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The Secretary of State for Energy Security and Net Zero (Ed Miliband)
It is a privilege to open this Budget debate on a theme of paramount importance to our country: the cost of living crisis facing Britain’s families. Whatever our party, we should take a step back and think about the history of the last two decades since the financial crisis, during which we have seen: the stagnation of real wages, only this year getting back to their 2008 levels; the worst progress on living standards in the last Parliament since records began in the 1950s; an epidemic of in-work poverty such that, according to the Resolution Foundation, seven out of 10 families with children who live in poverty now have someone in work; home ownership falling from two thirds of young people in the early 1990s to less than half today; and the biggest rise in energy bills in generations earlier this decade when Russia invaded Ukraine, on top of public services facing strains as never before.
Each of those on their own would cause people to doubt whether this country really works for them. Together, they represent a perfect storm that makes people question their basic assumptions about our economy, society and country. This is the condition-of-Britain question of our time, and it is the backdrop against which this Government were elected 17 months ago. The mission—the driving purpose of this Government and this Budget—is to tackle that crisis. That starts from an understanding that this crisis is due to not accidental circumstances but a governing ideology, and that our response must be to change course in three ways.
First, we need to make fair choices that favour ordinary working people, not the rich and powerful, who have been favoured for too long. Secondly, we must invest in and rebuild our public services and infrastructure so that we never return to austerity, which was such a disaster for the social and economic fabric on which so many people rely. Thirdly, we must endeavour to change our economy so that it produces more good jobs at good wages that sustain a decent living for people, ending the hollowing out of our economy and our communities. That is what this Government are about; that is what this Budget seeks to deliver.
First, then, I want to talk about fair choices. An illuminating chart—I love charts—on page 33 of the Budget Red Book shows the impact of decisions since the 2024 autumn Budget. It shows the progressive approach of my right hon. Friend the Chancellor. It shows that every decile will be better off as a result of her measures, except the richest 10%, with the greatest gains as a percentage of income to lower and middle-income families. That includes raising the national living wage and the national minimum wage, freezing rail fares for the first time in 30 years and freezing prescription charges, as well as two measures I want to focus on.
The first measure is lifting the two-child limit in universal credit, which goes to the heart of the affordability crisis that so many face. I think we need to have a debate about this issue. According to a Department for Work and Pensions document published on the day of the Budget, since its introduction in 2017, the two-child cap has put 300,000 children into relative poverty. That is the equivalent, as the document says, of 100 children every single day—more than three primary school classes each day being pushed into poverty. It is also part of a wider picture. According to the Joseph Rowntree Foundation, 7.1 million low-income households—one in four across the UK—have gone without essentials in the last six months, in one of the richest countries in the world. That is why we have acted on the two-child limit. Two million children will be helped, and 450,000 fewer children will be in poverty by the end of the Parliament.
As I understand it, the Conservatives oppose the policy change because they claim it is about helping people out of work who are undeserving. We need to unpack this false claim. The inescapable fact that the Opposition want to run away from is that around 60% of families impacted by this policy are in work, not out of work. These are people for whom work simply does not pay, like in the case—highlighted by the Child Poverty Action Group—of Shauna and her husband, who have three children. Shauna’s husband works full time and she says,
“This will make a big difference because we’ve had to incur debts. Hopefully it will mean I can cover the last bills that come in each month instead of being in the red. I could buy a new mattress for two of my children. They can feel the springs on the mattresses they’ve got that they’ve had for many years.”
That is the condition-of-Britain question.
How does the Leader of the Opposition describe Shauna and her husband? She calls them “Benefits Street”. These are people working all the hours God sends, working hard, trying to do the right thing: the very people the Conservatives claim to stand up for. How dare she!
Dr Luke Evans (Hinckley and Bosworth) (Con)
When it comes to making decisions about poverty, it is difficult, so I would be grateful to understand the Secretary of State decision to change the winter fuel payments, which the Government’s own analysis said put 100,000 people into relative poverty and 50,000 people immediately into absolute poverty. Those are decisions that he and his Government made because they were concerned about the finances of the country. The Opposition now have similar concerns with regard to the child benefit cap changes, and yet the Government have made a different decision. Could he explain the reasons why there is a difference?
Ed Miliband
Well, the hon. Gentleman’s question is out of date, because, in case he had not noticed, we changed the policy on winter fuel payments. Let me just say this to him: he will have to answer to his constituents. Some 1,500 children in his constituency will be helped by our changes to the two-child cap, and he is saying, “Rip that help away.” Let us have the argument about this.
Ed Miliband
I will in a moment.
On the one hand, 60% of these people are working—and the Conservatives do not really want to explain why they want to cut help for those people. But let us discuss the 40% of households that are not working and will be impacted. What we are seeing here—I am old enough to remember—is a re-run of the last Tory Government and their attempt to blame the poor for their poverty. Leaving that aside, however, what the Conservatives are actually saying is, in truth, that they believe in punishing the children of people who are out of work and on benefits—
Ed Miliband
The hon. Gentleman says from a sedentary position that that is absurd, but it is not. The Conservatives believe in punishing children—
Wendy Morton (Aldridge-Brownhills) (Con)
Will the Secretary of State give way?
Ed Miliband
I will give way in a moment—let me make my point.
The Conservatives believe in punishing children for having another brother or sister. Children with only one sibling—two children in total—get the full amount, but if they have two siblings, they do not. How is that fair? How is that right? As the Chancellor said very powerfully in her Budget speech, is that good for our economy and our society? Of course it is not.
Wendy Morton
If the policy is so good, how will the Secretary of State explain to working people that they will be £18,000 worse off than those on benefits? How can that be fair?
Ed Miliband
This is all about working people, as I tried to explain earlier in my speech. Sixty per cent of people—[Interruption.] Please listen for a second. Sixty per cent of families who will benefit from the measure are in work. If the right hon. Lady wants to ask about the Chancellor’s wider Budget strategy, let me say that I absolutely fully support it, because it was a fair Budget. Yes, it did raise taxes on those with expensive homes—a policy that I advocated for 10 years ago, as a matter of interest—as well as on gambling companies and on landlords. [Interruption.] Members should read the Red Book. The measure is part of a fair Budget. By the way, the Conservatives will have to explain to people up and down the country why they want to leave hundreds of thousands of children in poverty. That is not fair or right, and it is bad for our country.
Several hon. Members rose—
Ed Miliband
I will make a bit more progress.
The second policy I wish to focus on is the Chancellor’s decision to take £150 off the cost of energy bills—that will be important for families across the country. It has been possible only thanks to a principled decision that she made to shift the cost of some levies into public spending, which is itself possible only thanks to her Budget decisions, including raising taxes on the wealthiest, moving into public spending 75% of the cost to households of the renewables obligation, and abolishing the energy company obligation, with £1.5 billion extra allocated for the warm homes plan.
I notice that the Conservatives now seem to claim that that was their idea in the first place, but there is a crucial—
Harriet Cross (Gordon and Buchan) (Con)
Will the Secretary of State give way?
Ed Miliband
I will in a moment—let me develop my argument.
The Conservatives say that this was their idea in the first place, but there is a crucial difference: they proposed abolishing the renewables obligation—
Ed Miliband
But they had with no way of paying for it. “Yes”, says the hon. Gentleman. This is quite extraordinary—all the sins of opposition combined into one. The Conservatives had 14 years to do it, but they never did, and suddenly it is such a great idea to just abolish the renewables obligation.
Ed Miliband
“Yes”, says the hon. Gentleman—although, of course, he was an Energy Minister and he never did it. [Interruption.] He looks a bit sheepish now, doesn’t he? That is rare for him. Basically, I think the Conservatives’ argument is that they would just rip up all the contracts that the Government have signed—including lots of contracts that the Conservatives themselves signed—sending a message to every investor in Britain that the British Government will not honour the contracts that they sign. If it had been a remotely serious policy, they would have carried it out when in government, but it was not a remotely serious policy, because they are not a remotely serious party; that is the truth. In fact, it is all more Liz Truss. They will the ends; they want the cut in energy bills, which is good, but they do not have the foggiest idea of how to pay for it. Taken together, the choices made in the Budget, including on energy, will make life more affordable for people, and will begin to tackle the problems that I have outlined.
Harriet Cross
We are talking about £150 off energy bills that are already £200 higher than when the right hon. Gentleman came into government, and £300 was meant to come off those bills. Will bills be higher or lower than when he came into government last year?
Ed Miliband
If we look at the average of bills in 2025 versus 2024, they are lower. I hope that the hon. Lady will support our cuts to energy bills in April, when they come in.
Dr Ellie Chowns (North Herefordshire) (Green)
Will the right hon. Gentleman give way?
Ed Miliband
Let me make a bit more progress. My second point is about public spending. In the spending review and the Budget, my right hon. Friend the Chancellor made the crucial decision not to return to austerity. She could have made a different choice and cut public services—I think that is what Conservative Members would go back to doing—but we know the impact of that approach from the last 14 years. This is about the living standards of millions of people across our country who cannot buy their way into private health care or private schools. This can be hidden by the smokescreen that Conservative Members want to put up, but the Chancellor has made the incredibly important decision to invest in the future. That has enabled the Government to cut NHS waiting lists by more than 200,000, roll out free breakfast clubs in schools, expand free school meals, fund the expansion of free childcare, and announce the biggest boost to investment in social and affordable housing in a generation. Conservative Members are back to austerity.
Jim Shannon (Strangford) (DUP)
I thank the Secretary of State very much for what he is saying, but on the £150 energy dividend for people across the United Kingdom, the Red Book lacks detail about how the policy will work in Northern Ireland. Perhaps he could indicate whether the support will be £150 in Northern Ireland, as it will in England. We must ensure that people receive the same in Northern Ireland as they do on the mainland.
Ed Miliband
The hon. Gentleman asks an important question; let me write to him with the detail on his point. We want as many people as possible across our country to benefit from this policy. By making different choices from those made in the past, my right hon. Friend the Chancellor is able to invest in the long term. She is delivering the highest levels of public investment that this country has seen in four decades.
Jerome Mayhew (Broadland and Fakenham) (Con)
At the last general election, the Secretary of State and all his colleagues said that they would raise taxes by £7 billion, and that their plans were fully funded and costed. What democratic mandate does he claim to have for increasing taxes by £66 billion, and debt by a further £70 billion?
Ed Miliband
The mandate that the British people voted for was a mandate to change this country, given the problems that we inherited from the last Government.
Several hon. Members rose—
Ed Miliband
Let me develop my argument, because this point is crucial: we can tackle the affordability crisis that people face only by investing in the future. Our vision of what makes an economy succeed is different from that of Conservative Members. We believe that public investment crowds in and does not crowd out private investment; that the only route to economic success is a Government who support industry and workers with a proper industrial strategy; and that rights at work and strong trade unions are not an impediment to a good economy but an essential ingredient of it. Nowhere is that more apparent than in clean energy. Since the election, we have seen the largest public investment in home-grown clean energy in our history, leveraging private sector investment—that is the point—of more than £60 billion. We have the largest nuclear building programme in half a century, with Sizewell C, small modular reactors, and fusion at West Burton, which the Conservatives failed to deliver. There is funding for carbon capture in Teesside, Humberside, Scotland and the north-west, which the Conservatives failed to deliver, and we have the first new publicly owned energy company in more than 70 years in Great British Energy, which they opposed.
Pam Cox (Colchester) (Lab)
In the east of England, we welcome the Government and private sector investment in Sizewell C, and a clean energy supply chain that will stretch from Suffolk through to Essex. Does my right hon. Friend agree that the Budget offers tax incentives to start-ups and scale-ups in that sector, which will help that supply chain to flourish and bring energy bills down even further?
Ed Miliband
My hon. Friend is absolutely right. When we recently announced the small modular reactor fleet at Wylfa in north Wales, we saw the huge opportunities, not just for the areas where nuclear power stations are being built, but rippling across the supply chain. That is why I am so proud of the investments that we have been able to make. What is the result?
Ed Miliband
I will not, for a few minutes. The result is new jobs building wind turbines at Siemens Gamesa in Hull, new jobs making transformers in Stafford, new jobs making heat pumps in Derby, and new jobs at Sumitomo’s new factory at the Port of Nigg—some of the 400,000 additional clean energy jobs that we expect our mission to support by 2030. That is the difference.
What is the Conservatives’ policy? They want to rip up the Climate Change Act 2008 and abandon net zero by 2050, which was their legacy. As a result, they have been roundly condemned by British business. Energy UK says that abandoning that target will scare off investors. The Confederation of British Industry says that it is a “backwards step”, because the Climate Change Act is
“the bedrock for investment flowing into the UK”.
Baroness May—they do not like to talk about her—called it a “catastrophic mistake”. And get this: even Boris Johnson —rarely have I quoted Boris Johnson—says that
“in my party, it’s all about bashing the green agenda, and personally I don’t think we’ll get elected on…saying what rubbish net zero is.”
Normally—I have experience of this—Oppositions stick by what they did right in government, and trash what they did wrong. The right hon. Member for East Surrey (Claire Coutinho) is pursuing a novel approach to opposition: trash anything that they did right, and double down on everything that they did wrong. Nowhere is that more true than in our dependence on fossil fuels.
At this point, I express my sincere thanks to the right hon. Lady’s colleague on the Front Bench, the hon. Member for South Suffolk (James Cartlidge), who sadly is not here. Last week, I was talking about the causes of the energy bills crisis of 2021. He shouted out—I checked Hansard—“Because Putin invaded Ukraine!”. Obviously, he is one of the finest minds on the Opposition Front Bench, and he is right about that, but he has given the game away. This relates to affordability and this Budget debate. The lesson from the worst cost of living crisis in generations is this: it came about because Putin invaded Ukraine. What was the cause of higher bills? Why were we worse hit than many others? Because we were so exposed to fossil fuels. It was not the price of renewables that soared; it was the price of gas, including from the North sea, priced and sold on the international market. That is what happens when we do not have clean, home-grown power, and when we are at the mercy of petro states and dictators. What is the strategy of right hon. Member for East Surrey now? To double down on the Conservatives’ failure. She literally says that we should cancel the allocation round 7 auction.
Ed Miliband
Yes, the right hon. Lady says. The Conservatives are the people who lost it all in the fossil fuel casino, and now they say, “Let me just have one more go at the roulette wheel. This time it will be different. Cross your fingers and hope for the best.” Let us think about this. What are they betting on? In today’s world, at this moment of all moments, with the world at its most perilous for generations, their policy is to cross their fingers and hope for everlasting peace in the world and no geopolitical instability.
Ed Miliband
I have already given way to the hon. Gentleman. With Russia still at war in Ukraine, with deep tensions in the middle east, and with NATO being tested, this is ridiculous irresponsibility from the Conservatives. [Interruption.] The hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie) should listen to this. We know that half our recessions since the 1970s have been caused by fossil fuel shocks, and the world is so much more unstable. Here is the worst thing of all: it was not the Conservatives’ energy bills that they were betting with; it was the British people’s. Families, business and the public finances are still paying the price of their failure, and there has not been a word of apology or contrition.
The right hon. Member for East Surrey now has to pretend that black is white, ignore the dangers, and claim that fossil fuels are cheaper, when actually strike prices for solar and onshore wind in last year’s auction were nearly 50% cheaper than the levelised cost estimate of building and operating a new gas plant. The truth is that the Conservatives have learned nothing and must never be let near the levers of power again. The difference between us is that we make fair choices; they would double down on unfair choices. We invest in the future; they would return us to austerity. We are building an economic future for the country; they would destroy the economic opportunities and security of the clean energy economy.
To conclude, this is a Budget that, despite the challenges, provides a clear direction of travel on the biggest issue of our time: the affordability crisis. This is a Budget that shows a Government who are acting on the No. 1 issue facing the British people. This is a Budget for fair choices, for investing in public services, and for creating a better economy. That is why this Budget deserves support in the Lobby tomorrow night.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the shadow Secretary of State.
Claire Coutinho (East Surrey) (Con)
That was a fine performance, but anyone listening to it out there will think that the Secretary of State is in cloud cuckoo land. The Government have taxed working families up the wazoo. They have taxed tens of thousands of people out of their jobs. They are clobbering them left, right and centre with rising bills, and for what? It is not for growth—no, there is none of that coming—but so that they can go on a welfare spending spree.
