(1 day, 1 hour ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Madam Deputy Speaker (Judith Cummins)
I call the shadow Chancellor of the Exchequer.
Sir Mel Stride (Central Devon) (Con)
The film “Groundhog Day” sees Phil Connors go to a place where he wakes up every morning to the same DJ playing the same song: “I Got You Babe” by Sonny and Cher. We have a very similar situation with the Chancellor. It is groundhog day, with the Chancellor destroying the economy, putting up taxes, losing her fiscal headroom, and round and round it goes. That film was said to be a romantic comedy. Well, there has been nothing comedic about the results that this Chancellor has delivered in terms of increased unemployment, diminished living standards, higher inflation and so on. Whether the public were ever enamoured with the Chancellor, I know not, but they certainly are not now—according to the polls, she is apparently the least popular Chancellor in the history of polling on that question.
Dame Harriett Baldwin (West Worcestershire) (Con)
I liked the introduction to the shadow Chancellor’s speech. Would a better film analogy perhaps be “The Nightmare Before Christmas”?
Sir Mel Stride
That is absolutely true.
Let us look at how we ended up at this sorry pass. In opposition, Labour assured the British electorate that they would not be putting up taxes left, right and centre, and when they got into power, what did they do within a few short months? They slapped taxes—£40 billion-worth—on the British people, £25 billion of that by way of national insurance increases on business alone. It is no surprise that that destroyed employment and growth.
They talked down the economy. They came up with this confected £22 billion black hole. What an irony it was—[Interruption.] There may be chuntering from those on the Front Bench, but what an irony it was that it was at the behest of the Government themselves that the Office for Budget Responsibility was invited to look into this claim and said that it would not legitimise that figure. The damage was done. The animal spirits in the economy were extinguished.
Of course, they did something else that socialists down the ages always do: they borrowed and borrowed and borrowed and spent and spent and spent until they ran out of other people’s money—
The Parliamentary Secretary to the Treasury (Torsten Bell)
Who did the borrowing?
Sir Mel Stride
The Minister is having trouble containing himself, such is the punishment that he is receiving at the moment. They borrowed all this money, and what did that do? It stoked inflation, and with inflation higher, interest rates have been higher for longer.
Sir Mel Stride
The Minister says from a sedentary position that inflation is coming down. The International Monetary Fund says that inflation will be the highest in the G7 this year and next year.
We know that with high inflation, interest rates are higher for longer. That means businesses’ borrowing costs are higher. It means that consumer sentiment is dampened. It means that the servicing cost alone on the burgeoning debt that this Government are constantly adding to is currently £100 billion a year—twice what we spend on defence. In fact, if debt servicing were a Government Department, it would be the third largest in Whitehall—not spending money on better public services, as we are often told by the Labour party, but simply paying for the profligacy of the Labour party when it comes to borrowing.
The run-up to this Budget was a farce. We have seen weeks and weeks of uncertainty generated by the Treasury, which has leaked every possible combination of tax increases and then U-turned on some of them. It has flown so many kites that it has blotted out the sun, and a huge shadow has been cast across businesses, which have pressed pause on investment and hiring. The Parliamentary Secretary to the Treasury should speak to Andy Haldane, who concludes that what I am saying is absolutely right. It has also weighed down on consumer sentiment. All this hokey-cokey around what is in the Budget has done real damage to our economy on this Government’s watch.
Sir John Hayes (South Holland and The Deepings) (Con)
My right hon. Friend did a service to the House a week or two ago when he drew what he is describing now to the attention of this Chamber. He told the Government that these leaks were not only doing damage to the economy, in the way he has just described, but were a discourtesy to this House. Many times, Madam Deputy Speaker, you and Mr Speaker have said that announcements should be made to this House first. It is fundamental to this place that what the Government announce is brought here for scrutiny, not the public realm.
Sir Mel Stride
My right hon. and gallant Friend is entirely right, as usual, and something else has also been going on. I have written to the OBR to ask Richard Hughes exactly what happened with the information that the Treasury appears to have leaked out about the forecasts during the run-up to the Budget. I say that in the knowledge that the OBR’s own guidance says that information exchanged with the Treasury during the build-up to a Budget is provided to Ministers in confidence. Why is it then that the Chancellor herself was on the airwaves before the Budget, opining on the apparent coming downgrade to productivity? I have written to the OBR to ask whether it feels that that was appropriate.
I have also written to the permanent secretary to the Treasury to ask if he is implementing an investigation into the leaks coming from the Treasury. Interestingly, he has written back to me simply to say that in the event that there are suspected leaks, of course there is an investigation. He has not quite answered my question as to whether there is an investigation being undertaken at the moment, but I will be following up with him on that matter.
What has happened in this Budget? The OBR forecasts tell a sorry story: unemployment is higher in every single year of the forecast than it was forecast to be back in the spring. Inflation is up—we have seen the latest figures from the Office for National Statistics. Labour is the party that talks about resolving poverty; it is a disgrace that food inflation in the last set of figures went up way above the headline rate, from 4.5% to 4.9%. That rise is being borne by some of the most vulnerable and some of the poorest in our society.
On growth, of course the Chancellor tells a good story. She says that the growth forecast is up compared with spring this year, but, as the Parliamentary Secretary to the Treasury will know, it is down compared with the autumn of last year, when the OBR said that growth would be 2% in this year; it is now forecast to be 1.5%. In in every subsequent year, growth is forecast to be lower than was forecast back at the time of the spring statement. That is the simple fact.
Sir Mel Stride
We will come on to why that is the case momentarily.
What has happened to borrowing? One might have thought that the Government would have learned the lesson that ever-increasing borrowing always leads to disaster, but no: there is £11 billion of additional borrowing on average in every year of the forecast. What has that done to living standards? Real household disposable income—the economists’ measure of economic wellbeing —is down in every year of the forecast compared to the forecast in the spring.
The OBR says—the Parliamentary Secretary to the Treasury will like this one—that real income growth across this forecast will be well below the average of the last decade. So this Government should not point a finger at the last one when it comes to living standards.
Rachel Taylor (North Warwickshire and Bedworth) (Lab)
Will the right hon. Gentleman give way?
Sir Mel Stride
I will in a moment. It is there in black and white in the OBR’s report. The reason for that forecast is £26 billion of additional taxation in 2029-30, and, as the Parliamentary Secretary to the Treasury will know, an additional £12 billion of tax take that will occur because of fiscal drag. Those higher inflationary numbers in the forecast are dragging ever more people into paying ever more tax.
Jim Shannon (Strangford) (DUP)
While I am not churlish about the extra money that the Labour Government have given to pensioners, the fact is that they have pushed more people beyond the threshold, meaning that pensioners will pay more tax than they have ever paid. Does the right hon. Gentleman agree that when it comes to helping people, unfortunately this Government have given with one hand and taken away with the other?
Sir Mel Stride
The hon. Gentleman is absolutely right. The income tax threshold freeze—which has been extended for three years, even though the Government briefed that it would probably just be two—means 780,000 more people paying tax for the first time, because the personal allowance will be frozen for longer, and 920,000 people going into the higher rate tax bracket. In fact, by 2029-30, around one in four workers in this country will be in the higher rate tax bracket.
The Institute for Fiscal Studies has said that the measure is a clear breach of the Labour party manifesto. The Chancellor herself accepted in the autumn Budget last year, when she said that she would not come forward with the measure, that it would hurt working people. She repeated that yesterday. It is very clear that this is a breach of the Labour party manifesto.
When it comes to young people, we hear that there will be a freeze to the student loan payment thresholds. Young people are already disproportionately impacted by the changes to national insurance, particularly the reduction in the threshold that means that lower-income earners, which include younger people, will be disproportionately impacted by those tax changes.
The Employment Rights Bill, which is coming down the line, will make it far riskier to take younger people—[Interruption.] Government Members should be careful what they wish for. The Labour party speaks a lot about those who are not in employment, education or training, of which there are about 940,000; that Bill will do nothing to improve their life chances. It will make things worse. It will make it more risky to take those people on and employ them.
Rachel Taylor
As the right hon. Gentleman seems to care so much about those who are not in education, employment or training, why did he allow 88,000 young people to become NEETs, and is he proud that when he left office, almost 1 million young people were not in any form of employment, education or training? Is this not the worst kind of hypocrisy?
Sir Mel Stride
I congratulate the hon. Lady on reading accurately from the Whips’ circular. The Opposition stand by our record—[Interruption.] Absolutely. When we were in government, we were a job-creating machine: there were 4 million more jobs under us than had been there before. When we left on the day of the general election, we had a near-record high level of employment and a near-record low level of unemployment. Unemployment is now at a five-year high—[Interruption.] The Parliamentary Secretary to the Treasury shakes his head, but it happens to be true. One of the results of the Budget for young people is that there will continue to be a lost generation of workers.
What about those who want to save, do the right thing and provide for their future in retirement? Should we not be encouraging that? What has the Budget delivered on that front? Salary sacrifice has been savaged, the savings tax has been put up, and the cash ISA has been cut. We are punishing savers. We will see the reverberating effects of those measures for many generations and many years to come.
Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)
The sad fact is that youth unemployment—that is, unemployment among 16 to 24-year-olds—is at a staggering 15%. Given the national insurance hikes and the rise in the minimum wage, employers are unlikely to consider taking young people on, which could have the disastrous effect that people who graduate from university or from an apprenticeship will emerge having done a lot of work, but will not be able to get a proper job.
Sir Mel Stride
My hon. Friend is precisely right. I have set out the iniquitous impacts of the reduction of the national insurance threshold on younger people, as well as the impact that the Employment Rights Bill will have by increasing the risks of employing younger people. That is self-evident and obvious, and businesses are saying it over and over again. If an employer is put in a position where he is faced with a young person who has no career track record, and the Government’s legislation says that on day one the employee can take that employer to a tribunal for unfair dismissal—a claim that may get clogged up for two years, and for which the lawyers advising the employer will probably conclude that he should give in and pay out, even if the merits of the case do not warrant it—that is a recipe for higher youth unemployment. It is simple; it is basic economics.
Look at the taxes in the Budget placed on rental income. Do Labour Members not realise that that will lead to higher rents and fewer properties on the market? Do they not understand that if the family home is taxed, we will catch a lot of people who may be asset rich but are income poor? I suppose the solution will be to allow that liability to roll up and be paid on death—yet another death tax at the hands of this Government.
What is all this pain and taxation paying for? In large part, it is paying for more welfare—it is as simple as that. Scrapping the two-child cap is a mistake and it is unfair, because those who are paying taxes, working hard and doing the right thing have to take tough choices as to whether they can afford a larger family or not. It is quite right and proper that those who are on benefits should face similar choices.
Josh Fenton-Glynn (Calder Valley) (Lab)
I am sure the right hon. Gentleman is aware that the majority of people impacted by this uplift, and two-thirds of children in poverty, have a parent in work. The false dichotomy of those in work and out of work is simply incorrect, and as a former Minister in the Department for Work and Pensions, he should know that.
Sir Mel Stride
I have already set out the fact that this Government’s ruinous taxation policy, including in the Budget yesterday, is to load up taxes on people who are in work, many of them not high earners. The impact of that tax is the reason why the OBR has concluded that for every year of this forecast, real household disposable income—in other words, the cost of living issues people are facing—will deteriorate compared with the forecast back in spring. The Labour party is making poverty worse by making sure that work does not pay to the degree that it should.
The other point to make is about inflation. If the Government run a policy of borrowing vast amounts of money and spending half a trillion pounds over and above the plans that they inherited across this Parliament— that was added to by more than £100 billion just yesterday—we should not be surprised if inflation is the highest in the G7, or if the International Monetary Fund says that it will be the highest in the G7 next year. What does high inflation, particularly on food, do to poverty? It drives poverty up, and therein lie the answers that the Government need to think about.
There is an alternative, which is to get on top of and control Government spending and to do the responsible thing. Our golden rules is that at least half of those savings should go towards driving down the deficit and the debt, but we would then have capacity to drive down taxes as well. That is exactly what we set out at our conference: £49 billion of savings, and £23 billion of savings on welfare. Thanks to the solid commendable work of my hon. Friend the shadow Work and Pensions Secretary, we have found those savings, and it is a tragedy that the Government—[Interruption.] The Parliamentary Secretary to the Treasury says, “What are the savings?” The savings are £23 billion on welfare—[Interruption.] It is a number. As a member of the Treasury team, he should be familiar with numbers, but clearly he is not.
We will be bringing down the welfare bill, and the savings are clear. I direct the Parliamentary Secretary to the Treasury to the paper from the Centre for Social Justice, which makes it clear—[Interruption.] Well, it is rather better than the Resolution Foundation stuff that he produced, I have to say. The paper from the Centre for Social Justice makes it clear that by changing the gateways into longer-term sickness and health benefits, which we did when we were in office—[Interruption.] If the hon. Gentleman stops jabbering and starts listening, he might actually learn something, and that might be for the good of his party and this country.
When we were in office, we made reforms to the work capability assessment that, according to the OBR’s own scoring, would have seen 450,000 fewer people going on to those benefits. We were making a real difference in arresting the rise of the welfare bill. What did the Government do on coming to office? They scrapped those measures on day one. They then came forward with their own proposals—[Interruption.] I hope that when the Parliamentary Secretary to the Treasury gets to his feet later he will address this, and talk us through what happened to his Government’s attempt to control the welfare bill. It got smashed into a million pieces on the rocks of his own Back Benchers—that is what happened. That is the tragedy of much of this Budget: the economics are being driven by the internal politics of the Labour party. We have a Prime Minister and a Chancellor whose position is now so precarious that they have to bob up and down like a cork on the tide when it comes to making policy at the whims of Labour Back Benchers.
There is a certain melancholy about this Budget. It is like groundhog day; an old song, with the words seared into the collective mind. A socialist anthem for all time:
“That for he who has, then that must be taken away.
For he who has not, then to him must be given.”
That is not on the basis of any measure of fairness, as suggested in the topic for debate today, but rather on a fundamental misunderstanding of basic economics. Economics is about resources, of course, but it is also about incentives. To he who has, I say this: if you work hard we applaud you, and we will incentivise you to work harder still, recognising your contribution to the common good. To the vulnerable we say this: we are there for you. But to others who have not we say this: here is not a hand out, but the means for improvement.
For the socialist, Madam Deputy Speaker, distribution is all, and the means are never sufficiently willed. The eternal lesson—also the lesson of this Budget—is that that path leads all to be diminished. An economy laden with debt, with Government spending spiralling still and taxation touching skyward, will never burn bright. The whole will never grow. It is not enough—it will languish. That is how the dreams of millions perish. Yesterday, the lingering flickers of hope died.
The Secretary of State for Work and Pensions (Pat McFadden)
It is a pleasure to open today’s debate on behalf of the Government, and to respond to the shadow Chancellor. He went through his lines and, as I expected, he talked a fair bit about welfare. If only he had ever been in a position to do something about it. That is the essential problem with the position of Conservative Members. It is not even that they failed to reform the system, it is that they created it in the first place. Their system created the fork in the road between those judged fit to work and those judged unfit to work. Their system forced people into a choice between poverty and being declared incapable of work, often permanently. It is their system that left millions of people with no contact and no support from the system, other than the payment of benefits. Perhaps most damningly, it is their system that saw the huge growth in inactivity among the young, about which they did nothing while they were in office.
As the shadow Chancellor knows, there is a wall in the Department for Work and Pensions, carefully placed between the microwave and the toilets, on which there is a very fetching portrait of the shadow Chancellor, along with portraits of all his predecessors as Secretary of State for Work and Pensions. They all sat in the same chair, in the same office as I do. They saw the same trends and the same graphs that I see, but they did absolutely nothing about the situation. He talked about the changes that he proposed to the work capability assessment, but he was a little quieter about those changes not happening, because they were so incompetent that they were struck down as being unlawful by the courts. He then said that he would have done more but he was interrupted by the general election—the Conservatives had 14 years and the election was called at a time of their choosing.
The shadow Chancellor is asking the House to indulge the fantasy that, having been relieved of the duties of ministerial office, he has suddenly stumbled upon the answer to the problem, like a reverse Nostradamus, granted a magical power that enables him to identify the solutions to problems, but only at the moment when he ceases to have responsibility for fixing any them. The Conservatives remind me of a messy 16-year-old who has turned his bedroom into a tip, but when his exasperated parents come in to clean it up, the teenager says, “I was about to do that.” No one believes the teenager and no one should believe the Tories, because they had their chance and did nothing about it.
On their watch, welfare spending went up by almost 1% of GDP over the last Parliament, the equivalent of about £22 billion a year. When they left office, did the OBR think that they had a credible plan to change the system? No, they did not. The OBR predicted that costs would rise by a further £100 billion. Sometimes the Tories say that they want more face-to-face assessments, which I want too. However, in September 2023, a little over six months before the election was called, they signed off a new set of contracts allowing 80% of the assessors to work from home. Who was the Secretary of State when those contracts were signed? We do not need ChatGPT to tell us—we just need to look on that wall between the microwave and the toilets, because it was the shadow Chancellor. And that was long after the covid pandemic.
The Conservatives created the system, but they did not change it when they had the chance and they increased the number of children in poverty by 900,000, so it falls to us to begin to change the system. We have begun. We are reducing the gap in universal credit between standard unemployment and the sickness rate, a change that the OBR estimates will get 15,000 more people into work and that starts to address the incentives for sickness built into the previous Government’s system, reform that we are carrying out that the Conservatives did not.
Changes to the Motability scheme will focus on value for money and ensure that if the UK taxpayer is paying for new vehicles, more of them are made here in the UK—reform that we are carrying out that the Conservatives did not.
Ben Obese-Jecty (Huntingdon) (Con)
The Secretary of State talks about trying to ensure that cars available under the Motability scheme are made in the UK. I looked at the Motability website yesterday and some of the changes have already been implemented, but there are an awful lot of Chinese cars listed. Yesterday, Omoda and Jaecoo, two of the Chinese companies on that list, announced that they would be implementing a 20,000 mile rebate to individuals to pay for the electric vehicle tax introduced in the Budget. That will allow China to get an even greater foothold in the UK economy. Those cars are built with Chinese IP that sends information straight back to the state, allowing it to track where those vehicles are. What will the Government do to address the impact of the growing number of Chinese vehicles and about the fact that the Budget is, perhaps unwittingly, encouraging the use of Chinese cars in this market?
Pat McFadden
The hon. Gentleman should be supporting our changes because they have done two things: they are removing a number of luxury brands from the system and they are ensuring that more British-made cars are part of the scheme, and that will continue going forward.
By the end of the decade, we will have provided an additional £1 billion for employment support for the long-term sick and disabled through the pathways to work programme, so that people are not just signed off and written off—more reform that we are carrying out that the Conservative party did not. We are fixing the long-running injustice to carers that they ignored for years, which is more reform that we are carrying out that the Conservatives did not. There is more reform in this Budget than the shadow Chancellor implemented in his 20 months as Secretary of State for Work and Pensions.
But I know that we have to go further, because the greatest crisis is among the young. We inherited a situation with close to a million people not in employment, education or training. That is terrible in human terms, expensive in financial terms and deeply unequal, because the numbers are often highest in the most deprived parts of the country. Those are often places where there are already multiple problems and where the loss of hope seems the deepest. Addressing this problem is a cause around which we should rally. That is why in this Budget we offer a youth guarantee, with £820 million of investment, that will offer the young unemployed a training place, work experience or ultimately a job, giving hope and opportunity where previously there was none—more reform that we are carrying out that the Conservative party did not.
Sir John Hayes
I am very interested in that part of the Budget and I am grateful to the right hon. Gentleman for setting it out in more detail. One part of the youth guarantee is the boost for apprenticeships, particularly in small and medium-sized enterprises, but looking at the fine print, is that not already supplied by the apprenticeship levy? What small and medium-sized enterprises need, as I learned when I was the apprenticeships Minister, is some grant funding to get them started in the process. Does the Government have that in mind or is this simply a rehash of the apprenticeship levy?
Pat McFadden
I note the right hon. Gentleman’s request for more public expenditure and I am coming on to the growth and skills levy in a moment. What we will do with that is tilt it more towards young people and towards more short courses, and this Budget puts a further £725 million into that, which will enable the full funding of apprenticeships for the under 25s for small businesses. That is good for young people and good for employers. It is important, because no matter where they are from, what their background is or who their parents are, every young person should have the chance to make the most of their life. I want the country’s young people to know that through our youth guarantee, the apprenticeship support and the other measures outlined in the Budget and outside it, we will support them, we believe in them and we want them to succeed.
Even after that, I know that we need to go further, and that is why I have asked former Health Secretary Alan Milburn to report in the new year on the issues of young people, work and inactivity, looking across departmental boundaries and recommending policy responses that will offer young people more opportunity and a better chance in life.
After the Conservatives either neglected all that or opposed that which they did not neglect, what have they got left? Arguing that instead of our approach, people’s wages should be lower. We saw where that led during the last Parliament. The shadow Chancellor talked about living standards—during the last Parliament, living standards declined more than at any time in living memory. Now living standards are rising in this Parliament and wages have risen more in a matter of months than they did in 10 years when the shadow Chancellor’s party was in office.
As people sometimes remind me, I have been around for quite a while. I am proud to have served in the last Labour Government, which lifted 600,000 children out of poverty—and almost all the measures delivered were opposed by the Conservative party. In fact, the Conservatives’ record was a rise in child poverty of 900,000. Their argument was that the two-child limit would force people to make different choices about the number of children that they would have, but that is not what happened; it simply forced more children into poverty.
The real indictment goes deeper, because, as the right hon. Member for Central Devon knows, the two-child limit was not really a welfare policy at all. In the end, it was not even about saving the money. The truth is that it was about political dividing lines. It was a device used by the Conservative Government, in which children were the weapon of choice. That is what it was about, but not any more. Tackling child poverty is an investment in the future of those children and in the country, because children who do not grow up living in poverty will have a better life. This policy is not just about the distribution of money; it is an investment in opportunity. That is why the Chancellor announced the abolition of the two-child limit in the Budget. As my hon. Friend the Member for Calder Valley (Josh Fenton-Glynn) said, the clear majority of households that will gain from this measure already have someone in work. The policy will lift 450,000 children out of poverty, and that number will rise, thanks to other measures, such as the expansion of free school meals, help with energy bills, and the expansion of free childcare so that more parents can take up work.
This will be the largest reduction in child poverty over a Parliament since records began. As the Chancellor spelled out, it can be funded by a combination of tackling fraud and error in the system, the Motability and other changes, and the changes to online gambling taxation that she announced yesterday.
We understand that the health and welfare systems are deeply connected, so we will continue to get waiting lists down, and to treat more patients. We announced 250 new neighbourhood health centres in the Budget. Waiting lists and waiting times rocketed when the Conservatives were in office, and that was not just a health issue; it was an economic and benefits issue. A system that treats people more quickly, rather than having them wait in pain, is good for the economy, too. Through the reforms that we are making on incentives and support in the system, and on opportunity and tackling poverty, we are beginning to change the welfare state from a passive distributor of benefits to a platform of opportunities to get people back into work. However, we need to go further, and we will.
No one on the Labour Benches underestimates the scale of the challenges we face. There is no escaping the fact that the OBR’s decision to downgrade its assessment of productivity is the official verdict on the Conservatives’ years in office. They left this Chancellor with a £16 billion hole to fill. That hole is not because of the decisions she took, but because of the scarring effects of the Conservatives’ time in power. A botched Brexit deal, austerity that impoverished the public realm, and cuts to capital investment—the OBR is clear that they all caused long-term damage to the UK’s productivity and economic growth. That has to be owned by the Conservatives.
The shadow Chancellor attacked the Budget in the strongest terms, and he is right that it is a contrast with the Conservatives’ record, because they took the country to the very precipice of economic disaster. They used the British public as a test bed for a giant ideological experiment that saw mortgages go through the roof. The Bank of England had to launch an emergency rescue package for the country’s pension system. The Conservatives shook international confidence in the UK economy and destroyed whatever economic credibility they had by their own hand. There is a difference in our approaches—a very welcome one.
