor.
Natalie Fleet
I welcome the debate and I thank the shadow Chancellor for giving way on the point about women. We are here to talk about the conduct of the most powerful woman in this country, who used her Budget to remove the rape clause, to take children out of poverty and to give justice to miners in my patch. That never would have happened without her. I welcome this moment to celebrate our Chancellor, and I thank the right hon. Gentleman for it.
Sir Mel Stride
I thank the hon. Lady for that passionate intervention. The best way to get people out of poverty is through work. To the point made by the hon. Member for Stoke-on-Trent Central (Gareth Snell), the record of the last Government was exemplary. We had 4 million more jobs, and 800 new jobs every day under the last Conservative Government.
Josh Fenton-Glynn (Calder Valley) (Lab)
Were I not sat in a different place, I would be feeling déjà vu, because this appears to be the same debate that we had on the Budget just a week or so ago when I pointed out to the right hon. Gentleman that the problem we have is that two thirds of children growing up in poverty have a parent in work, when it was a third before the last Government got in. Will the right hon. Gentleman, who is a former Secretary of State for Work and Pensions, like to, first, apologise for that and, secondly, reflect on why work was not a route out of poverty under his Government?
Sir Mel Stride
I just ask the hon. Gentleman what he thinks the effect of increasing taxes on hard-working people does for poverty. Any economist will say it drives poverty up.
There is also the question of the farm tax, with the changes under the inheritance tax regime. In the run-up to the general election, the Secretary of State for the Environment, Food and Rural Affairs, then in his shadow position, looked the National Farmers Union president Tom Bradshaw in the eye and said that, at least on that count, farmers had nothing to fear from a future Labour Government. Well, that lasted about five minutes before they changed and the Chancellor changed her position. That will cause untold misery to farmers up and down our country. It will mean that farms that have been passed down generation to generation over many years will now fall into the tax net and potentially have to be broken up.
Dave Doogan (Angus and Perthshire Glens) (SNP)
We know that there are serious questions over this Chancellor’s alleged experience in the financial services sector. We can see that she has no experience in either industry or commerce. Perhaps the worst of her detriments, however, is her clinical lack of empathy, seeming totally unable to connect cause and effect. That is why she has allowed the disastrous—
Dave Doogan
Indeed. In terms of that conduct and those decisions that have been made, that is most evident in the egregious family farm tax—a betrayal of the producers of our food, no less—and the, let us call it, management of market-sensitive information before the Budget, which had a material effect on the economy of these islands.
Sir Mel Stride
The hon. Gentleman makes excellent points, and I will come to the issue of the market-moving effects of some of the comments made by the Chancellor. On the point that he rightly raises about the impact on people’s lives, these are real jobs. These are people struggling with real businesses. These are farmers getting up early in the morning, going out, working and doing what they know to be right, yet they are weighed down by the decisions taken by the Government.
Labour said that it had no intention of means-testing the winter fuel payment. There was no mention of it in its manifesto during the last general election, yet within a very short period of time, that is precisely what it did. Before Labour Members get excited about excluding millionaires and multimillionaires from those payments, the reality is that about 80% of pensioners living below the poverty line were impacted by that decision, which would have only entrenched and driven up poverty.
Dr Luke Evans (Hinckley and Bosworth) (Con)
One concern that I have is the repeated pattern seen with the Budget. At the time, the Government sat on an impact assessment that showed that 100,000 pensioners would be pushed into poverty and 50,000 into absolute poverty. That was the Government’s own assessment, but they did not release it to the House or the country before pushing through the policy, which we have now seen in the Budget. Does my right hon. Friend agree that this is a pattern of behaviour rather than a one-off mistake?
Sir Mel Stride
My hon. Friend is absolutely right. The Government talk a good game on poverty, but when it comes down to what they do, we see something entirely different.
Sorcha Eastwood (Lagan Valley) (Alliance)
On the point about what poverty means to our constituents, we are sitting in Northern Ireland with the local growth fund and the Treasury refuses to understand that the way we do things is different. We do not need 70% capital funding; we need it the other way around. That, to me, speaks to some of the substantive motion that I am comfortable to speak to, which is that it sometimes feels that the message is not getting through. Whether it is on the farm tax or the winter fuel allowance, our constituents need a Government who will listen. They promised to listen, but so far that has not been reflected.