In the election, Labour promised the public that it would not lift the two-child benefit cap, just like it promised that it would not raise taxes on working people. It has broken promise after promise, and it has fudged the reasons why, to say the least. In this debate, the Government want a thank you from the public because they have handed them back a tiny fraction of the money that they took from them. I can tell you that the public are thinking of a phrase that ends in “you”—
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. The shadow Secretary of State knows not to use the word “you” when she is obviously not referring to me.
Claire Coutinho
The public are thinking of a phrase that ends in “you”, but the first word is not “thank”. The Government want to talk about the cost of living, but they are clobbering low and middle earners with tax rises and higher bills. That is why the majority of the country says that this Budget will leave their family worse off. The majority of the country has also said that they think the Budget is unfair. The Secretary of State talked about fairness, but the public do not feel that it is fair, and they are right. All the things that hurt disposable income are up: inflation, bills and taxes are up. The things that help—growth and employment—are down. Household disposable income has been revised downwards because of this Budget.
Ms Stella Creasy (Walthamstow) (Lab/Co-op)
The shadow Secretary of State wants to talk about fairness. One of the practical consequences of retaining the two-child cap was that in order to be exempted from it, 3,000 women had to declare to a Department for Work and Pensions official that they had been raped. [Interruption.] An Opposition Member is saying “wind up”. Will the shadow Secretary of State clarify why she thinks that measure would be fair?
Claire Coutinho
The hon. Member makes an impassioned case, but why did Government Members not make it at the election? Why did the Government remove the Whip from seven Labour MPs who voted against keeping the cap last year? Why did the Government make all Labour MPs vote to keep the cap, including the Secretary of State? That is the question that Members need to ask. The Government want to be known for having helped people with the cost of living. They must think that the public are stupid. Everyone out there can see that everything that the Government are doing is making the cost of living worse. They do not understand the basics, and the situation is apparently so bad that No. 10 has been giving Back Benchers lessons about Government debt. Given that we have seen Labour Back Benchers cheer at two job-killing Budgets, perhaps the Government need to expand the curriculum.
Wendy Morton
Is it not the truth that we have in front of us not the Budget of the Chancellor, the Prime Minister or the Cabinet, but the Budget of the Back Benchers?
Claire Coutinho
My right hon. Friend is right, and here is the problem: this Budget might have made the Back Benchers happy, but it is not the Budget that they promised at the election. Let me help them. To start with inflation, we left Labour with inflation back under control at 2%. That took difficult decisions, which needless to say Labour opposed, but it was important to do that because inflation hurts: it picks the pockets of families who find themselves working just as hard but able to afford less and less. However, under Labour, inflation has doubled thanks to the choices it made at the last Budget.
We have now broken away from our international peers—Labour Members can check the graphs—and we have significantly higher inflation than Europe and the United States. In fact, we have the highest inflation of any major economy, and the OBR has said that, compared with March, it now expects inflation to be higher for longer. Why? It is because Labour has chosen to make the cost of energy and the cost of food more expensive, and to pursue policies that will push up rent. People’s weekly shop is up because of Labour’s choices: taxes upon taxes—a jobs tax, a packaging tax, a family farm tax. These are Labour’s choices, and they mean that the average family will pay almost £300 more for their groceries this year. With Labour’s war on farmers, is it any surprise that a pack of mince, a family staple, is up 40% this year alone?
Let us take housing: rent is going up by £700 this year for the average renter. Labour does not understand that a lower supply of homes to rent means higher rents, yet it is written in black and white in the OBR document that its new housing taxes risk
“a steady long-term rise in rents”.
Labour’s choices mean that the cost of going away on a family holiday will set people back up to £400 extra because of its flight tax. Those choices mean that food will cost £300 more, rent will cost £700 more and holidays will cost £400 more—that is £1,400 more and I have not even got to energy bills or taxes yet. On energy, where do we even start?
Peter Swallow (Bracknell) (Lab)
The right hon. Lady has repeatedly suggested that energy bills are going up—[Interruption.] If she does not believe me, perhaps she will believe Martin Lewis, the money-saving expert, who tweeted earlier today:
“I’ve just got the new predictions for the April Price Cap, which is a cut in cost of 4.2%. Without the Budget changes, it would be predicted to be rising 3.5%.”
Will she correct the record and explain why she does not support the work that we are doing to cut energy bills?
Claire Coutinho
I will come to what Martin Lewis says about the hon. Gentleman’s party’s policies in a second.
Labour promised £300 off energy bills, but bills have gone up by £200 instead. Going by his own election promise, the Secretary of State owes the public a £500 cut. Why have those bills gone up? It is because of the costs introduced by the Secretary of State for Energy Security and Net Zero. Hon. Members do not have to take my word for it—they can just listen to Martin Lewis, who says that wholesale prices have plummeted but energy bills are up because there are countless costs landing on those bills thanks to the Secretary of State—[Interruption.] The hon. Member for Bracknell (Peter Swallow) wanted to talk about Martin Lewis a second ago but he does not want to hear about him now.
Among those costs are the cost of backing up wind farms and switching them off when it is too windy, all the grid costs that are multiple times higher because of the system that Labour is creating, the warm home discount that everyone is paying for through their bills, the carbon tax that has gone up by 70% this year, and the tax on gas to pay for hydrogen that is coming in January. I am not sure whether Labour Back Benchers know about all these costs, but they add up to hundreds of pounds extra. No wonder the Secretary of State never did a costing; he did not want anyone to know the truth. He is piling hundreds and hundreds of pounds on to energy bills, and now he wants a round of applause for this £150 off them.
Paul Waugh (Rochdale) (Lab/Co-op)
On that point, will the right hon. Lady give way?
Claire Coutinho
Let us talk about that £150. If someone has a gas boiler, the figure is £130. I remind the Secretary of State that that is almost everybody in the country. Oh yes, and if they pay tax, the amount has not come off—it has just been moved from their energy bill to their tax bill. Most importantly, that amount does not even touch the sides of what this Secretary of State will cost people in the end. Like so much of what Labour says, it is just sleight of hand. The real question is this: since the election, have bills gone up or down? The answer is up.
The Secretary of State should be honest that this policy was never part of his plan. It is not part of Great British Energy or clean power 2030—all the things that he promised would lower bills. In fact, it is a tacit admission that he has failed. The centre knows that his plan cannot lower bills. In fact, if the reporting is correct, the Secretary of State fought against the policy, but he has been forced into it, because his promise to cut bills by £300 has become a national embarrassment to them all. It is taxpayers who are bailing him out to the tune of £7 billion.
Lloyd Hatton (South Dorset) (Lab)
Does the right hon. Lady not share the concerns already articulated by the Confederation of British Industry that simply to scrap the Climate Change Act and the important work of this Government in pursuing net zero targets would be a “backwards step”? That would actually be to the detriment of people’s energy bills and inward investment into our economy and would kill off jobs. Those are the words of the CBI, after all.
Claire Coutinho
We can exchange quotes, but the hon. Gentleman might want to—[Interruption.] Let me respond. He can go and check the quotes of the most respected energy economist in the country, Sir Dieter Helm, who says that the Government’s plan is locking people into higher bills for longer. One of the fundamental problems we have in this country is that energy costs are too high, and the Secretary of State is locking people into those higher prices for longer. If the Government truly want to cut bills for everyone, they should use our cheap power plan.
Do you know what is extraordinary, Madam Deputy Speaker? The Government have come up with a package that costs the Exchequer more, cuts bills by less and does nothing to cut energy bills for struggling businesses. Food bills are up. Rents are up. The costs of holidays are up. Energy bills are up. That is cost after cost after cost because of the Government’s policies, and they want a round of applause for moving a fraction of those costs off energy bills and straight on to people’s tax bills. Only people with the Labour party’s grasp of numbers could think that that is a good deal. The Secretary of State says that there is an affordability crisis, but he does not explain the cause; the Government are the cause. That is before we even get to tax.
Taxes on student loans, taxes on income, taxes on saving, taxes on housing, taxes on driving, taxes on pensions, and even taxes on taxis—if Labour could, it would tax the air that we breathe. Taxes are rising more in this Parliament than in any since the 1970s. The freeze in income tax thresholds means that the average worker on £35,000 a year will lose £1,000 in tax by the end of the decade. That is an extra two weeks they will be working, not to feed their family but to pay for Labour’s benefits bill.
Let us be clear. When the Government say that they are asking for a contribution, they are not asking, are they? It is not like anyone can say no. I do not know whether there has ever been a more irritating formulation of words than that phrase, which we have heard so much over this weekend.
There will be so many people out there who will look at this Budget and think, “Why do I bother? Why do I get up at 5.30 am? Why do I work overtime? Why do I barely see my family? Why am I going to pay more tax for people on benefits who are not working those hours?”
Kevin Bonavia (Stevenage) (Lab)
The right hon. Lady says that people will pay for people on benefits, but some 60% of those people on benefits are working. Does she not agree that we are supporting people into work?
Claire Coutinho
Let me make this point to the hon. Gentleman. The average person on benefits in work is working 20 hours, sometimes less. Why should a family with kids who are not well off and are working 40, 50 or 60 hours a week be worse off than a family on benefits working far fewer hours?
I quit a job in the City to go to work for the Centre for Social Justice and work with people fighting poverty, and I have worked with struggling families in some way since I was 16. It is not compassionate to make welfare pay more than work. It is not a helping hand; it is a trap.
The Government should also talk to the many couples who have put off having children or stopped at one or two children because they cannot afford it. Younger brothers and sisters simply will not be born. Those missing children are a personal tragedy for every couple who are having to make that choice, but there will be more of those decisions, because the Government are loading more and more costs and taxes on to hard-working families.
Lloyd Hatton
Can the right hon. Lady explain to the House what it would mean for the 1,360 children in her constituency, and the nearly 1,700 children in my constituency, who would remain in levels of relative poverty if we chose to pursue the two-child benefit cap for many more years, as she is suggesting?
Claire Coutinho
We have a fundamental difference in belief. Labour Members believe the best way out of poverty is welfare; I think the best way is jobs and growth, but the Government are killing those things.
The problem with the Labour party, as we can see from its policies, is that it clearly thinks the only answer to the cost of living is redistribution, even past the point at which there will be no one left to redistribute from. Conservative Members know that jobs, low taxes and low costs improve the quality of life, but the Government are killing those jobs—every month under them, parents are losing their jobs. What do Labour Members think the cost of living is like for those families who have lost their salaries under this Labour Government? There are 170,000 fewer people on the payroll since the election. Young people cannot get a foot on the jobs ladder—because of this Government, the cost of hiring a young person has gone up by £4,000. They say they are raising the minimum wage, but they are crushing businesses’ ability to pay for it. The result is hiring freezes and redundancies, and for all those people just above the minimum wage who are also struggling, there will be no money left for wage progression. The best way to improve living standards is growth, but this was not a Budget for growth; it was a Budget for Labour Back Benchers. That is why it did not contain a single growth measure.
Labour’s entire approach to the economy has been to raise the cost of basic goods, to raise taxes, and to crush wages and employment. The Government are expecting a shrinking group of hard-working taxpayers to pay for more redistribution, to cover the costs that they are choosing to impose on the public. In the words of one Labour Cabinet Minister, this Budget has been a “disaster”. Those are not my words—according to a No. 10 source, they think they are the words of the Secretary of State. Labour will not be known as the party helping people with the cost of living; it will be known as the party that has broken its promises to working people, broken its promises on tax and on bills, and broken the social contract that sees work pay more than welfare.
Several hon. Members rose—
Madam Deputy Speaker (Ms Nusrat Ghani)
Colleagues can see from looking around the Chamber that the speaking list is very long, so Back Benchers are on a speaking limit of six minutes.
Rushanara Ali (Bethnal Green and Stepney) (Lab)
This Labour Government are rebuilding our economy, rebuilding our public services and addressing the cost of living pressures that our constituents face. This Budget will make a huge difference to my constituents’ lives, thanks to the cuts to energy bills, the freeze on rail fares, increases in the living wage and action to tackle child poverty. Inflation is coming down, and forecast interest rates are also coming down. Growth is forecast to rise this year, and business investment is forecast to rise over the course of this Parliament.
We inherited a dire situation, with public services on their knees, chronic under-investment and a fiscal black hole. For 14 years, Tory Governments presided over austerity, stagnant wages, the chaos of leaving the European Union, and the Liz Truss mini-Budget fiasco that sent markets into a panic, mortgage rates soaring, and inflation rates to over 11%. The cost of leaving the EU is now estimated to be far more than previous estimates: a recent report by Stanford University found that Brexit is reducing the UK’s GDP by 6% to 8%, with the impact accumulating gradually over time. That report also found that investment has reduced by between 12% and 18%, employment has reduced by 3% to 4%, and productivity has also reduced by 3% to 4%.
Chris Vince (Harlow) (Lab/Co-op)
I thank my hon. Friend for giving way at such an early stage in her excellent speech. She has talked about the impact of austerity on the country’s finances; I would add that austerity has had a huge impact on productivity, particularly in my constituency, where we have seen 13-hour waits in A&E and year-long waits for appointments. Does my hon. Friend agree that that means people cannot go back to work, which affects their productivity?
Rushanara Ali
I fully agree with my hon. Friend. That is why it is vital that we rebuild our public services and invest in our national health service, to ensure people are able to contribute to our economy.
We also inherited a mountain of debt, with the previous Conservative Government having borrowed £1.5 trillion between 2010 and 2024. The fact is that austerity, Brexit, covid and Tory economic mismanagement have left our economy in peril, and our constituents are suffering the consequences in the form of rising prices and flatlining wages. For the poorest and most disadvantaged, the cost of living crisis has been a daily struggle for years. The Trussell Trust distributed approximately 60,000 food parcels in the 2010-11 financial year. By 2024-25, the number had risen to 2.89 million. This is the poisoned inheritance that my right hon. Friend the Chancellor is tackling, so of course she had to make tough choices with the hand that she had been dealt.
The decisions made in this Labour Government’s second Budget to lift 450,000 children out of poverty, help families with the cost of living and enable record investment to be made in our NHS will help a great many children. In my constituency, the scrapping of the two-child cap will lift more than 6,000 children out of poverty.
Rushanara Ali
I am going to make progress, as many colleagues want to speak.
The minimum wage and the living wage are being increased to support the lowest paid. The 250 new neighbourhood health centres, which are part of the shift towards the prevention of ill health, will help to tackle stark health inequalities.
More widely, in less than 18 months this Labour Government have secured three landmark trade deals, with £150 billion of inward investment from US companies, which is a solid vote of confidence in Labour’s economic plans; investment in the jobs of the future, in AI and green technologies; and clean energy projects set to create 400,000 jobs by 2030. That is thanks to the work of my right hon. Friend the Secretary of State for Energy Security and Net Zero, who has led the way on this agenda, in the last Labour Government as well as this one. We should be proud of the five cuts in interest rates since Labour came to power, and for the first six months of the year the UK was the fastest-growing economy in the G7.
As has been pointed out, wages have been growing faster than inflation. Real wages rose by more in the first 10 months of this Government than in 10 years under the last Conservative Government. I am especially proud that 3.5 million workers are receiving a pay rise worth £1,400 this year because we have boosted the national minimum wage. We are investing in the health of the nation, with 5 million extra NHS appointments—double what was promised. We are investing in housing, with a record £39 billion for the social and affordable homes programme, and we are investing in young lives, with free breakfast clubs in primary schools as well as 30 hours of free childcare.
This Budget is delivered in tough times, after years of under-investment, low productivity and stagnant wages. The decisions that have been made will deliver on our manifesto pledges, ensuring a stable economic platform, investment in our economy and a fairer society. For many children, this Labour Budget will deliver the opportunities that are desperately needed instead of obstacles, and the chance of a better life.
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. I call the Liberal Democrat spokesperson.