We have trade agreements with the world’s biggest economic powers—agreements that eluded the Conservatives. We have a reformed planning system, which will get the country building. Public investment is at its highest level for four decades, and inflation is coming down faster, as a result of the measures that we are taking. It will come down by a full 0.4 percentage points next year, according to the OBR. Borrowing is down in every year of the forecast. We are keeping corporation tax at the lowest level of any G7 country. We have help for high streets, and permanently lower tax rates for 750,000 businesses. We are doubling eligibility for our enterprise tax incentives, so that new businesses can not only be created, but can grow and scale up here in the United Kingdom.
We are cutting energy costs for 7,000 businesses to make manufacturing more competitive. We are providing help with the cost of living through the first rail fare freeze for 30 years. We are freezing prescription charges. Energy bills are being cut by £150 per year. We are raising the national minimum wage for millions of workers, as recommended by the independent Low Pay Commission. We are expanding free breakfast clubs, and there are free school meals for all children in families on universal credit.
This is a Budget for the whole country. It helps with living standards and helps people to meet their monthly bills. It fixes some of the problems of the past, and gives the country strong foundations for the future. It is a Budget that believes in maintaining the public square, and it continues the progress that we have made on the NHS. That progress is, for us, not just a social goal, but an economic goal. It is a Budget that protects the state pension and raises its value by £575 next year. It is a Budget that continues with welfare reforms, reduces child poverty and offers hope to young people for the future. That is the difference, and that is why we should support the Budget today.
Madam Deputy Speaker (Judith Cummins)
I call the Liberal Democrat spokesperson.
Daisy Cooper (St Albans) (LD)
This time last year, Government Ministers told us repeatedly that their No. 1 mission was growth, but after Labour’s second Budget, it is clear that growth is nowhere to be seen. The OBR makes it clear that the Budget has almost no meaningful growth measures at all. The Confederation of British Industry has concluded that the Government’s growth mission has stalled, and others say that it is positively anti-growth. We Liberal Democrats have consistently said that the Government cannot just tax their way to prosperity; they must grow their way to it. The most effective way of doing that—the single biggest growth lever that the Government could pull—is fixing our relationship with Europe.
The Conservative-Reform Brexit deal has been a disaster for our country and for British business. It has left our public finances with a £90 billion Brexit black hole; the Labour Government know it, and the Secretary of State for Work and Pensions has just said it, but for some unfathomable reason, the Government will not just get on and fix it. We Liberal Democrats once again call on the Government to get serious about fixing our relationship with Europe.
Research by the House of Commons Library shows that a better deal—a deal within the Government’s red lines, that excludes a customs union, the single market and all the rest—could raise an additional £25 billion a year in revenue. With our proposal of a bespoke UK-EU customs union, we could raise even more. Members on the Labour Benches will say, “We have all these new trade deals. We are fixing this relationship,” but once again, the OBR report from yesterday spells it out in black and white. It says that the lasting effects of Brexit more than wipe out the combined benefits of all the Government’s new trade deals. If the Government want economic sustainability, it is clear as day what they need to do.
The same could be said about headroom. This time last year, we knew that Donald Trump was heading back into the White House, and we Liberal Democrats warned the Government that they had not left enough headroom to deal with the economic headwinds, which were predictable and predicted. We welcome the fact that the Government, as part of their mission to create a sustainable economy, have provided more headroom this time around, but we disagree with the way that they built it, relying on billions from unfair stealth taxes and other tax hikes on people and small businesses. That was not a fair choice; a fairer choice would have been to ask the big banks to do their bit.
The Government know that if they do nothing on the big banks, taxpayers will pay out approximately £30 billion to the big banks between now and April 2031—not because of any risk that they have taken, or any loans they have made, but because of a glitch in quantitative easing. In the middle of a cost of living crisis and a cost of doing business crisis, the Government seem happy for £30 billion of taxpayers’ money to be paid out to the big banks, but we Liberal Democrats are not. That is why we have called for a windfall tax on the QE-related parts of the profits that the big banks have received, which would raise £30 billion for the taxpayer over the next five and a half years. We propose that just less than half of that money be spent on slashing energy bills by removing levies from them, but we would not lose the revenue for the insulation schemes that the Government have just axed. Some of the money could also be used to slash VAT by 5% for hospitality, attractions and visitor accommodation over the next 17 months until April 2027. That would give a boost to local economies in every single village, town and city across this country to get our economy moving again. That is the kind of growth stimulus that we Liberal Democrats would pursue.
It is incredibly frustrating that the Government are not doing more for our high streets. They will say that they are looking to introduce permanently lower business rates multipliers. They may have done so, but the new, higher valuations were published this morning, and many businesses are warning that they could simply wipe out any benefit that businesses get from the lower multipliers. I saw a WhatsApp exchange between some of my pub landlords in St Albans this morning, and when one of them saw the higher valuation for their independent pub, they replied with a single word. It was the word that Boris Johnson used to describe his approach to business. I am very worried that the combined impact of higher valuations and the new multipliers could put even more of our high street businesses in jeopardy, so I ask the Government to come clean and publish the combined data as soon as possible. I hope that a Minister can tell us—if not today, I hope that they will promise to come back to the House and do so—how many businesses have been brought into paying business rates for the first time, and how many might see their business rates go up overall. If the picture is bleak, I hope that the Government will tell us what actions they will take to protect the great British high street.
Small businesses also need action on energy support. Just last week, my Liberal Democrat colleagues and I wrote to the Government asking Ministers to instruct the Competition and Markets Authority to launch an investigation into the lack of competition among energy suppliers, and into practices that we believe are preventing small businesses from getting the best energy deals. The Federation of Small Businesses is making the same call. This issue has to be fixed, and I hope that Ministers will look at it.
On income tax, the Government have broken their promise in all but name by freezing income tax thresholds for a further three years. This policy, started by the Conservatives and continued by Labour, means that in the tax year 2030-31, British taxpayers will pay an additional £67 billion in income tax to the Treasury. The Institute for Fiscal Studies says that these stealth taxes are the largest single tax-raising measure since 1979. What will the result be? Well, the OBR says that disposable income—a byword for living standards—will go down, in large part due to this tax rise. Is it any wonder that people in all income brackets simply do not feel any better off?
Turning to the so-called mansion tax, we in this House all know that council tax is broken, but adding extra layers does not make it any fairer. Economists from left to right all agreed yesterday that the Government’s proposals are complicated and will cause bunching in the tax system. They are a messy compromise that does not raise very much money, and will raise none for around three years. These proposals could result in many appeals and could distort behaviour. This is not the way to fix property taxes. [Interruption.] The Parliamentary Secretary to the Treasury chunters from his seat. That was several Prime Ministers and several general elections ago. When the Liberal Democrats called for such a tax, the Conservatives wanted to stay in the EU; I think we can all agree that there has been a lot of water under the bridge since then. If the Government were serious about pursuing wealth, they could make a much fairer choice and go after the big banks and the tech giants.
On the tech giants, why did the Chancellor slip out a review of the digital services tax yesterday, without announcing it in the Budget? I think we all know the answer, but let me be plain: if the Government are gearing up to cut taxes for people like Elon Musk and Mark Zuckerberg, while raising taxes on struggling households, that would be a massive betrayal. As for the dividend tax, the Federation of Small Businesses summed it up when it said that
“Hikes to dividend tax mean the government continues to make investing in your own business one of the least tax-friendly things you can do with your money.”
Fundamentally, the root problem remains. This Budget, like last year’s Budget, is nothing more than a Treasury tax grab. The Government are still yet to outline a vision for the economy and for the country, and the lack of joined-up thinking is so stark. Last year they said that they were going for growth, and then they inflicted a growth-crushing jobs tax. This summer the Government’s own pension investment review said that four in 10 people are not saving enough for retirement, but now the Government have announced a measure that the OBR says will reduce pension contributions before the commission has even had a chance to report. This is a “spend now, pay later” Budget, with pension changes and other expensive additions pushed right to the end of the forecast. Clearly that is a way to buy time for some growth to emerge, but what happens if it does not?
The Government have had an opportunity to set out their path to delivering the change they promised, but I fear that they have squandered it. We Liberal Democrats wanted this to be a Budget that tackled the cost of living, that saved our high streets, and that was going to go for growth through a better deal with Europe. I am sorry to say that this Budget was botched; it was bungled; it was a missed opportunity. Whatever we call it, the bottom line is that this Budget does not deliver for the British people. I fear that the Government have run out of ideas. I fear that they are also running out of time.
Paul Waugh (Rochdale) (Lab/Co-op)
This is a Budget that cuts the cost of living for families in Rochdale, boosts apprenticeships, and helps the NHS and our public services—public services that were brought to their knees by 14 years of not just Tory cuts, but coalition cuts. This is a Budget that balances the books, with fairness at its heart, and it is also a Labour Budget that puts children at its heart. I want to focus, in particular, on the historic decision to lift the Tory two- child cap, a policy that has punished so many children in Rochdale and across the land, for the crime of simply being born.
As a journalist who worked up in the Press Gallery for 26 years, I reported on, reacted to and analysed Budgets over more than a quarter of a century. With any Budget, there is always talk of winners and losers, but when the two-child cap was introduced in 2016, the biggest losers were children. Think about that: children losing money because of the warped ideology that they were to blame for their parents’ poverty. I grew up on free school meals, so I know what it is like to be in a household where money is tight. Indeed, one of the reasons I stood for Parliament in the first place was to reverse the shocking rise in child poverty that occurred since 2010 under the last Tory Government, and particularly in Rochdale.
The decision to scrap the two-child cap would not have been possible without a Labour Government, but neither would it have happened without the many community groups and anti-poverty campaigners in each of our constituencies. Earlier this year in Rochdale we held a roundtable meeting on the Government’s child poverty strategy. It was a heartening gathering, because we in Rochdale are proud of the many things we do locally for our kids, from never closing Sure Starts—which was tough for the local council—to providing free breakfast clubs way ahead of any national roll-out, and giving kids a free lunch if they go to Saturday school.
However, our roundtable was also a sobering gathering, because despite everything we have done locally to combat poverty among toddlers and youngsters, many of the adults and campaigners there told us that the biggest problem was the national two-child cap, which has been a catastrophe for the incomes of many families on low pay or between jobs. I want to pay tribute to some of those campaigners and community workers in Rochdale: Jo Barker-Marsh, Aqub Nazir, Heather Madden and Nazrine Akhtar. Without their passion and commitment to helping our children, today would not have been possible.
I was not surprised by the Leader of the Opposition’s rant about welfare yesterday. She repeated the Tory misinformation about the two-child cap, basing it on the myth that penalising larger families will somehow stop others from having a third or fourth child. As the Chancellor said yesterday, and as my right hon. Friend the Secretary of State has made absolutely clear from the Dispatch Box today, there is no evidence that the two-child cap led to any change in family size. Why is that? It is because families have children for a whole host of reasons. Women certainly do not get pregnant to get more benefits. In fact, the real scandal in this country is that having children results in a substantial and long-lasting financial penalty for mothers, due to reduced earnings, unemployment and a lack of support. That is something this Government are addressing.
ONS research found that five years after the birth of a first child, a mother’s monthly earnings were, on average, 42% lower than they were one year before the birth. The important point to stress is this: people move in and out of work for a whole host of reasons beyond their control. Many people have had their third or fourth child before they lost the job, became ill or were widowed, disabled or had to care for a sick relative or a disabled child. There is a wider point, too, which is that welfare has become a pejorative term. We need to talk more about social security, a safety net that is there for families who fall on hard times through illness, redundancy and no fault of their own.
As has been said many times, more than six in 10 families on universal credit are in work. Many are on universal credit for only a few months until they can get back on their feet, or until their children are older, or they can sort proper childcare. No one in this party will defend the tiny minority who game the system, but the tabloid caricature of people lounging about on benefits is far removed from reality, particularly for parents. In the real world, many parents of kids in poverty go hungry themselves, rather than let their kids go without. Many cut back on essentials such as food and heating because they have to. The Joseph Rowntree Foundation found that the depth of hardship is particularly severe for families with three or more children, with around seven in 10 having to skip meals or go hungry.
Daisy Cooper
We Liberal Democrats welcome the decision by the Government to scrap the two-child benefit cap. Does the hon. Member agree that, as well as it being the right thing to do, it saves taxpayers money in the long term? We know that poverty has lasting impacts on people’s health and educational outcomes. In making the case to the British public, it would be helpful if the Government could explain the longer-term impact that poverty has for the taxpayer.
Paul Waugh
That is exactly what my right hon. Friend the Secretary of State for Work and Pensions set out at the Dispatch Box earlier, talking about the positive case for this move on child poverty.
In Rochdale, we feel child poverty more keenly than anywhere. The statistics for my constituency after 14 years of Tory cuts are shocking. Relative poverty in Rochdale went up between 2014 and 2024 from 33% to 44.1%. That is one of the highest rates in the country. The Conservatives like to talk about relative poverty, but absolute poverty went up from 31% to 39%. The latest figures show that the total number of children in absolute poverty in Rochdale was 9,380 in 2024, but that 44% child poverty rate in Rochdale is just the average. The figures are even worse in individual areas such as Wardleworth, Kirkholt, Deeplish, Smallbridge, Firgrove and Freehold, where up to 60% of children live in absolute poverty. Those children were the collateral damage in a Tory attempt to get a political dividing line. How disgusting is that?
The idea of the deserving and undeserving poor is as old as the Victorian workhouse. We should banish it to the dustbin of history, just as we are banishing the pernicious two-child cap to the dustbin of history. In Rochdale, more than 5,000 children will be lifted out of poverty by this Budget. That is 5,000 future nurses, plumbers, engineers, carers, teachers, entrepreneurs and soldiers who will now be given the best start in life that they need to achieve their dreams and fulfil their potential.
The last Labour Government, which did so much to help children escape poverty, once had a new policy called Every Child Matters. By putting hundreds of pounds in the pockets of Rochdale families, this Budget shows that this Labour Government are restoring that moral mission as a national priority, sending out the message loud and clear that all kids count.
Dame Harriett Baldwin (West Worcestershire) (Con)
It is a pleasure to follow the hon. Member for Rochdale (Paul Waugh). I will be picking up on some of the points he made later in my remarks, but I will start by characterising the whole Budget in the way that we heard from the Leader of the Opposition, which is that this was the “Nightmare Before Christmas” Budget. After last year’s Halloween Budget, another Budget has come back for more and more tax on the strivers, the entrepreneurs, the hard workers and the pensioners across our land.
In our scrutiny of the Budget as the Treasury Committee, we will be trying to draw out some of these decisions that the Chancellor announced yesterday from the Dispatch Box. It is clear that last year’s Halloween Budget was the biggest tax-raising Budget in UK history, and yesterday’s Budget was the third-biggest tax-raising Budget in UK history. It is an enormous burden that we have put on our country.
What we saw in the run-up to the Budget was also extraordinary, including the fact that the Office for Budget Responsibility’s report was leaked during Prime Minister’s questions. Madam Deputy Speaker, you will be aware that the Chairman of Ways and Means was rightly outraged about that on behalf of Parliament.
For the benefit of the House, I will outline the role that the Treasury Committee plays in relation to the Office for Budget Responsibility. It will appear before the Committee on Tuesday. We received a letter today from the chief executive, Richard Hughes, outlining the fact that he is undertaking an investigation. That has been published, but the House may not be aware that the Treasury Committee has a veto over the appointment of all three senior members of the Office for Budget Responsibility and, importantly, their dismissal. That is written into legislation. We take our responsibility to get to the bottom of what happened incredibly seriously, because on behalf of Parliament we have to find out.
There was a lot of skulduggery in the run-up to this Budget, with all these kites being flown by the Treasury. There was possibly speculation by the media, but all these ideas culminated on the morning of 4 November with the Chancellor breaking into the nation’s breakfast with her doom-laden pronouncements about the upcoming Budget. It was extraordinary and unprecedented, and it was rightly the subject of an urgent question by my right hon. Friend the Member for Central Devon (Sir Mel Stride). After that, we had a story in the Financial Times on the evening of 13 November that moved the gilt market the minute it opened on the morning of the 14th. It was about the decision not to proceed with an income tax switch with national insurance.
Extraordinary skulduggery has been going on somewhere in the Treasury. I hope that when the Parliamentary Secretary to the Treasury responds to this debate later, he can provide clarity on the instructions that the Chancellor has given to the permanent secretary to do a full skulduggery investigation of the Treasury. It should not just be a leak inquiry, as something significantly more widespread has happened in the run-up to this Budget, and I do not think that Parliament can accept it. We need to draw a line under this behaviour, and we need to get to the bottom of it. Apparently the Chancellor herself said to Labour Back Benchers that this decision—that she would not have to increase income tax—was going to be the rabbit she would pull out of her hat at the Dispatch Box yesterday.
Some of the briefing that Treasury spokespeople did after this leak to the Financial Times related to the fact that the OBR had improved its economic forecasts, but we saw in its document yesterday that it had not changed its main economic forecasts since 31 October, so that cannot be right either. There has been some unbelievable leaking or briefing—“skulduggery” seems to sum it up—from Treasury special advisers, and the role of the Office for Budget Responsibility has been tainted. We as a Committee, on behalf of Parliament, take our responsibility in relation to the OBR incredibly seriously.
I want to highlight a couple of the measures in the Budget, and the first relates to productivity. Both Front Benchers mentioned the importance of focusing on productivity and the impact that the downward revision in productivity had on the Office for Budget Responsibility’s forecast, but everyone knows that this country’s private sector has continued to become more productive, whereas the problem with productivity in the public sector was very much exacerbated in the last Parliament and during the pandemic. Public sector productivity has still not recovered to the kinds of levels that we had before the pandemic. There is some incredible productivity scarring in our public sector, and I think it would be welcome if the Minister could outline from the Dispatch Box how the Government plan to tackle public sector productivity.
If productivity in the national health service returned to pre-pandemic levels, it would be worth £20 billion. Possibly all the tax rises in yesterday’s Budget could be removed if we got to that level of productivity again. I do not think that giving NHS doctors a 30% pay rise, with no requirement for them not to strike again, helps productivity. I do not think that the Government’s decisions align with getting better productivity out of our public sector, but I am sure that the Minister will be able to elaborate on that.
Finally, I will pick up on the powerful speech that the hon. Member for Rochdale made about child poverty. He will be aware that over the last 14 years, absolute child poverty—not in his constituency, but in aggregate across the country—has fallen. That is largely down to higher employment but also, importantly, more help with childcare. Those are important things to focus on in terms of people’s ability to work and to earn more.
Last week, the Treasury Committee asked experts what the child poverty line is in this country, and it is important for the House to understand the figures that we got back from the Institute for Fiscal Studies. After a household with two children and two adults have paid all their taxes and housing costs, the relative poverty line, which is what the Secretary of State mentioned earlier, is £24,650 a year. For a household with three children and two adults—again, after they have paid their taxes and housing costs—the figure is £28,176. We need to recognise that many people who will be caught by the tax rises in the Budget have much lower incomes than that. Widowers who have a small widow’s pension will pay more tax because of the decisions in yesterday’s Budget.
Paul Waugh
I have a lot of respect for the hon. Lady’s record in government and as the Chair of the Treasury Committee. She talks about tax rises. Does she accept that the bulk of the tax rises this Parliament—covering four of the five years—are Tory tax rises through the threshold freeze that she and her colleagues voted for?
Dame Harriett Baldwin
I am talking about yesterday’s Budget. The Chancellor herself announced that she was freezing the thresholds for a further three years, and I dare say that the hon. Gentleman will be asked to vote for that in the Aye Lobby next week. I disagree with him, because the Chancellor has just announced that the thresholds will be frozen for an additional three years.
Another person who will pay more tax as a result of the Chancellor’s decisions is a single young person on minimum wage. I do not know whether hon. Members have seen the emigration statistics that were published today, which show that hundreds of thousands of our young people are fleeing this country. That is something that we should all be very concerned about.
A single mother who has just received a lump sum in a divorce settlement will pay more tax as a result of yesterday’s Budget. A sole trader or entrepreneur who runs a business and perhaps pays themselves in dividends will pay more tax as a result of yesterday’s Budget. A driver in my rural constituency who needs to drive to go to work will pay more tax because of yesterday’s Budget. We can see that the choices made by the Chancellor punish the employers, the farmers, the family businesses, the workers, the savers, the pensioners and the drivers—everyone who tries to do the right thing and tries not to be a burden on the state.
I will leave the House with one final point.
Dame Harriett Baldwin
I am looking forward to the Minister’s winding-up speech at the end of the debate, and I will not give way at the moment.
Given the skulduggery that the Treasury seems to have engaged in during the run-up to this Budget, the lingering impression will be that the spectre of further tax hikes looms. The floating of the income tax idea and all the other tax ideas, and all the taxes, will come back like a ghoul in Budgets to come.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
Order. In an attempt to get everybody in today, I am going to put an immediate six-minute time limit on speeches.
Tonia Antoniazzi (Gower) (Lab)
I am really pleased that the Chancellor has announced that the Government are clamping down on illegal high street activity—let us call it “shop a shop”. My constituents Stuart Evans and his son, who run a fish and chip shop in Gorseinon, have raised concerns that other high street shops are exploiting cash-only operations, so I welcome the additional funding to support stronger and more joined-up enforcement against those who break the rules. I am looking forward to changes to the legislative framework, which currently limits trading standards enforcement capabilities; in fact, I am going to meet trading standards officers in Swansea very soon.
I also welcome the removal of the two-child benefit cap and the abolition of the rape clause, because 1,270 children in Gower will benefit, with 450,000 lifted out of poverty nationally by the end of the decade. I thank the Minister—my hon. Friend the Member for Swansea West (Torsten Bell), who is my constituency neighbour—for helping my constituents who used to work at the former 3M plant with the pre-1997 indexation issues that they had with their pensions.
I want to take this opportunity to raise a couple of other subjects that are very close to my heart, and I have had conversations with Front Benchers and the Chancellor regarding some of my concerns. I am the chair of the all-party parliamentary beer group— [Interruption.] I get all the fun gigs. We recently published a report following our inquiry into how brewing and pubs can help drive economic growth. I want to flag the report to the Minister, because it is really important. We have seen a change in the business rates, but we feel that the industry faces issues across many different departments. The sector is a key driver of local and national prosperity, and it plays such a crucial role in helping to get young people into jobs. That is why I think the apprenticeship stuff is really good, so I thank my Front Benchers for that. It is really key that we get young people working, create good jobs and revitalise our high streets, and I know that strengthening our communities is very much what we need to happen. I also welcome the reduction in energy costs.
I am going to keep my comments brief, but I want to bring up some issues in the Chamber. My Front Benchers know that my constituency is on the outskirts of Swansea. I have a large agricultural community, and I am really concerned about their wellbeing. No one in the agricultural community denies that we need to reform inheritance tax, and I genuinely welcome the small move that will help farmers—the spousal arrangements that allow widowers to transfer relief from their spouse—but the idea that farmers do not pay tax is nonsense; of course they do. However, that change does not address the impact on the elderly and terminally ill, and it also penalises divorced and single farmers. I gently urge those on the Front Bench and the Chancellor to look at the Finance Bill, consider the recommendations from my Northern Ireland Affairs Committee, the Welsh Affairs Committee and the Environment, Food and Rural Affairs Committee, and look at potential Government amendments to move things to a better place.
If we can remove the anti-forestalling clause, especially for lifetime gifts, I will not be having phone calls and conversations with people in the agricultural community who may be thinking of taking their own lives before 6 April next year, because those are the conversations people are having with me and other MPs across these Benches. I urge the Government to think about that, because this community feeds us—it feeds our nation—and it needs to have the ear of the Chancellor.
Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)
Madam Deputy Speaker, thank you for allowing me to speak in this debate. I am pleased to follow the hon. Member for Gower (Tonia Antoniazzi), and I agree with what she said about farmers. I draw attention to my entry in the Register of Members’ Financial Interests.
This Budget was an omnishambles. Not only have the Government being dripping leaks for the last month, which undermined market and business confidence, but the OBR, in error, yesterday published the Budget on its website 45 minutes before it was given at the Dispatch Box. This is unprecedented. The pound went down, and some of the hedge funds, which were already betting against the market, made millions. This does not provide confidence and stability in our public finances. It is undeniable that the financial position is much worse than it was when we were responding to the Budget last year.
