Budget Resolutions and Economic Situation

Mike Wood Excerpts

Wednesday 28th October 2026 Commons Chamber

[Mike Wood (Kingswinford and South Staffordshire) (Con)]

Will the right hon. Gentleman give way?

[Peter Kyle]

I will make some progress, because lots of Members want to speak, and I have not even got on to the main argument that I want to make.

There are real benefits from this Budget. In my constituency, the council tax rebate will impact positively on 42,000 homes. The same will be true in the constituency of the right hon. Member for Herne Bay and Sandwich (Sir Roger Gale) and in others around the country.

The Chancellor also mentioned directly the defence dual use investment for companies doing dual-use innovations. When he was Defence Secretary and I was Secretary of State at the Department for Science, Innovation and Technology, we worked together, and it was the first time that the Secretaries of State of those two Departments came together to work on the strategic challenges and opportunities faced in the defence industry. I am really pleased that we now have a Chancellor investing in dual use. It will be based on the conversations and workstreams that we set up when we were those two Secretaries of State. Those two roles should work together going forward.

When Labour came to office in 2024, we inherited a growth emergency. Now we have taken solid steps forward, but we must still have the mindset that we are facing a growth emergency. It is my belief that we are on a motorway heading in the right direction but even now are only travelling at 30 mph.

I believe that the challenge we face is a complacency that was set down in previous times, when we took growth for granted. From the 1997 Government onwards, for a decade before the financial crash, I think it is fair to say that we felt that growth was dependable—that there was a sense of inevitability about growth. We could focus on all the social issues we wanted to tackle based on the proceeds of that growth, but we did not pay enough attention to underpinning growth and making sure that it was sustainable into the very long term.

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[Andrew Lewin (Welwyn Hatfield) (Lab)]

This is a Budget that supports those who need it most through the winter and that ask the banks, which are on course to make record profits, to make a greater contribution. Crucially, it backs young people with the ambition to own their own home and to build a business.

There is lots to reflect on. As the newest member of the Treasury Committee, I intend to get into the detail in the weeks to come, but I will start with the international context. It is crucial that we have an honest debate in this House and in the country about the impact that context has on all of us. It is true that we are spending billions more on debt interest than was projected just a few months ago, but that is not because of extra borrowing by this Government; it is because of the global spike in inflation caused by the war in the middle east. It is also the case that the IMF has praised our Government for taking decisive action on deficit reduction. However, in the 21st century no country and no economy can stand alone.

[Mike Wood]

The hon. Gentleman will be aware that a key part of the deficit reduction strategy—according to the Red Book—is a reduction of 2% a year in the annual spend on mainstream schools after 2028-29. Will he go into the next general election promising that in his manifesto?

[Andrew Lewin]

It is news to me that I will be writing the manifesto, but I am always open to a promotion. Our spending review will cover all elements of spending on public services, but this is a Government who have backed public services, unlike the Conservative party.

In a more uncertain world, it is imperative that the UK lives by our values. I have been going through the Red Book, and—this is on page 103—the single biggest increase in investment announced today is in our defence, to fund the defence investment plan. That is a very important statement of intent at such an uncertain time for our country, Europe and the world, which is further demonstrated by the package of £10 billion for additional support in loans to Ukraine.

Before the Budget speech, I was pleased to hear the Prime Minister reassert how important it is to him that we have a stronger economic trading relationship with the European Union. Also—I will be honest—I am slightly pleased by how much it upset the hon. Member for Harwich and North Essex (Sir Bernard Jenkin), because that means we are going in the right direction. It is a sad state of affairs that the Conservative Party has drifted so far away from mainstream business opinion that they are saying they will not countenance any improvement in our deal with the European Union. That is why people in areas such as mine, Welwyn Hatfield in Hertfordshire, are no longer voting Conservative.