Charlie Maynard (Witney) (LD)
This is a Budget driven far more by political calculation than by the economic realities that the country faces. The Chancellor has an enormous majority—on paper, at least—and the country desperately needs change, but we now have a second Budget in which the Government have failed to demonstrate that they have any big ideas to get the economy moving. However, before I go into that, I want to focus on some positives.
I welcome some of the announcements that the Chancellor made last week, which will help households that have been struggling with the cost of living. Lifting the two-child benefit cap will be worth up to £5,000 a year to each of the more than 500 families in my constituency who have been impacted by the cap. Too many children and families have been trapped in poverty because of the decision to impose it and the Government’s previous stubborn decision to keep it. I just wish that this had been done a year ago, and I give my commiserations to the brave Labour Members who lost the Whip after standing up for a policy that their party now finally accepts.
I also welcome the Government’s action to cut energy bills by removing the renewables levy, which is something that we Liberal Democrats had been calling on the Chancellor to do. It will make a difference to families struggling with sky-high fuel bills. However, I wish that the Government had gone further, rather than removing just 75% of the levy and only for three years. We were proposing to fund the renewables obligation instead from a windfall tax on the excess profits in the banking sector that have resulted from quantitative tightening—something that would have happened now, unlike the deferred taxation that the Chancellor is proposing, which may or may not happen. Both those changes will make struggling families’ lives a little easier, and are very much welcomed.
Similarly, doubling remote gaming duty—something we have also been calling for—is clearly a sensible move. It is one way to raise much-needed revenue without increasing the burden on hard-working families, but it is comparatively small, raising only £1 billion a year. The sad truth is that these are all small wins in the context of the huge challenges we face.
Peter Swallow
Before the hon. Gentleman gets to the part of his speech that I do not think I will like as much as what he has said already, does he welcome the freezing of rail fares for the first time in 30 years, which means almost 300 quid off a season ticket into London for commuters in Bracknell?
Charlie Maynard
Yes, I welcome it.
The OBR has marked down economic growth for each of the next four years, which is bad news. We have a ballooning debt, which now sits at £2.9 trillion. Our debt costs have tripled in the last five years—yes, that is the Conservatives’ fault—and our Government debt is now more expensive than Italy’s. Yes, this all happened on the Conservatives’ watch, but we now have a situation in which 11% of Government spending goes on covering the interest payments, not on paying down the debt itself, and the Chancellor has given no indication that she is serious about addressing that.
Across the five years of the forecast, the Chancellor proposes to deliver a reduction in our net borrowing of just 0.04% of GDP, and I question her tactics. What is the sense in taxing salary sacrifice schemes when we know the strain that the state pension and social care systems are under and when we need people to save more, not less? Does common sense not tell us that discouraging people from saving for retirement now will only lead to a greater burden on the public purse in the long run?
Then there is the desperate state of our special educational needs and disabilities provision. The SEND national deficit overspend is forecast to reach £17.8 billion by March 2028. The Government have said they will cover costs directly from that point on, but they have given no answer as to how this huge bill will be settled up. In Oxfordshire alone, the SEND annual overspend is expected to reach £153 million by March 2026. Why are we waiting two and a half years to do something about that?
As per policy decision 37, the Government determine that they will go further on efficiencies and savings in public services, but not just yet. There are zero governmental cost savings in each of the next three years and then, miraculously, we expect £4 billion in savings in 2029-30—the other side of a general election. How can the country take the Government seriously when they take this approach?
That last instance highlights the problem with the fiscal framework the Government have set themselves. The rule that the current Budget must be in surplus in 2029-30, and the aim of ensuring that debt is falling as a share of the economy by ’29-30, are all well and good, but entirely excluding the intermediate years from the calculation serves our country extremely badly. This Government are gaming the system, in the same way the Conservatives did before them, by adjusting everything in year five to perfectly line up, with more spending early on and tax rises deferred, possibly into the never-never.
Let us look at international examples of how national Budgets are set to understand why the UK is so ineffective at controlling its debt. The Government could take inspiration from the Swedish model of tax scrutiny. Thirty years since introducing changes, and aided by strong economic growth, Sweden has reduced its national debt from nearly 80% to 32%—and yes, Sweden had covid too. Meanwhile, our national debt stands at around 95%. A key component of the solution is that we need to substantially strengthen the scrutiny powers of this Chamber when it comes to the Government’s financial management. This four-day debate clearly does not provide an effective scrutiny function, and there is no meaningful ability for Parliament to amend the Budget once it is announced. Our country is the poorer for this approach.
Secondly, of course, we need to seek a deal with Europe that captures the economic benefits of the European market, which is five times bigger than our own, while maintaining control of our borders. This should start with negotiating a new customs union with the EU. Last month, the US’s National Bureau of Economic Research published a paper that found that Brexit had cut UK GDP by between 6% and 8%, with the economy now £170 billion smaller than it would otherwise have been. The House of Commons Library found that we are losing £90 billion in tax revenues every year as a result of Brexit—an enormous number. That is equivalent to two thirds of the UK’s entire annual Budget deficit of £138 billion; to nearly 80% of our entire annual debt expense of £114 billion; or to our defence, security, prisons and courts budgets combined. The Government now finally acknowledge that Brexit has left our country poorer, weaker and more divided, but they are still unwilling to do almost anything material about it.
I was elected by my Witney constituents in 2024 to do all that I can to make their lives better and our country better. This Budget is a key lever through which to do so, and I am deeply dismayed at the lost opportunity that it represents.
Gareth Thomas (Harrow West) (Lab/Co-op)
I commend the skill and courage of my right hon. Friend the Chancellor, who has faced the most difficult inheritance of any post-war Chancellor since Hugh Dalton in 1945. I welcome the cost of living measures, the cut in energy bills and the increase in the minimum wage, and the lifting of the two-child cap is very welcome too. In addition, I commend the work that my hon. and learned Friend the Economic Secretary to the Treasury has begun on tackling financial exclusion.
My right hon. Friend the Chancellor has been particularly skilled at increasing capital funding, and I will campaign for more of it to be invested in Harrow, not least in council or co-operative housing. Indeed, the lack of new socially rented housing being built in Harrow by the Conservative-run council is a disgrace. Not one new council home that had not already been agreed has been built since the Conservatives took over control, making the housing crisis in my constituency much worse.
More capital investment in schools in Harrow West is certainly needed. After 14 years of Tory neglect, there are classrooms that cannot be used, windows that cannot be shut, roofs that need fixing and sports facilities that need modernisation. Crucially, more investment is needed in our NHS too. Notably, a new intensive care unit at Northwick Park hospital is needed to ease pressure on the A&E unit and improve the quality of care.
I welcome the explicit mention in the Budget of the role of co-operatives in our economy and the publication of the call for evidence on co-operative growth. Co-operatives and mutuals are rarely given the attention they merit, yet the opportunities for growth and, crucially, for the locally owned growth they generate are significant. I hope the Treasury will bring forward its own specific call for evidence on how credit unions, mutual insurers and building societies can expand to play their part in growing our economy.
The standout issue for co-operatives is their ability to issue capital instruments that do not lead to de-mutualisation. This has been done successfully in Australia, where 600 million Australian dollars has already been raised to grow mutuals, notably in the elderly care sector. There is serious interest from co-operatives here in using similar capital instruments to invest in social care. The movement is vital for tackling financial exclusion, and for delivering jobs and better opportunities in our country’s most deprived neighbourhoods.
The banking industry should partner with, and invest in the growth of, credit unions and community development finance institutions. Many British banks do so already in the US, where it is a requirement; they should do so in their own backyard too. The Government cannot double the size of the co-operative and mutual sector of our economy on their own. Businesses in the sector need to do that themselves, but greater interest, imagination and urgency from the Treasury—which, under the Conservative party, paid only passing attention—in tackling the finance, legislative and capacity challenges that the sector faces will be critical.
My right hon. Friend the Chancellor, in the run-up to the Budget, rightly drew attention to the impact of Brexit and the dismal trade and co-operation agreement negotiated by the Conservative party. The OBR continues to estimate that the impact of Brexit has been a 4% hit to our GDP, with sustained damage to our tax revenues, to jobs and to family finances. In short, it has been an unparalleled act of economic self-harm, with the TCA easily the worst trade deal ever negotiated. I welcome the steps that the Government are taking towards a sanitary and phytosanitary deal to lower food prices and reduce border delays, and a youth mobility scheme and energy co-operation make obvious sense too. These will benefit growth, but I believe that we should go further and use the 2026 UK-EU summit to agree on the ambition of a more profound reset. With imagination and sustained business encouragement, a better deal to lower trade barriers could be possible.
The recent EU-Swiss deal is interesting for the greater flexibility the EU has now shown to a close and serious partner. As we rebuild our country’s relationship with our allies across the channel, it is surely time, within our red lines, to be bolder in our ambitions to strip away the red tape that the Conservatives love about trade with Europe, particularly for goods exports. The needless rules, the different standards and the extra unnecessary checks they introduced in the TCA are making it harder for British businesses to sell into the EU. Mutual recognition of qualifications and easing business mobility restrictions are worth exploring too.
Ms Creasy
My hon. Friend is making an incredibly powerful point about going further on our relationship with Europe. Does he recognise that the OBR says that Brexit, as negotiated by the previous Government, is one of the “structural challenges” facing our manufacturing industry, so perhaps again being part of the Pan-Euro-Mediterranean convention, for example, would be one way to help businesses with all the extra paperwork created by the rules of origin changes?
Gareth Thomas
I understand that the Department for Business and Trade, my former Department, is about to issue a call for evidence on exactly how to negotiate membership of that, and I very much look forward to its happening.
If we are to get faster and more significant growth, we have to take the axe to more of the red tape that Boris’s trade deal introduced, so I urge my right hon. Friends to continue to be bolder and more ambitious for a deeper and more profound EU reset agenda.
Lastly, I think we should consider in the coming months how to rebuild the fiscal space to fund the development assistance that gives us so much soft power. That assistance supports our security needs, and it is vital to the effectiveness of key parts of peacekeeping, global health and the empowerment of those whose prospects are being damaged by poverty, conflict and climate change. I look forward to supporting the Budget in the Division Lobby tomorrow.
Sir Gavin Williamson (Stone, Great Wyrley and Penkridge) (Con)
Thank you, Madam Deputy Speaker, and may I say what a delight it is to see you in the Chair this evening?
I was not going to start by saying this, but I agree with the Secretary of State for Energy Security and Net Zero, when—and I may misquote him slightly—he spoke about “decent jobs at decent wages.” I absolutely agree, and that is what we all want to see in every one of our constituencies right across the country. However, I do not believe that this Budget goes any way towards delivering those decent jobs at decent wages, and certainly not in Staffordshire.
As we look at what is happening, we are seeing inflation rising. G7 comparisons are trotted out, but we will have the highest inflation in the G7 this year and also next year. The OBR has forecast that inflation will stay higher for longer, and why is that? It is because of the Chancellor’s last Budget. I am not sure whether this Budget will have helped reduce those pressures, but the initial indications certainly seem to be that it will not. This is a real problem because it is impacting people’s real lives. We are seeing food price inflation rising in 2025: it was 4.9% in October, up from 4.5% in September. This is having an impact on everyone’s lives—on their household incomes and how they get by.
This is a very bad Budget for jobs in Staffordshire, because nothing is being done at all for the ceramics industry. It is not as large an employer as it used to be 30 years ago, but it is still an important employer, whether at Dunoon in my constituency, Steelite, Churchill or so many other great businesses producing pottery in Staffordshire. This Budget will make it more difficult for them to produce pottery in Staffordshire, because it will mean they have higher costs. Having spoken to some of those working in the ceramics industry only last week, I know that a third of everything they spend is on energy costs. To compare this with the United States or continental Europe, producers are looking at half the price of what Staffordshire businesses are paying for their energy costs. How are we able to compete on the global stage if we do not help those producing in this country to have energy costs that mean they are competitive? I appreciate that the Minister summing up is the Secretary of State for Transport, but I hope that she will be able to respond to that point.
One of the most successful technology companies in this country is based not in London or Cambridgeshire, but in Stoke-on-Trent, and it is called bet365. It is the world’s leading technology company for betting. It employs 5,500 people in Stoke-on-Trent, and it is the single biggest private sector employer there. Those who work there live not just in Stoke-on-Trent, but right across Staffordshire, the north-west and the country. However, this Budget could destroy one of our most successful technology sectors, and for what? On the gambling tax increases, the OBR noted in its analysis:
“The behavioural responses to these changes are uncertain but are estimated to reduce the yield by around one-third. We estimate that operators will seek to pass through around 90 per cent of the duty increases by increasing prices or reducing payouts, leading to a reduction in consumer demand which reduces the yield from the measure by £0.5 billion by 2029-30. The elasticities used to estimate the demand effect also capture potential substitution to the illicit market, and substitution between different forms of gambling due to the tax differentials introduced through this policy.”
This will be a hammer blow to jobs in the city of Stoke-on-Trent and in Staffordshire.
Bobby Dean (Carshalton and Wallington) (LD)
The right hon. Member mentions that bet365 is based in Stoke. Could he explain to us why it is also based in Gibraltar and Malta?
Sir Gavin Williamson
This company operates internationally: bet365 is one of the most successful technology companies in this country, and it operates right across the globe. It is quite understandable why it does so, but the hon. Gentleman probably does not care about jobs in Staffordshire. He has probably not ever thought about jobs in Staffordshire, and he does not mind if they all move to Malta or some other jurisdiction. That is not for him to worry about, but it is for me to worry about, as it is for other Members who represent seats in Staffordshire.
This Budget is an absolute hammer blow to an industry that is providing high-quality, well-paid jobs in Staffordshire and in a city that has seen the decline of coalmining, the decline of ceramics and so many job losses over so many decades, and bet365 has been one of the most responsible employers by investing in the local community, investing in charity and paying its taxes here in the United Kingdom. In fact, its owners are the highest payers of tax in the whole United Kingdom. This will see jobs being lost right across my county. It is destroying the old industries of Staffordshire while at the same time destroying the new industries in Staffordshire, making sure that the people of Staffordshire will be worse off and suffer as a result of this Budget.
Callum Anderson (Buckingham and Bletchley) (Lab)
It is a pleasure to contribute to this third day of the Budget debate, and a pleasure to follow the right hon. Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson), and I associate myself with the speeches of my right hon. Friend the Secretary of State for Energy Security and Net Zero and my hon. Friend the Member for Harrow West (Gareth Thomas).
In the short time available, I wish to cover a few areas, the first of which is the fiscal stance of the Government in relation to the cost of living. Overall, I believe that the set of measures announced by the Chancellor last week will indeed cut the cost of living, tackle NHS waiting lists, and reduce the deficit and the debt, which is much needed. Having worked in financial services before entering this place, I have observed debates on fiscal probity and prudence with great interest, but I would like to remind Members—certainly those on the Government side of the House, but also those across the House—that fiscal responsibility or fiscal prudence is not just an end in itself; it is a means to an end. It delivers economic and financial stability, and ultimately lowers inflation.
I welcome the fact that measures in the Budget will reduce inflation more than expected. By increasing the headroom, we are enabling the central bank to, in time, reduce interest rates at a faster rate, which will not only support mortgage holders but support businesses to expand their operations. In the long run, it will also help to reduce our national debt. Given that over a third of our national debt is held by overseas investors, it is incredibly important that we respect their wishes and be fiscally responsible.
My right hon. Friend the Secretary of State for Energy Security and Net Zero gave a tour de force on the various measures we are taking to reduce the cost of living, certainly with regard to energy bills and rail fares. My constituents in Buckingham and Bletchley will benefit from frozen fares, whether they travel from Bletchley or Milton Keynes to London Euston or to elsewhere in the country. When I was out knocking on doors with my right hon. Friend the Member for Wycombe (Emma Reynolds) on Saturday, people on the doorstep particularly welcome the frozen prescription charges, as well as the broader investment in the NHS. In Milton Keynes we have seen lots of investment over the past few years, enabled thanks to the fiscal responsibility of this Labour Government, such as the £500 million investment in the new hospital in Milton Keynes. Just last week the Milton Keynes University hospital confirmed the construction of two new operating theatres, beginning early next year, all thanks to a Labour Government.