Put simply, the Government are spending more than this country can afford. Last year, the Chancellor announced £40 billion in tax rises. We were promised that this would be a once-in-a-lifetime increase and would have filled the so-called black hole, so why has the Chancellor come back this year with another huge tranche— £26 billion—of tax rises? This tax burden will be equivalent to 38.3% of GDP by the end of this Parliament, and staggeringly, tax in this country is at an all-time record high. Interestingly, spending will go up now, but many taxes will not go up until 2028-29, around the time of the next election, so Labour MPs should take careful note of the measures that the Government introduced yesterday.
A growth rate of 1.5% per annum is lower than forecast, and growth per head is at the bottom of the G7 league. However, for the OBR to downgrade productivity rates to just 1% by 2029-30 is alarming, because it implies that growth will continue to flatline. Staggeringly, the chairman of the OBR has said that nothing—I repeat, nothing—in the Budget will score towards increased growth.
The Public Accounts Committee, which I have the privilege to chair, has been banging the drum for putting more money towards digital skills and the use of AI in all Departments and agencies. In the spring statement, most Departments were allocated more money for new technology. The PAC has heard time after time that old legacy IT equipment needs to be replaced, because new digital technology is needed to accommodate AI such as large learning models, and old analogue systems are much more prone to cyber-attacks.
Yet any improvements in efficiency are offset by the debt and the interest to service it. Last month, the UK national debt reached a staggering record £2.6 trillion, and the debt interest alone will be £136 billion a year by 2029-30. That would be the third largest Department if it were a Department, and it does not treat a single child or educate anybody.
One thing I can say about this Budget is that it is not discriminatory in whom it hurts. Working people, savers, pensioners, drivers, farmers, homeowners and businesses— I could go on—are all being taxed more to pay for this out-of-control spending. This is not a Budget for working people; it is a Budget to pay for the massive increase in the welfare state. Indeed, as a stark example, the Government announced yesterday that they would increase the help to save scheme for universal credit claimants, which of course is tax-free, whereas ordinary working taxpayers will see the tax on their savings increase by 2%. Where is the fairness in that? The OBR has forecast that the welfare state is going to rise by a staggering £73.2 billion to £406.2 billion over the next five years.
One aspect of the economy at the moment is that the unemployment rate has increased to 5.1%. At the end of last year, it was 4.3%. Sadly, we now have 1.79 million people out of work, and I suspect that everything announced in the Budget yesterday will only increase that figure. As I said in an intervention on my right hon. Friend the shadow Chancellor, what is really sad about those figures is that the unemployment rate for 16 to 24-year-olds is nearly 5%.
On the two-child benefit cap, in April 2025 there were 37,020 households in the UK on universal credit with exactly five children and an additional 18,260 households with six or more children. As a father, I know how much it costs to bring up children. It is the best decision I ever made, but I know the costs associated with childcare. Many parents up and down this country, including my constituents, are taking tough decisions about not having any more children, and they are paying out more and having to work harder to afford their existing children. Where is the fairness in this system?
Paul Waugh
What would happen if the hon. Gentleman had three or four children, and he were to fall ill or had to care for a sick child? Would he want those children to suffer from that plight?
Sir Geoffrey Clifton-Brown
It is always possible to find cases that are very difficult to deal with. In government, we have to make decisions about the totality of the population. I think it is up to parents on benefits to think very carefully about how many children they have and the circumstances in which they may find themselves.
Sir Geoffrey Clifton-Brown
No, I have already given way once on this subject.
Our wealth creating sector is shrinking, whereas the public sector is ballooning, yet the Government’s policies are punishing businesses and wealth creators. The freezing of tax thresholds is a tax rise, as the Chancellor has confirmed many times at the Dispatch Box, but she has now confirmed that they will be frozen for another three years. Every time they are frozen, that brings more people into the tax net. In this case, it is forecast to bring another 750,000 into the tax net. The 2% increase on savings and dividends is another penalisation of those working hard to save their money. Where are the incentives to save money if the Government are taking more of their savings?
Finally, hospitality businesses are going to be hit hard by this Budget. In North Cotswolds, they are at the heart of the community, yet nationally one pub is closing its doors every day at the moment. I do not see any pub landlords welcoming this Budget—
Steve Race (Exeter) (Lab)
It is a pleasure to follow the hon. Member for North Cotswolds (Sir Geoffrey Clifton-Brown), and a great pleasure to speak in this Budget debate. I direct Members to my entry in the Register of Members’ Financial Interests.
This is the second of what will be many Labour Budgets that will help this country to rebuild our public services, rebuild our public finances and bring down the monumental national debt. That is all at the heart of delivering long-term economic sustainability, growth and fairness, which is our great task after 14 years of Tory and Lib Dem mismanagement. I want to speak about the two issues closest to my heart as the MP for Exeter—the start-up and scale-up economy, and child poverty in Exeter.
Today, over 1,000 start-ups are active across the south-west region, and our start-ups are growing not just in volume, but in value. The average venture-backed start-up in the south-west is now worth £11 million. Moreover, five of the UK’s top 50 start-up constituencies by funds raised are in the south-west: Bristol Central, Filton and Bradley Stoke, Bristol East, Bath and, indeed, Exeter. That amounts to 10% of the national total in a region that is too often overlooked.
What is most exciting is what comes next. Half of our start-ups are at the seed stage, brimming with ideas and ambition. These are the major employers and major innovators of the future. These are the businesses that will supercharge Exeter’s economy and help deliver economic sustainability and prosperity. That is why I was really pleased to see changes in the Budget that will support new businesses in my constituency to start up and then to scale up, helping them to raise capital, attract talent and stay competitive here in the UK.
First, the significant expansion of the investment limits for both the enterprise investment scheme and the venture capital trusts means that from April 2026 companies will be able to raise much larger sums, with annual limits doubling to £10 million and lifetime limits rising to £24 million, and even higher thresholds for knowledge-intensive companies. That means that more ambitious ideas can be funded right here in Britain, particularly in sectors such as green engineering, AI, biotechnology and fintech—the sectors that will power the next decade of economic leadership in this country.
Secondly, the Budget strengthens one of the most powerful tools for fast-growing firms: the ability to attract and retain the skilled people who make innovation happen. By expanding the enterprise management incentive scheme—increasing the employee headcount eligibility to 500, and raising the asset and share option limits—we will ensure that starters can continue to offer meaningful equity to their teams as they grow. This gives scaling companies the firepower to compete with big employers to keep talent in the UK, and to ensure that workers share in the success they help create.
Together, the reforms send a strong signal that Britain backs bold entrepreneurs. We want the next global success stories to start, scale and stay right here in the UK and in Exeter. Indeed, just today one of my contacts in the start-up world said that entrepreneurship was at the heart of the Budget in a way that has never been seen before.
I want everyone in Exeter, no matter their upbringing, to know that they can achieve their potential by working in start-ups, scale-ups, or elsewhere in the economy and public services. That is why I was pleased that the Budget rightly put fairness at the heart of our national mission. Nowhere is that mission more urgent than in the fight against child poverty. Child poverty is not a statistic on a page. It is children in Exeter whose parents are going without meals so that they can eat. It is a family making impossible choices—heating or food, rent or clothes. As one of five children who grew up in a council house, I know what it is like when every penny counts. Nationally, more than 2.7 million children were living in poverty last year, which is 22% of all 0 to 15-year-olds. That is more than one in five children across the UK. We all recognise that that is not only unsustainable, but morally indefensible and a catastrophic consequence of 14 years of Tory and coalition government.
In Exeter today, around 3,000 children aged 0 to 15 live in relative poverty. That is 19.9% of all our children—one in five. Earlier this year, I convened a local roundtable in Exeter with charities, schools, housing providers and health leaders, and we asked the hard questions. Where are families slipping through the gaps? How do we redesign support so that children are not left paying the price of economic insecurity? The message was clear: child poverty is family poverty. It is not isolated to any one Department. It cuts across the housing system, the labour market, childcare and education. It affects health, mental wellbeing and lifetime opportunity.
I am proud that this Government are not looking away. We are tackling the barriers that families face head-on, right across the Government, through the expansion of free school meals, funded childcare and beyond. That is why I welcome the Chancellor’s decision to lift the two-child benefit cap—a long-overdue change that will raise 450,000 children out of poverty. But I know that we will go further, which is why I have been engaging with Ministers on the creation of the child poverty strategy, so that we take a whole-Government approach that tackles the causes and not just the symptoms, because simply raising benefits is not enough. I want every child in Exeter to break away from intergenerational poverty, and to succeed and fulfil their potential in life through their own work and achievements.
We have already started the process of rebuilding hope and opportunity for young people. I have spoken before in this Chamber about the gutting of Sure Start, which was one of the most transformational programmes of the previous Labour Government. I am delighted that we are restoring Sure Start-style services in communities across the country: evidence-led family-centred support that helps children keep thriving from the very beginning. For my city, these services are not an optional extra; they are foundational. If we want children to arrive at school ready to learn, healthy, safe and confident, this is how to do it.
The Budget recognises that fairness is not something that trickles down; it is something we build. Exeter children need us to build it now. They waited too long under the last Government, who simply failed a whole generation. We must ensure that the circumstances a child is born into never limit the life they are able to lead. I am therefore proud to support the Budget, and proud that the Government are choosing to put our children first.
Claire Young (Thornbury and Yate) (LD)
The theme of today’s debate is fairer choices, so I want to look at whether the choices made yesterday really were fairer.
On energy bills, I welcome the removal of the main green levies from electricity bills. They created a perverse disincentive to switching away from gas, at a time when we need people to do so to decarbonise heating. That causes particular hardship in a rural constituency like mine, where a significant number of households are off-gas. However, I note that it is only a temporary move, with the Resolution Foundation saying that £55 is set to be added back to energy bills in 2029-30. I urge the Chancellor to look carefully at the Liberal Democrat proposals to reduce energy bills by half by 2035. I also flag to the Chancellor that constituents in off-gas areas have raised concerns about what they see as the unfair tax treatment of lower carbon fuels, which they see as a more realistic option for reducing their carbon emissions in the short term.
Is the Budget fairer for businesses? Businesses across my constituency are struggling, as they face a dangerous mix of higher costs and lower consumer spending. Before the Budget, the Liberal Democrats called for an emergency 5p cut to VAT for hospitality, accommodation and attractions to help those businesses stay afloat, and also to help people to afford the occasional treat to enjoy. It is something that businesses across my constituency have called for recently, and it would have helped attractions as varied as Bristol Zoo Project, The Wave and Dyrham Park, as well as hotels, pubs and restaurants across the constituency. However, the Chancellor ignored our calls while also failing to introduce a fair reform of business rates to ensure that those businesses can continue to grow and thrive long into the future.
Is the Budget fairer for children with special educational needs and disabilities? The last Conservative Government left councils facing huge pressures. The best way to fix that is to address the black hole caused by the crises in social care and SEND provision, but what the Chancellor announced yesterday failed to give the clarity that is desperately needed on the existing SEND deficit. My own council of South Gloucestershire, of which I was the leader until I was elected to this place, has long grappled with historic underfunding and rising demand for SEND support. It is one of the f40 group of the lowest-funded authorities and one of those that entered into safety valve agreements because of those rising deficits. We need clarity on what will happen to those historic deficits after the Government take this in-house.
Were the choices in the Budget fairer for my constituency and the wider south-west? While the Chancellor did remember that the south-west exists this year, the Budget did little more than that. Where is the support for our rural transport? Where is the support for our farmers, who travelled to Westminster yesterday to plead for the Chancellor’s support? For the last year, I have been helping their campaign to reverse the damaging change to farmers’ inheritance tax. Where is the support for our communities facing river and surface water flooding? This is an issue I have raised repeatedly here in Parliament, including in last year’s Budget debate. At least £13 billion will go to mayoral strategic authorities, but not to the West of England. We were also excluded from the new £912 million local growth fund. The decision to extend business rates retention was a small crumb of comfort for authorities such as South Gloucestershire, but extending it does not mean that councils can rely on existing funding for the scheme continuing, thanks to re-baselining.
To conclude, I urge the Chancellor to talk to MPs of all parties in the south-west and to give our region the support we deserve.
Yuan Yang (Earley and Woodley) (Lab)
I rise to welcome the Budget, because despite the difficult economic times we are in, the Chancellor has made decisions that are strong, sound and fair. It is a strong budget that more than doubles the fiscal headroom to £22 billion. It is a sound budget that improves the economic efficiency of some of our taxes and maintains our capital investment in the country’s future. It is a fair budget that lowers the cost of living, saving us money on rail fares and energy bills, and raising half a million children out of poverty.
First, on the headroom, this Chancellor has the strength to do what previous Chancellors have shied away from doing. Headroom is important to buffer us from the volatility in the global economy. It buffers us against shocks that we cannot predict. I am glad to see that the Chancellor has also followed the International Monetary Fund’s recommendations to assess the fiscal rules annually, which will improve the predictability of policymaking.
Yesterday during the Budget debate, the former Chancellor, the right hon. Member for Godalming and Ash (Sir Jeremy Hunt), accepted my intervention. I asked why he had left us with the lowest headroom in the history of the OBR. He said that he did not raise more headroom because he would have had to cut spending or raise taxes, and he was not prepared to do those things. I therefore take it with a pinch of salt when the shadow Chancellor says in this debate that suddenly they have dreamt up plans in the past 12 months in opposition, when they did not have such plans in 14 years of governing. The response of the right hon. Member for Godalming and Ash was that he was not prepared to do the things that were necessary. That is like someone saying to their flatmate that they did not do the washing up because they would have had to tidy up and get their hands wet, and they were not prepared to do those things. He took the weak option. He shied away from making important economic decisions—he left us with his dirty plates—and is now lecturing us about making difficult choices.
I am glad of the right hon. Gentleman’s honesty, and his acceptance of my intervention, because it shows us a deeper truth: the previous Tory Government could not cut further, because they had already cut everything they could, and then some, leaving us with courts backlogged for years, prisons overflowing and child poverty at its highest this century.
Secondly, this is an economically sound Budget. Different forms of income should not be taxed differently. This is not just about fairness; it is about economic incentives. Landlords should not pay lower effective rates of tax than their tenants, and those who can afford an accountant should not be able to benefit from structuring their income as dividends, thereby paying a lower rate of tax. I welcome the raising of rates on property savings and dividends to make them closer to the rates paid on earned income, reducing the bad incentives to restructure income for tax avoidance. The tax system is not just about raising funds for public services; it is about shaping the economy and building in the right incentives to encourage productive behaviour.
I am glad that the Chancellor will reform the system of enterprise investment and venture capital trust schemes and review the tax system’s impact on entrepreneurs. I meet many of them in my constituency in Reading, which is a brilliant place for companies on all scales, from university spin-outs to world-leading giants. We have a particular concentration in life sciences, pharmaceuticals and IT services—services the OBR might be able to benefit from. Whether I am visiting Oxford Quantum Circuits in Thames Valley science park or a blockbuster film set at Shinfield Studios, I see my constituents building the British industries of the future, and when I visit schools, I encourage the schoolchildren to dream big and to take their share of that future.
But what of those children? The previous Conservative Government put 700,000 more children into poverty. Almost one in three children are growing up in relative poverty. That is the highest this figure has been this century. In Earley and Woodley, which is easily in the richest fifth of all constituencies in the UK, I get letters from parents who cannot feed their children during the half-term holidays. Because of the Chancellor’s Budget, 1,750 children in my constituency will be lifted out of poverty.
The hon. Member for North Cotswolds (Sir Geoffrey Clifton-Brown) said that it was possible to find “cases” of people falling into poverty. I would urge him to look at the figures. Poverty can befall anyone. According to “Understanding Society”, the largest longitudinal household panel study we have, the poverty entry rate—those who start off above relative poverty one year and find themselves impoverished the next—is around 8%, which means that one in 12 of our constituents could, in any given year, find themselves suddenly in dire straits. That could be because of divorce, bereavement, illness, bad health or bad luck, and that is what the social security system is for.
Some 70% of children growing up in poverty are in working families. There is something wrong with an economy that produces these outcomes. That is why it is important that this Government are raising the minimum wage and giving workers more power to negotiate their terms in the workplace. At the same time as fixing the foundations, we have to put out the fire on the roof, because poverty is an urgent challenge; if we do not address it now, it threatens to burn the house down.
We speak a lot about the post-pandemic cohort of young people who are not in employment, education or training, but why are there so many? This is the austerity generation. New evidence published yesterday by the Work and Pensions Committee shows that individuals exposed to multiple instances of childhood adversity, such as poverty and poor parental health, were five times more likely to be NEET. An estimated 53% of NEET cases today are attributable to persistent poverty and family adversity. Our children are the future of our economy; we have to invest in them and in our future. That is why I am proud to support a sound, strong and fair Budget.
John Lamont (Berwickshire, Roxburgh and Selkirk) (Con)
This Labour Government came to power with so many promises. The Chancellor promised to kick-start economic growth, and not to increase the taxes of working people. Now that Labour is in government, I am afraid that it is doing the exact opposite. If it can be taxed, the Chancellor will tax it—an electric car, a holiday, or even a taxi home after a night out. I am afraid that the Chancellor and those on the Government Benches are completely out of touch on how the economy works.
The statistics speak for themselves. Unemployment has surged across the United Kingdom: 19% more people are without a job since this Labour Government came to power, and almost 100,000 jobs have been lost in hospitality. The Government inherited inflation that was bang on the Bank of England’s targets; now, it has almost doubled. That is why there is a cost of living crisis out there in the real world. Economic growth is going in the wrong direction; forecasts have been revised downward next year, and are predicted to be lower in every remaining year of this Parliament. That is this Chancellor’s record and her legacy.
In advance of this Budget, there was wild speculation about what the Chancellor would present and endless rumours of more tax rises—kite flying by the Treasury. How can we expect any business to plan or invest for the future if the rules of the game continue to shift in this way? Of course, the situation is a whole lot worse in Scotland, where the SNP Government have made us the most highly taxed part of the United Kingdom.
I will focus my speech on two choices that this Labour Government made in the Budget. The first is the family farm tax. Yesterday I met farmers from across the United Kingdom who came to protest against this Labour Government’s decision to introduce the family farm tax. I was disappointed that I did not see many, if indeed any, Labour Members taking the time to speak to the farmers outside Parliament. I was utterly disgusted at the last-minute cancellation by the Metropolitan police—perhaps this Government were involved, too—of the farmers’ rally in Whitehall yesterday.
Farmers are devastated by the Chancellor’s decision not to reverse this cruel tax. It is not that they do not want to pay their fair share; they already do, and they are a vital part of our economy, protecting our countryside, rural communities and food security. They simply cannot afford to pay it. I entirely agree with the comments of the hon. Member for Gower (Tonia Antoniazzi), who is sadly not in her place just now, but who highlighted very clearly the anguish facing many farmers, not just in her constituency, but in mine and across the United Kingdom. I deeply regret the fact that Ministers have their hands over their ears, and are refusing to listen to the plight of our farmers.
John Cooper (Dumfries and Galloway) (Con)
My hon. Friend is delivering a searing indictment of this Budget. Does he agree that the intention of the farm tax may have been to take in multimillionaire so-called “slipper farmers”, but in rural constituencies like his and mine, it is hitting tenant farmers?
John Lamont
My hon. Friend is absolutely right. The intention may have been to force overseas investors, trust funds and others out of the farming sector, and to attack big landowners, but the tax is doing the complete opposite: it is destroying the family farm sector, forcing tenant farmers out, and seriously impacting on our food security ambitions.
The family farm tax is yet another promise broken by the Chancellor, who gave no indication before the last election that Labour would introduce it. The supermarkets agree: Tesco, Sainsbury’s, Morrisons, the Co-op, Marks & Spencer and many more have expressed their concern about how the tax will impact farmers and our nation’s capacity to produce our own food. I grew up on a farm, so I understand this. The consequences of the Chancellor’s failure to reverse this cruel tax will be catastrophic for our rural communities.
Two weeks ago, I visited dozens of small businesses across the Scottish Borders—corner shops, greengrocers, butchers, manufacturers, gift shops and many more. The same issue came up at almost every single one: the extremely tough business conditions just now. The jobs tax is forcing many of them to delay hiring decisions, or even lay off staff, and the additional red tape is forcing good employers to jump through totally unnecessary hoops. The average cost of a member of staff has surged by almost £1,000 a month, thanks to the jobs tax and the Government’s Employment Rights Bill. To make matters worse, because of the state of the economy, customers have less to spend on goods and services. It is all adding up to be an economic nightmare.
The Chancellor’s decisions are pushing our economy into a tax doom loop: higher taxes will fund more spending, which harms our economic growth and— surprise, surprise—means that the Chancellor receives lower revenue, and so once again comes back to ask for more tax rises.
Greg Smith (Mid Buckinghamshire) (Con)
I entirely endorse the argument that my hon. Friend is making. The big punishment in yesterday’s Budget was the increase in taxation on dividends. That says to our wealth creators and entrepreneurs—the people who create jobs—“Don’t bother.”
John Lamont
My hon. Friend is absolutely right. The Budget creates no incentives for people to invest and take the risk of setting up and growing a business. It sends out all the wrong messages about what we want in a country that has traditionally been full of entrepreneurs. Because of the doom loop that the Chancellor has created, it will always be hard-working businesses and families who pay the price for her economic failure.
The Chancellor could have made much better choices in her Budget. She could have saved £47 billion, including £23 billion from welfare, avoiding the need to increase taxes in this way altogether. She could have introduced a cheap power plan to bring down energy costs for homes and businesses. But the Chancellor has not listened. She has not learned from the mistakes she made in last year’s Budget. This Labour Government promised economic stability, but this Budget does nothing to make that a reality, which is why Conservative Members oppose it so strongly.
Alice Macdonald (Norwich North) (Lab/Co-op)
The Budget that the Chancellor delivered yesterday set the course for a fairer Britain, founded on a stronger, more resilient economy. It will make a real difference to people in my constituency. It tackles head-on the cost of living crisis, which has had such a terrible impact on so many. The origin of much of the crisis lies with Conservative Members, who oversaw devastating austerity policies, a blundering Brexit and a Liz Truss-sponsored economic crash.
In contrast, the Chancellor was clear about her mission to build a stronger, fairer and more secure economy. She was clear that we will not go back to austerity, and that we will not pass the debt burden on to the next generation. Instead, we will tackle the cost of living pressures head-on with targeted and funded interventions to deliver support where it is most needed. The theme of today’s debate is key to that; it is only through economic sustainability and by making fair choices that we can deliver a better Britain.
First, I did not hear Conservative Members welcome the choice we made to tackle the cost of living and put more money in people’s pockets. We have cut £150 off the average energy bill. Prescription charges have been frozen, and rail ticket prices have been frozen for the first time in 30 years. My constituents who take the train from Norwich to London on an annual season ticket will save around £600 a year. This Labour Government are bringing down everyday costs for working people.
Secondly, I want to talk about the fair choices being made that deliver for children and young people. During Parliament Week last week, I visited Thorpe St Andrew sixth form. There were some excellent questions asked, and many students asked me about jobs, opportunity and making work pay fairly. There were also questions about the minimum wage. I welcome the increase to wages, which was recommended by the independent Low Pay Commission. The national minimum wage for workers aged 18 to 20 will go up by 8.5%, and for under-18s and apprentices, it will go up by 6%. Overall, the national living wage will go up by 4.1%.
Alongside that, I welcome the investment of £820 million in the youth guarantee, which guarantees anyone out of work or study for more than 18 months a paid job. This Labour Government are delivering a stable economy for the next generation, fair pay, opportunity and lower national debt.
Approximately a third of children in Norwich live in poverty. Their chances in life, and whether they go to school with a coat on and a full belly, should not depend on the circumstances of their birth or how many siblings they have. That is why I welcome the decision to abolish the Conservatives’ cruel two-child benefit cap. This move will lift out of poverty 1,900 children in my constituency, 4,000 children across the whole of Norwich and 450,000 children nationally. As many Members have mentioned, we must remember that the majority of children affected by this policy are in families in which one parent works. Removing the cap is not only the right thing to do for our children, but in all our interests, because making children poorer costs us and damages our economy in the long term.
I am also proud that we are abolishing the horrendous rape clause. No longer will women be forced to undergo the humiliation of proving that their child was born as a result of rape in order to receive extra support. Children should not pay the price of political choices, and this Labour Government will make sure that they do not.