Sir Mel Stride
The hon. Lady is absolutely right.
There is another change to the inheritance tax regime that will be equally as destructive as the agricultural property relief changes, and that is the business property relief changes—the tax changes relating to family firms up and down the country. I have met many of them. These are sometimes substantial businesses that have gone from having a bright outlook under the last Government to suddenly being concerned about the provisions they will now have to make to avoid being broken up as a consequence of the ruinous changes to the inheritance tax regime for those businesses. This is destroying investment, jobs and growth. That is the story of the Labour party.
Gareth Snell
On the right hon. Gentleman’s new-found concern for pensioners in poverty, the one time that the triple lock was suspended was under the Conservatives in 2021. I believe that he is on record as saying that it was unsustainable and should be replaced with a double lock. Is that still his position or does he support the triple lock?
Sir Mel Stride
I invite the hon. Gentleman to look back a bit further in time, before the triple lock was introduced by the Government of my party, to the time when his party was last in office. Under the last Labour Government, pensioner poverty was the fourth highest in Europe. That is why we brought in the triple lock—to clear up the mess that his party had created.
Labour also said, during the run-up to the general election, that unlike all socialist Governments in the past, it would not borrow and spend massively, yet the plan set out in its first Budget last autumn was to spend around half a trillion pounds more across the Parliament than under the plans it inherited. That was added to further in the recent Budget. Billions of pounds more are to be borrowed and spent. The consequences of that are that inflation has been stickier and higher for longer, as I have set out. It will be the highest in the G7 this year and the highest in the G7 next year. The consequences of that are that the Bank of England has had to keep interest rates higher for longer than it otherwise would have. The consequences of that—[Interruption.] Yes, there should have been more reductions—if the Government had not fuelled inflation, we would have seen interest rates coming down faster.
The reality is that increased borrowing costs have heaped pressure on people with mortgages and on businesses, and have added to the cost of servicing the huge national debt, to which the Government are readily further adding such that we are now spending £100 billion a year just to service our national debt, and that will rise to £140 billion, according to the latest Office for Budget Responsibility forecast. That is more than double what we spend on defence. If debt servicing were a Department, it would be the third largest in Whitehall, but not one looking after public services or providing the additional teachers, which, apparently the Prime Minister does not realise are not there. This is money being spent simply on paying for the profligacy of the Labour party.
David Pinto-Duschinsky (Hendon) (Lab)
I want to help out the right hon. Gentleman, because he seems a bit confused. On his party’s watch, the debt service exceeded £100 billion. When it took over, the debt service was only £30 billion, so his party tripled it. Will he apologise for mortgaging our children’s future as a result of the Conservative party’s inability to manage the public finances?
Sir Mel Stride
May I give the hon. Member a basic lesson in economics? In 2010, when my party came into office, we inherited a deficit at over 10% of GDP—as any economist will say, that is the amount of money being added to the debt every single year. It was over 10% on the watch of the Labour party, and that is the story of increased debt.
The debt pile as a percentage of GDP was coming down just before covid. Along with just about everybody else in the political firmament at the time of covid, the Labour party urged us to spend ever more to support the economy and to support jobs. That is precisely what we did, and of course that came with a fiscal cost.
Sir Mel Stride
Three times might be a bit too much—we will come back to the hon. Gentleman later.
Jonathan Davies (Mid Derbyshire) (Lab)
After the global financial crisis, which hit every country in the world, the Conservatives inherited a growing economy in 2010. I remember that it said it would wipe the deficit by the end of the 2015 Parliament, but that simply did not happen. We acknowledge the huge pressure that covid put on the economy, but we are taking steps to get the deficit and borrowing down, because it is a huge burden on the economy.
Sir Mel Stride
The steps, as the hon. Gentleman terms them, that his party is taking to get the deficit down are to borrow ever larger sums of money—half a trillion more than was laid out in the plans that his party inherited, and that has been added to further by the Chancellor at the last Budget.