The final area I wish to cover is the pro-growth measures the Government are pursuing, some of which were announced last week. My hon. Friend the Member for Harrow West gave a very compelling argument for the need to increase the capabilities of our co-operatives and mutuals, which are an excellent feature of our economy. I want to highlight the role of UK listings relief, the expansion of the enterprise management incentives eligibility criteria, and the extension of the enterprise investment scheme and venture capital trusts. It is incredibly important, in the globally competitive economy in which the UK is operating, that Britain is the best place to start, scale and ultimately list a business, and I welcome the measures provided in the Budget.
In conclusion, the Budget very much contributes to the financial prosperity of our economy, but we will need to go further, in the coming years and in the forthcoming parliamentary Session, on regulation, pro-growth tax reform and more inward investment—the Chancellor was in Wales today to bang the drum for more investment in the UK. As the Prime Minister said in his speech this morning, in the long run we also need to control benefit expenditure. The previous Government oversaw a ballooning of welfare and benefit expenditure. On the Labour Benches we believe in the virtue of work, but we must not use the failings of the previous Government to shirk the responsibilities of the future.
Katie Lam (Weald of Kent) (Con)
Madam Deputy Speaker, it is a particular pleasure to speak with you in the Chair this afternoon, inspiring envy, I am sure, from your new legions of fans.
On Wednesday, the Chancellor said that energy prices were one of the greatest drivers of the rising cost of living. She accepted that the cause of high energy bills must be tackled at source—in other words, at the supply side—and she recognised that the rush towards net zero is driving up energy bills for the British people. Thus far, the Chancellor and I are in agreement—stranger things have happened—but none of that seems to inform the Budget she actually served up. She promised to cut energy bills by shifting certain so-called green levies from bills on to general taxation, but that does not change the fact that the British people will still bear the costs of this Government’s net zero delusions. It is an attempt to hoodwink the public by shifting the costs from energy bills on to general tax bills.
As my right hon. Friend the Member for East Surrey (Claire Coutinho) has repeatedly made clear, the answer is not to rearrange how those costs fall, but to stop imposing those costs altogether. The pursuit of net zero is sadly leaving this country worse off and is making almost no impact on global emissions, as countries such as China and India race ahead to open more coal-fired factories. Even those who have supposedly done everything right are still being crushed. One business in my constituency has invested £1 million in renewables, but it has still seen its energy bills triple. For far too many businesses, those sorts of rises in their energy bills will be the final nail in the coffin.
And rises are coming. Largely thanks to the Government’s policy on energy, Ofgem is again set to raise the energy price cap in January, meaning higher bills for the British public. Any short-term cost savings will quickly be eaten up as a result. The savings the Budget claims to offer are a mirage. Does the Chancellor believe that the British people are not smart enough to notice that, or does she simply not understand how it will play out?
The long-term picture is no better. Last week, our energy system operator officially warned that, thanks to the Government’s plans to cripple our North sea oil and gas industry, we will be at serious risk of running out of gas. Yet the Chancellor’s Budget maintains the windfall tax regime, which is destroying domestic production. They continue to spend vast sums of taxpayers’ money on schemes designed to cripple that industry in the long term.
James Naish (Rushcliffe) (Lab)
The hon. Lady and I have had exchanges on this issue before. At the start of the year, the CEO of Centrica recognised that it was the lack of gas storage that was putting £100 on electricity bills and £100 extra on gas bills, and that was down to the decision, in 2017, of the Conservative Government not to invest in Rough. Will she now acknowledge that that was a mistake?
Katie Lam
The gas is already stored in the North sea. The problem with the industry, and what is making it unprofitable, is the Government’s determination to hammer the oil and gas industry.
The Chancellor gave no clear verdict on the nuclear regulatory review. Instead, she promised that the Government would set out their plans in three months’ time. That means more delay and uncertainty for companies that might want to invest in British nuclear, and ultimately more delay in reducing the bills of British families and British businesses. This is not a Budget that will make any improvement to the lives of ordinary, hard-working people. It is a Budget that bakes in net zero, which means more taxes on the British people, more businesses forced to close their doors, more reliance on other countries to keep the lights on, and more emissions exported to countries like China.
No country has ever succeeded without cheap, abundant energy. For businesses, high energy costs can be the difference between success and bankruptcy. For people working hard to make ends meet, high energy costs can be the difference between having money to set aside at the end of the month or needing to dip into savings. Punishing those businesses and those people even more in pursuit of arbitrary net zero targets is profoundly cruel. The immense damage wrought by the cost of living crisis cannot be overstated. High energy bills mean families forced to cut back on after-school clubs for their children, businesses forced to cut back on staff, and young people forced to delay buying their first home even further.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
Does the hon. Lady agree that it is the linking of electricity prices and of renewable energy prices to gas that is creating these high energy prices, and that de-linking them would immediately cut prices for the consumer?
Katie Lam
That is not the immediate problem. The energy prices currently being baked in by the prices the Government are agreeing at the moment will see energy prices sky high for years and years regardless of what happens to the price of gas.
The Conservatives’ cheap energy plan will save households hundreds of pounds and offers a much-needed lifeline to British industry. I very much hope that the Secretary of State for Energy Security and Net Zero will adopt at least some of its measures.
Justin Madders (Ellesmere Port and Bromborough) (Lab)
It is a pleasure to see you in the Chair, Madam Deputy Speaker.
As always with a Budget, there is far more to say than one can fit in a speech, but I just want to start by saying that the decision by the Chancellor to increase the headroom is not one that will garner many headlines or capture the public’s imagination, but it is probably one of the single most important things in the Budget. We simply could not have had another year where every bit of speculation on policy led to speculation on the markets, pushing up borrowing costs and leading to a constant cycle of uncertainty. I hope that this increased buffer and the move to annual forecasts will mean that we get some stability back, and that we will see the OBR—under new leadership—make far more accurate predictions and forecasts in the future than it has made to date.
I support the measures in the Budget that have been introduced to put more money into people’s pockets. My constituents will welcome another above-inflation increase in the minimum wage and the freeze to prescription charges, as well as the £150 reduction to average household energy bills, rising to £300 for the poorest households. Energy and transport costs make up a significant proportion of household expenditure, particularly for those on the lowest incomes. I hope that the rail freeze will also apply to Merseyrail, which is the main rail line for my constituents. It did seem a bit odd that we could not get confirmation from the Government last week that the freeze would apply to Merseyrail, but I see that the Transport Secretary is present—hopefully she will be able to confirm by the end of the debate that she does indeed have good news for my constituents on that score.
I am also proud that Labour is treating child poverty with the seriousness that it deserves. I welcome the measure announced by the Chancellor to scrap the two-child benefit cap that has forced so many families into hardship and harmed children through no fault of their own. This measure alone will lift 450,000 children out of poverty, meaning that, alongside other measures previously announced, we will see more than half a million children taken out of poverty. More than 2,000 children in my constituency alone will be lifted out of poverty as a direct result of this Budget.
I have heard commentators say that scrapping the cap was a measure simply to appease Back Benchers like me, but I think that really belittles the moral case for action. Let us be clear: this cruel policy did not achieve its initial aims, often punished families for changes in circumstances that were beyond their control, and ultimately cost our economy far more than the £3 billion a year that it saved.
Mr Luke Charters (York Outer) (Lab)
I wonder if my hon. Friend will allow me to raise the case of a single mum in my constituency who unexpectedly became pregnant a third time. It was a time of anxiety for her. She used food banks periodically and worried that she would not be able to afford toys for her kids at Christmas. Does my hon. Friend agree that the two-child benefit cap imposed by the Conservatives is the cruellest Tory policy of all?
Justin Madders
My hon. Friend is right to point out that the policy punished children for being born, which is not something any Labour Government should be part of.
We hear that this decision may encourage people not to work, but we all know from the statistics that a majority of people in receipt of benefits are in some form of employment. As for the wider cost, the Child Poverty Action Group estimates the cost of child poverty to the country to be about £40 billion a year, so not only is scrapping the cap the morally correct thing to do; it is also the best thing for our country economically.
While I understand the pressures facing the Government, I hope that the fiscal circumstances will improve in such a way to see income tax thresholds readjusted to take account of the inflationary pressure recently experienced. Going forward, we must continue to ensure that those with the broadest shoulders carry the burden to ensure that more and more working people are not dragged into paying tax by fiscal drag.
I have to say, I would like an explanation of the Chancellor’s comments about how those in receipt of the state pension will not have to pay any tax at the point that the state pension reaches the tax threshold in future. Of course they should not have to pay any tax on it, but why should a pensioner who might have a small private pension of £20 a week have to pay tax on that and their state pension? Once we start to look at some of the implications of the policy, it becomes clear that there are a number of unintended consequences. I hope that when the extra headroom that has been created by this Budget goes on to inspire further ideas in future Budgets, we can look at stopping some of the anomalies that the fiscal drag has created.
I will conclude with a few words on the automotive sector. I am proud to have in my constituency a Stellantis factory—or a Vauxhall Motors factory, as it is more commonly known round where we live. It is a site I have fought hard for over the years. Of course, the factory now manufactures electric vehicles. I welcome that the Budget reinforces the commitments that were made to our automotive sector in the industrial strategy for manufacturers. I am pleased that funding for DRIVE35 has been expanded by £1.5 billion, providing £4 billion over the next 10 years, which will help to build on the important investment the automotive sector needs.
I am also happy that plans to change the rules for the employee car ownership schemes have been delayed from next year until 2030, as that would undoubtedly have left many of my constituents hundreds of pounds a month worse off. Having now seen the impact of that policy, I hope the Government go the whole hog and cancel it altogether.
Dr Luke Evans
I have the automotive industry in my area too, and electric vehicles are really important. The implementation of the pay-per-mile change for electric vehicles is causing huge anxiety, as is the impact on the second-hand car market. We do not understand how this measure will work. Does the hon. Gentleman agree that the Government must be clear on this, as it will have a big impact over the next two to three years while it is discussed?
Justin Madders
The hon. Gentleman must have seen my speech, because I am just about to talk about that issue. He is right that there are a number of unanswered questions.
First, it is important to say that we do need to change to a pay-per-mile system for electric vehicles. The revenue we raise from fuel duty is clearly going to go down over the coming years, so there has to be a change.
Several hon. Members rose—
Justin Madders
I am sorry; I am not going to take any more interventions.
I think the pay-per-mile system is the right thing to do, although I do have concerns about the timing and how it will work in practice. I have to say, I did enjoy putting the question to Conservative Treasury Ministers when they were in government and never getting any answer at all, so I am pleased that this Government are at least acknowledging that this is an issue that needs tackling.
The hon. Member for Hinckley and Bosworth (Dr Evans) is right to raise concerns about what the change will mean for the sector. The OBR has forecast that there could be around 120,000 fewer electric car sales over the forecast period, which of course will not be welcome news, and certainly is not helpful for our emissions targets. It is worth pointing out that the automotive sector is already at a precariously low level of production, and of course not all sales of EVs will be for UK-manufactured vehicles. In my opinion, we really ought to be giving generous discounts—the majority of those cars are built here, so we absolutely need to see more done to boost demand. Measures such as the electric car grant, which was launched earlier this year, continue to support people who want to switch to EVs, particularly with vehicles actually made in this country—that is a very important part of the scheme. However, even with that generous incentive, the pay-per-mile proposals will see us lose ground.
The Budget also contained measures on boosting charging infrastructure, which is really important, as it will give people confidence to make a purchase, but we cannot pretend that everything in this Budget goes all the way. That is, of course, before we get into the practicalities, so we need further thoughts on implementation.
This is a progressive Budget. It is a Budget that protects the most vulnerable, puts money into workers’ pockets and begins to rebalance the tax system and to make it fairer. There is no doubt that there is much more to be done in the longer term: we need to see faster improvements in our crumbling public services; food inflation remains stubborn, and is predicted to continue to be high over the medium term; housing costs mean that for many, renting—let alone buying—is still out of reach; and social care costs still mean that many people lose their home at the end of their lives, so we need that review of social care to deliver. Those are longer-term challenges, but for today, I believe the Chancellor has played a difficult hand pretty well.
Steve Barclay (North East Cambridgeshire) (Con)
The Secretary of State opened this debate by saying that we should look at the backdrop of the general election, which was a surprising way for him to open discussion on the Budget, not least because a central theme of the Budget is Labour doing the very opposite of what it said it would do at the general election. That can be seen first and foremost with the £26 billion of additional tax—on top of the £40 billion in tax in the Government’s first Budget—when Labour said at the general election that it had fully costed proposals and that it would not need to tax working people. Indeed, Labour said at the general election that growth was its No. 1 policy objective, and yet what do we see in the official documents from the OBR? We see growth forecasts down every year of the forecast.
Even the topic of this debate—“bearing down on inflation”—is the opposite of what the OBR says is happening, with inflation staying higher for longer as a result of the measures the Government have taken. Labour inherited inflation at 2%, and yet it is now forecast to stay at 3.5% next year and to be at 2.5% the year after. Indeed, on the topic of the cost of living, nothing hurts people’s incomes more than inflation, which pushes up bills and the cost of food and erodes people’s income.
The Government also promised to deliver jobs, but we can see the consequences of their first Budget: the changes to national insurance—the jobs tax—have meant that unemployment has been up every month that the Government have been in office, and the graduate recruitment situation is the worst on record. In response to this Budget, the OBR forecasts that unemployment will be at 4.9% in 2026-27. This Budget is supposed to be “bearing down on inflation”, but inflation is up. The Government talk about addressing the cost of living, but people are being taxed more, and more people are unable to get a job. Graduates in particular are being hit. We can see the difference between what Labour said at the general election and what it is delivering.
That all matters, because away from the big numbers—the billions that get quoted in Budget documents—are a whole series of individual measures that will bear down on people’s incomes and prospects. The Government’s measures will bear down on the small business owner who does not have the same security as a big public sector organisation, and who has put their own capital at risk; they will see a 2% increase in the dividend tax, on top of the corporation tax that they already pay. The measures will bear down on the pension saver, through the changes being made to salary sacrifice. The Government are also freezing income thresholds.
It is interesting that Labour Members cheered a Budget in which the Chancellor did the opposite of what she said last year that she would do. Last year, she said that it would be a breach of the manifesto to extend tax threshold freezes, and that is exactly what she did this time. It is worth looking behind the headlines, and bearing in mind what the official data says this will cost: in today’s prices, by 2030, the measure will cost a higher-rate taxpayer £600 extra, and a basic-rate taxpayer £220 extra. Those decisions will have real consequences on people’s take-home pay.
I represent a rural constituency, but this Government seem to dislike rural communities. We saw that last year with the family farm tax, and we are seeing it with the electric car mileage scheme, which disproportionately penalises rural communities. Again, that change was not in their manifesto. Looking at the consequences of the last Budget, the Institute for Fiscal Studies has said that national insurance changes are costing the average worker £900. These policies have real costs.
The tax changes are being sold as raising more money for, among others, the NHS. At the general election, the Government said that they would end the resident doctors’ strikes, but another one has been announced today. The NHS Confederation has said that this is not a Budget for the NHS, and under the Budget, an estimated £3 billion extra in drug prices will have to be absorbed. An announcement has been made that standards may be changed so that real mental health funding is flat, and just goes up in line with inflation, which is not the change that the Government promised.
Steve Barclay
I am happy to; perhaps the hon. Member wants to come in on the Government’s pay offer.
Mr Charters
I wanted to come in on the right hon. Member’s point about inflation. I am sure that he will welcome a Budget that reduces inflation. If he looks at the Blue Book—[Interruption.] Hang on a minute. Look at the Blue Book. It says:
“Government policy measures announced since March are expected to decrease inflation by 0.3 percentage points”.
Does he welcome that, or is he staying silent on fiscal measures that reduce inflation?
Steve Barclay
Clearly the hon. Member has just had a text message from the Whips Office. The reality is that the Government inherited inflation at 2%, and it is currently at 3.6%, and the OBR—the independent forecaster—forecasts it to be 3.5% next year. It takes a certain genius to intervene to show that the Government are going in the wrong direction.