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[Mike Wood (Kingswinford and South Staffordshire) (Con)]

The disappointment of today’s Budget is that, having put on his running shoes for the media earlier this week, the Chancellor spent his statement running away from the big challenges facing the country and ducking each difficult decision. The first big challenge that he ducked was getting a proper grip on the public finances, so that we do not have to leave our children and grandchildren with spiralling national debt. He tells us that everything is under control because the OBR says that his fiscal rules have technically been met, but the public are not fooled by Treasury scorecards, and neither are the markets.

Just like his predecessor, the Chancellor promises to bring borrowing down right at the end of the period covered by his fiscal rules, in this case with the hidden promise of 2.6% annual spending cuts, which includes those 2% a year cuts from mainstream schools every year, after the next general election. Those steep cuts will clearly never happen, and the markets know it. In the meantime, he did not say that he was increasing borrowing from 2.9% to 3.4% next year, and from 2.5% to 2.9% the year after—billions in extra borrowing. Like his predecessor, the Chancellor seems to take his inspiration from St Augustine: “Oh Lord, help me to be pure, but not yet.” Every year, the date for that fiscal restraint is pushed back another 12 months and borrowing revised up in the meantime. He speaks of fiscal discipline, but this is fiscal policy on the never-never.

Nowhere is the reason for that fiscal timidity clearer than on welfare. All hon. Members know that public spending cannot be controlled and Britain cannot get back to work without proper structural reform to a ballooning welfare bill, but where we needed action, all we got were yet more taskforces, reviews and procrastination.

That failure on welfare leads directly to the most sorrowful failure in the Chancellor’s entire Budget: national defence. The Chancellor knows the urgent need for an immediate plan to increase defence spending to 3% of GDP by 2030 better than anyone; it is why he said he resigned as Defence Secretary earlier in the year. He knew the Government were playing Treasury accounting tricks—tucking MI5, pensions, the Chagos Islands bills and even £200 million for doing up Barrow-in-Furness high street under the badge of “defence spending” to pad out a press release—but when we strip out those tricks, our armed forces are facing a real-terms cut in their day-to-day running costs over the next three years.

Finally, the Chancellor had the chance today to undo the terrible damage done by his predecessor and inject real, sustainable growth into our economy. Business distress is at a 20 year high. High street names like Poundland are collapsing, and young people have paid the heaviest price of all, with surging numbers of NEETs and a genuine youth jobs crisis. Nowhere feels the triple whammy of high employment costs, punitive business rates and relentless regulation more acutely than our hospitality sector. Our pubs, bars and restaurants are the heart and soul of communities like mine in Kingswinford and South Staffordshire—

[Leigh Ingham]

On that point, will the hon. Gentleman give way?

[Mike Wood]

No, we are coming to the end of the debate.

Those pubs, bars and restaurants are the No.1 place where young people get their first foot on the jobs ladder. The Chancellor’s announcement on small business relief will clearly be welcomed by those firms that qualify, but the truth is that it will do little to help most hospitality businesses. Fewer than one in 10 restaurants and licensed premises are set to benefit, with the rest continuing to suffer from Labour’s business rates bill hike.

The Chancellor had a simple, practical lever right in front of him today—a meaningful increase in the alcohol duty differential for draught beer and cider pulled across the bar in a well-run local pub or restaurant, compared with cheap bottles and cans stacked high in supermarket aisles. It would have helped our British breweries, helped save community pubs and protected hospitality jobs for young people. Again, the Chancellor knows that: in opposition, he called for cuts in beer duty, but in the Treasury he is hiking the main beer duty rate. He ignores the cross-party pleas for big reductions in draught beer duty, and instead hammers publicans and brewers once again, with another hike in the beer duty he used to say should be cut.

The Chancellor needed to step up and take the decision needed to help pubs and hospitality. Instead, just like on debt, on welfare and on defence, he ducked it. Our businesses, our young people and our armed forces cannot afford to wait in a holding pattern until this Government discover their courage.