Turning to public services, I welcome the announcement of 250 new NHS neighbourhood health centres; it builds on the 5.2 million extra NHS appointments that we have already delivered. I will work hard to make sure that we get one in Norwich North. Fixing the NHS is one of the biggest priorities for my constituents, and I know that the Government will continue to focus on that.
The east of England is a brilliant place to live, work and do business. Indeed, the recent “Opportunity East” report highlighted that our region is a powerhouse of national growth, generating £214 billion in gross value added annually, and receiving nearly £10 billion of private research and development investment each year. There are many excellent businesses there of all shapes and sizes, as well as entrepreneurs and start-ups, including those based at the Norwich research park, so I welcome the measures in the Budget to back entrepreneurs and start-ups. I also welcome the investment that we have already seen in our region. The historic investment in Sizewell C will create jobs and opportunities for the whole region and, indeed, the country.
Yesterday, the Chancellor announced billions in flexible funding for seven mayors to invest in their areas. Given that Norfolk and Suffolk is to elect a mayor next year, I urge the Government to continue this approach, and to back local growth and local leaders. As the Chancellor said, the benefits of investment and growth must be felt in every corner of our country.
In conclusion, the Budget starkly contrasts with what we saw under the Conservatives, when living standards for many of my constituents in Norwich North fell. The Chancellor has set out a Budget that is about creating a fairer future for everyone, and that builds stability for Britain today, and for Britain’s tomorrow. It is sad that many Conservative Members reject the choices that we have made. We reject austerity, decline and unfairness. We want a future in which workers are paid fairly, people can pay their bills, we take action to end child poverty for good, everyone can see a doctor when they are sick, and we have a strong and sustainable economy for generations to come. That is the future that I have been fighting for since I was elected, and will continue to fight for.
Kirsty Blackman (Aberdeen North) (SNP)
I will start by welcoming a few of the measures in the Budget. I was contacted yesterday by the Pension Protection Fund about the indexation of pre-1997 pensions. The hon. Member for Caerfyrddin (Ann Davies) fought hard for this on the Pension Schemes Bill Committee, and I spoke about it on a number of occasions, so I am pleased that this change is being made. I think it will make a real difference to the oldest and poorest pensioners who are covered by the Financial Services Authority.
I want to talk about the two-child benefit cap. Alison Thewliss, previously my colleague, who fought very hard to get the rape clause removed, is delighted that this change is being made. The SNP has worked incredibly hard on this, not just over the course of this Parliament, in which we have moved two votes in the House specifically on the two-child benefit cap, but in previous Parliaments, because we know that it is the most cost-effective way of taking children out of poverty. In fact, yesterday in Scotland we tabled measures to mitigate the two-child cap in Scotland from next year. Thankfully we will no longer have to mitigate that policy, because the UK Government have agreed to do it.
We are pleased that this has happened and are very glad that the Government have caught up. However, I point out that it has taken some time, and about 100 children a day have been pushed into poverty as a result of keeping the cap in place. I invite Labour Members to reflect on the fact that a number of their colleagues were suspended for supporting my party in our move to scrap the two-child benefit cap. If it is the right thing to do today to get children out of poverty, it was the right thing to do then.
Turning to the total welfare bill, I have heard of a number of people—particularly from parties that are further to the right—talking on the radio about the growth of the total welfare bill and the fact that by the end of the forecast period it will reach £406 billion. The growth that is happening is about £91.5 billion, and almost half of that —£44 billion, which is 48%—is in pensions alone. I do not think it is right to couple those two things together when talking about the growth of the welfare bill. I understand that people do, and that the Red Book and Blue Book also couple them together. However, when people who say that we should get the welfare bill down talk about this £406 billion figure, they really need to be clear that half of that increase is in pensions. It is because we have the pensions triple lock and an increase in the number of pensioners.
Looking at the OBR’s figures in the fiscal risks report that was published in July, out to 2070 there is a significant increase in the percentage of GDP going to pensioners—from 5% to 7.7% by 2070. I am aware that it is quite a way in the future, but we need to be clear that, because of the growing number of older people, and the fact that they are living longer, there is an increase in the number of pensioners. Therefore, there is an increase in the amount we are spending on pensions. It is right for the Government to have to justify why they are increasing the welfare bill, but talking about that entire £406 billion figure as an increase in the welfare bill is not the right way to go about it, if that is what we are looking to tackle.
There are a couple of things more that I want to raise. With regard to energy prices and the cost of living generally, on coming into power, the Labour Government promised a £300 reduction in energy prices. Even with the Chancellor’s changes, we have seen a continued increase in the cost of energy. In fact, even with a £150 rebate, there will be more money on energy bills for the average family than when the Labour Government came into power. The SNP put forward a proposal in advance of the Budget talking about a bank levy similar to one that was introduced previously, specifically to pay £300 to billpayers to ensure that that Labour promise was met.
We still believe that the cost of living is too high. Let us look at the current 4.9% level of food inflation. It is impossible not to buy food; everybody has to buy food, just like they have to pay for energy. People can avoid taking foreign holidays and they can avoid buying a car, but they cannot avoid buying food and paying for their homes to be heated. Those inflation figures are therefore key and important.
Lastly, as hon. Members would expect, I will talk about the energy profits levy and oil and gas. Yesterday, alongside the Budget, the North sea future plan was published, and that entire document includes one mention of the energy profits levy and just when it talks about responses to surveys. Not once in that entire document do the Government mention the energy profits levy. I receive emails from people about oil and gas and the just transition, and the energy profits levy is the key measure that is causing a thousand jobs a month to be lost. If economic growth really is the Government’s key priority, they need to look at the energy profits levy, and they need to do so before 2030. My constituents are losing their jobs and that economic growth is failing as a result of this UK Government’s policies.
Dame Chi Onwurah (Newcastle upon Tyne Central and West) (Lab)
Had our productivity grown at the same rate as media speculation, the UK would have been in a much stronger fiscal position ahead of the Budget. All the more credit is due, then, to my right hon. Friend the Chancellor of the Exchequer for delivering a Budget for working people, lifting children out of poverty and equipping our economy to grow, at the same time as delivering a master class at the Dispatch Box.
There was another performance that was, well, magical in its way: that of the Conservative Members. They have managed to forget their economic vandalism, their fiscal incompetence and their social sabotage, and pretend that the UK’s economic situation is nothing to do with them, even as the OBR downgraded its productivity forecasts to reflect their past productivity failures. It is like some Westminster edition of “The Bourne Identity” without Matt Damon—well, perhaps the shadow Minister, the hon. Member for North Bedfordshire (Richard Fuller), thinks he is Matt Damon—but with a whole political party that wakes up not knowing where it has been for the past 15 years. But the north remembers, and particularly the north-east.
We are a great and vibrant region, and the engine of the industrial revolution. It was growing up in Newcastle, surrounded by the legacy of great Geordie engineers and inventors, in a culture that championed making and building things, that inspired me to become an engineer. But the wealth created by our region’s industrious workforce has not been enjoyed by us. Despite having world-leading companies and research institutions, the north-east now has the lowest GDP per head in the UK, at £28,000. Every region in the country is below the national average of £39,000, except the south-east at £41,000 and London at a whopping £69,000.
The Conservatives responded to the global financial crisis with the economic equivalent of leeches, with sustained austerity resulting in the slow strangulation of the economy and my constituents’ wages. Annual earnings for full-time employees in the north-east fell during that time and, despite Tory talk of levelling up, we see the same regional disparities in labour productivity, which is also, indirectly, a measure of capital investment, both physical and human. If we could just lift the north-east’s per capita GDP to the national average, it would increase UK GDP by over 1%, which is almost the same GDP growth as we had for the entire country in 2024. That is why the Chancellor chose to turn her back on Conservative austerity and make the tough decisions necessary to invest.
Let me focus on just two areas, science and social justice, which are the twin passions of my personal politics. As a Geordie and as Chair of the Science, Innovation and Technology Committee, I am delighted to see the new £30 million facility in the constituency of my hon. Friend the Member for Darlington (Lola McEvoy), which will accelerate the development of novel RNA—ribonucleic acid—therapies from labs to market to tackle cancer, heart conditions and infectious diseases. I am also excited by the Budget measures to support innovative businesses to grow and investors to invest beyond the start-up phase.
My Committee’s inquiry into regional innovation and growth heard wide-ranging evidence that disparities in investment, access to capital, skills, infrastructure and integration of universities and local economies all need to be addressed if we are to ensure that our regions benefit from Britain’s scientific strengths. Unfortunately, the inquiry also revealed an enduring complacency and lack of regional focus in many Whitehall Departments. I urge the Chancellor to go further to address the barriers to regional growth, and I particularly echo the hope of our regional mayor, Kim McGuinness, to see more infrastructure investments in the coming months.
The last Government’s record on social justice stained our nation, with children growing up in households where heating and eating were daily sources of stress. Cutting £150 from the average household energy bill, extending the warm home discount to a further 3 million of the poorest households, expanding free school meals and breakfast clubs and improving nutrition will make a real difference to young lives and cut the cost of living for my constituents. The Chancellor’s high-value council tax surcharge will also go some way to righting the ridiculous situation of a family in a band D home in Newcastle paying more council tax than someone in a £10 million property in Westminster.
Finally, the decision to scrap the two-child limit will change for the better the lives of 4,960 children in my constituency alone and put almost £7 million back in the pockets of local families. It is an honour and a privilege to support a Labour Chancellor delivering a Labour Budget in the interests of every region and of every working person in this country.
Andrew Rosindell (Romford) (Con)
It is a privilege to follow the hon. Member for Newcastle upon Tyne Central and West (Dame Chi Onwurah), but I am afraid that I have to disagree with what she has said this afternoon. I am sorry to say that this Budget will not improve the lives of my constituents in Romford, who are hard-working people who pay their taxes and contribute to society and who do not want the state to take money out of their pockets in the way this Government are doing.
The people of Romford are market traders, small businessmen, shopkeepers, entrepreneurs, City workers and company directors. They are the kind of people who will set their alarms early each day to get up for work to earn an honest living to support their families. Yet this Budget will hold my constituents back, stifle growth, increase the burden on hard-working families and demonstrate what seems to be a complete disregard by the Chancellor for supporting the genuine aspirations of the British people.
The Government are taxing people beyond that which is reasonable or sustainable, while showing no serious attempt to reduce the size of the state, cut back the over-bloated public sector or get people off a life of benefits and back to work. This Budget has radically increased taxes on working people and the freezing of the income tax threshold is, I am sorry to say, nothing but an underhand method of taking yet more tax from my constituents. In fact, 800,000 pensioners will be put into the 40% tax bracket. Pensioners in my constituency will be poorer, and I can tell the Minister that they will resent that.
The tax burden is now the highest it has been since the second world war, and my constituents will rightly ask what they are getting in return for this additional payment to the state. The truth is Britain is spending way beyond its means, and our Government appear incapable of making the serious cuts that are essential to restore our finances. The Conservative Government before should have done a lot more as well, but this Government are compounding the problem and making things far worse. If we carry on taxing and spending like this, our economy will continue to fall into a downward spiral. We need a radical change of approach, or I fear Britain will face bankruptcy.
Margaret Thatcher rebuilt our economy in the 1980s based on sound money, living within our means, cutting taxes for hard-working people, reducing the size of Government, reforming the labour market and making it flexible, curtailing the power of the trade unions, abolishing exchange controls, and creating an enterprise culture that generated prosperity and incentivised wealth creators for many years to come. That approach led to decades of economic prosperity, which was inherited by the Governments of Tony Blair and Gordon Brown only for it to be mucked up by their Labour policies, leaving the Conservatives to start to rebuild the economy once more.
The first woman Prime Minister got it right, and the first woman Chancellor of the Exchequer should now take a leaf out of Mrs Thatcher’s book. It makes no sense whatsoever for the Chancellor to freeze rail fares and give bumper pay rises to the public sector while raising taxes to the highest level in living memory to pay for them. This is economic illiteracy. Then, there are the millions for electric vehicles, representing yet more subsidies for the green agenda and more money thrown at the failed ECOS—employee car ownership schemes—experiment. The British people are no longer willing to fuel the fantasy of net zero to the detriment of our British industry. This is not economic ambition; this is an ideological obsession which now has little support. My constituents of Romford have no time for the net zero agenda any more. They can see that it is only making Britain poorer, with much pain for little gain.
The Government’s social engineering taxes are without doubt what Winston Churchill described as the philosophy of envy. VAT on private schools has added additional pressure to the state sector and has been the cause of the closure of large numbers of private schools. It has been so harmful to children and to the standing and success of our education system at home and abroad. The family farm tax is another example of how the Government’s policies are causing misery and harm to our rural communities and to families who for generations have farmed the land to feed the nation. It should be cancelled, and the Government should apologise to our farmers.
We now have a new wealth tax disguised as a levy on property, which represents a dagger to the heart of private property. This is an attack on the very notion of ownership. The truth is we have a massively bloated welfare state, and I have no confidence that the Labour Government will seriously tackle that issue. It is time to get back to common sense and sound economic management, so let us remember what Margaret Thatcher achieved for our country.
Mary Glindon (Newcastle upon Tyne East and Wallsend) (Lab)
I welcome a number of the announcements in the Chancellor’s Budget addressing the issues affecting my constituents’ lives. Despite the challenging headwinds facing the Exchequer, the Chancellor decided to protect the £120 billion of additional capital investment she set out at the spending review and introduced measures to ease cost of living pressures. Balancing the books by reducing capital spending would be to dismantle growth. The north cannot afford that if the productivity of our major cities like Newcastle is to catch up with European peers.
News on the cost of living is also welcome, with the average family due to save £234 next year from energy support and fuel duty measures. The decision to freeze rail fares and prescription charges will be a sigh of relief for families up and down the country, and I also support the 4.8% increase to the state pension in line with our commitment to the triple lock. On social security, I am delighted by the decision to scrap the two-child benefit cap. This progressive Labour choice builds on the work the Government are already doing on child poverty—the roll-out of universal breakfast clubs, the expansion of free school meals and now the removal of what has been a moral stain on Britain for the past eight years. The Tories reacted with anger; I welcome it wholeheartedly for the 2,940 children in my constituency who will be impacted positively by the measure.
I commend the Chancellor for the steps she has taken on taxing profits made by gambling firms. Remote gambling is associated with the greatest levels of harm. For some, it is not entertainment; it is a rapid decline into addiction, mental health struggles and debt. Yesterday the Government struck the right balance. Land-based gambling is lower stakes and takes place in a more regulated and social environment. The sector is a source of investment for our high streets, which have been beleaguered for a number of years. I am also pleased that those high streets will be supported by the introduction of permanently lower business rates for eligible properties —the lowest tax rates for more than three decades.
While I welcome the introduction of maintenance grants for disadvantaged students, I hope the Government will listen to the higher education sector’s concerns about the proposed international student levy. According to the Office for Students, 45% of universities are set to report a deficit this year. Diverting international tuition revenue at such a fragile moment for the sector could lead to additional course closures, staff redundancies and reductions in student support services. I urge the Government to review the levy mechanism before implementation and to publish full sensitivity analyses using realistic assumptions for international student demand.
While I hope the Treasury will seek to identify alternative sources of funding for maintenance grants, I urge the Government to introduce transitional protections should the proposals be introduced in 2028. I also hope the Treasury will examine the exclusion of PhD researchers from the Government’s expanded childcare offer. Because stipends are not classed as taxable income, they are denied access to that support. Will the Treasury team work with the Department for Education to explore solutions that ensure that researchers receive the same childcare offer as other working families?
On our North sea, I remain deeply concerned about our offshore energy sector. Net zero is our future—there is no denying that—but the transition must be fair, managed and prosperous. David Whitehouse, chief executive of Offshore Energies UK, has warned that waiting beyond 2026 to reform the energy profits levy would
“see 1,000 jobs continue to be lost every month, more energy imports and a contagion across supply chains and our industrial heartlands.”
I echo his words:
“This is not over. We will keep pressing for change”.
I could not make a Budget debate speech without mentioning the vaping industry. Illicit products, under-age sales and rogue retailers undermine public trust in what is the most effective form of smoking cessation. I am pleased that the Government have announced plans to give border officers and tax officials greater powers to tackle the surge of prohibited e-cigarettes on high streets across the country, with police having powers to remove illegal vapes on the spot and to fine shop owners up to £10,000. A licensing scheme would be the icing on the cake.
Politics is about values, which are always tested when the going gets tough. Against a backdrop of challenges, this Government have reaffirmed their moral commitment to tackling poverty and getting our economy back on track.
Monica Harding (Esher and Walton) (LD)
I am sure that the Chancellor is sick of hearing her own words from last year quoted back to her:
“extending the threshold freeze would hurt working people. It would take more money out of their payslips”—[Official Report, 30 October 2024; Vol. 755, c. 821.]
Yesterday, she froze income tax thresholds, dragging one in four people into higher rate or additional rates of tax and pushing the tax burden to an all-time high of 38% of GDP. Today, she is refusing to rule out coming back for more. Blindly copying the playbook of the last Conservative Government, she is the continuity Chancellor. There is still no vision for growth, just that old-style Labour tax and spend. It is like new Labour’s wealth creation to pay for better public services never happened.
The Government may like to blame the Conservatives for the OBR’s downgrade in growth, but the OBR has said that none of the measures in the Budget will boost growth. In fact, the Budget may actively harm growth. The OBR has said that slower wage growth and higher taxes mean living standards will rise more slowly than expected. Take, for example, the raid on pension contributions: the OBR tells us that employers will pass on the cost of the £4.7 billion tax raid on pension contributions to employees through lower wages and less generous schemes. The CBI has data showing that three quarters of employers will decrease pension contributions as a result. It is a tax on those doing the right thing.
That comes after Government policies harmed businesses in their first Budget, including the national insurance increases that have put thousands of pounds on to a load of businesses in my constituency, causing them to hire less and cut hours for the very people that the Government say they want to protect: part-time, low-paid workers, often with caring responsibilities. Higher unemployment in turn means more spend on universal credit—indeed, £1.8 billion more, as estimated by the OBR, on unemployment. It is all the wrong way round.
Yesterday, one long-term successful business owner in my constituency said to me:
“The whole thing is just depressing. I could work for another 10 or 20 years creating wealth for the economy, but the Government is making it so hard I may as well retire. And if I was in my 30s, I wouldn’t choose to do it here any more—I would move overseas.”
She is one of our wealth creators—she creates the growth we need. Another large business in my constituency who once felt confident about investing in Britain, creating growth and hiring new staff is now telling me that it is scaling back plans, postponing projects altogether and contemplating offshoring.
Talking of supporting people trying to do the right thing, let us turn to landlords. One of my constituents, who is known as a decent landlord, told me yesterday:
“I may as well pull out—what is the point? I get 2% gain on my properties. I may as well put it in the bank and get 4%.”
The Government’s policy will take rentals off the market and increase rents. In Esher and Walton, where rental prices are sky high, that means more people will not be able to afford to live there.
The property tax will gum up the housing market and distort it by bunching properties for sale below the threshold. It is said that the surcharge will raise more than £600 million, but that will be offset by £200 million of behavioural impact, so the take-home is £400 million, which is a rounded-up figure. In London and the south-east, where the average price per square foot is higher, those properties might not be such big houses, and in them are likely to be pensioners. Public First has said that two fifths of homeowners in bands G and H are pensioners.
Monica Harding
I do not have the time.
Older homeowners who have watched their properties’ value soar over the years will be hardest hit by this granny tax. They are asset-rich but cash-poor. They may be forced to sell up—at reduced asking prices—and more properties will get dragged into the mansion tax net. As that happens, a proportion of terraced houses, flats and semis will join them.
Worst of all, this is not a serious attempt to reform property tax, including business rates, stamp duty and council tax. Like the Budget, it is tinkering and meddling around the edges. This is a patchwork Budget that does not take us much further forward. Where has the national mission for growth gone? This is a low-growth Budget from a low-growth Government who thumb their nose at the wealth creators. It does not tackle some of the big questions. Where is the money in the plan for adult social care? Where is the money in the plan for the £14 billion deficit in SEND provision to help local authorities that are about to go bankrupt? The Budget is a smorgasbord of contempt for aspiration and growth. The Government have not only abandoned working people in my constituency, but waged a quiet war on aspiration itself.
I am pleased that the Government have lifted the two-child benefit limit. [Hon. Members: “Ah!”] My party laid out how we would do that, but Government Members know as well as I do that poverty does not end there. To tackle poverty, we need to create growth.
There is an alternative, which the Liberal Democrats have laid out in our plan to turbocharge economic growth by repairing the £90 billion Brexit black hole caused by the previous Conservative Government. The UK needs to negotiate a new bespoke customs union with the European Union: a modern arrangement designed around the needs of British businesses and workers, which would raise £25 billion a year. Instead of that we have a Budget that taxes work, punishes investment, stifles aspiration and still fails to deliver for public services; a Budget that tells wealth creators—
Graeme Downie (Dunfermline and Dollar) (Lab)
I was going to say that it is a privilege to follow the hon. Member for Esher and Walton (Monica Harding). At the beginning of the debate, we talked about films with the shadow Chancellor, and the hon. Lady reminds us of “Back to the Future”, as that really was 2010 all over again. Perhaps a couple of steps to the right, so to speak, may well be in order.
My constituents in Dunfermline and Dollar tell me every week what matters to them, and that is what the Chancellor has delivered in her Budget speech. She delivered on the main issues that affect people by bringing down the cost of living, ensuring that working people in every corner of the country keep more of what they earn. It is a Labour Budget in every sense of the word, focused on helping the people who need it most, lifting families out of poverty and creating new opportunities for the future.
I am proud to be one of the founding members of the living standards coalition on the Labour Benches. We hear every day how important these issues are, and we have pressed for these changes simply because we know that these are the actions that matter most to the people in our constituencies and will make their lives better. The alternative proposed by Opposition Members is also something out of a film, except that film is “The Wolf of Wall Street”—a failed ideological lurch back to hated austerity: the cruel experiment that shattered public services and pushed millions of people across the country into poverty and despair.
Yesterday in the Budget, the Chancellor announced that there will be no return to those dark times. We will see responsible choices that stabilise the economy and put money back into people’s pockets. With the increase in the national living wage and the national minimum wage, the Chancellor has shown yet again that the Government are laser focused on making work pay, ensuring that those who work hard to get ahead feel a sense of fairness. To the 10,000 Fifers who will benefit from these measures, I say, “The Labour Government are fighting for you now and will go on fighting for you day in, day out.”
The Government have shown what matters most to the British people: no more fear and uncertainty from Tory mismanagement, bills down, wages up, pensions up and more money in people’s pockets. That was a promise made by Labour and kept by this Labour Government.
We have already seen the Government deliver trade deals. Just last week, a £4 billion agreement with Indonesia secured hundreds of jobs at Rosyth in my constituency. Today, the Chancellor confirmed that the Budget will see no return to austerity in Scotland, with the Scottish Government receiving a further £820 million, putting Scotland at the heart of the Budget. Sadly, Scots have seen lengthened NHS waiting times, delayed trains and struggling schools, but the Budget has laid the foundation that will allow Anas Sarwar as First Minister in Scotland to rebuild north as well.
Keeping fuel costs down is vital for my constituents— I have led campaigns on that during my time in Parliament —so I very much welcome the Chancellor’s fuel duty freeze and the other measures to support people and small businesses in Dunfermline and Dollar.
We are also looking after the older generations—particularly people who have served our country and powered our past. One of the Government’s first acts was to right a historic wrong by overturning the injustice that diminished the mineworkers’ pension scheme and returning pension funds to the pockets of retired miners. The day after the previous Budget, I discussed with the then Chief Secretary to the Treasury the need to support members of the British Coal staff superannuation scheme. Thanks to me and coalfield MPs from across the Labour party, the Chancellor announced that change, which will benefit 176 families in my constituency and almost 700 across Fife. I pay tribute to BCSSS campaigners across the country, including Alan Kenney in my constituency. Justice for BCSSS members means more money in the pockets of the retired workers whose labour quite literally kept the lights on in this country, ensuring that they have financial flexibility and security, which inevitably boosts the local economy.