This Budget is presented as being transformative for the NHS and for other services, but take community services; community health services in all our constituencies are hugely important. Waiting lists have been at about 90,000 since the general election, particularly for children, but we do not hear too much about that from the Government. We have heard very little in this debate about productivity, so let me close with one example. Last month, the Health Foundation said that there was only a one in six chance of the Government achieving the 2% annual productivity growth target that they set. Members might wonder why that matters. If productivity growth is at 1%, it will cost an extra £9 billion a year for the NHS. There is only a one in six chance of delivery, but if the Government do not deliver, there will be a very significant cost to the NHS.
This Budget puts up tax on working people in order to pay more in welfare. We can see that in a whole series of measures. We can also see the gulf between what the Government said at the general election and what the Chancellor has delivered. She has not even been consistent with what she said in her Budget last year.
Several hon. Members rose—
Madam Deputy Speaker (Judith Cummins)
Order. I will impose an immediate five-minute time limit after I call Sam Carling, who has a six-minute time limit.
Sam Carling (North West Cambridgeshire) (Lab)
That is very generous, Madam Deputy Speaker. I am delighted to speak about a Budget that builds on what this Government started last year and takes the necessary decisions to grow the economy and protect working people. With a focus on reducing the cost of living, cutting NHS waiting lists and reducing the national debt, this is a Labour Budget with Labour values.
We have already taken measures to cut the cost of living. We have been improving our energy security, which will bring down energy bills permanently and protect us from the thrall of international markets. We have started rolling out free breakfast clubs in schools, so that parents can get to work on time and kids can start the day ready to learn. We have expanded free school meals and raised the minimum wage, bringing a pay rise to millions of workers.
I am delighted that we are moving forward with further measures. Energy bills are being brought down for households by an average of £150 from April. We are introducing measures to tackle child poverty, which will make this Government the biggest reducers of child poverty since records began. We are lifting over 450,000 children out of poverty and benefiting around 3,200 children in my constituency, according to analysis in the Daily Mirror.
As with last year’s Budget, we see a significant boost to pay for those on the lowest incomes. When the Conservatives, among other parties, decry that by saying that it will impact on inflation, they need to look at the numbers. The OBR forecast shows that Government policy, particularly the energy bills package and the fuel duty freeze, will reduce inflation by 0.4 percentage points in the next financial year. Gilt yields shot down on Wednesday as the Chancellor delivered the Budget. The markets have confidence in our handling of the economy. On Thursday, JPMorgan Chase announced that it will build a new centre at Canary Wharf that will provide 12,000 jobs and boost our economy by £10 billion. That is not the kind of decision that a major player with global reach makes if it does not trust the Government’s handling of the economy. It is a huge vote of trust and mark of confidence in what we are doing.
This is a hugely progressive Budget, as was last year’s. On average, households in the lowest income deciles will benefit most from the decisions taken by this Government from the 2024 Budget onwards. Indeed, by percentage of income, all but the richest 10% of households will benefit from overall policy decisions in 2028-29. When it comes to slashing the cost of living, this Government are backing up their words with real action, reversing the damage done by our predecessors. [Interruption.] Conservative Members are chuntering at me, but I think they need to remember that the last Parliament was pretty much the only one on record in which living standards fell.
People in Peterborough and North West Cambridgeshire are really going to feel the benefits locally. I am delighted that the Chancellor announced £20 million for the new Peterborough sports quarter during her speech. That includes funding for a new Peterborough pool, after the Conservatives closed our regional pool when they ran the council. [Interruption.] Again, I am being chuntered at. The Conservatives closed the pool we had when they ran the council. These are the measures of a Government who are making a difference. By comparison, under our predecessors, living standards were hammered, wage growth was stagnant, and millions more experienced food insecurity.
Labour built the NHS, and we have always been its best custodians. We have proved that in our time in office so far. We promised 2 million extra appointments in our first year, but thanks to massive investment from our first Budget, we hit that target seven months early, and have delivered 5.2 million extra appointments since July 2024. Waiting lists are falling for the first time in 15 years.
Iqbal Mohamed
I welcome the investment in the NHS and the reduction in waiting lists for everyone in our country, but does the hon. Member agree that over time, the money that is going to private companies to reduce the waiting lists should be redirected to the NHS, so that profits do not leave the NHS, and there is more money to treat patients?
Sam Carling
The hon. Member has made his point. As we heard from the Chancellor, all NHS efficiencies will be reinvested in its budget, and I welcome that. My constituents rarely raise with me the specific way in which their healthcare is being delivered. What they want to know is why they cannot get a GP appointment and why they cannot get to hospital on time. What we are doing will deliver changes.
We must also talk about our national debt. Reducing the debt is a necessary and moral issue. Of every £10 we spend, £1 is spent on Government debt interest. Imagine what we could achieve if we had that money available to invest in our local communities. I am therefore delighted that due to the measures that the Chancellor has announced, combined with the action we took last year, debt as a share of GDP will fall consistently. We will achieve a Budget surplus of £22 billion in 2029-30, which would be the largest surplus for over 20 years.
Let us not forget that the UK was the fastest-growing economy in the G7 for the first half of this year, and both the IMF and the OECD forecast that for 2025 as a whole the UK will have better growth than the eurozone, Canada, Japan, France, Italy and Germany. So while Reform and the Conservatives scream doom and gloom, the Government are quietly getting on with the job. The Budget builds on everything we achieved last year, and I know that we will see the cost of living slashed, debt reduced and NHS waiting lists brought down.
Chris Coghlan (Dorking and Horley) (LD)
In February, Louise Holmes took me to her restaurant HolmeStores in Dorking, which was especially popular for brunch. It had fantastic food and a beautiful wood-panelled interior. Louise had 12 employees and was thinking about a second site, but she could not afford the employers’ national insurance increase, so today it is closed. Putting my constituents out of business through tax rises is no way to grow our economy.
Americans are twice as rich as they were in 2008; why are we 10% poorer? This is called the productivity puzzle, but actually it is no puzzle at all. Decades of research, including by recent Nobel prize winner Philippe Aghion, show that productivity can be raised by policies that support innovation, such as public research and development. UK Government support for nuclear submarine technology has led to the development of Rolls-Royce’s small modular nuclear reactors for civilian use. The roadblock is that economic policymaking in this country is too often driven towards meeting the OBR’s fiscal rules, while the OBR uses flawed assumptions for growth, such as the assumption that public R&D has no impact on economic growth after five years.
The Budget has been surrounded by controversy about the £16 billion productivity downgrade, but the more serious question is: why did the OBR downgrade productivity in the first place? In the 15 years since the OBR’s inception, it has consistently overestimated productivity, and has had to downgrade it when it has been wrong, which has created enormous volatility in economic policymaking. That is no way to run a G7 economy.
The good news is that the Government have started to adopt some policies that raise productivity. London Business School’s Paolo Sirico—I introduced the Chancellor to his work last year—has quantified the stunning impact that public R&D can have on economic growth. Paolo has shown that from 1950 to 2015, US patents that had a publicly funded component generated 12 times the productivity of patents purely funded by the private sector. The most famous example of that is, of course, John F. Kennedy’s Apollo programme.
Public funding of basic research in universities and laboratories is so powerful for economic growth because it de-risks the cost of developing new technology and generates the discoveries that attract private investment into start-ups and venture capital. In the spring statement, using Paolo’s model, the Chancellor was able to use £2.2 billion of extra defence R&D to upgrade long-term UK GDP growth by £11 billion a year. I therefore urge the Government to adopt a broad public R&D investment strategy for economic growth, like the US, Israel and South Korea. The investment needed is not actually that large—an extra £5 billion a year on public R&D would take us to US levels, as a share of GDP—and, if we borrowed to do that, debt-to-GDP would actually fall because GDP would rise faster than debt over the long run.
I urge the Government to invest £5 billion in public R&D in our leading industries, such as finance, film, defence, healthcare and renewable energy. Then it might be possible to turn our country into one of the fastest-growing advanced economies in the world.
Barry Gardiner (Brent West) (Lab)
I joined the Labour party because I believe in equality and justice, and those are two of the values that I use to judge any Budget. Does it create a more equal society, and is the society that it creates more just? Therefore, there are aspects of the Budget that I welcome, such as the removal of policy costs from household energy bills, saving families £150. It is welcome that the parents of 3,730 children in my constituency will be helped by the abolition of the two-child benefit cap and the expansion of free school meals. I welcome the rise in the minimum wage and the living wage.
Steve Witherden (Montgomeryshire and Glyndŵr) (Lab)
Does my hon. Friend agree that rises in the national minimum wage are among the most important of pay rises because of the money they put into the pockets of the poorest workers in our society?
Barry Gardiner
I am grateful to my hon. Friend for making that point. He is absolutely right, and that money gets recycled throughout our economy.
I think it is a scandal that more than 60% of people in receipt of universal credit are actually in work—often working two jobs to make ends meet. That is a scandal because it means that those employers are not paying their workforce at a level that we, the rest of society, consider to be enough to live on. We, the taxpayer, are subsidising those companies’ wage bills so that they can pay their shareholders higher profits.
The Budget does not reverse structural inequality or shift the dial on growth. It is also a Budget that whispers when it should be screaming about the catastrophe that will collapse our economy within the next 25 years. Let me talk about the figures that matter and about the budgets that are actually going to change our lives.
Over the past 800,000 years, the concentration of carbon dioxide in the atmosphere has varied between 180 and 300 parts per million. During the last 10,000 years—the period of human civilisation—it has varied between 260 and 280 parts per million, which has given us humans a relatively stable temperature and climate. When we started the significant use of fossil fuels in the 19th century, the concentration of CO2 was at 280 parts per million; today, it is at 424 parts per million.
As a result of those emissions, global mean temperatures have risen by nearly 1.5°C. That is the level that we know gives us only a 50% chance of avoiding dangerous climate change. What does dangerous climate change actually mean? It means the systematic collapse of our economy. It means refugees fleeing parts of the world where life has become impossible because of temperatures persistently above 40°C, drought and failing crops. It means unprecedented societal chaos as supply chains fail and competition for food turns to violence. It means war.
What the Government have failed to understand is that they cannot weigh up the cost of addressing climate change against the cost to the economy, when the whole economy depends on keeping climate change under control, so the first budget we need is a global carbon budget that sets the quantity of CO2 that we can emit if we are to meet our Paris temperature agreements. If we are to stay below the 2°C threshold, we have only 530 billion metric tonnes of CO2 that we can release into the atmosphere. That may sound a lot; in fact, it is only 13 years of emissions at their current rate. The budget to stay within 1.5°C is a lot worse: just 130 billion metric tonnes, which is just three years of emissions at today’s level.
Barry Gardiner
I will not.
Parliament is supposed to be a gathering of the leaders of our community: rational and intelligent human beings capable of horizon scanning and guiding our country to a safe and sustainable future. Instead, it acts like the frog in the pan of gradually boiling water, delaying its escape until too late.
The Budget should have been bold. It should have put our country on a wartime footing with a national programme of retrofit, no new build that is not net zero in its embodied and operational carbon, a huge roll-out of public transport and a major programme of electrification. We have a huge majority, yet we act as though we are afraid of the power that we spent 14 years seeking.
Today, the green economy is growing three times faster than the rest of the UK economy. If growth truly is our ambition, it is in that clean, affordable and secure future that we should be investing. People often talk of a just transition. I prefer to talk of a bloody marvellous one. What’s not to like about warm homes with affordable energy; comfortable, efficient, speedy and reliable public transport; the creation of thousands of new jobs; decent air quality; a secure food system with reliable supply chains; and a stable geopolitical world? We live in an age of public sufficiency and private luxury, as Professor Kevin Anderson said last week at the national emergency briefing. A Budget that was adequate to the challenge we face would have turned that on its head, creating a society where every private home had what was sufficient and every public domain was one of luxury. That would be the just and equal society I came into the Labour party to create.
John Glen (Salisbury) (Con)
It is a pleasure to follow the hon. Member for Brent West (Barry Gardiner), who I know holds his views with great sincerity, although I do not agree with many of them.
Before I get into the substance of the Budget measures, I want to address the process leading up to the Budget. People might say that this is a subject of fascination just for those in the Westminster bubble, but in the run-up to this Budget, it went way beyond that. In the weeks—and, indeed, months—before the Budget, virtually every conceivable tax rise was floated as a possibility. Last week, we heard from the Office for Budget Responsibility, and what it said was summed up very well by Ben Zaranko from the Institute for Fiscal Studies:
“At no point in the process did the OBR have the government missing its fiscal rules by a large margin. Leaves me baffled by the months of speculation and briefing. Was the plan to lead everyone to expect a big income tax rise, then surprise them on the day by not doing it?”
Next Wednesday, the Chancellor will come before the Treasury Committee, of which I am privileged to be a member, and we will no doubt ask her about what was happening in those weeks. I do not want to pre-empt the scrutiny of that Committee, but I think everyone across the House must acknowledge what was happening. We all read the papers. We could all see how decisions about where to invest, whether to invest in the UK, whether to employ any more people and whether to have confidence in the future of the country’s economy rested on the way the Budget was prepared for.
I regret very much the error that was made by the OBR. It was clearly a profound error, and Richard Hughes has taken responsibility for it this afternoon. He has done the right thing—the honourable thing—but this will be conflated with the much more serious breach of protocol over several months leading up to the Budget, and we in this House need to come to terms with the implications that this has for our reputation.
There are some things in the Budget that I welcome, but there are some that I do not, including the enormous tax increase. We all fought an election where Labour plainly said that only £7 billion of tax rises were implied. We had £40 billion last year and a further £26 billion this year. This will mean 780,000 of the lowest-paid people coming into tax by the extension of the threshold freeze, as well as a tax on electric vehicles, more tax on property rents, a tourism tax and increases in tax on dividends, savings and unearned income. Employee ownership trusts relief will be halved and salary sacrifice contributions will be limited.
It is obviously the prerogative of every Government to raise tax as they see fit, but what concerns me is the lack of understanding of what it takes to drive growth in an economy. When I look at the implications for the hospitality sector, which is a significant one in Salisbury, I see people who are already bemused by the unexpected increase in employer national insurance, the increase in the national living wage and the implications of changes in employment legislation—and that is before we even heard the measures in last week’s Budget. People are worried about the risks and costs associated with investing in plant, machinery and people.
Chris Coghlan
I thank the right hon. Member, a colleague on the Treasury Committee, for giving way. I agree with many of the things he is saying, but does he not agree that the Conservative party also has considerable responsibility for this situation, through Brexit?
John Glen
I did not support Brexit. Brexit happened. We made a decision as a country, and I do not want to relitigate that. I commend the hon. Member for what he does to promote the discussion about measures to drive forward productivity. I think the Government could learn from some of his observations this afternoon, because until we get to a point where those who create wealth and jobs feel that it is in their interest to do so, we will be dancing on the head of the pin in terms of feeling secure about that trajectory of sustained growth. The burdens that come from this Budget will be significant, and will change the way that people think about investing in this economy. A dynamic economy does not come from ever-higher tax and higher spending on welfare.
The OBR has downgraded growth in every year. I recognise that, since the global financial crisis, many economies face similar challenges—let us be honest about that—but we cannot go on spending money on welfare unless we address the drivers of sustainable growth in our economy. I fear that the measures in the Budget last week, many of which purported to give long-term benefit, will not provide what those who create wealth need in the short term.
Tom Rutland (East Worthing and Shoreham) (Lab)
It is a little over a year since we had the first Labour Budget in 15 years, and since that Budget, many of my constituents in East Worthing and Shoreham have felt the benefit in some way or another. They include the 20,000 people no longer waiting for treatment and getting on with their lives, benefiting from a 15% fall in hospital waiting lists at my local trust since the election; the children at Holmbush primary academy, one of the schools in the early adopters scheme for a free breakfast club, who now start every day prepared, focused and equipped to make the most of their school day; the parents benefiting from the additional free childcare, freeing them up to get to work; and the thousands of workers across Adur and Worthing benefiting from the boost in the minimum wage and wages more broadly, which have increased more in the first year of this Government than in the first decade under the Conservatives.