You will recall, Madam Deputy Speaker, that after her first Budget, the Chancellor said that she would not be coming back for more tax, which brings me to the issue of her being misleading. That was clearly a misleading statement, because the recent Budget sets out that £26 billion more will be raised in tax in the year 2029-30. But £26 billion is not the extent of the increased tax rises. Because the Government have fuelled inflation, for the reasons that we have been discussing among ourselves, fiscal drag has dragged in a total of £38 billion of additional taxation in that year. The Labour party must start to understand that if it taxes and taxes and taxes the economy, it will get less growth, less productivity and less employment, and that is precisely what we are seeing.
The Labour party also said—if you recall, Madam Deputy Speaker—that the Chancellor would not be taxing hard-working people. Well, that simply was not true. By freezing the income tax thresholds for those extra years, the Chancellor is increasing taxes by £7 billion, which is a direct contradiction of what she said—with great gusto—in the previous Budget. She said that she would not do that because it would hurt hard-working people and that she would stick to her promises. Clearly, she did not mean it when she said it.
Graham Stuart
I wonder how best this behaviour can be described—as a falsehood, an untruth, a fib, a lie or a whopper, or are there other synonyms that better describe the repeated failure to do what one promises?
Sir Mel Stride
I thank the right hon. Member for that observation. I have been cautioned by the Chair as to the language—“misleading”—that I use, but it was clearly misleading for the Chancellor to come to the House and say that she would not be putting up taxes and that this was a one-off, as she used the expression “wipe the slate clean”, and yet be back for £26 billion more only a matter of months later.
The Chancellor also said that she would control welfare spending. Well, how did that go? The first thing that Labour did was to scrap the reforms that we had brought in—in fact, from when I was Secretary of State for Work and Pensions—that the OBR had scored as 450,000 fewer people going on to long-term sickness and disability benefits with a multibillion pound—
Sir Mel Stride
I think I have a jack-in-the-box over there. A jack-in-the-box is great to observe, isn’t it? I am not sure that is the case with the hon. Gentleman, but I might take what is probably the fourth intervention from him momentarily.
The Government scrapped our plans, with the result that 450,000 people who would not have gone on to those benefits are now heading exactly in that direction. They U-turned, of course, on the botched attempt to bring in their own reforms because perhaps some Labour Members sitting here this evening refused to back them. That cost about £5 billion.
We have seen that the terms of reference for the Timms review, which is looking at reform of personal independence payments, make it explicitly clear that there will be no attempt to manage down any of the forecast numbers for that benefit within the OBR’s forecast. Labour has given up on welfare reform.
Sir Mel Stride
Momentarily—I assure the hon. Gentleman that I will come to him.
What Labour has done in the meantime with this Budget is to take entirely the wrong decision, which is to tax all those hard-working people to the tune of £7 billion—a high proportion of that to transfer straight across to those who are on benefits, including scrapping the two-child cap. Those are the wrong priorities. They are about the socialist obsession with redistribution, and nothing to do with driving the incentives in the economy that grow it and make everybody better off.
Mark Pritchard (The Wrekin) (Con)
We heard from Labour Back Benchers about the previous Government’s borrowing, but that was for the country as a whole—for example, covid recovery loans. We have seen with this Budget what I would call career recovery loans, which are for the benefit of two people: the Chancellor of the Exchequer and the Prime Minister.
Sir Mel Stride
My right hon. Friend is absolutely right. In her heart, I do not believe that the Chancellor really thinks the right decision was to scrap the two-child benefit cap—I genuinely do not. This is a case of the political or fiscal tail wagging the welfare dog; it is as simple as that. The Front Bench has given up on any serious welfare reform.
Of course, the Chancellor has reassured us by telling us that she has rebuilt her headroom. She has doubled the headroom against her fiscal target, though it should be pointed out—
David Burton-Sampson (Southend West and Leigh) (Lab)
Will the right hon. Member give way?
Sir Mel Stride
I will in a moment.