This Budget supports working families and lifts them out of poverty. As others have said, we cannot allow a false choice to exist; we must always remember that 70% of children in poverty come from working families. Those are hard-working people who are trying to support their children but who need just a little more help from this Labour Government. The scrapping of the two-child limit will benefit an estimated 1,400 children in my constituency alone.
While we are talking about righting historic wrongs, something about which I have not heard much in this debate is the Labour Government’s covid counter-fraud commissioner recovering £430 million of our money from scammers enabled by the Conservative party.
Fife will also benefit from £40 million of pride in place funding thanks to this Government’s support for local communities, which will build local infrastructure, improve skills and increase community capacity where it is needed most. That funding is available only because of the choices made by this Government and the Chancellor. We will use the funds we have to support the people who need it most, bringing down bills, putting more money in people’s pockets and creating a prosperous economic future.
This Budget is about fairness, stability and hope. It delivers for Dunfermline and Dollar, for Scotland and for the United Kingdom. Promises were made, and promises have been kept. This is a future we can believe in, and the Budget will have my full support.
Greg Smith (Mid Buckinghamshire) (Con)
In reflecting on the title that the Government have offered up for today’s Budget resolutions debate, “Economic Sustainability and Fair Choices”, I have found myself wondering on what planet anyone could possibly call yesterday’s Budget sustainable or fair. The forecasts show that GDP growth will be down in every year from 2026 to 2029, consumer prices index inflation will be up 3.5% this year, taxes will increase by £26 billion, the unemployment rate will hit 4.9% in 2026, the size of the state itself will increase to 44.8% of GDP, borrowing will go up £11 billion, and debt interest will be higher in every year of the forecast. That is not the makings of a sustainable economy or growth, and it is certainly not fair on the taxpayers who will have to shoulder the burden to pay for it all.
As I visit businesses in my constituency—the retailers and hospitality businesses on the high streets of Wendover, Princes Risborough, Great Missenden; the village pubs; the furniture manufacturers in Princes Risborough and the surrounds; and the rocket scientists and big businesses at Westcott venture park—they all paint a picture of preparing for things to get worse. They say that they are not planning to take on new employees or apprentices.
Graeme Downie
Did the hon. Gentleman have a similar conversation with his constituents after Liz Truss’s disastrous Budget, which he supported? What did they say?
Greg Smith
Labour Members are like a broken record. The last Conservative Government certainly made a number of mistakes—we have put our hands up to that—but we left employment high and unemployment at a record low, and jobs were being created every single day.
Now, businesses are not taking on—or are planning not to take on—more new starters, or, like Rumsey’s Chocolaterie on Wendover High Street, have already had to lay people off or cut their hours because of employer NI, business rates and the looming Employment Rights Bill. Those are the real-world consequences of the Labour Government’s policies. The dividends tax in the Budget struck right at the heart of the entrepreneurs—the small business owners—who risk everything to create growth, employ people and create the jobs that we want in our economy. It has sent them the message: “There will be less in it for you, if anything at all.” Many of those businesses operate on narrow margins, working their socks off almost for nothing, and this Government are making it even harder for them. That is no way to run an economy.
I am lucky enough to have many farmers in my constituency of Mid Buckinghamshire, where around 90% of the land is agricultural, and I talk to them as often as I can. My party held an emergency food and farming summit at Fleet Marston farm in my constituency a couple of weeks ago, where my right hon. Friend the Leader of the Opposition, the shadow Secretary of State for Environment, Food and Rural Affairs, my right hon. Friend the Member for Louth and Horncastle (Victoria Atkins), and the shadow Farming Minister, my hon. Friend the Member for Keighley and Ilkley (Robbie Moore), joined me to again hear directly from farmers about the impact the family farm tax will have. They will have to either sell up to a third of their farm to meet that tax bill or take on a level of debt that it will take over 40 years to pay back.
The National Farmers Union, many other organisations and farmers directly have tried to reach out, including yesterday on Whitehall, to get Labour MPs and Ministers to listen and understand the real-world consequences of their decisions. And yet the Budget yesterday was entirely lacking anything other than the transferable allowance to take away the stress, anxiety and existential threat to British agriculture that the family farm tax and changes to business property relief represent to family businesses and family farms up and down the country. I can assure anyone who challenges the point I am making that it will not be other farmers who buy the land when farms have to sell to meet the inheritance tax bill—it will be property developers and those with all sorts of other concerns, who will not keep that land in food production. The nation’s food security will suffer as a direct result of the failure to scrap the family farm tax yesterday.
I want to talk briefly about another issue I have been focused on for a number of years, during the last Parliament and this one. I draw the House’s attention to my co-chairmanship of the loan charge and taxpayer fairness all-party parliamentary group. I am grateful to the Chief Secretary to the Treasury and the new Exchequer Secretary for the time they have taken to reach out on this issue. Some of the announcements yesterday were welcome, off the back of the McCann review. However, I am sorry to say to the House that they have not been met with total joy from the victims of the loan charge, because many people caught up in the loan charge are still being asked to pay amounts of money that they simply cannot afford.
The Chancellor, the Chief Secretary to the Treasury and other Ministers are on the record saying, when in opposition, that the victims of the loan charge were “victims of mis-selling” and that the perpetrators—those who promoted these schemes—should have been brought to justice. What we got yesterday was nothing of the sort. We did not get the fully independent review that the APPG and the Loan Charge Action Group have been calling for.
Despite the concessions yesterday, many people simply will not be able to pay. Two thirds of the victims are now over 55, 40% are over 60 and a quarter are already retired. They just do not have the ability to find the amounts of money being asked for, and the offer on the table is nothing like the settlement made with the big banks some years ago, which was in the region of 10% to 15%. I urge the Exchequer Secretary to look at this again and to deliver a genuinely fair settlement to everyone caught up by the loan charge and pursue those who sold the schemes.
Adam Jogee (Newcastle-under-Lyme) (Lab)
I am grateful for the opportunity to speak in this debate. Many of the measures announced yesterday will make a real difference to the lives of the people I represent back home in Newcastle-under-Lyme. To whom much is given, much is expected. The Labour party received a mandate and the trust of the people last year, so we must get on with the job of getting our country back on track, and this Budget helps us do that.
Communities like mine in the industrial heartlands believe that hard work should always pay off, that people should contribute their fair share, that nobody should walk by on the other side, as Holy Scripture tells us, and that everyone in our United Kingdom should be able to live with dignity and opportunity and to get by and get on. Nobody in a country like ours, rich in people, ambition and potential, should ever be forced to choose between heating and eating. Nobody should be left living on social security when they can and should, if able, be at work, benefiting from the dignity and power that work provides.
I am grateful for the announcement on the BCSSS. That change is something that I have campaigned hard for, alongside colleagues such as my hon. Friend the Member for Easington (Grahame Morris), and my Staffordshire colleagues and neighbours, my hon. Friends the Members for Stoke-on-Trent North (David Williams), for Cannock Chase (Josh Newbury), for Burton and Uttoxeter (Jacob Collier) and for Lichfield (Dave Robertson)—and yes, my hon. Friend the Member for Dunfermline and Dollar (Graeme Downie), and many others. Men and women from Newcastle-under-Lyme who worked down the pits in our coal industry, fuelled our economy and kept the lights on, will now finally get the justice that they deserve. They will get the money that they are owed, and it cannot come fast enough.
In our United Kingdom, no child should grow up in poverty. That is why I welcome the decision to tackle real injustice and inequality, and lift 1,770 children out of poverty in Newcastle-under-Lyme. I am glad that two local schools back home—the Meadows school and Langdale primary school—have already received funding for breakfast clubs. I look forward to more local schools benefiting, so that no child goes to school hungry.
Newcastle-under-Lyme is home to many wonderful family farms and the farmers and families who live on them—people who tend to our land, feed us and keep our country going. I have raised their concerns, which I share, about the proposed changes to APR for farmers. I welcome the sensible concession in the Budget that will allow for a clearer and smoother transfer of reliefs between married couples and civil partners, but I urge colleagues on the Front Bench to consider the threshold. Going for the baddies who land bank is the right thing to do, because those who should pay must be made to pay, but we must not allow an unintended impact on small family farms.
Graeme Downie
I thank my hon. Friend for raising the issue of family farms; I have a number of them in my constituency. Does he agree that it is important to strike a balance in his part of the country, as well as in the devolved Administrations, and to put the tax burden in the correct place, while protecting small family farms?
Adam Jogee
I am grateful to my hon. Friend, who gives voice to the fact that we are one United Kingdom, and the same approach must be taken in Scotland as in the centre of our collective universe, Newcastle-under-Lyme. It is important to note that the challenges facing our farming industry did not start last July—we all know that—but this Government now have the chance to give our farmers the support that, I am afraid, the previous Conservative Government failed to.
It is easy to be gloomy about the state of the world, but there is always hope. This weekend marks the first anniversary since the cowboy operators at Walley’s quarry landfill site were closed down; 147 days into my time as our MP, we finally secured justice for the people in my community who were forced to live with the disgusting and disgraceful situation at Walley’s. That is a sign that things can only get better, and I pay tribute to all the campaigners who worked so hard with me over my first 147 days as MP.
With this Budget, we are fixing the roof—and while the sun may not be shining, it certainly is not raining outside. We will see more children eating properly and not going to school hungry; more parents able to work without worrying about childcare; and more former miners finally getting justice and the money that they are rightfully owed. We will see prescription charges and rail fares frozen; more pensioners able to afford to heat their homes and buy Christmas presents for their grandchildren; and the disgusting rape clause gone. We will see more people able to afford their energy bills, which will be cut by £150, and more young people will be supported into life-changing education and employment opportunities. We will see support for farmers, but there is much more to do on that. I hope that the Minister has heard that, for the third time this speech.
There is more support for universities and colleges, such as Keele University and Newcastle College in my constituency. They will receive the support that they need to continue providing a world-class British education. We will see more doctors, nurses and NHS staff getting the credit and support that they richly deserve. I declare an interest, as my wife is a nurse—an excellent one, as are all her colleagues.
The Budget will not change the country overnight. It will not solve every issue immediately, but it sets us on a path to a fairer, better and more inclusive United Kingdom. I will always shout loudly when we show the difference that a Labour Government can make. I will speak truth to power when we need to do things better, and I will always ensure that the people of Newcastle-under-Lyme are heard loudly and proudly in this place. We have much to do, so let’s get on with it.
Sir Christopher Chope (Christchurch) (Con)
It is a pleasure to follow the hon. Member for Newcastle-under-Lyme (Adam Jogee). I thank him for his support for the campaign against the family farm tax, and for his courage in speaking out in favour of abolishing that impost on our farming communities.
It is no exaggeration to say that this is the worst Budget that I have witnessed as a Member of this House, but it generated the best response I have ever heard from the Leader of the Opposition. I congratulate my right hon. Friend the Member for North West Essex (Mrs Badenoch) on the way that she dealt with it, and I start by referring to her excellent speech. She said:
“the Chancellor has, by her own admission, broken her manifesto promise on income tax. In the last Budget, she said: “I am keeping every single promise on tax that I made in our manifesto, so there will be no extension of the freeze in income tax…thresholds”.
She also said that
“extending the threshold freeze would hurt working people. It would take more money out of their payslips.”—[Official Report, 26 November 2025; Vol. 776, c. 403.]
Yesterday, the Chancellor had the gall to say, in the conclusion of her speech, that she was
“keeping every single one of our manifesto commitments”—[Official Report, 26 November 2025; Vol. 776, c. 399.]
It is hardly surprising that disillusionment with politics and the political system in our country is running so high, when there is that sort of betrayal of not just a manifesto commitment, but even what was said last year. I happened to be, I think, the only Conservative MP at the CBI dinner last year, and I heard the Chancellor say to Rupert Soames, president of the CBI, that she was not coming back for more, that there was a clean slate, and that the Government would not increase taxes. She seems to have disregarded what she said a year ago to the CBI. Was she seduced by Rupert Soames? I do not know. Did she mean what she said, or did she not? It is hardly surprising that people do not trust this Government any longer.
Those who had the misfortune—I do not know whether you ever did, Madam Deputy Speaker—to travel on Belgium’s national airline Sabena developed the acronym “such a bad experience, never again”, and that is exactly the view of those who voted Labour for the first time at the last general election. They are saying, “never again”, because they witness the arrogance, the incompetence, and the downright deceit of this Labour Government.
It is worth putting on record the extent to which taxes are now increasing. Table A.5 in the Office for Budget Responsibility’s “Economic and fiscal outlook” sets that out. I put this in the context of what the Chancellor of the Exchequer said on the “Today” programme this morning. When asked whether she would rule out further tax increases in this Parliament, she declined to answer, and in essence said that she would not, but let us remind ourselves of the tax increases already in the Budget. In 2024-25, income tax was £305.9 billion. It is going up to £410.9 billion by 2029-30, which is an increase of £105 billion, or over one third. National insurance is going up from £171.4 billion to £239.2 billion, an increase of 40% over five years. Business rates are rising from £32.1 billion to £41.9 billion, an increase of 30% over five years. Council tax is rising from £47.4 billion to £63.3 billion over five years, an increase of at least one third. Inheritance tax is rising from £8.3 billion to £13.5 billion, an increase of 60% over five years. It is hardly surprising that people are feeling poorer and betrayed. Very few people will experience increases in their household income of anything like those proportions in the next five years. That is why this Budget is such a disaster and a betrayal of the national interest.
There is also an unhealthy development in the Budget that I hope you, Madam Deputy Speaker, can discuss with Mr Speaker. Many constituencies were mentioned, and Labour Members were identified as having contributed to the Chancellor’s decisions. It struck me that people are now being bought off by the Chancellor in return for their support, and that is an extremely unhealthy development. It is basically what we have seen happening in the United States, and we do not like it at all.
Anna Gelderd (South East Cornwall) (Lab)
This Budget sets out fair decisions that benefit communities across the country that have felt the strain of the last decade, and that expect to see the change that they voted for delivered, and the cost of living brought under control.
I am delighted that Cornwall’s potential has been recognised with the new £30 million Kernow industrial growth fund. This new fund demonstrates that Cornwall once again has a leading role to play in powering the UK economy. Mining is at the heart of our story in Cornwall. With the new support, we can begin the next chapter, in which critical minerals and other core industries will help us to unlock the next great industrial revolution, and greener, cheaper energy. The fund will support local businesses and workers. That investment is combined with the stability that will come through extended business rate retention, and sits alongside wider opportunities offered through the National Wealth Fund, the British Business Bank and Great British Energy. These choices support secure, year-round jobs, and this combination of investment, stability and real change for the majority of working people is reflected throughout the Budget
South East Cornwall will feel a benefit through local growth and to family finances. Families gain real support. Wages have risen faster in the first year of this Government than they did over the past decade. The reduction in energy bills and the freeze to prescription charges, fuel duty and rail fares will be welcomed by my residents in South East Cornwall. The changes to universal credit will bring thousands back into work, strengthening labour markets in places like Liskeard, Torpoint and Callington.
One of the most significant steps is the decision to scrap the two-child benefit limit. Shockingly, child poverty rose by 900,000 between 2010 and 2024. I say “shockingly”, but I am not sure if that truly shocks the Conservatives, who presided over that decline. I know what child poverty looks like. I know how it locks people out of opportunities through no fault of their own, and I know how hard schools, campaigners, charities and other support systems work to try to bridge the gap, but some gaps require systemic change. This Budget will lift 450,000 children out of poverty. That is what systemic change under this Labour Government looks like.
In South East Cornwall, relative child poverty stood at 21.7% in 2023, meaning that almost a quarter of our local children entered school already facing hardship. Growing up in poverty makes people less likely to be in work, and more likely to earn 25% less, aged 30, so that is not good for kids or for the adults they become, and it is not good for our economy. This Budget reduces pressure and gives families a more secure start.
For too long, local healthcare has been a challenge for residents in South East Cornwall, so I am pleased that Labour is backing our NHS with extra support. Investment in healthcare technology and the creation of 250 neighbourhood health centres will cut waiting lists and improve access. The NHS neighbourhood rebuild opens up more than 120 new centres by 2030, and there will be improvements at Truro health park. That is backed by real investment; these are not fantasy priorities. Residents in South East Cornwall rely on services in both Cornwall and Plymouth, and these upgrades will bring benefits right across my region.
Young people get new opportunities as well. Investment in school libraries and new playgrounds will improve learning and wellbeing, and there will be an £820 million investment to support young people by guaranteeing them a place in college, an apprenticeship or personalised job support. The free apprenticeship training for under 25s in small businesses will help local employers across South East Cornwall. That is 1,854 small and medium-sized enterprises in my region that will be able to train and retain young people. This is a real chance to build a local, skilled workforce and to keep that talent at home in Cornwall.
Cornwall needs the tools to strengthen its visitor economy in a way that benefits our local people in the long term, so an overnight visitor levy could be an important step. We rely heavily on tourism, yet residents often feel the pressure of the summer peaks without seeing the long-term benefits, so the power to raise local revenue and reinvest in our community projects could create a fairer balance and support a more resilient local economy.
I also welcome the new announcement for farmers and their families. The ability for spouses to transfer any unused agricultural and business property relief allowances gives farming families more certainty as they plan for their future. South East Cornwall is a proud rural and coastal constituency, and I have been working with many local farmers to ensure that their views are heard in my discussions with Ministers. Fixing thresholds and closing loopholes strengthens confidence, but I know there is further work to do.
Greg Smith
While the spousal transfer is a very narrow measure that might give a couple of years or maybe a decade’s relief, at the end of the day farmers will still have to sell massive chunks of their farm to meet the inheritance tax bill. What will the hon. Lady say to her farmers when that point comes?
Anna Gelderd
I thank the hon. Member for allowing me more time to make my points. Farming is at the heart of my community—
Anna Gelderd
I know, and I am very glad to be debating with the hon. Member on this point. Farming is at the heart of my community, and I am working hard with Ministers to ensure that the new changes are reflected. As I have said, there is much more work to do.
I particularly welcome the clear recognition of Cornwall in this Budget. Alongside the Kernow industrial growth fund, the Government’s commitment to work with the Council of Europe to increase the UK’s formal recognition of the Cornish language under the European charter for regional or minority languages matters, because Kernewek remains at a lower level of protection compared with other Celtic languages. That is why I introduced my ten-minute rule Bill focused on Cornish language and heritage.
Opposition parties talk about leaving the European convention on human rights. Cornwall fought hard for our national minority status and the frameworks that protect our language and heritage, so I do not want to see them thrown away. I want to see a wider use of Kernewek in signage and place names, which I know will boost our local economy as visitors flock to see it.
This Budget moves us in the right direction. It does not complete the work, but it delivers a fair step towards repairing Britain and rebuilding the opportunities in places such as South East Cornwall. I will continue working, as I have done since being elected, to deliver real investment, strong public services and a local economy that works year-round.
Several hon. Members rose—
Madam Deputy Speaker (Caroline Nokes)
After the next speaker there will be a five-minute time limit.
Sir John Hayes (South Holland and The Deepings) (Con)
G. K. Chesterton said:
“It is human to err; and the only final and deadly error, among all our errors, is denying that we have ever erred.”
Yesterday’s Budget brought into stark relief the fact that the Chancellor and this Government have erred and, worse, are in denial about their error.
The UK faces a twin-pronged fiscal crisis. Public debt is at around 100% of GDP and rising, with debt interest making up about three quarters of the deficit. Public spending, at close to 45% of GDP, is near to a high in the post-war years. Much of that failure is systemic—Governments of all colours have failed to address some fundamental macroeconomic challenges—but yesterday’s Budget not only failed to fix that entrenched mess, but did not even acknowledge that it is happening.
As the global liberal order decays, we face global economic challenges on a scale we have not seen for 100 years. Artificial intelligence risks transforming the jobs market. A recent study by the National Foundation for Educational Research forecast that up to 3 million jobs could disappear by 2035. Employment in sales and customer service occupations has fallen by more than 10% since 2021, and around 12 million people in England currently work in occupations deemed to be in decline. That requires Government to play a role.
Government can be a force for good. This House took far too long to recognise the damage that would be done by the internet, and finally, when those horrors were obvious, it legislated. We need to restrict AI where it does similar damage, rather than indulging this naive faith in technological change at all costs.
The old, comforting bourgeois assumptions about the benign nature of globalisation and the faith in technological change risk endangering many of the jobs I have described, and the purpose and pride they fuel. The US President was right to impose tariffs on cheap goods that were destroying vital US industries. In response, China is dumping surplus goods in Europe, and it has been estimated that 3 million industrial jobs in the EU are at risk from that surge of subsidised imported goods.
In response to these existential threats, the Government seem frozen in time. Too much of the establishment remains wedded to dysfunctional orthodoxies. We are playing by the rules of the game when the important players have left the table. We cannot continue to proselytise for unbridled free trade when the two biggest economies in the world, China and America, have given up on it. We have to protect those industries that are critical to our national economic interests, building greater economic resilience by reindustrialising and by manufacturing again, so ensuring that more of what we consume is made here in Britain, with the jobs, skills and reassurance that provides. An economy can nourish communal health, but it cannot do so in a world that is wedded to globalised, multinational, corporate companies that are careless of the difference they make to communities such as mine in Lincolnshire and those across the country.
Here in Britain, and across the western world, living standards are stagnating, productivity growth has all but disappeared, and the state grows ever bigger in the face of rising poverty and worklessness. Why, then, does the political class continue to profess a blind faith in an economic model that has delivered record levels of state dependency? The assumption that little can be done to reverse the inevitable process of industrial decline is simply wrong, as the experience of the United States suggests. Once we tune out the noise surrounding President Trump’s on-and-off tariffs, we can hear the faint stirrings of industrial revival. A detailed study of the impact of tariffs during the President’s first term found that once the pre-existing decline in manufacturing employment was accounted for, tariffs contributed to rising employment in areas with a large presence of protected industries. Neither did consumer prices surge in the United States, despite the predictions of liberal economists. Just imagine the potential benefits of a consistent and coherent trade policy that puts the needs of British industry first.
Bradley Thomas (Bromsgrove) (Con)
Does my right hon. Friend agree that in a world where capital and labour are highly mobile, and one that is increasingly pressured as a result of energy costs, the best thing the Government could do is pare back the regulation that inhibits manufacturers’ ability to compete competitively and prevents the UK from being a very attractive destination for that capital and labour?
Sir John Hayes
My hon. Friend makes a valuable point. Both Governments and these big corporates welcome a regulatory system that disadvantages small and innovative companies. Big organisations quite like regulation, for they can cope with it because of their scale; small organisations struggle with it, because they simply do not have the resources to deal with it.
In 1979, manufacturing accounted for 30% of GDP in Britain; today that figure is just 8.5%. Manufacturing employed 21% of the workforce in 1982; by 2023 it employed just 8%. By some measure this is the greatest deindustrialisation of any major nation. We can and should build a different economic model—a new order.
We need a fundamental rethink of our economic model, breaking from the failed orthodoxy that currently prevails and moving towards what Hilaire Belloc and GK Chesterton called “distributism”, where local economies —introspective, feeding communal health, with shorter supply chains—mean that we can make more of what we need here in the UK, fuelling skills and nourishing communities. What Chesterton and Belloc intuitively understood was that the excessive concentration of economic power harms society and fuels the discontent that many people in Britain feel today. Real wages have stagnated, while those at the top—large corporations in particular, often based overseas—accumulate huge wealth and power.
We can build that new order. Small family businesses enrich the places in which we all live. Mutuals and co-operatives sustain communal and economic health in localities. We can do this, but it requires a radical rethink of the economic orthodoxy. The Budget does not suggest that rethink. All parties must step up to the mark and understand that we live in a post-liberal age where a new order is possible. Let us together build that new order, to deliver the common good by sustaining our national interest.
Adam Thompson (Erewash) (Lab)
Undoubtedly my constituents will be watching this Budget debate closely, asking what it means for them and whether it will sort out the cost of living, fix the NHS and help pay down the national debt. What they will have seen from my right hon. Friend the Chancellor and her ministerial team is a Budget with those issues at its heart.
Over 14 years this country experienced the steepest fall in living standards in living memory. The planned rise in the minimum wage next April is just one step towards alleviating those problems for the lowest paid in society. The youngest full-time workers will see a nearly £5,000 pay increase. Coupled with £150 off household energy bills, this Government are literally putting money in people’s pockets. Unlike the Tories and their latest rebrand, Reform, I will be proud next week to back a Budget that backs working people.