Now we have our second Labour Budget of the term, a Budget focused on giving people across the country a helping hand with the cost of living. Let us contrast that with the Tories and Reform, who have both promoted their ideas to return to the days of austerity, as if we were not already having a hard enough time trying to tell the difference between them, with another three former Tory MPs having joined Reform just today. But let me tell the Tories on the Opposition Benches and the Tories with Reform masks on over there—oh, what a surprise, they are not there—that when we stood on a promise to change this country last year, we meant it, and I am determined not to let my constituents down by allowing their failed ideas to creep into Government ever again and distract from the very real job of giving our country its future back.
On the other side, we have the Greens accusing us of austerity. They should welcome the record investment in clean energy that this Government are making, including expanding the Rampion wind farm off the coast of my constituency. Unfortunately, their record of ultimately opposing green infrastructure when push comes to shove— or when shovels come to ground—in their constituencies suggests that when it comes to the climate, all they have to offer is hot air. So let me tell them something, too.
In this Budget, we are not returning to austerity, because austerity would not lift 450,000 children out of poverty, but this Labour Government will. Austerity would not expand free school meals to 3,200 children in my constituency, but this Labour Government will. Austerity would not cut £150 off the average energy bill, but this Labour Government will. Austerity would not freeze rail fares, fuel duty and prescription charges, but we will, just as we will cut NHS waiting lists and support the 3,500 small and medium-sized enterprises in my constituency with fully funded apprenticeships. Austerity would not rebuild this country, but this Labour Government will.
We will do all that while adhering to our fiscal rules and cutting the national debt over the course of this Parliament. That discipline and stability are important, not just for addressing the amount of interest the Government pay on their debt—to be clear, there is nothing progressive about spending £1 in every £10 of taxpayers’ money on debt interest—but for the cost to individual families. We on the Labour side of the House know that when a Government choose populism over realism, or the economics of fantasy over stability, it is working people who pay the price—those people whose mortgages soared after Liz Truss’s mini-Budget, leaving them scrabbling around to find the extra cash to keep the roof over their heads. As a result of this Government’s determination to deliver economic stability, those mortgage rates are now coming down, with interest rates already cut five times by the Bank of England since last year’s election, saving the typical family £1,000 a year. With this Budget forecast by the OBR to reduce CPI inflation by 0.4 percentage points next year, we can hope for further cuts to interest rates soon.
We are under no illusion: there is more to do. But this Budget is another key step in turning the page on the chaos left by the previous Government. Guided by our Labour values, we are putting the priorities of the British people back at the heart of Government policy and, by doing so, giving working people the stability and investment in the future that they deserve.
Dr Luke Evans (Hinckley and Bosworth) (Con)
I congratulate the Government on keeping one of their manifesto commitments, because their manifesto said, “Change”—it is just that no one realised that would be all that was left in the British public’s pocket when it came to it. I would like to give a second congratulations to the Chancellor, because I gather that she has won an award: best Dubai estate agent for 2025. We know that 250,000 people have now emigrated from Britain because of the impacts of her Budget. I expect she is now going for the next award in 2026.
More importantly, this seems to be a Labour Government who are caught between trying to do things on purpose or by mistake. At the last Budget, they were up front that they were going to tax education for the first time. They did not realise that what they were actually going to do was put up taxes on hospices, pharmacies and GPs—that was all missed. Now a new Budget has come forward, and I call it the “ball of wool Budget”. Why? Because for the first time in history we have had this ball of wool unravel time and again, for weeks upon weeks, until it was finally spun into a yarn that we were supposed to believe, but the British public have seen right through it. It is unparliamentary to use the term “liars”, but I think I can use “Pinocchio”, and I think the Prime Minister and the Chancellor may well fall into that category.
Rest assured, people in Leicestershire and up and down the country see right through this Labour Government. They see what this Budget was all about: trying to placate the Back Benches, and how? It is through £40 billion of tax rises in the first Budget and £26 billion of tax rises in this one. Don’t just take my word for it, because even if, before the last Budget, we believed in the fictional black hole, which was then disproved by the OBR, the Chancellor went on Sky News after that Budget and said:
“We’ve now wiped the slate clean… It’s now on us…we’ve set the spending envelope on the course for this Parliament, we don’t need to come back for more. We’ve done that now”.
She went on:
“there’s no need to come back with another Budget like this, we will never need to do that again.”
Yet here we are with £26 billion more tax on the British public, yet we still have weak growth, high inflation and no living within our means.
The Chancellor has even broken her own manifesto commitment, which she has admitted, because in the 2024 Budget she said from the Dispatch Box:
“I have come to the conclusion that extending the threshold freeze would hurt working people. It would take more money out of their payslips. 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 and national insurance thresholds beyond the decisions made by the previous Government.”—[Official Report, 30 October 2024; Vol. 755, c. 821.]
Yet, one year on, she said from the Dispatch Box last week:
“I am asking everyone to make a contribution.”—[Official Report, 26 November 2025; Vol. 776, c. 393.]
I need to tell the Chancellor that being asked for a contribution is not the same as being told, which is what this Government are doing. What would happen if someone tried to refuse, saying, “No, I’ve paid my fair share”? My constituents say, “I’ve done enough,” but they cannot just say no. They will get a fine or, worse, a criminal record and go to jail. So let us deal with the semantics and say what it is: a naked choice to increase tax on the British public.
In the run-up to the election, my right hon. Friend the Member for Richmond and Northallerton (Rishi Sunak) was prophetic in what he said. We were not listened to, and I understand all the reasons why. He said, “A Labour Government will tax your holiday, your house, your GP, your pharmacy, your flights, your car, your pension, your savings”—have I missed anything? They have taxed charities, and even milkshakes—tax, tax, tax. The public have seen what a Labour Government have done. They were told about it, and they have seen it twice in a Budget. When it comes to the next one, I hope they will remember that.
Madam Deputy Speaker (Judith Cummins)
The hon. Gentleman may have meant to evade the rules with his reference to the Prime Minister and the Chancellor, but he did not. I advise him to withdraw those comments.
Richard Burgon (Leeds East) (Lab)
I congratulate everyone in this House and outside it who fought to scrap the two-child benefit cap and to make the wealthiest pay more. The positive steps in the Budget in that direction, such as the mansion tax, are a real credit to that campaigning.
On the scrapping of the two-child benefit cap, I voted to add that to the Government’s programme last year, and I did so because all the experts said, correctly, that it would be the best way to immediately lift hundreds of thousands of children out of poverty. I am delighted that the Government have got the message and done that. I am proud and delighted that thousands of children in my Leeds East constituency will benefit from this, in Gipton and Harehills, in Garforth and Swillington, in Killingbeck and Seacroft, in Cross Gates and Whinmoor, and in Whitkirk and Colton. It gladdens my heart to see that injustice righted.
Mr Adnan Hussain (Blackburn) (Ind)
Over 45% of children in Blackburn live in relative poverty. I congratulate the hon. Member on taking a principled stance. He has been proven right, so I thank him on behalf of the children of Blackburn.
Richard Burgon
I thank the hon. Member for his kind words. It is important that we all see our time in Parliament as being part of a crusade against child poverty and to make child poverty history, because no child is responsible for their own poverty. It sickens me to hear some of the talk from the Opposition on this.
Budgets are always followed by days of detailed coverage, but the simple truth is that the Budget and the Government’s whole record will be judged on whether living standards rise. Living standards have been stagnant for well over a decade, since the bankers brought the economy to its knees. Pay has been flat while the price of every essential has increased, and millions struggle with skyrocketing rent, energy and food costs. No wonder the cost of living crisis remains the No. 1 concern for people in the polls.
There are more welcome moves in the Budget to address that—the £150 off energy bills, the freeze on rail fares and the boost to the national minimum wage, to name just a few—but the scale of the cost of living crisis demands far bolder action. As it stands, this Parliament is on track to be the second bleakest for living standards since world war two—the worst being the previous Parliament. People are being asked to take more and more pain. That is why, before the Budget, I called for a package of emergency cost of living measures to give people the urgent relief they need. From cost of living grants to universal free school meals, there are so many ways in which we can take pressure off people who have been really struggling through no fault of their own. All that can be funded by raising tens of billions of pounds in taxation from the very wealthiest and those who are making super-profits by ripping people off, as the banks are doing.
Tens of thousands of people backed my call—such calls will continue to grow as this crisis persists—but I am afraid to say that, instead of going down the road of wealth taxes, the Government have chosen a stealth tax on ordinary people. Millions will face an income tax hike from the extension of the income tax threshold freeze, including 780,000 people who will have to pay income tax for the first time. Putting aside any debates on manifesto promises, that move will squeeze ordinary people even further at a time when they simply cannot afford it. The good news is that the extension will not kick in for another two years, so there is still time for the Government to think again and do the right thing by ditching it.
Just as I did with the two-child cap, winter fuel and disability benefit cuts, I will do everything I can to ensure that that regressive policy is overturned. There are much better alternatives. In 2010 the combined wealth of UK billionaires was £250 billion. Now it is more than £600 billion. Their combined wealth has more than doubled since 2010. How many of our constituents can say that their wages, standards of living or wealth have doubled in that time? We need to push for fairness in the taxation system. We should tax extreme wealth, not load stealth taxes on to working people in the middle of a cost of living emergency.
We all know that much of the economic weakness driving the crisis in living standards is the result of 14 years of terrible decisions by the Tories, but people expect this Government not only to sort that out but to protect them in the here and now. Not doing so will pave the way for the first far-right Government in our history. It is in this context of the cost of living crisis that the siren voices of Reform and the far right get an easier hearing. We must all avoid that. We do not want to end up with the hon. Member for Clacton (Nigel Farage) —the UK’s own version of Donald Trump—as Prime Minister, so let us work together to lift living standards and stop that.
Christine Jardine (Edinburgh West) (LD)
It is a pleasure to follow the hon. Member for Leeds East (Richard Burgon). He will forgive me for wondering whether some of his Scottish Labour colleagues perhaps believe that Christmas arrived early for them last week, given that much of the Red Book reads like the Christmas wish list of a potential First Minister of Scotland. There is the investment in Inchgreen dock in Inverclyde, regeneration projects in Kirkcaldy, the Forth Green port and £14.5 million for Grangemouth—I think we know which target seats Santa will be visiting this year—and £820 million in consequentials.
It is not all good news, however. Of course, the investment in Scotland is welcome, including the vital support for the Forth Green port, which should unlock high-skilled jobs for my constituents through growth in green industries, but at the same time we are seeing further job losses at Harbour Energy in Aberdeen. Any investment in renewables must not mean that we turn our backs on oil and gas workers and lose skills and investment.
I am particularly pleased to see that the Government have reaffirmed their commitment to £750 million for Edinburgh University’s new exascale computer—investment that I have consistently campaigned for since the election. That is set to become the UK’s new national supercomputer, with the potential to unlock world-leading research in artificial intelligence, medicine, physics and space, making Edinburgh a strong contender to be the home of the Scottish AI growth zone that the Budget document commits to—a wee hint to the Minister that something else could be popped into a Christmas stocking.
I thank the Chancellor for finally listening to calls, including from the Liberal Democrats, to scrap the two-child cap on universal credit, lifting 95,000 Scottish children out of poverty and helping 300 households in Edinburgh West. However, it is shameful that it has taken this Government so long to finally reverse the cap and the perverse “rape clause”.
Despite that progress, it is not all good news. I am disappointed by the gaps in the Budget, including on things that would have boosted Edinburgh’s economy and helped families in my constituency. I have mentioned the hospitality sector many times in this House. It generates £198 million every year in my constituency alone, where it supports 6,000 jobs. Pubs, restaurants and cafés across Edinburgh are still feeling the pinch from increased energy costs, the impact of employer national insurance hikes, and inflation. The Chancellor could have used this opportunity to cut VAT for hospitality, putting money back into people’s pockets as they go out to celebrate Christmas.
Similarly, there was nothing for the whisky industry, which is also feeling the effects of Trump’s tariffs. Analysis by the Scotch Whisky Association has shown a tax revenue loss of £150 million, following the previous hike in alcohol duty, so the increase in this Budget puts further pressure on a sector that is critical for Scotland’s economy.
I will finish with this thought. In Scotland, many of us hope for a change of Government at Holyrood next year. I heard that from people in my constituency at the weekend. They have the same concerns as people in any other part of the country; they are worried about the cost of energy bills and the state of our public services. Small business owners told me about the pressure that they are feeling without business rates relief in Scotland. They are looking to this Budget to give them some idea of what they might expect from the Labour party in an election campaign in Scotland next year, and whether they will like it. It will be the people of Scotland who decide whether this Budget and its creators have been naughty or nice.
David Williams (Stoke-on-Trent North) (Lab)
I speak in this debate having listened to the real voices of people across Stoke-on-Trent North and Kidsgrove, away from the Westminster bubble and media frenzy. For too many of them, the last Conservative Government were defined by rising bills, falling living standards and failing public services. My constituents’ views were clear: quite simply, this Budget will make life better for them and their families.
David, who lives in Tunstall, is a single dad. He skips meals so that his kids can eat properly. Sarah from Butt Lane told me that she panics when it comes to buying new school shoes every September. Sarah and David work hard—very hard—so I am relieved that their children will be among the 4,400 local children who are lifted out of poverty thanks to the abolition of the two-child limit. Their kids will also join over 6,700 others in benefiting from the extension of free school meals, as well as new breakfast clubs, thanks to this Labour Government. No kid should start the day with an empty stomach.
Over in Talke Pits, I spoke with Lisa, who earns the minimum wage in a warehouse. She told me that, for the past few years, she has felt as if she was
“running up the down escalator”,
but now thousands of people like Lisa will take home £1,500 more a year thanks to the fair decisions that we have made.
On Saturday evening, I went to the Kidsgrove Christmas lights switch-on, where I spoke to an older couple I first met last winter. For many years, they have been turning off appliances to save every possible penny. They told me that cutting £150 off their energy bills, combined with the 4.8% rise in the state pension and protection of the triple lock, will make a significant difference to them.
On the subject of pensions, a former mineworker in Packmoor contacted me to thank this Government for delivering justice for him and his former colleagues. As a result of the actions of this Labour Government, over 800 former mineworkers, canteen and office staff now have more money in their back pockets. As he told me:
“We earned it, David. But we’ve buried too many who didn’t live to see it.”
I also thank my friend, colleague and local councillor, Duncan Walker, who has campaigned on this matter for many decades.
Finally, I turn to Calvin, who contacted me about our record investment into our NHS. Like so many, Calvin was left languishing on waiting lists for years. Locally, waiting lists have already been cut by as much as 50% as a result of an extra 55,000 appointments at Royal Stoke and County hospitals. Calvin told me that he cannot wait to go back to work, and this investment will help many more like him.
This Budget is a serious, responsible and compassionate plan that begins to restore security for people across my constituency of Stoke-on-Trent North and Kidsgrove.
Gavin Robinson (Belfast East) (DUP)
It is a pleasure to participate in this Budget debate. I am reminded that in 2005, whenever Tony Blair was seeking re-election for an historic third term as Prime Minister, he celebrated the fact that this country had enjoyed 40 quartiles of economic growth. If anyone cares to think about that, they have to realise that that economic growth commenced two years before he commenced as Prime Minister. I say that because often in this Chamber all we get from our Government is complaints about what the Opposition could or should have done when they were in government, and an Opposition who chide the Government for some of the choices and pressure that they face. However, there are those of us in the Chamber—and, more importantly, in the country—who can look clearly at some of the economic challenges and missed opportunities.
It has been right in this debate that we have heard that a Government who promised not to raise tax on working people raised £40 billion in last year’s Budget. It is right to reflect that this year, having said that that was a one-off, £26 billion will be raised from this Budget. It is right to reflect on the pressure that that is putting on ordinary people up and down this country. It is right to reflect on the numbers who did not pay tax and who will pay tax—5 million additional taxpayers over the course of five years—and on middle earners in this country, 5 million more of whom will pay a higher rate of tax over those five years. Those are choices that the Government brought forth and that people in this country will have to pay for. This debate on the cost of living should lead to the same questions around threshold freezing or two-child limits.