It should be pointed out, of course, that that is a fiddled fiscal target. It is not the fiscal target that we were working to—the same definition of debt. It is not net public sector debt at all; it is something different. In fact, if we were to apply the targets that we were running to, which were much more stringent, to the figures in the forecast that we see from the recent Budget, those targets would be underwater in every single year of that forecast.
We should acknowledge that there is now real risk to the stability of our economy, even with an apparently doubled fiscal headroom. The first risk is in defence spending. Although within the numbers, there is the ambition to reach 2.7% of GDP by 2027, there is nothing beyond that. Of course, the Government know that they will have to spend more on defence, and that every increase of 1% of GDP in defence spending is about £25 billion—more than the entire fiscal headroom that the Chancellor has set aside.
The Chancellor knows that part of the problem she had with the forecast—although other things moved strongly and positively in her direction—was the productivity growth downgrade by the OBR from 1.3% to 1%. The trend for productivity over the past 15 years has been just 0.5%. If the OBR decides in a couple of years’ time to return to an assumption of trend growth in productivity, that will wipe out £28 billion of headroom. It will destroy all the headroom and more.
Similarly, on the path of interest rates, a 1% increase in interest rates across the forecast would cost £16 billion. In relation to particular spending pressures, such as special educational needs and disabilities, there is of course a £6 billion cost pressure, because that spending will be taken from local authorities and put on to the Government’s books in 2028. How that additional cost will be met is not in any way accounted for. Similarly, apparent efficiency savings of £4 billion in 2029-30—the target year—are very handy if one is trying to hit a fiscal target, but there is no explanation whatsoever of where or how those efficiency savings will be found.
My final point is that the tax increases set out by the Chancellor are all back-ended. That is when the frozen thresholds kick in. We are expected to believe that, in the run-up to a general election, a party that has shown no resolve, backbone or capacity to take difficult decisions will suddenly find some backbone, stick to its guns and deliver those tax increases. That simply will not happen.
Dr Luke Evans
Nowhere is that more evident than in health, with the abolitions and redundancies in integrated care boards. Given that those redundancies cover 50% of ICB staff, we now understand that the funding is just being reprofiled into later spending in 2028-29. Is that not exactly the kind of example that my right hon. Friend is talking about? Labour will encounter real problems in the next couple of years as it tries to drive through its agenda.
Sir Mel Stride
The reality is that back-loading tax-paying and squeezing spending, as the Government are doing, simply pushes off the inevitable. The evidence shows that, despite its huge majority, Labour does not have the backbone or a plan to control spending and take difficult decisions, even on tax.
The Chancellor is like Mr Micawber in Charles Dickens’s “David Copperfield”, who was just waiting all the time for something to turn up. Mr Micawber, as those who are familiar with the story will recall, not only ruined himself through his inability to manage his own finances, but ended up ruining another person, too. The Chancellor, with her inability to manage the public finances, will, I am afraid, be the ruin of our nation. For most of us, Christmas will be not so much a question of “Great Expectations”, but one of “Bleak House”. I give way to the hon. Member for Southend West and Leigh (David Burton-Sampson), who has been very patient.
David Burton-Sampson
The shadow Chancellor wants to talk about fiction, so let us talk about the Liz Truss Budget. Before we do, though, imagine if the Chancellor had turned up to deliver her Budget with headroom of £4.2 billion—£2.2 billion below what is set out by the stability rules. That would have been fiction. But she did not do that; she took the fiscally responsible decision to create headroom of £21.7 billion, which covers us for future financial shocks. Does the shadow Chancellor not agree?
Sir Mel Stride
Well, no. The reason there is the obsession with fiscal headroom is that this is the Chancellor who set up too little back in the day, blew it all, had to rebuild it, blew it all, and has had to rebuild it again. That is why the markets are so sensitive to fiscal headroom. The fact that the Chancellor is now saying that she needs £22.5 billion as fiscal headroom against her primary current Budget target is evidence of the fact that she had woefully too little back at the time of the first Budget, when she had £9.9 billion. That is the moral of the story.