There is a simple truth: when workers are paid well, they work better. When working people have more money, the economy grows. I was delighted to hear in the Chancellor’s statement the announcement of the Team Derby initiative, a new roaring engine for the east midlands economy, creating high-paid, good-quality jobs in my home in Derbyshire. For children in Ilkeston and Long Eaton, new free apprenticeships in SMEs will be something to truly aspire to when they come out of school, as good as any university degree.
In Erewash, waiting times for GP appointments are a full week longer than the national average. It is fundamentally wrong that people in Ilkeston do not get the same standard of care as people who live here in London. We need to build a truly national health service, ending the postcode lottery for good. In this Budget, we have 250 new neighbourhood health centres. That will hopefully mean that the days of my constituents commuting into Nottingham or Derby for minor scans or blood tests might soon be over.
To address those who say that we can borrow without end or cut Britain to oblivion, or who think that tax cuts for the wealthy would somehow magic us into economic growth—or, if we ask the Greens, perhaps hypnotise us into physical growth—we already know where those ideas lead. All of those options were tried and tested during the 14 long years that the Conservative party were in control of the Government. It left them in the moribund electoral doldrums where they now find themselves. First, they tried to cut their way out of a recession. Interest rates were a fraction of a percent, yet they did nothing to invest in and grow our economy. The NHS fell to its knees, businesses stopped growing and wages went down in real terms. Even their own Back Benchers—what is left of them—and party members were not happy with their approach.
After 12 years of trying one failed scheme after another, and eventually running out of even vaguely credible ideas, the Conservatives tried something new: they made Liz Truss Prime Minister. I think we all remember how that ended, with the abject chaos of the Truss mini-Budget , filled with uncosted spending commitments, tax cuts for the wealthiest and nothing short of an economic Hindenburg. Who paid the price for that chaos and that economic crash? It was working people—families in Long Eaton, Ilkeston and Sandiacre—with mortgages sent sky high, and in some cases doubling, savings wiped out and inflation run amok.
Who supported that vandalism? While Conservative Back Benchers were pulling their collars, nervously sending furtive glances in the direction of their majorities, who instead gave Liz Truss their full-throated endorsement? It was, of course, the fake patriots and faux defenders of working people at Reform UK. They are fake patriots. Simply put, they cannot love this country if they want to sell it out to foreign billionaires—or Russian oligarchs, for that matter. If they want to charge people money to use our NHS, if they want to cut the minimum wage —taking money out of working people’s pockets, so that it can be given back to their bosses, tax-dodging corporations, millionaires, billionaires or shady party donors—and if they want to see a return to years of dredging austerity, they do not love this country.
This Government are investing in Britain, in its people, in families and in our economy fairly and sustainably. We are on the long road towards fighting back against the cost of living crisis, to make life in this country affordable again. We are getting the NHS back on its feet, cutting waiting lists, ending the postcode lottery and putting healthcare back in our local communities, where it can make a real difference. There will be no more squalid years of austerity, and no more failing working people. This Budget puts working people back at the heart of our economy, and I am very proud to support it.
Bradley Thomas (Bromsgrove) (Con)
Yesterday the Chancellor attempted to present the Budget as a bold plan to rebuild Britain, but when we strip away the rhetoric, we see a Budget that is unsustainable, unfair and damaging to the very foundations of our economy. Most importantly, it is bad for all our constituents. Last year, the Chancellor raised taxes by £40 billion and promised that she would not be coming back for more. Yet here we are, one year on, with another £26 billion tax raid.
Credibility matters. When promises are broken so quickly, trust evaporates, and my constituents feel that betrayal directly. Families who believed the Chancellor’s assurances will now find themselves paying more tax, with less money left at the end of each month. The first duty of any Budget is to foster growth, yet the indicators all point in the wrong direction. Inflation is up, with food inflation at nearly 5%, so families in my constituency are paying more for their weekly shop. Taxes are up, and the OBR has confirmed that the UK’s tax burden is at a record high. It is projected to reach 38.3% of GDP by 2030. Our constituents are working longer hours, only to see more of their pay taken away.
Sir John Hayes
Food production in this country is critical to my constituency, my hon. Friend’s and others’, yet public procurement still does not prioritise British goods. Might he invite the Government to look at that again? It is absolutely right that this House, the Government and the public sector should support British-made goods, and British-made food in particular.
Bradley Thomas
My right hon. Friend is absolutely correct. The Government have a duty, in every single thing that they do and in their entire approach, to ensure that they promote the interests of the UK and of the businesses and farms that strive to keep us fed and prosperous.
Unemployment is up and redundancies are rising. In my constituency, local employers are cutting jobs, leaving families anxious about their future. Spending is up, and borrowing overshot forecasts by £9.9 billion this year. My constituents know that every pound borrowed today is a pound that they will repay tomorrow. Confidence is down, with business surveys showing stagnation, and local shopkeepers tell me that they are holding back investment because they see no stability. Growth is also down, with GDP growing by just 0.1% in Q3 of this year. My constituents see stagnation in wages, stagnation in opportunity and stagnation in hope.
This is Labour’s economic scoreboard: inflation is up, taxes are up, unemployment is up, spending is up, borrowing is up, confidence is down and growth is down. That is not rebuilding Britain; it is dismantling Britain’s prosperity, and all our constituents are paying the price. Two thirds of the British public now say that they want to see spending cuts. My constituents are tightening their belts, and cutting back on holidays and meals out. Some are even cutting back on heating. They expect the Government to do the same and to live within their means, yet Labour’s Budget expands spending recklessly.
Businesses in my constituency are being hit hard. Last year, employer national insurance contributions were increased and business rates relief was cut, and businesses are struggling to survive. For savers, ISA allowances have been reduced, which undermines savings. Retail has lost over 100,000 jobs in the last year. With our high streets feeling the pain, shops are closing and livelihoods are being destroyed. The Budget offers no relief for small businesses in my constituency; it only offers more burdens.
Labour claims that fairness is at the heart of the Budget, but fairness is not what families in my constituency are feeling. Income tax thresholds have been frozen, dragging more workers into higher tax bands, and savers have seen their allowances cut. Even electric car owners, who have been encouraged to go green and to do the right thing, are now being penalised. This punishes aspiration.
Farmers in my constituency are among the hardest hit, and the family farm tax remains largely intact. The changes to inheritance tax threaten the survival of the family farm, and rising input costs and inflation are compounding the pressure. Farming is not just an industry; it is the backbone of our food security, as my right hon. Friend the Member for South Holland and The Deepings (Sir John Hayes) pointed out, and the backbone of rural life, yet Labour continues to undermine it.
We are seeing an exodus of capital and labour in a world that is highly mobile. Over the last year, we have seen an exodus of high-net-worth individuals. While Labour Members may scowl at and casually dismiss that, the reality is that the displacement of those individuals would require another half a million average earners paying tax to plug the gap of tax revenue lost. That is the scale of the hole that the Government have created. Who will fill that? All of our constituents will—ordinary families, ordinary workers and ordinary savers.
Ambition without discipline is not a plan; it is a gamble. Labour’s Budget is a gamble with Britain’s future. Every £1 spent servicing debt is £1 not spent on public services, every broken promise erodes trust and every squeeze on families and businesses undermines the engine of our economy. Let us be clear: Labour spends until it runs out of other people’s money, and when the money runs out, our constituents pay the price. All of our constituents deserve better than what we have seen in this Budget. They deserve a Government who will restore fiscal discipline, encourage enterprise and deliver fairness for everyone.
Yesterday’s Budget is not a plan for the future, but a blueprint for decline. It ignores the public’s demand for spending cuts and for the Government to live within their means. It presides over the loss of further jobs, and it drives away wealth creation, leaving ordinary taxpayers to pick up the bill. It squeezes families, undermines businesses and will devastate farmers. This is not rebuilding Britain; this is dismantling Britain’s prosperity. Labour spends until it runs out of other people’s money, and my constituents cannot afford that any longer.
Perran Moon (Camborne and Redruth) (Lab)
Meur ras, Madam Deputy Speaker. I begin with some Kernewek, as I have done in pretty much every question in this Chamber, to reinforce the point about part III Cornish language status made by my hon. Friend the Member for South East Cornwall (Anna Gelderd).
Yesterday, the Chancellor announced a Budget intent on stability, investment and economic sustainability. It focused on driving growth in areas of socioeconomic deprivation such as Cornwall, including my constituency of Camborne, Redruth and Hayle. The Kernow industrial growth fund will boost our local economy in a sustainable way. Alongside the fairer funding review and the extension of the Cornish business rates retention, it means that this Labour Government are backing Cornwall’s economic growth and its public services. The Kernow industrial growth fund will enable investment in growth-driving interventions to support the duchy’s high-potential sectors. It will also help to build clusters around key industries to attract private investment and create high-value supply chains.
Cornwall is at the centre of the Government’s economic ambitions with its critical minerals, renewable energy and marine innovation sectors driving the transition to a greener economy. The £50 million fund, announced in this week’s critical minerals strategy, is set to further sharpen the teeth of the Cornish Celtic tiger. Since we arrived in Parliament, Cornwall’s four Labour MPs have made it our business to highlight our economic potential across Departments to ensure that we get a fairer deal for Cornwall. The Treasury has recognised the vast economic potential in Cornwall to create stable, secure jobs, driving growth across the duchy, and as a result has set up this Kernow industrial growth fund. We are grateful for the time the Chancellor has granted us to listen to our case, and we are looking forward to continuing our discussions with other Departments, which must now support delivering on this vast economic potential to ensure that essential housing, infrastructure and public transport are in place.
Those businesses of course need the new workforce of young Cornish men and women, which brings me on to fairer chances. When we said at the general election that we wanted to break down barriers at every opportunity and at every level, we meant it. In my constituency of Camborne, Redruth and Hayle, just under 5,000 children are living in poverty, but 2,210 of these children will be directly impacted by the scrapping of the two-child limit. That policy change has already been clearly identified and mentioned many times in this Chamber today as the single most effective measure to reduce child poverty. The economic and social damage of retaining this policy has been well documented. Removing it gives these children a real chance, from the very start, to enjoy better chances in life.
But that is not happening in isolation. When we combine the scrapping of the two-child limit with increased free childcare, expanded breakfast clubs, free school meals, investment in our Ofsted-rated outstanding Cornwall College, and now the Chancellor’s announcement of free apprenticeships for under-25s, we can see a golden thread running from cradle to career for children from the poorest backgrounds. This is what breaking down barriers looks like. This is what social mobility delivery looks like. It is a Labour Budget from a Labour Chancellor steeped in Labour values, delivering that golden thread for the children of my constituency and across the land. On behalf of the poorest children of Camborne, Redruth and Hayle, I want to take this moment to thank our Labour Chancellor.
Sarah Olney (Richmond Park) (LD)
Families and businesses across the country will have heard yesterday’s Budget and been disappointed that the Government missed their second opportunity to seriously address some of the key issues we are facing. Energy bills remain sky high, the cost of employment continues to rise, and, with no substantial reference to Brexit, the Chancellor is ignoring the single biggest measure which could boost economic growth.
Increasing the minimum wage is of course welcome news for millions of low-paid workers, but unless businesses are able to grow there is a danger that it will result in fewer jobs being available overall. Businesses from all sectors across the UK continue to struggle with high energy bills, compounded by the burden of last year’s NICs rise and concerns about the impact of the Employment Rights Bill on their monthly employment costs. The cost of employment has risen significantly over the past year, with nearly 70,000 job losses in hospitality alone since just last October. This has obvious challenges for businesses, many of whom will find it difficult to absorb further costs. However, these businesses provide vital social value and essential entry-level jobs, offering many young people their first job.
Adding national insurance to salary sacrifice pension contributions also pushes up the cost of employment. Last week, I asked the Chancellor what information her Department holds on the number of people who use salary sacrifice schemes. To my astonishment, the Treasury responded by stating that His Majesty’s Revenue and Customs does not hold that data on the number of employers offering, and employees using, salary sacrifice schemes. I am also concerned about the impact on investment if pension contributions are squeezed, because we know that pension funds have a significant role to play in ensuring that UK companies get the scale-up investment they need. We know that parties across the House are committed to boosting UK investment.
The Chancellor reinforced her commitment to fund the lower Thames crossing project, of which £900 million will be publicly financed. In the spring spending review, the Government announced a £1 billion structure fund as part of their 10-year infrastructure strategy. Does that mean that the Government have now only budgeted £100 million to be spent on critical transport improvements over the next nine and a half years? Does that mean I should give up all hope of ever getting funding for Hammersmith bridge in my constituency to be reopened? And the reason I am asking that question here in the Chamber is because on five occasions this year I have asked for a meeting with the Department for Transport to discuss its plans, and whether the structure fund will be allocated for the bridge’s repairs, and every single time that request has been denied. If the Chancellor is asking London residents to pay ever-increasing bills, local residents in my constituency will expect to see a fair proportion reinvested into their community. London is the UK’s financial hub. The failure to even talk to me about fixing Hammersmith bridge is indicative of the Government’s attitude towards London residents.
That question is particularly pressing for residents in my constituency, as they will be disproportionately impacted by the mansion tax. Not only is this an extremely limited revenue raiser, but it will also impact London residents more than in any other region in the UK. The Department for Work and Pensions’ own figures show there is less discretionary spending, after housing costs, in London than anywhere else. What is really needed here is wholesale reform to council tax and stamp duty, so we can look again at how property is taxed. I have heard people say that residents in Darlington pay more than those in Mayfair. Let me tell the House that a band A resident in my constituency pays more council tax than a band F resident in the borough next door. This is not about equalising council tax rates between poorer and richer houses. We already pay a considerably elevated amount of council tax in Richmond. [Interruption.] This is not equalising rates between boroughs; this is simply placing an additional expense—[Interruption.] I am sorry; would the Minister like to intervene? I can tell him that the poorest in my constituency are paying more council tax than extremely wealthy constituents in the borough next door, and this measure will do nothing to equalise that.
I will turn to the 2% increase in tax on landlords. I hear what the Government are saying about equalising sources of income, but they need to consider the impact that this will have on the availability of rental properties, particularly in London. We have already seen a big withdrawal of landlords from the property market in London, which is squeezing availability and affordability. Additional taxes will not do anything to address the housing shortage in London.
Briefly, the Valuation Office Agency has an 18-month backlog on business rate challenges. I want to hear what the Government are doing to boost the Valuation Office Agency and how much that will cost. They are only going to make £400 million from the mansion tax, and a lot of that will be spent on administration. I really want to hear from the Minister about that.
Oliver Ryan (Burnley) (Lab/Co-op)
This Budget sets out a serious and responsible direction for our country’s future and speaks directly to the needs of people in Burnley, Padiham and Brierfield. It supports families and workers, puts the public finances back on stable ground and backs the businesses that are the backbone of towns like ours.
Crucially, we are already seeing real, measurable progress for Britain after 14 years of incompetence, failure, stagnation and rampant inflation. Growth has been upgraded to 1.5% this year and wages have risen faster in our first year than during the last decade the Conservatives were in power. For people in towns like ours, those are not abstract statistics; they are the difference between treading water—constant struggle—and finally feeling as though we are moving forward again as a community and as a country.
Families in my area have felt the squeeze more than most. I hear weekly about parents monitoring the thermostat hour by hour, commuters worried about every fare rise and households whose disposable income has simply evaporated with the cost of living. I welcome our plan, which gives people real relief right now: £150 off energy bills next year, rising to £300 for those who need it most; more support; more homes insulated and more homes built in towns in our constituencies; a freeze on rail fares, petrol duty and prescription charges; and, for our NHS, the largest reduction in waiting lists in almost 20 years, in addition to 250 new neighbourhood health centres, 5.2 million more NHS appointments and care brought closer to home, with more doctors and nurses.
However, it is not just short-term support that matters; it is long-term renewal. We are maintaining the highest levels of public investment in 40 years, because our constituencies cannot rebuild on the foundations left behind after austerity and the chaos of 14 years of Tory Britain. Better transport connections, stronger and better-funded local services, investment in skills and young people, and higher-paid, quality jobs—these remain the building blocks of renewal in Burnley, Padiham and Brierfield.
Oliver Ryan
I will not, because of time.
We are doing all that while paying down the national debt and getting into surplus—something promised several times by the Tories but, as far as I am aware, never done. We are doubling the fiscal headroom, which is a momentous achievement—something we are probably not shouting about enough—and taking responsibility for the public finances after the rank mismanagement of the previous Government.
For too long, the welfare system that we inherited left working families too poor to eat and wrote off hundreds of thousands of people as too sick to work without offering them proper support. Indeed, when the shadow Chancellor was Secretary of State for Work and Pensions, the welfare bill soared by £33 billion, and he put an extra 229,000 people into the welfare system. The welfare bill doubled during the Conservatives’ time in office, which is bad for our budget, our communities and the people they wrote off. We are finally putting that right.
We are addressing poverty at the same time by scrapping the two-child limit, which is lifting 450,000 children out of poverty nationally, including a huge 5,170 children in Burnley, Padiham and Brierfield. We are guaranteeing jobs for people under the age of 25, ending long-term youth unemployment and ensuring that no young person is abandoned.
I am conscious of time, Madam Deputy Speaker. I just want to make a point about support for businesses. We have not only maintained Government capital investment plans, but made sure that we will lower permanently business rates for local employers and multipliers for our high street. We are doing this to create a stable and long-term approach for businesses.
We are taking important steps such as relieving stamp duty on the first three years of new UK-listed companies for larger entities, which is our invitation to the world to do business here. That will have a direct effect on our competitiveness. We are putting in place more support for manufacturers in places such as my constituency, where energy bills have swelled over the last 10 years. We are extending capital allowances for business assets and leasing, and we are extending tariff suspension and support likewise. This will help some of my area’s largest employers to grow. In addition, we are extending NICs relief for those who hire veterans. Our measures include ISA reform to encourage investment into quite sizeable businesses. I am also interested in the call for evidence on firms with scale-up potential, which will end next year.
All these steps will create growth for the economy and help my constituents, and I greatly welcome this Budget.
Ben Obese-Jecty (Huntingdon) (Con)
Tax increases of £26 billion and the tax burden rising to an all-time high of 38% of national income—this is a traditional, good old-fashioned high-tax, high-spend Labour Budget. It is a Budget that locks in a debt ratio of 100% and an economy with little or no growth. It effectively ends Labour’s pledge to grow the economy and raise living standards. The growth in real disposable incomes over this Parliament is now expected to be the second worst since records began in the 1950s. This is a Budget to appease the left of the parliamentary Labour party rather than the general public. It is a Budget to shore up the Chancellor’s weak position and that of the Prime Minister. We will see how successful that has been come May.
Since Labour came to power, the Chancellor has raised taxes by £66 billion, which is more than any Government in the last 50 years. When the Chancellor proudly announced that growth had increased by 0.5%, there were cheers from the Government Benches, but she did not mention that that figure was a downgrade from the 1.9% forecast earlier in the year, nor did she make reference to the downgraded projections for the rest of the decade. The Office for Budget Responsibility has downgraded its growth forecasts for real household disposable income per person over the next five years. The OBR’s “Economic financial outlook” report states that growth will slump to an average of 0.25% a year over the forecast,
“well below the last decade’s average growth of 1% a year”.
The average household will be £850 poorer at the end of this Parliament than when Labour took office.
The Chancellor said:
“today £1 in every £10 the Government spend is on debt interest—not on paying down that debt, but just on paying the interest”.—[Official Report, 26 November 2025; Vol. 776, c. 389.]
Some £113.7 billion is currently being spent on servicing that debt, and by the end of this Parliament that figure will reach £140 billion.
For a working person on average earnings, the tax threshold is frozen and will be for the rest of the decade. Pensioners will be dragged into the basic rate of income tax for the first time; 780,000 people are going to be dragged into being a basic rate taxpayer, and nearly a million will become higher rate taxpayers. For people on benefits, those benefits are not frozen; they are index- linked to inflation.
The OBR has forecast that over the next five years, welfare spending will rise by £73.2 billion to £406.2 billion. The U-turn on lifting the two-child benefit cap beggars belief. For it to go from a policy that saw seven Labour MPs lose the Whip, and that was effectively the catalyst for the creation of an entirely new political party on the left, to a totemic Labour policy is transparently a move to both appease the Labour Benches and shut the door on the surge in support for a Zack Polanski-inspired resurgent Green party and the stuttering Your party. By the end of this Parliament, lifting the cap will cost £3 billion a year. That is more than the total spend on fire and rescue services in England.
The heavily trailed high value council tax surcharge is lacking crucial detail on how it will be implemented. Doing it properly will require a revaluation of every property in the country by the valuation office by April 2028 in order to understand which houses are in scope. What will the criteria for that be? How will the value of the house be decided if it has not been sold in recent years? Moreover, the revenue will go to central Government, not the local authority. It will disappear into general taxation, and those paying the tax will likely never see any local benefit from it.
The decision to raise the minimum wage looks good at first glance.
Sir John Hayes
I support the minimum wage. It is important that working people, particularly less well-off working people, are adequately rewarded. Does my hon. Friend agree that the real impact will be on small and medium-sized businesses? Those businesses are already dealing with increasing cost burdens. When the Minister sums up, he might want to reflect on the effect that that may have on the creation of employment in those kind of businesses.
Ben Obese-Jecty
I wholeheartedly agree. I have spent the last year talking to small businesses in my constituency that have been crippled by the measures in the last Budget. When this year’s measures come in as well, some of those businesses will struggle desperately to keep on lower earners, particularly young people.
My first job as a 16-year-old was working in a supermarket, and I am sure many Members had a similar experience. Those opportunities are going to disappear for young people as a result of these measures. What this Labour Government have not taken into account is that every above-inflation wage increase leads to higher business costs, lower investment and fewer opportunities for those we represent. Many businesses that want to employ people will now find themselves unable to take on staff or to take the risks that the Chancellor mentioned, meaning that businesses cannot grow.
We are very likely to see the wage compression effect, whereby the gap between those on the minimum wage and those in more skilled or experienced roles becomes smaller. That, yet again, leads to a lack of incentive to develop skills and opportunities for those with them. The Government must address that, as it will curtail opportunities for young people and lower earners. Unemployment is now set to peak at 5% and the number of economically inactive people will also rise.
The pay-per-mile tax on electric vehicles will surely disincentivise the switch to EVs before the ban on new petrol and diesel vehicles kicks in, and the OBR estimates that there will be 440,000 fewer EV sales over the next five years because of the tax. How much tax revenue will be lost because those sales never happen? Then there is the plethora of other taxes that are part of the smorgasbord: the tourism tax, the NI raid on pension contributions, the reduction in the tax-free cash ISA allowance and even a milkshake tax.
We have not even touched on the absence of the commitment to 3% of GDP on defence anywhere in the Budget. There is not a single reference to it and I do not understand how. We saw today that the service chiefs will write to the Defence Secretary to tell him that it will not be possible to deliver the strategic defence review. I would love to hear from the Minister how Labour will facilitate defence in this day and age.
The OBR has stated that not a single measure contained in the Budget will improve growth, which has, in fact, been downgraded from the figure forecast in the summer. Taxes on working people have been increased by stealth to pay for welfare. That will be Rachel Reeves’s legacy, and this is quite possibly her last Budget—
Madam Deputy Speaker (Caroline Nokes)
Order. You can refer to the Chancellor of the Exchequer as the Chancellor or by her constituency name, but not by her own name.
Ben Obese-Jecty
I apologise, Madam Deputy Speaker. I shall draw to a close.
It comes to something when the Chancellor can stand at the Dispatch Box to deliver her Budget, make a boob joke and that not be the most offensive thing she says.
Rachel Taylor (North Warwickshire and Bedworth) (Lab)
I thank my right hon. Friend the Member for Leeds West and Pudsey (Rachel Reeves) for delivering a Budget with fairness and action to tackle the cost of living at its core, and one that will make work pay. Having sat through this debate for about eight hours, it is interesting to observe that Members on the Labour Benches are giving a voice to those vulnerable children living in poverty, while those on the Conservative Benches are simply standing up for those who own mansions. That is the difference.