Jim Shannon
In Northern Ireland we have 440,000 children, and 103,000 of them are in poverty. By abolishing the two-child cap, this Government have ensured that those 103,000 children will be lifted out of poverty. The potential is there to do that. Does my right hon. Friend agree that abolishing the two-child cap takes those children out of poverty and makes their lives better?
Gavin Robinson
As my hon. Friend knows, we have campaigned on the removal of the two-child limit. We did not agree with the limit; we do not think it is right, and we think it is immoral for families to be placed in that position. We opposed it when it was introduced, and we oppose it today.
When considering the cost of living, let us reflect on the fact that within two years—by 2027—the state pension will be taxed because of frozen thresholds? It will be taxed in 2027, 2028, 2029, 2030 and 2031 because of choices by this Government. We recognise that pensioners should be entitled to and need pension credit to supplement that, but if their sole income is the state pension, it will be taxed, unlike pension credit. That cannot be right, but it is what has been delivered through the freezing of thresholds.
I am happy to engage with the Northern Ireland Office—I am pleased to see the Secretary of State for Northern Ireland here—about some of the challenges that we face in Northern Ireland. I recognise the additional £370 million through Barnett consequentials, although that is not one year’s addition; it covers a period of years with but £2 million in one of those years. The Secretary of State knows that the challenge this year for our Executive is £400 million—that is the current pressure. What is the one thing missing from the Red Book’s section on Northern Ireland? It is any challenge to the Executive; it is any mention of the fiscal framework and those negotiations that need to take place.
I lament the fact that there was praise for our Minister for Finance in Northern Ireland last week, when he talked about the need for revenue raising in our Province but then went on to rule out every significant aspect of revenue raising. Politically, they are not in that space, yet we have to share power with them. That is wrong. I lament the fact that we have partners in government who say, “We need more fiscal devolution; we need more powers in Northern Ireland”, yet they have manifestly failed to use the powers at their disposal. That cannot continue, and I say that there is a role for national Government in those negotiations.
We welcome that there is a potential £150 of support for energy bills in households across this United Kingdom, but there is no detail in the Red Book—my hon. Friend the Member for Strangford (Jim Shannon) asked the Secretary of State about that earlier, but he was unable to answer. This measure is coming in in April 2026, yet all we have is a notional offer from the Government to support the Executive in creating a system. Can we have confirmation as to whether annually managed expenditure will be made available to ensure that every household in Northern Ireland will be entitled to £150 on the same basis as in England and Wales? Will that extend to oil boilers? We heard about £130 for gas boilers, but 70% of homes in Northern Ireland are fuelled by crude oil.
I hope the Government will respond to those challenges today, because I do not want to be sitting in four or five months’ time with constituents in Northern Ireland saying, “What of that offer of £150?”, only to find that the support has not been there through AME or through central Government negotiations.
On pensions, I welcome the decision taken to provide an index-linked rise to pensions from 1997, but the Deprived Pensioners Association has highlighted that it is only prospective, not retrospective. It has asked for retrospective index-linked pensions and arrears, because far too many pensioners from 1997 and onwards have had their economic wellbeing curtailed in this cost of living crisis, because of the Government’s failure to introduce this change. It must be retrospective, and I would look forward to that coming about.
Ben Goldsborough (South Norfolk) (Lab)
When we stood for election, we promised change—real change that would improve life for people in every part of this country. This week’s Budget moves in the right direction, but if we are to renew Britain, we must be willing to go further. There are measures worth welcoming. Ending the two-child cap will lift around 1,270 children in South Norfolk out of arbitrary disadvantage, and clamping down on illegal activity on high streets, such as minimarts, barbershops, vape shops, nail bars and car washes, will protect honest traders and restore confidence.
We must not, though, allow the good news to distract us from the deeper truth: delivering genuine renewal demands deeper reform. On the NHS, reform must be real, not just rhetorical. Too much of our healthcare system has been shaped around elderly care alone, yet under-30s with serious mental health conditions, and over-50s facing obesity or musculoskeletal disorders cannot be left behind. Without genuine innovation in prevention and rehabilitation, the NHS cannot remain both compassionate and sustainable. Partnership with the private sector must therefore play a role—not ideological outsourcing, but practical collaboration that cuts waiting lists and expands capacity. Labour is uniquely placed to deliver that in a way that strengthens the NHS rather than fragments it.
Welfare reform must also return to its original purpose: helping people to rebuild their lives and get back into work. A modern system should be humane and empowering, not defined by complexity, stigma and delay. If we want to reduce the long-term welfare bill, early intervention and smarter support are essential. Growth underpins all that. If we want world-class public services, we need an economy that can pay for them. That means reducing unnecessary regulatory burdens in sectors that give Britain the global edge. Finance, for example, faces layers of regulation that stifle innovation. A party that is serious about renewal cannot shy away from bold deregulation where it is justified.
Tax choices must be part of this honesty. The Chancellor has ruled out rises in income tax, VAT and national insurance for employees—a decision that protects working people at a difficult time—but that also means that the tax burden will inevitably rise later in the Parliament. We owe voters the honesty to say so.
Our pubs are vital to rural life and to South Norfolk’s villages. Pub landlords rightly tell me that supermarkets have an unfair advantage on alcohol pricing. Pubs are responsible places; they create community, support young workers and act as informal safeguards against harmful drinking. I urge the Chancellor to explore creative VAT options for high-street institutions.
Finally, after 13 months campaigning for fair inheritance tax treatment for farms, I welcome progress, but it does not go far enough. The forestalling clause traps farmers who may not have five or seven years to wait, including those who are terminally ill. That is unfair and unjust, and it threatens the foundations of our food security. Labour can once again be the party of rural Britain, but only if we protect the family farms we depend on.
This Budget makes progress, but progress alone is not enough. To deliver the change we promised, we need deeper NHS reform, a modern welfare system, bold deregulation, honest tax decisions, support for our pubs and high streets, and fairness for rural communities. That is the spirit in which I will continue to fight for South Norfolk.
Harriet Cross (Gordon and Buchan) (Con)
One of the most incoherent, damaging and destructive decisions that the Government took last week was not to scrap the energy profits levy. The levy will destroy our oil and gas sector, as the Government have been told by so many sources, including the industry itself, the renewables industry, the unions and Offshore Energies UK. The Government know exactly the impact that keeping the EPL will have on jobs, investment, our supply chain and our transition to cleaner renewable energies.
Iqbal Mohamed
Does the hon. Lady agree that the fossil fuel companies have put all their eggs in the basket of carbon-generating fossil fuels, and have not diversified over the past 30, 40 or 50 years? They have no other sources of income. Why should we pay the price for their profligacy?
Harriet Cross
No, I do not agree, because that is factually untrue. Investment in green technologies, including carbon capture, EV charging point roll-outs, wind and solar, is being driven by our oil and gas companies. They will stop investing in green technologies and our domestic supply if we tax them into the ground, and that is exactly what the EPL is doing.
The Labour Government have kept the EPL, which means that our oil and gas companies are being taxed at 78%, which is more than is faced by any other mature basin in the world. They also removed investment allowances, ensuring that our oil and gas companies are the most uncompetitive when they are trying to invest in the North sea. As a result, the companies and the skills that we need for the transition are moving abroad. Across the UK, we are losing tens of thousands of North sea jobs. That impacts every constituency. Do not think it is just north-east Scotland that is impacted; every single hon. Member in this House has oil and gas worker constituents—energy workers—who are losing their jobs today because of the Chancellor’s choice last week to keep the EPL. That impacts everybody.
Paul Holmes (Hamble Valley) (Con)
My hon. Friend is right. My constituency on the south coast has Oil Spill Response Ltd, which tackles oil spills. At a recent event, the vice-president of a very big oil company said that it was essentially closing up its operations in the UK and moving 50 miles up the road to Norway. Has she found the same in her constituency?
Harriet Cross
Yes, absolutely. Many flights that take off from Aberdeen are full of workers who are leaving north-east Scotland for Norway, taking their skills and taxable income with them. Norway welcomes the opportunity for investment in its energy sources. Norway drilled more than 30 new exploration wells in its North sea this year. We drilled zero. That is not because the North sea is different on either side of the boundary line, but because of the United Kingdom’s fiscal and regulatory regime. We are banning ourselves from our own resources.
We are making it so financially unviable to get at our own resources that we are becoming more and more reliant on other countries for our energy security. That does not make sense. Even if we come at the issue from a green angle and pretend that we are helping the climate, imports are more carbon intensive. We are bringing more carbon-intensive energy, which we need, into the UK. The Government love telling us that we will need oil and gas for years to come. We will, but we will not be using UK oil and gas for years to come. We will be using oil and gas from Norway, Qatar, Mexico or America, and we will import it at a huge carbon cost, and at a huge cost to the Treasury through loss of tax, other revenue and investment.
Offshore Energies UK states that £50 billion of investment will be lost because of the EPL being kept in place. That £50 billion could go to a huge number of schools, roads or NHS projects, or it could fill any deficit that we have, but no, it is being left, because the ideology of this Government is to run down our domestic oil and gas sector.
When I am out having constituency meetings in north-east Scotland, I spend most of my time listening to people who are worried about their jobs. They are worried about when—not if—their job will be lost, and where they will get another one. There are no new jobs in the oil and gas sector. They are not being created. When a job is lost in north-east Scotland, or in any other constituency with oil and gas jobs, there are no replacement jobs. Our skilled workers are moving abroad. That expertise and those skills—the ones that will drive the transition and keep our communities together—are moving away.
One of the most cynical things that the Government did on Wednesday last week, when they chose to keep the EPL, was to release their consultation results for the future of the North sea. They thought that the people of north-east Scotland were so dim, so stupid, that they would not realise that keeping the EPL in place was going to have a destructive impact. They thought that they could wave a little flag with “North sea future plan consultation” written on it, and it would distract us, but guess what? We are not distracted. We know that it does not matter how many tie-backs are allowed, or whether we rename a licence as a certificate; that will not make any difference when it comes to how long the North sea lasts, because we do not have the fiscal regime to make it viable.
I met representatives of a large oil and gas producer on Friday—I am sure that no Government Members did, because they do not actually engage with the sector or listen to it.
Harriet Cross
Well, in that case, the Minister will have heard exactly the things that I hear from it, so why has he not acted on them? I asked the company I met on Friday what it thought about the North sea future plan paper. Its words to me were: “We didn’t need 170 pages, we just needed a fair fiscal regime.” That is all it wants. It wants the EPL to be taken away, and it needs the fiscal regime to make sense.
The EPL windfall tax was brought in when there were record prices. Last week, the Government defined “windfall” as $90 a barrel and 90p a therm, yet we have to wait until 2030 to get that. We therefore now have a windfall tax on $68-a-barrel oil and about 80p-a-therm gas. Why do we need to wait until 2030? Why are we doing that to our oil and gas sector? Why are we making sure that they are completely taxed into the ground? Why are we making investment unviable, ensuring companies move abroad and undermining our industry? We have defined what a windfall is, but we will still tax companies on windfall profits now. That does not make sense. There is no windfall. We are now taxing the oil and gas sector so much that the tax revenues are falling. The decrease in revenue from the oil and gas sector last year was 40%. Why was that? It is because investment is going abroad and production is falling. It is because it is not viable to invest in the UK any more.
A company I met last week said that it is more stable to invest in west Africa than the North sea. That is the situation that is being created by this Government. That is the issue that we see in north-east Scotland, and it is my constituents and the constituents of neighbouring MPs who are feeling the brunt. My constituents do not talk about career progression, but about career survival: “How much longer will my job last? How many more redundancy rounds will I survive?” Those are the conversations we have in north-east Scotland. That is the reality of the oil and gas sector in north-east Scotland, and that is the absolute madness of the policies that this Government are following.
Will the Government, please, for the future security of our energy, for £50 billion of investment that could come into our energy systems, and for the survival of tens of thousands of jobs, scrap the EPL? It must be scrapped. In no other sector in any other part of the country would this Government allow that many jobs to be lost, yet they are willing to do that to the energy sector in north-east Scotland, and to our oil and gas workers, and that is completely irresponsible.
Rebecca Long Bailey (Salford) (Lab)
When Government choose to act, when they choose to listen and when they choose compassion, millions of lives are changed. The decision to scrap the two-child benefit cap will lift nearly half a million children out of poverty and ease the suffering of almost a million more. It is a humane, necessary intervention, and the Chancellor should rightly be proud of what she has done. All those who campaigned tirelessly for this over the past year should feel immensely proud. I am hopeful that this is just the beginning of a wider ambitious programme of reform to restore fairness, rebuild our economy, and restore the hope, which we thought was lost, that life will get better for every passing generation.
I know how hard the Chancellor has worked. She knows that we need money for our public services, after 14 years of crippling austerity, which have held our country back and destroyed our public sector, but restoring the public finances is the first building block of growth. That is not an easy task when we are working with a tax system that has needed fundamental reform for decades. I hope that the next step will be to design a tax system rooted in fairness and clarity, and a long-term strategy that lifts up those on modest incomes, supports young people striving to build their futures and ensures that national prosperity is shared, rather than hoarded. We should eliminate the structural unfairness whereby normal people’s salaries are taxed at higher rates than income derived from wealth, and the freezing of tax rates, which quietly drags millions more people into tax bands that were never designed for them.
It was good last week to see the Government introduce an online gambling tax, and a tax on homes worth more than £2 million, but I hope we will now explore the many more options available to us to restore fairness. We could tax capital gains and dividends at the same rate as wages. We could tax share buy-backs, and reintroduce the investment income surcharge that the Tories scrapped in 1984. We could charge VAT on financial services such as wealth management. We could look at a whole plethora of wealth taxes and so much more.
The same principles of fairness must extend to the broader financial sector. The banking industry benefits from extraordinary Government support, with deposit guarantees, central bank facilities and vast rounds of quantitative easing, while the public receive little in return. Governments of all stripes continue to grant what is now an annual £23 billion in interest payments on central reserves. That was meant to be a temporary fix to help following the financial crash, but many EU countries have stopped paying that interest. We could look at doing that, too.
The same forward-thinking approach is needed on energy policy. Removing green levies from bills will bring welcome relief, but families still face high costs, while energy giants have made more than £125 billion in profits since 2020. The Government have an opportunity to ensure that the energy system works for the public good, and to consider windfall taxes, fair pricing and even forms of public ownership. A resilient, affordable green energy system would strengthen the whole economy.
More broadly, the economy urgently needs strengthening. The OBR forecasts only 1.5% growth this year and sluggish productivity for the rest of the decade, and that is the result of 14 years of short-termism, of putting short-term dividend extraction before long-term industrial strategy, and of the UK investing barely 18% of GDP in productive assets. That is far behind countries such as France, Germany, China and India. We are not punching above our weight, but we should. Without proper investment in infrastructure, green industries, modern transport, digital systems and manufacturing, we simply cannot build the prosperous future we deserve.
We have made a fantastic start this week. The Chancellor’s strategies—such as Pride in Place, which will see parts of Salford receive £20 million over the next 10 years—are welcome, but we need further announcements on industrial strategy and strategic investments over the coming year. We have waited years for this. We have millions of people who are ready to work, build, care, invent and dream. Let the Budget be the spark that drives wider transformation, so that we have a fairer economy, a fairer society and a Government who match the courage and aspirations of their people.
Joe Robertson (Isle of Wight East) (Con)
Average households will be £850 worse off by 2029-30, according to the Joseph Rowntree Foundation. That is a consequence of this Budget, with the highest taxes in history, growth down, borrowing up and inflation up. In fact, the Government have missed their inflation target every single month they have been in office, with no projections that they will hit it any time soon. That target is 2%. The last time we hit 2% was in July 2024, when this Government took office. That is the result of a nightmare sequel to a horrendous original. We have had two Budgets, back to back, making people poorer, with more tax for more welfare.
It did not have to be this way; the Chancellor had choices. Instead of raising tax again—this time by £26 billion, with 43 different taxes—she could have cut the size of the civil service back to where it was in 2016. She would have saved £8 billion. She could have taken welfare spending back to where it was just before the pandemic. She would have saved £23 billion. She would have had the money she needed to not raise taxes, with some left over to cut them instead.