Sir Desmond Swayne (New Forest West) (Con)
The political reality is that this Government have been dead in the water since they failed to get their very modest reduction in the rate of growth of the benefits bill through Parliament earlier in the year. We saw the ridiculous nonsense in the Budget when, having sacked and suspended Back Benchers after the previous Budget because they voted to end the two-child limit, the Chancellor came back with this great triumphal announcement that she was going to do it for them. May I entreat my right hon. Friend to give way one more time to the hon. Member for Stoke-on-Trent Central (Gareth Snell) so that he can give us an explanation of his socks?
Sir Mel Stride
I think the less said about the socks the better, Madam Deputy Speaker.
Sir Mel Stride
Yes, not bad, but I have to say that the tie runs in a close second—that is pretty shocking too.
I now turn from the substance of the Budget to the chaotic pantomime that we had in the run-up to the Budget? We had every possible kite flown by the Treasury as to which taxes were potentially going up. We had so many kites that they blotted out the sun, and the long shadow of all that chaos swept across businesses who stopped investing, and consumers who stopped spending. Members should not take my word for that; Andy Haldane, the former chief economist at the Bank of England, observed that all that speculation made businesses and consumers “hunker down”. It had real economic consequences.
Dr Andrew Murrison (South West Wiltshire) (Con)
Will my right hon. Friend give way on that point?
Sir Mel Stride
I will take one final intervention, and there is none better than my right hon. Friend.
Dr Murrison
My right hon. Friend is being very generous. The truth is that through dither, delay and changing their mind, the Labour Government in the run-up to the Budget had a real impact on people’s lives. Does he agree that pensioners in particular were encouraged to withdraw funds from their pension funds, which will have an impact on them for many years to come? What does he think of the remarks of Michael Summersgill, the chief executive officer of AJ Bell, who said that millions and billions of pounds were withdrawn from pension funds precisely because of the changing mind of the Chancellor of the Exchequer expressed before the Budget?
Sir Mel Stride
My right hon. Friend is absolutely right, which is why that behaviour was so irresponsible. There are people who would have drawn down on their pensions because they were extremely concerned about what was being briefed out by the Treasury as to what changes may be coming down the line, and about their ability to do so after the Budget. We also had people leaving the country because they were worried about an exit tax, which was another kite flown by the Treasury. That grossly irresponsible behaviour had real-life impacts in the real economy.
When it comes to misleading, there is much to consider in the complete mismanagement of the run-up to this Budget. That is not just my view. Indeed, a member of the Cabinet was quoted in the press saying,
“the handling of this Budget has been a disaster from start to finish.”
The impression that has been given is that there was a deliberate attempt to paint an inaccurate picture of the public finances, designed to give political cover for Labour’s plans for more taxes and more welfare spending. The Chancellor delivered a pre-Budget statement in Downing Street on 4 November in which she said that the OBR would be downgrading its productivity forecast, meaning lower tax receipts, but she failed to mention that in reality the OBR’s forecast had already shown her four days earlier that overall tax receipts were £16 billion higher—not lower—than previously thought. To quote the OBR’s Budget report:
“In isolation, the reduction in productivity growth could have lowered revenues by around £16 billion in 2029-30. However, the boost to receipts from higher inflation and changes to the composition of nominal GDP growth…more than offset this.”
Ministers have pointed out that there was a need to increase headroom, but that was not the justification for tax rises that was being made before the Budget, and it is an admission that the headroom that the Chancellor left in her first two fiscal events was inadequate and irresponsible. Crucially, it also fails to acknowledge that a significant proportion of the increase in taxes was used to fund policy decisions to spend more on welfare.
On 14 November, the media were briefed that a plan to increase income tax rates had been dropped following an improved forecast from the OBR. We now know that that was simply untrue. The finalised pre-measures forecast came weeks before this, on 31 October. That is why it is vital that the Financial Conduct Authority investigates the briefings and leaks that went on, and I have written to it again this week on that matter. Even after the Budget, in a Guardian interview, the Chancellor said that income tax rises had remained on the table well into November,
“because we didn’t know the size of the downgrade, the productivity”.
Again, that is simply untrue.