I am pleased to see that around 1,990 children in my constituency of North Warwickshire and Bedworth and nearly half a million children across the country have been lifted out of poverty, and that the degrading rape clause has been removed from child benefit. That will be the biggest change a Government have ever made to child poverty in a Parliament and it is the right thing to do for children. I know that everyone in my area will be pleased to see the £150 off their energy bills too. That is the difference our Labour Government are making to the cost of living for ordinary families.
In a coalfield community such as mine, we carry immense pride in our heritage. Standing up for former mineworkers in North Warwickshire and Bedworth is personal to me. My grandad Bill was a miner at Birch Coppice, and I grew up understanding the dignity, sacrifice and solidarity that defined that way of life. That is why I am delighted that the Government have taken the long-awaited decision to return the British Coal staff superannuation scheme surplus to its members. The last Government allowed that injustice to continue for far too long. I have campaigned tirelessly for that measure, alongside my colleagues who represent coalfield communities and have lobbied hard for the Government to do right by BCSSS members. I am immensely proud that this Government have listened to the voices of my constituents who were impacted by that unfairness.
Earlier this year, I held an event for BCSSS members in my constituency. Ray Sweet, Andy Callow, Don Jennings and others shared with me the years they spent working in and around our mines. I am delighted to be able to tell them that they will finally receive the full pension they worked so hard for. I also met a woman who joined the National Coal Board at 16. She worked for years from 5.30 am to late in the day to ensure mineworkers got paid on time and at the end of their shift. Women like her, who supported the mining industry behind the scenes, have often gone unrecognised and underappreciated. I hope they now feel the recognition they have long been owed and the nation’s gratitude for their work to keep our lights on and our homes warm. I know that for many this comes too late, and I remember them too.
I thank the Chancellor for abolishing the bingo tax. I visited Palace Bingo in Bedworth last week and met the owners, Pete, Donna and Paul, who took over the family business. It was great to see the investment they have made; there are new toilet facilities there has been a total renovation. They provide safe entertainment for hundreds of people every day of the week in Bedworth, and I know how much people in my constituency enjoy a good night out at the bingo, as do I. It is right that they are exempted from bingo tax, and that online gambling pays the price for the harm it causes.
Finally, I have listened carefully to farmers in my constituency. They know that I have passed on their concerns to the Treasury, so I am pleased to hear the Treasury’s small concessions.
I want to reassure the residents of North Warwickshire and Bedworth that this Government are on their side. For all my constituents, I am feeling positive. There is work to be done, but this Budget will continue to bring the change that we promised at the general election. The damage left by 14 years of austerity is finally being undone. This Labour Budget is putting money in the pockets of those who need it most, delivering healthcare for everyone, providing opportunities for young people, unlocking growth, delivering new homes, reducing energy bills, reducing business rates for hospitality and retail, putting more money in people’s pockets to spend in local businesses, giving us pride in our towns and powering our future. That is the difference a Labour Government can make.
David Smith (North Northumberland) (Lab)
I am grateful to be speaking in support of a Government who have delivered a Labour Budget that has ended the child benefit cap. That benefits 1,150 children in my constituency. The Budget is tackling the cost of living by reducing household energy bills by £150 from next April. It is raising much-needed funds for our public services by increasing taxation on online gambling and on homes worth over £2 million—mansions—and it includes another rise in the national minimum wage. This is a Labour Budget with Labour values that will achieve so much. It will positively impact millions of lives, and I am proud to support it.
It is with a heavy heart that I have to tell the Minister—this will come as no surprise to him—that the one thing I remain concerned about in the Budget is the overarching changes to inheritance tax for farmers. I am grateful to the Chancellor for listening to my concerns and those of my colleagues on the Back Benches, and for making an adjustment. The expansion of the transferability of inheritance tax allowances to widows retrospectively is welcome. It is a compassionate change, and it will allow widows to add their deceased spouse’s allowance to their own to benefit their children on their death. It is an effective doubling of their allowance, which is to be welcomed. However, I remain concerned about the long-term impact of the policy.
In my constituency of North Northumberland, there are 710 farms, and over the past year I have met at least 90 farmers. I am not from a farming background, and this past year has been a steep learning curve for me, so I have been deeply moved by the generosity, respect and patience shown to me by farming constituents. They have opened their homes and lives to me, and they tell me that the inheritance tax status quo meant stability. Farm estates could transfer smoothly from one generation to another without their work being interrupted by lengthy processes. In addition to the allowance for transfers to widows, I urge the Government to consider an elderly farmer exemption, so that those surprised by this change in their old age can retire with dignity.
One farmer recently wrote to me saying,
“My father with his father and brothers worked to buy our farm. He wanted to pass that to me 10 years ago, the legal advice at that point was to do this on death. Now, at 80 years old, he has dementia, unable to make any decision on his own and his power of attorney (me) is unable to act on his behalf.”
Agriculture has faced headwinds for many years, not least under the last Conservative Government; energy prices rocketed, and dodgy trade deals with Australia and New Zealand undercut farmers. They have also had to contend with unusually difficult weather patterns, whether it has been too hot, too dry or too wet.
By 2029-30, the changes that we are talking about will have raised only £520 million. That sounds like a lot, but it is less than two days’ debt interest. In the light of widespread farming opposition to this policy, will the Government keep this policy under review in its first two years and, if the fears of farmers are established as facts, look to alter the policy accordingly?
There is a better way forward. If we raise the threshold at which IHT kicks in, cut the relief for those above the threshold and delink agricultural property relief and business property relief, we can protect those who need protecting and invite those who can pay more to pay more. The Minister knows that the minimum share rule is just one example of that, and he may observe that this change would draw more estates into the policy. Although the number of estates brought into the policy under the minimum share rule may grow, those estates would by definition have larger assets that were less likely to be involved in a working farm, and that would therefore be more disposable.
It is exceptionally hard out there for farmers, yet from the wee small hours to late at night, and without family holidays or long weekends, they put in the work to ensure that we all have food on the table. As one farmer said to me,
“My childhood included no Christmas, home-made clothes and food grown from the veg plot. It was a frugal upbringing…Even now there is no lavishness. Holidays are scarce, the house roof leaks, windows aren’t fit for purpose and damp and mould prevails in the house. A private landlord can’t allow his tenants to live like this, but we accept these conditions. That’s ok”.
They continued that the proposal
“will bring a tax bill of £400,000. We are a modest hill farm. We cannot make this kind of profit in 20 years, never mind 10.”
Most farmers farm not to become wealthy, but because it is a way of life. The Agriculture Act 1947, brought in by the Labour party, was the first great, sustained support for British farming. We have the opportunity to provide that support again. Farmers need us. They need stability, and they want a fairer system. There is still time to achieve that. In a £1.3 trillion budget, £520 million will not make a difference to our fiscal stability, but it would make all the difference in the world to the flourishing of British farming, including in North Northumberland.
Martin Rhodes (Glasgow North) (Lab)
I welcome the Budget set out yesterday by the Chancellor. The Labour party was founded on the principles of social justice, redistribution and universal rights, and the progressive nature of the Budget helps to deliver on those principles. It will ensure that the very wealthiest households pay a fair share to support public services. On average, households on the lowest incomes benefit the most from this Budget and last year’s Budget policy decisions, while the increases in tax are concentrated on the highest earners. In practical terms, 90% of households will see an average net income benefit, while the richest 10% will contribute more.
We are tackling the cost of living by cutting energy bills, increasing wages and protecting the value of the state pension. This Labour Budget delivers an average of £150 off energy bills. The Budget also raises both the national living wage and the national minimum wage, putting money directly into the pockets of working people. For older people in our communities, the increase in the state pension means that 1.1 million pensioners in Scotland will be better off. All those are tangible differences that people will notice in their everyday life, thanks to this Labour Budget.
The removal of the two-child cap on universal credit will help to reduce poverty across the country, including in my constituency of Glasgow North, where 2,130 children will be better off. We are delivering that through a progressive Budget, but there is more to do across a whole range of Government Departments. I very much welcome the removal of the two-child cap, but we need to look at other policy areas, too. That is why I welcome the fact that in their mission to end child poverty, the Government and their taskforce are not just looking at the social security levers, hugely important though they are, but identifying all the levers available.
The Budget invests in Scotland. It has made an extra £820 million available for investment in our public services in Scotland, taking the additional funding to date for the Scottish Government to over £10 billion under this Labour Government. What we need now is a Scottish Government who will use those resources to invest in our public services and not fail to spend them. We need a Scottish Government who are focused on delivering for and with the people of Scotland, not focused on division and constitutional posturing.
This Labour Government, with this Labour Budget, are building a stronger and fairer country; one where living standards rise, child poverty falls and public services are renewed. This is a fair Budget, a redistributive Budget, a Labour Budget, and it is a privilege to support it.
Andrew Cooper (Mid Cheshire) (Lab)
This Budget is about building an economy that works for working people and families, not returning to the short-term decisions of the previous Government, which left public services stretched and household finances fragile. I welcome the fact that the Government are choosing stability, fairness and long-term investment, because strengthening our country begins with putting people first. Prior to the general election, the two issues that my constituents mentioned more than any others were living costs and the state of the NHS. I am proud that, under this Government, progress has already been made on both, but while much has been achieved, there is much more to do.
Since coming into office, the Government have begun turning the tide on NHS waiting times, after years of record backlogs. For the first time in 15 years, waiting lists have started to fall; there are more than 230,000 fewer people waiting for treatment, and over 5 million extra appointments have been delivered. In Mid Cheshire, the ultra-long 65-week-plus waits are on target to be eliminated by the end of the year.
Alongside that, the NHS 10-year plan is transforming care by shifting services into communities, embracing digital innovation and focusing on prevention. Families in my constituency are already beginning to feel the impact of that progress. In Northwich, the new Cheshire and Merseyside surgical centre has opened at the Victoria infirmary. It will treat 12,000 patients each year, including a large number of high-volume, low-complexity cases, to bear down on waiting lists further. Meanwhile, Leighton hospital’s rebuild—which was shamefully delayed by the previous Government, despite the dangerous reinforced autoclaved aerated concrete issues hanging over the hospital—is not only fully funded, but moving on apace. I share the Government’s commitment to ensuring that patients receive timely treatment, staff have the tools that they need to deliver it, and the public can rely on an NHS that works for everyone.
The Budget also addresses one of the most pressing challenges facing families: the cost of living. Rising prices have put pressure on household budgets. Over the past year, action has been taken to ease everyday costs. That action includes the largest increase in the national minimum wage in years, free breakfast clubs in hundreds of primary schools—including not one, two, three or four but five in Mid Cheshire—and expanded energy support through the warm homes discount. For households in my constituency, those measures help to stabilise family finances, support working parents and ensure that children start the school day ready to learn.
The Budget goes further by delivering stronger cost of living support through targeted measures for low-income households. We could talk about the rise in the national minimum wage, which will help working families, or about the scrapping of levies from energy bills, saving families £150 on average next year and reducing pressure on their budgets, but the removal of the two-child benefit cap, which will lift nearly half a million children out of poverty, including 2,420 across Middlewich, Winsford and Northwich, will be most significant. Labour believes that every child should have the opportunity to reach their full potential—that someone’s background and circumstances, and who they know or where they come from, should not shape their life more than their talent, creativity and determination. As Gordon Brown said,
“The two-child benefit cap was a scar on the country’s soul”.
I will be proud to be a Labour Member when we vote to scrap it.
Together, those steps will boost household incomes in my constituency and across the country, providing families with not just short-term relief but lasting financial confidence. Our priorities—reducing debt, strengthening the NHS and tackling the cost of living crisis—are interconnected. A stable economy enables investment in public services. A stronger NHS supports a healthier, more productive population. Easing cost pressures gives families the confidence to plan for the future. Together, they form a coherent strategy for long-term prosperity.
The measures announced in the Budget will help to build a stronger economy, a healthier NHS and a fairer society, and will deliver tangible improvements for Mid Cheshire and communities across the country.
Richard Baker (Glenrothes and Mid Fife) (Lab)
The Chancellor of the Exchequer delivered her Budget in the most challenging global economic circumstances; there is sluggish growth across the international economy, and we have an economic inheritance from the Conservative party of high public debt and low investment. Despite that, she delivered a Budget that will tackle poverty, invest in growth and provide fairer chances for all.
For Scotland, the Budget delivers an additional £820 million for public services. Since the Government came into power, over £10 billion has been pledged for public services in Scotland. The Chancellor talked of the importance of Scottish Labour leader Anas Sarwar making the case for investment in Scotland. He is already achieving more for Scotland in opposition than our failing SNP Government. Imagine what he could do leading Scotland’s Government, ensuring that those funds are spent to far better effect in our communities. This is the opportunity that Scotland has next May. The Budget shows what Labour Government can achieve for Scotland.
The Budget will benefit my constituents in Glenrothes and Mid Fife in so many ways. Ending the two-child cap means that more than 7,000 children in Fife will have a better start in life. Thousands of workers in Fife will see their pay increase, thanks to the rise in the minimum wage. Households across the Kingdom of Fife will benefit from £150 off their heating bills.
I am delighted that 178 people in Fife who are members of the BCSSS mineworkers’ pension scheme will finally see the interest in their pension fund protected, with an average increase in their pension of £100 per week. I pay tribute to all those who have campaigned for that change in the scheme, not only on the Labour Benches but in our local communities. My hon. Friend the Member for Dunfermline and Dollar (Graeme Downie) was right to pay tribute to Alan Kenney of Glenrothes in my constituency, who has made the case for this change with such dedication and eloquence.
This is a Budget that shows we will not return to the Conservative party’s austerity measures, which resulted in nothing but harm and stalled economic growth. Instead, we will invest in building an economy that is stronger, where everyone has a chance to benefit from increasing prosperity. This Budget provides more chances in employment for our young people, with the youth guarantee for every eligible young person who has been on universal credit for 18 months, and the biggest ever investment in employability support for disabled people and those with health conditions in more than a generation, increasing funding to up to £1 billion a year across the UK. That is particularly important for Scotland, where the disability employment gap is higher than the UK average.
It is vital that these funds are used to the greatest effect in creating jobs for disabled people, who are too often excluded from the workplace. We should look to replicate the success of schemes such as the “All In” employability programme delivered by the charity Enable, which I had the privilege of working for before my election. We should also look to support the ambition of Outlyer, an entertainment company, co-founded by Emmanuel Kelly and Chris Martin of Coldplay, that has a mission to employ at least 1,000 disabled people over eight years in the growing entertainment sector, in jobs that offer genuine career paths with transferable skills to disabled people. That is the kind of ambition we should all have for economic growth in our country—for it to benefit everyone in our society.
This Budget balances fiscal responsibility with fairness and aspiration, investing in the defence and renewables industries, which offer such hope to the local economies of Glenrothes and Mid Fife, providing fairness through measures that help families with the cost of living, tackling the scourge of child poverty in our country and offering opportunities to more of our people to reap the rewards of employment and skills. That is why it is a Budget I am proud to support.
Sarah Russell (Congleton) (Lab)
My constituents may recall that I once started a speech in this place with the words “Potholes, potholes, potholes”—I thank the hon. Member for North Bedfordshire (Richard Fuller) for that glance of recognition. No one will be more delighted than the people of Congleton with the Chancellor’s announcement in the Budget that we will double the road maintenance budget over the course of this Parliament. The road safety Minister, my hon. Friend the Member for Nottingham South (Lilian Greenwood), is in her place, so I will take this opportunity to ask that she makes sure my constituents get their fair share of that money. As she has heard me say before, my roads are dark, fast, dangerous and poorly maintained, so I look forward to us bringing that money through progressively over time.
The cost of living crisis is another major issue for my constituents. The £150 off energy bills will be extremely welcome for families in my constituency, as will the freeze on prescription charges and the freeze on rail fares—something that has not happened for 30 years. I am proud that we have put up the minimum wage, because work should pay, and families working very hard every day should be able to afford the things they need.
With regard to pensioners, we have maintained the triple lock, and the average pensioner on the full state pension will get another £575 next year. Nationally, three quarters of pensioners will remain eligible for the warm home discount, which is very important.
I understand that removing the two-child benefit cap will be contentious for some people, but it will instantly take 1,310 children out of poverty in our local area. The widening of free school meal eligibility has also given 2,000 extra children a warm meal every day. Of course, we all want to see children thriving in our community. The reality is that we are exceptionally affluent in our constituency. I know that for many people it does not feel like it, but we are one of the top 20 most affluent places in the country.
Nationally, we are spending £2.2 billion on temporary accommodation. There are 174,000 children in temporary accommodation, 80 of whom died in that temporary accommodation last year. We have to spend money on relieving poverty for our poorest children and households, because that is the only way that these shameful figures will change. Our children are becoming shorter compared to their European counterparts, because of malnourishment in our communities. There is a moral case to do this, and in all likelihood there will be savings from this investment as well.
I know that local infrastructure concerns many of my constituents. Some of the figures I will give have been provided before, but they bear repeating. We are spending over £1 billion on rebuilding Leighton hospital. We are spending £60 million on rebuilding Sandbach school. We are spending £740,000 on improvement’s to the Ashfield Medical Centre. We are spending the best part of £1.5 million across three local hospices that serve my community, following lobbying from me and other Labour MPs in the Cheshire East area. I am extremely proud of the things that this Budget and the previous one are delivering for my constituents.
On local high streets, we all value our independent businesses, so I was proud to see the permanent reduction in business rates for small independents, whether they are pubs, restaurants or shops. I was also pleased to see that small and medium-sized enterprises, of which there are many in my constituency, will get the training costs fully reimbursed for their apprenticeships. That is good for local young people and for businesses.
I am also extremely proud of the British industry competitiveness scheme, which will allow businesses in energy intensive industries, such as Diamond Electronics, which I visited in Smallwood, and CLD Systems in Sandbach, to be able to reduce their energy costs and improve their competitiveness in the long term. There is a consultation now open on how we do that, and I encourage local businesses to engage with it.
Lastly, I alongside other colleagues called for a gambling tax, and I was very pleased to see it included in the Budget. I have spoken to constituents who are really struggling with online gambling problems. That industry needs to pay for the problems it is creating. I also very much support the mansion tax—this is the way to a fairer society. The Budget has brought economic stability, fair taxes and high-quality public services, and I truly believe in it.
Josh Fenton-Glynn (Calder Valley) (Lab)
This Budget comes at a crucial time for the country and this Government. I say that because I am not blind to the public mood. It is a mood that calls for more change and, fundamentally, I think that only the Labour party can deliver the change that we need.
To understand the decisions we made in the Budget, Members must bear in mind what we inherited. The economy was a cupboard left not only bare by Liz Truss, but with broken hinges and no remaining shelves because of the decade and a half of austerity that preceded her. This Labour Government were not elected because the last lot had done a good job; we were elected because there was a mess. Throughout our whole electoral mandate at the last election was the message that we should make things better: we should improve the cost of living, support poorer children, and fix our public services, from roads to the health service. Changing Government takes time. I am one of the many alumni of local government in this place, and I never thought I would dream of the speed of action and the immediacy of decision making that we can get in a townhall.
I will speak briefly about supporting businesses such as those in Calder Valley, and lifting children out of poverty. I welcome the Government’s work to transform business rates relief and protect our high streets. Retail, hospitality and leisure are central to our communities in Calder Valley. In Calderdale, 3,200 businesses will benefit from lower rates. When we talk about this change, we are talking about the clothes shop in Brighouse, the café in Hebden Bridge, the pub in Todmorden and the curry house in Elland. They are places that keep our towns alive and bring people together.
Just as our high streets are vital to our community life, our manufacturing is vital to so much else in our nation and our national security. In Calder Valley we are proud of our manufacturing—we are known to some across the country as “valve valley”, and I promise I will make that name stick in this place. Those businesses are ready to contribute to Britain’s national interest and security. The Chancellor’s commitment to changing procurement laws, so that when national security is at stake we support skilled jobs in our country, is common sense.
SMEs in Calder Valley also welcome the fact that apprenticeships will now be free, which will help them to secure the next generation of British manufacturing. However, apprenticeships are not just jobs; they are opportunities and a sense of pride for so many families.
I have talked about business, but I will also talk about the heart of the Budget. I thank the Chancellor for removing the two-child benefit cap. I know from my time working at the Child Poverty Action Group, at Oxfam on UK poverty, and at Church Action on Poverty that this change is one of the most significant steps we can take to reduce child poverty. Measures in this Budget will lift half a million children out of poverty. Children growing up poor are less likely to succeed at school, twice as likely to be obese, and more likely to suffer from poor health throughout their life. As adults, they earn less. The vandalism of the rapacious rise in child poverty under the last Government will echo through generations. This country had the largest rise in child poverty among high-income countries between 2013 and 2023, with deep poverty rising by 67%. That is the legacy of Conservative Members.
The need could not be clearer. In Calder Valley, 5,624 children were living in poverty in 2023-24, compared with 4,317 in 2014-15. That is a rise of more than 1,000 on the Tories’ watch, and behind every one of those numbers is a kid who deserves a fair chance, and a parent fighting to get it for them. Nearly 2,000 children in Calder Valley will have their lives made better because of this Budget, but it is not just one measure; it is a strategy—free breakfast clubs in schools, the expansion of subsidised childcare, and a higher minimum wage. That will make our country stronger into the future, but there is more work ahead. Families need certainty that support will continue, and businesses need confidence that investment in British industry will be matched by action, skills and infrastructure.
This Budget is a turning point, and a signal that Britain is ready to move beyond austerity and neglect towards fairness, opportunity and prosperity. Above all, it is about trust—trust that the Government will stand for families when times are hard, trust that investment in British industry will mean real opportunities for towns such as mine, and trust that fairness, not austerity, will guide our decisions. That will build confidence in our system, our Government, and in our country as a place to live, invest and prosper.
Andrew Lewin (Welwyn Hatfield) (Lab)
Thank you, Madam Deputy Speaker. I am sure the best is yet to come.
I am pleased to address the House on a day with bond yields falling, growth figures for the year revised upwards, and an opportunity to reflect on the announcements made yesterday and what they mean for people in Welwyn Hatfield. I want to try to address two of the macro trends that shape the UK economy today, and which would frame the choices available to any Chancellor, irrespective of their party allegiance.
The first trend is the happy reality that people in the UK are living longer than ever before. Millions of Brits are living longer and healthier lives, staying active, spending more time with grandchildren, playing sport, music, doing charitable work and enjoying holidays. That is unquestionably and unequivocally good news, but inequality among older people is stark and real. Lifespans vary hugely by postcode, and this Government’s focus on the NHS is essential if we are to close that gap. However, one challenge is perhaps even more profound, because the ratio between the working-age population and those who are retired has been transformed. Since the creation of the welfare state there has been almost a doubling of what is called the “dependency ratio”, and we see that vividly in how it impacts Government spending.
By 2030-31, welfare spending supporting pensioners will have increased to £195 billion per year. Welfare spending supporting families with child benefit, including the changes announced yesterday, will be £14 billion per year. Welfare spending is going up
disproportionately to support pensioners. That reflects the happy truth that people are living longer, but when we discuss the future of welfare in this House, let us always be mindful of the facts.
I am afraid that the second theme relates to the biggest act of economic self-harm in a generation. The Brexit deal put up trade barriers with our closest and largest trading partners. We have 16,000 fewer businesses in the UK exporting to the European Union, a surge in food prices, bureaucracy at the border, and a hit to our economy of at least £100 billion. We must repair the damage. It is critical that the Government continue to drive forward the UK-EU reset, and do so at pace, with a sanitary and phytosanitary deal that could reduce food prices, and a youth mobility deal that will be good for growth and for cultural connections. UK-EU relations were on the floor thanks to the last Government. We are rebuilding the relationship, and I will continue to advocate that my colleagues in Government do that at pace, with urgency, and with increasing ambition, because it is so fundamental to all our growth prospects for the future.
I commend the Chancellor on increasing the headroom on her stability rule. The markets were looking for reaffirmation that the Government are serious about meeting their targets, and they got their answer. Bond yields fell yesterday, meaning the cost of borrowing fell too. Coupled with the inflation figures last week, the case for another cut in interest rates looks stronger than ever. If the story of this Parliament is interest rates falling and lower mortgage repayments, then the story of yesterday’s Budget was one that coupled stability with fairness.
Removing the two-child limit was morally and economically the right choice. I spoke a moment ago about the relatively small cost of this measure to the Exchequer in the context of welfare spending, but in practice we are talking about £17.25, a very modest amount to many people, but a sum that will be transformative to the families currently living below the poverty line.
On the cost of living, the Budget set out a series of decisions that will help the day-to-day lives of ordinary people in Welwyn Hatfield and across the country: the bus cap maintained, train fares frozen for the first time in 30 years, prescription charges held steady, and a major intervention on energy bills that will see them fall universally by around £150 next year, in addition to the warm homes payment this winter, which will benefit at least 10,000 people in Welwyn Hatfield and 2.7 million across the country.
The economic fundamentals are challenging. In these circumstances, it is an even more significant achievement by this Labour Government to meet the fiscal rules, to calm the gilt markets, to provide extra support on the cost of living and to drive down child poverty. This Budget is responsible and fair, and it sets a foundation on which to build in the future.
Josh Newbury (Cannock Chase) (Lab)
I came to this House determined to speak up for the people I represent, particularly those who feel under pressure, children whose life chances are held back, and 1,500 former mineworkers. In my maiden speech, I spoke about our proud mining heritage. When I made that speech, this Labour Government had just delivered justice for members of the Mineworkers’ Pension Scheme and, just over a year later, I am immensely proud that the same has been done for the British Coal staff superannuation scheme. These former mineworkers, who built the communities that I am proud to represent and helped to power our nation, had to wait far too long to even be heard, so I commend this Government on righting this historical wrong, but even more so all those campaigners on never giving up. The action taken by this Government will mean a 41% boost to the pensions of 40,000 former mineworkers.
Turning to the cost of living, we have taken action to reduce energy bills by taking 75% of the renewables obligation off bills, and the energy company obligation will be scrapped as well, saving my constituents an average of £150 a year. That saving will be added to by the first freeze to rail fares in 30 years, the continued freeze on prescription charges and the £89 that they will not have to pay on fuel duty.
As the Chancellor said, one policy above all has supressed the life chances of children in the most deprived households and neighbourhoods in our country: the two-child benefit cap. Scrapping it will lift 2,430 children in my constituency out of poverty. Contrary to the stereotypes often peddled by Opposition Members, almost 60% of the families who will benefit from this change are in work. While the cost of scrapping the limit is £3.5 billion, the cost of child poverty is £39 billion. Behind that staggering sum are life chances blighted and immense talent that our country is missing out on. Along with expanding free school meals, increasing the minimum wage, introducing Best Start family hubs and introducing apprenticeships that do not cost small businesses, these changes will ensure that all children and young people have the best start in life.
Finally, another matter close to the hearts of many in my constituency and county is growth in rural communities. Many people in rural towns and villages have felt left behind by successive Governments, and that is particularly true in the world of farming, which often feels far removed from the corridors of Whitehall. This Government deserve great credit for the biggest farming budget in history and for getting money out of the door, something that the Conservative party failed to do.
However, while visiting farms in my constituency, I have heard repeatedly that changes to agricultural property relief are hanging over many farmers and their families, and supressing confidence. The personal impact of that was brought home to me when I sat down with a couple in their mid-80s, 15th generation livestock farmers in my constituency, who told me about farming families that they know being affected by mental ill health, particularly among elderly farmers. They told me that they feel paralysed in the face of these changes, not knowing if there is a way to ensure that their farm has a 16th generation.
The changes are holding back growth in the agricultural sector, as many are not investing in new machinery or rapidly advancing technologies. However, following concerted efforts by many Labour Members, we have the change that will enable spouses to transfer their allowance to a surviving partner. That will take some farmers out of inheritance tax and will reduce the bills of many others, so it is welcome.
Looking ahead, I am encouraged by the Government’s relentless focus on farm profitability and changes to the planning system, which will free up farmers to get on with the things that help their businesses and infrastructure and the environment. Baroness Batters’ review, due to be published next month, will be critical in charting a path to more profitable farming, and I and many Labour Members will engage with it keenly. Rural Britain is ready and willing to make a greater contribution to the vital mission of growing the economy and ensuring that the benefits are felt in every corner of our country.
Yesterday’s Budget made it clear that there will be no return to austerity or short-termism. It rectifies the injustices of the past for members of the BCSSS. It acts right now, in the present, to cut the cost of living, and it safeguards Britain’s future. This is a Budget that keeps us on the path to renew Britain and improve life for people in the towns and villages I represent in Cannock Chase, so I very much welcome it.
Madam Deputy Speaker (Judith Cummins)
Order. I will start speeches by the Front Benchers at 4.40 pm. With the remaining time, I call Phil Brickell.
Phil Brickell (Bolton West) (Lab)
I warmly welcome the Chancellor’s Budget. It will improve the lives of my constituents by putting £150 back into the pockets of working people through removing levies on energy bills and by lifting 2,570 children out of poverty. This is a Budget with fairness at its core; it reduces child poverty, has more funding for the NHS and has more investment in school libraries. After the chaos of the 2022 Truss mini-Budget, the Chancellor has shown what real fiscal discipline looks like: inflation falling, growth prioritised and proper headroom restored.
I am particularly pleased that the Chancellor has stared down the sloganeers at both extremes. She has rejected the failed trickle-down instincts of the populist right, which bequeathed this Government with a legacy of failed austerity and profligate wasting of taxpayers’ money on dodgy PPE contracts during the pandemic. She has also dismissed unevidenced calls from the left-wing populists for a wealth tax, when it has no answers to the hard questions about capital flight, offshore assets or our overburdened enforcement agencies. All the while, she has increased the burden on those with the broadest shoulders, including via the new high-value council tax surcharge on homes valued at more than £2 million, ensuring that homeowners in mansions are not paying less in council tax than someone living in a mid-terrace in Blackrod.
I thank the Chancellor for heeding my calls by introducing new measures to tackle high street tax dodging and organised crime. The National Crime Agency estimates that some £12 billion in criminal cash is generated in the UK every year, including in the suspicious vape shops we have all clocked while walking round our constituencies. Those suspect enterprises not only erode the civic pride we have in our high streets, but undercut genuine businesses looking to provide a service and make ends meet. I welcome the Chancellor’s commitment to a cross-Government taskforce to tackle tax abuse and money laundering on our high streets, backed by £50 million every year over the next three years, which is funded by an increase in the economic crime levy paid for by the banks and other professional services firms. That is despite the platitudes from Lib Dem Members saying that banks are not being asked to pay more, when actually they are.
I will bring the issue of tax dodging on our high streets to life with an example of just how egregious some of these wheezes truly are. In the brief time that I have, let me talk a little about the world of snails—snail fornication, snail gestation, snail feed and snail cannibalism. London Centric’s Jim Waterson recently published an investigative report on this topic. It details how former Lancashire shoe salesman, Terry Ball, runs elaborate snail-based tax avoidance schemes that are costing councils millions of pounds simply by placing boxes of snails in vacant office buildings in an attempt to exempt them from business rates.
The scheme, perfected over many years to prevent the snails from eating one another and stop mass snail fornication, allows unscrupulous individuals to claim that empty warehouses are being used for agricultural purposes. In turn, landlords are granted a business rates exemption. If the firms in question are challenged by the local council, they are simply liquidated. They hold no assets, so no business rates can be claimed back, and they magically reappear under the guise of another mollusc-based enterprise registered at Companies House—it is taking shell companies to the extreme.
One local council has reported a loss of £370,000 in tax receipts just because of this specific mollusc-based wheeze. This is not just a quirky anecdote; it is a hard-edged example of how loopholes in our system are being exploited, made all the easier by the Tories’ decision in the last Parliament to abolish the Office of Tax Simplification. Indeed, the very same council is reporting losses of £10 million a year due to non-payment of business rates.
I welcome the further steps announced by the Chancellor yesterday, such as rewards for informants of high-value tax fraud, extra funding for trading standards, enhancing tax transparency on real estate, 350 new criminal investigators to tackle fraud and illicit tobacco and vapes, and a boost to HMRC to go after tax dodgers and their unscrupulous advisers. We need to do a lot more, but I commend the Chancellor. I urge her to continue in the same vein by reforming reliefs, strengthening enforcement and sending a message that Britain no longer tolerates tax gimmicks—whether involving snails, shell companies, or slimy advisers.
Helen Whately (Faversham and Mid Kent) (Con)
To govern is to choose, and the Chancellor has chosen. She has chosen spending over saving, higher taxes over welfare reform, and benefits Britain over working Britain. She would rather raise taxes by £26 billion than shave a single penny off the welfare bill. She will make people who work and save pay more for the benefits of millions who do not.
I say that the Chancellor chose, but are these her choices or those of Labour Back Benchers? Just a few months ago, when debating the Government’s personal independence payment reform Bill, those Back Benchers were the ones who stood up and said things like, “I didn’t come here to cut benefits.” They were the ones in and out of meetings with No. 10 while the debate was going on in this Chamber, and they were the ones who forced the Disability Minister to stand up during that debate and announce that there would, in fact, be no savings. The Government’s welfare Bill then became a spending Bill, which Labour Back Benchers all voted for, of course.
The Chancellor could have used the Budget to right that wrong—or could she? The wolves have been circling ever since. This was not a Budget for Britain; it was a Budget for Labour Back Benchers. It was a “save our skin” Budget, but in saving her own skin, the Chancellor is selling the country down the river at a cost of £26 billion to taxpayers and 200,000 jobs, on top of the 150,000 that have already been lost since Labour has been in power and the thousands more that the unemployment rights Bill will destroy.
Yuan Yang
Three quarters of the tax raised by this Budget will go towards building fiscal headroom, doubling it—something that previous Conservative Chancellors never did. Does the hon. Lady welcome the investment in the gilt markets that international investors have now shown, demonstrating their confidence in the UK economy?
Helen Whately
This Budget is simple: taxes are going up on working people to pay for more benefits. That is the story of this Budget.
The Chancellor told the country that she was spending to bring down the cost of living. Really? For whom? Inflation is up, tax is up and wage growth is down. The only group of people who are going to be better off are those on benefits—the 10 million people of working age whose benefits will be uplifted by inflation, the thousands more who will go on to sickness benefits in the year ahead, and the half a million households who will get money from the lifting of the two-child cap. Those households will receive £5,000 more on average by the end of this decade, at a cost of £3 billion to the taxpayer, and some will get much more. A family with five children could get an extra £10,500, while a family with eight children will be able to get an extra £21,000, nearly as much as the annual pay before tax of a full-time worker on the minimum wage.
Labour Members have told us again and again today how Labour is fixing child poverty by giving out that extra money. We all care about children—we all want children to get the best start in life. [Interruption.] Come on. Labour Members are chuntering at me, but they cannot doubt the fact that everyone in this place wants children to get the best start in life. Handing out money might improve the poverty statistics that they like so much to crow about, but it will not solve the problem. Work is the best way out of poverty, and the Government’s handout will make parents less likely to work.
There are couples across the country—couples in work—who are wondering whether they can afford another child. Thanks to this Budget, their taxes are going up, and their incomes may well go down. Thanks to this Budget, some of them will decide to have no more children, or no children at all. That is sad, and it is unfair. Labour Members have been crowing about the Budget, but as my hon. Friend the Member for West Worcestershire (Dame Harriett Baldwin) said earlier, the threshold rises it contains could even drag some working families below the relative poverty line that they like to talk about so much.
Paul Waugh
The hon. Lady refers to the threshold freeze. Why did she vote for seven years of frozen thresholds?
Helen Whately
The sad fact is that the country went through a pandemic and we had to get the country’s finances under control. This Chancellor promised that she would not increase taxes on working people, but that is exactly what she has done. Who can trust her? I know that people out there do not.
If all we heard about this Budget was the speeches of Government Members, we would think something wonderful was going on. I hate to shatter their delusions, but the fact is that people out there are despairing. People have been saying to me, “If all the Government are going to do is take your money in taxes, why work? Why bother?” We are seeing those who can, from successful business people to talented future entrepreneurs, leaving the country. The Government are killing aspiration and growth, and, in fact, savings. The OBR says that household savings will fall as a result of the Budget, from 6% to 2% by 2030. The Budget is an attack on people who are simply doing the right thing: working, saving, trying to pay their way in life and trying to build a better future.
The Government could make different choices. If they were willing to get a grip of the welfare bill and bring it down, they could cut taxes on working people. We have heard from several Ministers, and from the Secretary of State for Work and Pensions himself, that the system needs reform, but their actions say otherwise. Working-age welfare spending is up £40 billion in this Budget. The Timms review’s terms of reference tell us that there are no savings to see here. The Secretary of State will not even say the word “savings”. They say one thing, but do another. It sums them up. After all those promises not to put taxes up on working people, here we are with two Budgets in a row hiking taxes on working people.
It does not have to be this way. We have identified £47 billion of savings from public spending. Of that, £23 billion is welfare savings from doing the right thing, such as stopping giving sickness benefits to people with anxiety and attention deficit hyperactivity disorder and stopping handing out benefits to foreign nationals. It is not kind or compassionate to trap people on benefits. It is not fair on people who are working to pay the bills, and it is simply not affordable for our country to go on like this.
The Minister likes to chat a lot during debates, and he has said that he stood for office “to stop drawing charts”—[Interruption.] He might like to listen to what he actually said, although he does not like to listen to other people. He said that he stood for office
“to stop drawing charts and start changing them.”
He has certainly achieved that. Inflation is up, unemployment is up, borrowing is up and public spending is up. Perhaps he can tell us which of those he is most proud of.
The Minister, the Chancellor, the Prime Minister and the entire Government will all leave their mark on our country with this Budget. At their last Budget, they dug a hole. With this Budget, they have dug it deeper. Instead of cutting the welfare bill, they are adding to it. Instead of getting people into work, they are putting them on benefits. Instead of backing workers, they are funding stay-at-homers using the hard-earned money of Britain’s taxpayers. That is the choice they have made, and we reject it.
The Parliamentary Secretary to the Treasury (Torsten Bell)
It is a pleasure to close today’s debate, and I thank all Members for their contributions, including my hon. Friends the Members for North Warwickshire and Bedworth (Rachel Taylor), for Exeter (Steve Race), for South East Cornwall (Anna Gelderd), for Gower (Tonia Antoniazzi), for Norwich North (Alice Macdonald), for Newcastle upon Tyne East and Wallsend (Mary Glindon), for Newcastle-under-Lyme (Adam Jogee), for Newcastle upon Tyne Central and West (Dame Chi Onwurah), for Dunfermline and Dollar (Graeme Downie), for North Northumberland (David Smith), for Glasgow North (Martin Rhodes), for Mid Cheshire (Andrew Cooper), for Glenrothes and Mid Fife (Richard Baker), for Earley and Woodley (Yuan Yang), for Congleton (Sarah Russell) and for Calder Valley (Josh Fenton-Glynn), who all made strong cases for this Budget.
I listened carefully as Opposition MP after Opposition MP talked down the British economy, as the hon. Member for Huntingdon (Ben Obese-Jecty) did, talking down British workers and talking down British entrepreneurs. I have been trying to remember what it reminded me of. I was racking my brains, but then it came to me: they are just reading out exactly the same script that they had at exactly this time last year. The shadow Business Secretary, the hon. Member for Arundel and South Downs (Andrew Griffith), frothing with his usual excitement, claimed that Britain would spend 2025 in recession. He said:
“‘Could we be in recession?’ Yes we could.”
That was his forecast.
The actual figures are in, and the truth is that Britain in 2025 did not just avoid recession, but beat the forecast. The OBR has revised up growth this year from 1% to 1.5%. Let us look at wages. As my hon. Friend the Member for Erewash (Adam Thompson) said, wages are up in the forecast and, far more importantly, in people’s pay packets. Wages have gone up more in the first year of this Government than in the entire first decade of the last Conservative Government, and there is much more to do.
Changing Britain was always going to be hard, and we now know that the damage from the last decade of austerity and Brexit was worse than previously thought. That lies behind the productivity downgrade that the hon. Member for West Worcestershire (Dame Harriett Baldwin) rightly raised, but the question is how we respond to that news.
Sir John Hayes
I notice that the Minister is wearing a William Morris—or William Morris-esque—tie, and what Morris understood was the importance of craft and skills. The Government addressed apprenticeships in the Budget in a minor way, but does the Minister know that simultaneously the skills White Paper envisages downgrading apprenticeships by diluting the competencies they confer, thereby undermining their reputation with learners and employers?
Torsten Bell
What I know is that youth apprenticeships fell by 40% under the Conservative party. That is what failure looks like. I am coming on to some of those matters.
We do not want to grow this economy by simply borrowing more, as my hon. Friend the Member for Bolton West (Phil Brickell) rightly pointed out before he turned, at some length, to snails. There is nothing progressive about arguing that we should spend more than £1 in every £10 of taxpayers’ money on debt interest —money that would be better spent on schools and hospitals—so Liz Truss and the leader of the Greens should stay exactly where they belong and where they both started out: in the youth wing of the Liberal Democrats, far away from Government.
We in the Labour party will cut borrowing in every single year—more than in any other G7 country—and more than double the headroom against our fiscal rules. We are cutting borrowing and giving businesses the confidence to invest, and cutting inflation too. We are taking £150 off energy bills, freezing rail fares for the first time in 30 years—as my hon. Friend the Member for Burnley (Oliver Ryan) set out—and extending the fuel duty freeze. All this knocks 0.4% off inflation next year, helping interest rates—which have already been cut five times since the election—to keep on falling, helping businesses to expand and getting mortgages down.
What will not be coming down is public investment, which the OBR says boosts our economy. The pro-growth choice is not to return to the austerity of the past, as my hon. Friend the Member for Cannock Chase (Josh Newbury) set out. Austerity saw Tory Chancellors slash public investment, and repeatedly scrap and delay projects—the worst kind of short-term political fixes, with the worst kind of long-term economic consequences. This Budget presses ahead with an extra £120 billion of capital investment.
It is exactly because this Government are confident about Britain’s future that we are going to invest in it. Sizewell C is going ahead, and we are building the UK’s first small modular reactor at Wylfa—the biggest industrial investment in north Wales for a generation. We are also building the lower Thames crossing. Infrastructure is being built in every corner of Britain. The blockers and the pessimists, and the gloomsters and the doomsters, are being taken on, confronted and defeated. The Opposition parties have never seen a housing development or energy project that they did not want to block, but those days are done. Britain is getting back in the building business.
The Budget also contains necessary and fair choices on tax, which hon. Members have raised repeatedly. We have not hidden from that fact, nor am I hiding from the fact that we are asking everybody to contribute by further freezing tax thresholds towards the end of this Parliament. I hear the chuntering and the howls from the Conservatives, but where did this year’s frozen thresholds come from? Them. Who put in place next year’s freeze? Them. They announced threshold freezes, they defended threshold freezes, they voted for threshold freezes, and they cannot howl with outrage about them now. In case all of that is not clear enough to them, let me spell it out: of the revenue raised from frozen thresholds, over three quarters comes from the choices made on their watch. The difference between us and them is that we are not ducking the long-needed reforms that our tax system needs—reforms that mean we can keep the contribution from workers as low as possible.
We have already abolished non-dom status, raised capital gains tax and ended tax breaks for private schools. The Budget brings an end to the disgrace of someone in a terraced house in Blackpool paying more in council tax than someone in a £10 million mansion in Westminster—or what the shadow Chancellor called an ordinary family home. If he had had more time, I am sure he would have gone on to worry about people with an ordinary family deer park, duck pond and stables.
Torsten Bell
I will come to the hon. Lady in a second, because she and the hon. Member for St Albans (Daisy Cooper) told us that the Liberal Democrats wanted wealth taxes, while continuing their record run of opposing every single wealth tax put in front of them, and conveniently forgetting that the Liberal Democrats tried and failed to introduce just such a wealth tax in government —a level of convenient amnesia matched only by the hon. Member for Clacton (Nigel Farage) when reminiscing about his school days.
Sarah Olney
Because the Minister was maintaining his own running commentary throughout my speech, he probably missed me making the point that, although he keeps saying that this is equalising council tax between poorer areas and richer areas, he must admit that it in fact does nothing of the sort. When people owning £2 million houses in Putney pay their £2,500 levy on top of their council tax, they will still only be paying the same amount of council tax as people living in the lowest band of properties in my constituency. There are arguments to be had about the mansion tax, but can he stop saying that it equalises council tax rates in different parts of the country, because it does nothing of the sort?
Torsten Bell
I did not say anything of the sort. I said that we are not going to have a £10 million mansion in Westminster paying less tax than a terraced house in Blackpool, and that has been brought to an end by this Budget.
I have heard the worries of some Opposition Members about the surcharge, and I want to assure the House that less than 1% of properties will be affected, and even for the £10 million mansion I have mentioned, it will not exceed £7,500 a year. To put that in perspective, it is not even enough to bribe a Russian-sympathising, Putin-praising Reform politician—or a traitor, as we should always call them.
Other reforms in the Budget will ensure that everyone who drives on our roads helps to maintain them. It will address the fact that tenants pay higher taxes than their landlords and tackle some of the tax breaks that have exploded in recent years, disproportionately benefiting the wealthy. That is the fair thing to do, and it is the responsible thing to do.
I know that others want to take a different approach, and I heard representations from some to raise income tax. Who was particularly keen? The shadow Chancellor. He told eager listeners—[Interruption.] I think he should listen. He told eager listeners at the Conservative party conference that he would “go for income tax”. In fact, he was more enthusiastic than that, going on to label it the best “thing to do”. We have not taken his advice, and are instead delivering major reforms—reforms ducked by Tory Chancellor after Tory Chancellor.
We have heard a lot about welfare today, and I recognise why. It is because our welfare system is failing, and we are changing it. We are undoing the huge incentive to be labelled too sick to work that the Conservative party built into universal credit, and the OBR has confirmed that this will move tens of thousands more people into work. The shadow Chancellor claimed he had a plan to reform welfare, but he did not mention that it was quashed by the courts. What he actually did as Secretary of State for Work and Pensions was to oversee the subsidised leasing of luxury cars, with the ordinary taxpayer bearing the cost of tax breaks for Mercedes and BMWs on the Motability scheme. Well, those days are done. The scheme has itself removed luxury cars, and it has committed to half of its cars being built in Britain. We are reforming its tax breaks to save over £1 billion in the coming year.
Torsten Bell
I am afraid that I do not have time to give way.
The last Government cancelled face-to-face assessments for health benefits; this Government are bringing them back. The last Government also oversaw a scandal that has received far too little attention. They allowed people who came to Britain for just a few years—people who left, and never had any intention of returning—not only to buy a state pension, but to buy it on the cheap. The Conservative Government did not just waste money here at home; they wasted it across Canada, Australia and New Zealand, and we are bringing this overseas pension scandal to a close.
What this Government will never do is pretend that the Tory policy of making children poor does anything other than cost us all in the long run. Child poverty costs this country £40 billion a year. A child growing up in poverty is less likely to be in work as an adult, and they earn 25% less at age 30. We tackle child poverty not only because it is a moral imperative, as was laid out by my hon. Friends the Members for Rochdale (Paul Waugh) and for Camborne and Redruth (Perran Moon), but because it is an economic one. This Government will scrap the two-child limit, we will lift over half a million children out of poverty and we will deliver the biggest fall in child poverty of any Parliament on record.
Everyone can see what the Conservatives are trying to do. They cannot defend their record, and we all know why. They have nothing to say about Britain’s future, as the Leader of the Opposition made patently clear yesterday, and now they are salivating at the prospect of trying to hide their total lack of policy behind the cheap, divisive, lazy politics of talking about “Benefits Street”. Well, bring it on, because this Budget is for every street, with potholes being filled, neighbourhood police back on the streets and an NHS that is actually there when we need it. It is a Budget for every street in cutting borrowing because that helps not just mortgage payers, but employers; it is a Budget for every street in cutting energy bills because the cost of living crisis has seeped into everyone’s homes—rich and poor, north and south; and it is a Budget for every street because child poverty exists in every part of Britain, limiting life chances, wasting talents and undermining not just some childhoods, but all of them. With borrowing down, energy bills cut and public services rebuilt, this is a Budget for every street in Britain.
Ordered, That the debate be now adjourned.—(Gregor Poynton.)
Debate to be resumed on Monday 1 December.