We now know that at no point was there a deficit of the scale suggested to the media. We know that because the OBR felt it necessary to take the unprecedented step of publishing its forecast rounds in full. The question remains as to why Ministers seem to have been so unconcerned about what was appearing in the press, when the OBR has now revealed that the alarm was being raised before the Budget. The reality is that the briefings and leaks were a smokescreen designed to distract from the real reason that taxes were going up, the utter weakness of this Labour Government and the need to buy off their Back Benchers with yet more welfare spending.
In the process, the uncertainty and speculation fuelled by the Treasury had an impact on families and on growth. As my right hon. Friend the Member for South West Wiltshire (Dr Murrison) rightly pointed out, people made decisions about their finances. They locked in higher mortgage rates, and businesses put off making investments and hiring workers. The British public have been left worse off and they have been misled. They deserve an apology, and they deserve much better than this weak and irresponsible Government.
James Murray
The word “rates” is definitely in there. The manifesto talks about the income tax rates and additional, main and higher rates of income tax, and it is very clear that we were talking about the rates of tax on working people. As I said, the manifesto also says that we will keep taxes on working people as low as possible. I note that the right hon. Gentleman did not take my suggestion to comment on some of the other tax choices we took at the Budget—the fair and necessary choices. The Opposition are picking and choosing what they want to refer to in the Budget. The Budget is a package. If they do not like it, they should explain what they would do instead.
Sir Mel Stride
On the matter of picking and choosing, the right hon. Gentleman is absolutely right that on 4 November, the Chancellor did point out that there was a downgrade in productivity; we now know that to be £16 billion, and she knew that at the time. Does the right hon. Gentleman accept, however, that she did not mention—it was omission—the upgrade to the number, which was twice as much as that £16 billion, and that she thereby gave an inaccurate reflection of the state of the public finances at that time?
James Murray
The Chancellor set out the productivity review that was under way by the OBR. In fact, if the right hon. Gentleman consults the OBR document published on Budget day, he will see in black and white that the productivity downgrade reduced tax receipts by £16 billion. The Chancellor was clear in her speech on 4 November that this, combined with the clear need to increase headroom to build resilience in public finances, would require everyone to contribute, and that is what happened.
James Murray
The right hon. Gentleman had a very long time to comment earlier in this debate—I may give way to him later.
James Murray
As the right hon. Gentleman should know, this Government take our responsibilities to public office incredibly seriously, and we have made sure we focus on that in the way we conduct ourselves in office. In speaking to people on 4 November, the Chancellor was setting out the challenges that we knew we were facing and the principles that would guide her in approaching decisions ahead of the Budget. It was important to set out the priorities she would have in taking her decisions on Budget day.
Sir Mel Stride
The right hon. Gentleman is being very generous with his time. Does he accept that on 4 November, the Chancellor knew that there was an upgrade to the state of the public finances of around £32 billion due to additional tax, inflation and other factors? If he does accept that, could he explain to the House why no mention whatsoever was made of that fact by the Chancellor?
James Murray
What the Chancellor knew when she gave her speech on 4 November was that headroom stood at a precarious £4.2 billion, and that was before previously announced policy measures had been accounted for. As I have said before in this House, and as Professor Miles of the OBR said to the Treasury Committee, that was a very challenging fiscal situation. If I had been at this Dispatch Box trying to justify a headroom of £4.2 billion or less, that would have been completely indefensible. Doing nothing was not an option—£4.2 billion of headroom would have been insufficient and deeply irresponsible.
In her speech at the beginning of November, the Chancellor was clear that she would seek to build more resilient public finances, with headroom to withstand global turbulence. She set out her priorities for the Budget, and those priorities were exactly what the Budget delivered. The apparent astonishment of Conservative Members that a Government could set out circumstances honestly, explain their approach and then deliver as promised is very telling—it must be an alien concept that they never considered during their time in office. As the Chancellor set out on 4 November and then delivered in her Budget, she wanted to cut NHS waiting lists, and that is exactly what we are doing. Waiting lists are already down by 230,000, with an extra 5 million appointments delivered since the election and 250 new neighbourhood health centres on the way.