Dr Scott Arthur (Edinburgh South West) (Lab)
It would be interesting to talk through the implications of such a drastic cut to welfare in one single Budget, and what that would mean for people in the hon. Gentleman’s constituency, particularly the young people with children who will be lifted out of poverty by this Budget.
Joe Robertson
It is one single Budget with a plan over five years, as the hon. Gentleman well knows. The best way to lift all families out of poverty and to stop them slipping into poverty is to grow jobs and grow the economy so that we have more money to spend on public services.
We know that the Government wanted to cut welfare. Indeed, they tried to cut welfare spending just a few months ago, but they were held to ransom by their Back Benchers and watered down their plans. Instead of coming back with a properly costed, reformed proposal, we have a £5 billion cash grab. They have given up on tackling the welfare bill altogether. We have more tax for more welfare.
Most people on welfare do not want to be there if they have a choice, but the key word is choice. The Government have to give them choice, by allowing businesses to employ people and by increasing job opportunities, not decreasing them. What happened to the party of a hand up, not a handout? Until Labour rediscovers the central role of businesses in employing hard-working families and in growing the economy, so that we can invest more in public services through growth, people will remain on welfare and our economy will remain sluggish.
I will finish by saying something on transport costs, particularly as the Secretary of State for Transport is in her place. Although I do not agree with her reforms to rail and buses, I share the sentiment behind them: that we should be putting passengers above profit. I continue to ask that she does that not just for rail and buses, but for communities all over the United Kingdom that rely on ferries. While she is freezing the cost of rail, my constituents are paying more and more in ferry fares, because we have providers that are controlled by private equity companies that are unregulated and unlicensed. I know that she would not accept that for any other community across the UK. Of course, I do not hold the Secretary of State responsible for that—it is not a situation that she created—but she is in the wonderful position of being able to do something about it, and I urge her to do so.
I thank the maritime Minister, the hon. Member for Selby (Keir Mather), for the talks that he has had with me and my neighbour, the hon. Member for Isle of Wight West (Mr Quigley). I look forward to continuing those conversations because, quite frankly, with private equity trading one of the ferry companies in the past few days, those companies are not going to make the changes that we deserve without the Government stepping in.
Paul Davies (Colne Valley) (Lab)
It feels like a lifetime since 2022, when a Prime Minister and a Chancellor gambled with our economy. They put Britain in hock to the bond markets, sent mortgage rates soaring and plunged millions of families into hardship. That reckless approach left deep scars that our communities still bear today. Contrast that chaos with what my right hon. Friend the Chancellor has delivered in her Budget. Instead of instability, we have security; instead of ideology, we have investment. She has put money into the NHS, backed innovation, supported start-ups, and stood shoulder to shoulder with the British public during a cost of living crisis created by the Conservative party. Under the last Government, the country spiralled downwards towards despair. Today, we are reversing that and creating hope for the future.
The cost of living remains the single biggest concern for my constituents. It was the first issue they raised with me ahead of the Budget, which is why I welcome the practical steps in the Budget that will make a tangible difference to everyday life: £150 off energy bills, a freeze on NHS prescription charges, a freeze on rail fares for the first time in three decades, alongside a cap on bus fares, the national living wage moving up to £12.71 an hour, the state pension increased by 4.8% from April 2026, the two-child benefit cap scrapped, and expanded free school meals and breakfast clubs. These changes will ease the pressure on families and commuters alike.
I very much welcome the rise in the national minimum wage and national living wage, giving full-time workers an annual boost of around £900. One of my biggest asks of this Budget was action on the two-child limit. I came into politics to eradicate child poverty, and the measures announced in the Budget to lift children out of hardship are hugely welcome. The decisions of the last Tory Government pushed more than 900,000 children into poverty. That was an absolute disgrace. I am proud that this Labour Government are reversing that damage.
I reject the notion that those who need state support are somehow irresponsible or on the take. The real scandal is the number of parents who are in work yet still in poverty. Let us be very clear: we cannot simply stand to one side and allow those children to suffer the ravages of poverty. That was the reality of the two-child cap and its abhorrent rape clause. Ending that injustice is the right thing to do. In my constituency of Colne Valley, ending the cap will benefit around 1,520 children. That, alongside the expansion of breakfast clubs, such as the one at Scapegoat Hill primary school, will transform life chances for young people in my area.
As I said earlier, this Budget is about not ideology but investment. It is about investment in all our people, in particular our young people, who all deserve the best start in life, fair access to good jobs and career opportunities. This is not the blinkered ideology that we have seen from the Tories and Reform, but Labour values embedded in fairness and equality of opportunity, so that it does not matter where people are born and who to. Everyone deserves a real and tangible share in the successes of this country, so I am proud to support this Budget, particularly the lifting of the two-child cap, which will make a huge difference to so many of my constituents and many more across the country. This is a Budget that is anti-poverty and pro-children, and that is surely something we can all get behind.
Graham Leadbitter (Moray West, Nairn and Strathspey) (SNP)
I will focus on particular measures in the Budget that will have a massive impact on my constituents in Moray West, Nairn and Strathspey, and more widely across the north and north-east of Scotland.
First, one of the bigger contributors to the cost of living crisis is the cost of energy. To recap where we are at present, the Labour party promised a £300 reduction in energy bills in their manifesto, but since the 2024 election, consumer and business energy bills have risen substantially. It is estimated that by April, energy bills will be up to £560 higher than the Labour party promised. Taking into account the measures in the Budget, they will still be more than £400 higher than promised. The Resolution Foundation estimates that by 2029-30, energy bills will be £60 lower than current prices, making them about £430 higher than at the time when the Labour party made their manifesto commitment.
The Labour party’s latest swindle on energy bills is already falling apart. To compound matters, my constituents and businesses in the north of Scotland already pay the second highest level of electricity prices in the UK, second only to north Wales and Merseyside, despite vast amounts of energy being produced on their doorstep. That basically means that those consumers are paying for a regulatory system that was created when Battersea power station sold energy rather than Rolexes—a system that successive Governments have manifestly failed to deal with. It is shocking energy price discrimination, with price increase misery heaped on top.
Patricia Ferguson (Glasgow West) (Lab)
Does the hon. Gentleman think that his constituents would have benefited if Nicola Sturgeon had delivered the promise that she made eight years ago to the people of Scotland to deliver a publicly owned energy company for our country? I think it would have made a difference, but unfortunately it never happened.
Graham Leadbitter
I agree that we need a publicly owned energy company, and I would fully support that. The problem is that we do not have the full powers of an independent country, which are just the normal powers that we would need to do that. I am glad that the hon. Lady recognises that problem. We are nearly 18 months into this Government and their energy price promises have fallen apart, alongside the collapse in trust in the Chancellor.
Secondly, let me come to the Chancellor’s treatment of the North sea. Today, Harbour Energy announced a further 100 job losses, on top of the 350 it announced earlier in the year. Mossmorran, Grangemouth, Aberdeen port and many other sites and companies associated with the North sea energy sector are closing, reducing the workforce or focusing elsewhere in the world, as the sector grapples with a fiscal regime that not only acts as a barrier to investment but is accelerating decline. The latest announcement of job losses is pinned squarely on the Government’s failure to reform the energy profits levy. The decision by the Government to do nothing is akin to Thatcher’s treatment of miners and their communities and the steelworkers at Ravenscraig.
Graham Leadbitter
I would be happy to debate that when it is brought before the House by the Chancellor, if that ever happens.
To accelerate the demise of an industry without ensuring that the right and appropriate time is available for the transition is frankly criminal. I have heard many times Labour Members railing against the impact of Thatcherism in the 1980s—and they are right to do so—yet now they are defending their record of doing the same thing to our oil and gas sector. It is utterly shameful.
Kirsteen Sullivan (Bathgate and Linlithgow) (Lab/Co-op)
Does the hon. Member accept that 75,000 jobs were lost from the oil and gas sector between 2016 and 2024, under the previous Conservative Government? Does he welcome the North sea jobs service, which this Government will bring in next year?
Graham Leadbitter
On both those points, I absolutely do. The previous Government introduced the climate change targets, and they have now withdrawn from those. That is the last thing that the energy sector needs; we need investment in renewables.
On the jobs and skills side of things, there is investment from both the UK Government and the Scottish Government. I welcome their partnership on that, but compared with the impact of the energy profits levy, it is frankly small beer. It will not have an impact unless there is an underpinning fiscal regime that actually supports those jobs until we have a renewables sector ready to take those jobs on. That is simply not there at the moment, and unless the fiscal regime changes substantially, those jobs will not be there and people will simply be on the scrapheap.
The worst cost of living crisis for any family is when a family member loses their job. Some 1,000 jobs are going every single month in the energy sector, and the transition plan—if the Government actually have one—is doing little to nothing to support those workers, their families, or the communities they live in. The Government must take urgent action on the EPL, or we will have another industrial jobs disaster, such as Ravenscraig, that will reverberate in communities for generations.
Let me turn to the plight of WASPI women, who continue tirelessly to campaign against the wrong done to them. A year ago, almost to the day, I asked the Prime Minister when they would be compensated—he flannelled his answer and refused to commit. In the space of that year, around 3,500 WASPI women have died without compensation. The Chancellor made no mention of WASPI women in the Budget statement, despite the Government having to rethink things following recent court proceedings. Action must be taken urgently to give compensation to WASPI women, who have been left without the pensions they deserve because successive Governments communicated with them so badly.
Dr Arthur
I think there is support for this issue across the House. I do not know any MP who does not think that the WASPI women should not be compensated, because their fight is a just fight, but there is uncertainty about how it would be funded. How would the hon. Gentleman fund it?
Graham Leadbitter
We have made the point repeatedly that there can be additional funding from banks, which I know hon. Members from the Liberal Democrats agree with, and funding could certainly be made available through a wealth tax, which we have supported for a long time.
The one thing I can welcome from the UK Government in this Budget is the removal of the two-child benefit cap, but I have questions for Labour Members. A principled few Members voted in support of the SNP’s amendment to the King’s Speech nearly 18 months ago, including the hon. Member for Leeds East (Richard Burgon)—I agreed with pretty much everything he said earlier. That could have happened then, but Labour Members chose not to support it. I am glad and grateful that they do now.
Several hon. Members rose—
Madam Deputy Speaker (Judith Cummins)
There will be an immediate four-minute time limit after the next speaker.
Steve Witherden (Montgomeryshire and Glyndŵr) (Lab)
For many people struggling with the rising cost of living, this Budget provides real relief. Above all, the Chancellor has committed to scrapping the two-child benefit cap. That is a testament to the campaigners, who have worked tirelessly for years, and to hon. Members across the House who have repeatedly called for the reversal of this cruel policy. It will lift 450,000 children out of poverty, including around 69,000 in Wales—a substantial achievement.
Other measures are also incredibly welcome. The increase in the minimum wage and the living wage—building on the April 2025 rise, which has already benefited around 160,000 workers in Wales—is a massive move in the right direction to a fairer economy. Reducing household energy bills by an average of £150 per home will bring practical relief to families. For those of us representing rural constituencies, the decision to keep fuel duty frozen is essential to daily life, to work, and to accessing basic and vital services.
I greatly welcome the additional £505 million allocated to the Welsh Government, on top of the largest uplift since devolution, which was delivered at the spending review. That funding will support essential services and investment across Wales.
The Budget takes some initial steps towards wealth redistribution. The council tax surcharge on homes worth more than £2 million, the 67% increased levies on online gambling, and the closure of the loophole that allowed rapidly growing ultra-low-cost platforms to ship goods into the UK tax-free are all sensible and highly welcome reforms and demonstrate success in shifting the national conversation on wealth taxation. However, inequality in the UK is stark, with 20% of people owning two thirds of the country’s wealth.
The very welcome mansion tax is expected by the OBR to raise around £400 million per year by 2029-30, yet approximately £38 billion could be raised through even more progressive wealth tax measures, which some of us on the Back Benches have been calling for, such as equalising capital gains tax with income tax or introducing a 2% wealth tax on assets over £10 million. The depth of inequality we face demands bolder action than what we have seen.
Let me turn to two areas that I believe the Budget does not address. The decision to keep local housing allowance frozen when it is already so far out of line with the true cost of rent will push thousands more people into homelessness and dramatically increase the pressure on the already overstretched temporary accommodation budgets of local councils. Only 1% of properties in Wales are currently affordable to those relying on LHA. With rents continuing to rise, I urge the Government to act before that figure falls to zero.
Let me turn to agricultural property relief. While the adjustment allowing married farmers or widowed spouses to transfer inheritance tax allowances is welcome, it will support only a small number of families. It does not address the serious pressure that APR places on elderly and terminally ill farmers or the serious effect that the APR proposals are having on the mental health of farmers. It does not sufficiently protect family-run farms, our food security, or the livelihoods that underpin rural communities. Much more thought is needed here.
The thresholds remain too low. I have visited family dairy farms, and I know that they have to add up a herd of Friesians, the amount of land needed to graze them, the tractor and other farm machinery, the farmhouse, barns and outbuildings, slurry tanks, and water pumping facilities—Friesians drink a lot of water during milking seasons, and many Welsh farmers are a long way up hills and mountains. We need to tax the Clarksons, the Dysons and other plutocrats more, but not family farms.
I became a Labour MP to reduce poverty, tackle inequality and stand up for my constituents. While the Budget contains very welcome adjustments, we need to go further to address the hardship facing millions across the UK.
Charlotte Cane (Ely and East Cambridgeshire) (LD)
I, too, welcome the Chancellor’s decision to remove the two-child benefit cap. I was proud to stand on that policy from the Lib Dem manifesto, because it will lift at least 350,000 children out of poverty. It will go a long way to helping families with the cost of living, but it is no good if the Chancellor gives with one hand and takes away with the other.
My local councillors are still waiting to hear how the new crisis and resilience fund will work and how much funding they will receive. It will replace the household support fund, from which they currently pay for the school holiday food vouchers. The new scheme should be in place from April 2026, so the councils are now finalising their budgets for that financial year without knowing if they have the funding needed to continue with the vouchers. I hope the Chancellor will soon confirm to councils that the funding will be provided and increased in line with demand.
Mr Hussain
Does the hon. Member agree that, in working-class towns such as Blackburn, where years of under-investment have taken a real toll, only targeted, needs-based funding will bring down the cost of living and lift real economic growth?
Charlotte Cane
I actually think we need both. Lifting the two-child benefit cap is really important.
I was also disappointed that there was no help for farmers in the Budget. The Chancellor is maintaining the inheritance tax, which will destroy many family farms in Ely and East Cambridgeshire and across the country. The Government have abolished the fruit and veg aid scheme from this month, removing much-needed support with the capital costs of increasing productivity and accelerating innovation. The Chancellor increases farmers’ costs, the Home Office restricts their seasonal workforce and the Department for Business and Trade signs trade deals that allow unfair competition, but the Chancellor did not give even a small gesture of help to farmers in this Budget.
I visited Christmas fairs this weekend in churches that need hundreds of thousands of pounds’ worth of repairs. People told me of their worries about the listed places of worship grant scheme, which is currently funded only to March 2026. That grant covers the VAT costs of repairs, meaning that fundraisers only have to raise the cost of those repairs, not the additional cost of VAT. I hope the Chancellor will confirm sufficient funding for the Department for Culture, Media and Sport for that scheme to be continued and increased back to previous levels.
We know that we are struggling to provide good-quality social care. This impacts too many elderly, disabled and vulnerable people who are not getting the support they need. It also impacts kinship carers, many of whom are disgracefully hounded to repay so-called overpayments of carer’s allowance, yet this Budget does not invest in social care. I met publicans in Ely and East Cambridgeshire last week who were very disappointed that there was no cut in VAT for hospitality businesses in the Budget. As their costs go up, for staff, supplies, fuel, duty—you name it, their costs go up—they have to increase their prices, and then they have to add 20% VAT to those increases, so a meal costed at £25 will have another £5 of VAT added to it. Reducing the rate of VAT would reduce those businesses’ prices and encourage more customers.
These are all matters that people in Ely and East Cambridgeshire have asked me to raise in this debate in just the few days since the Budget. They are things that make businesses and individuals struggle with inflation and the cost of living, and the Budget has not addressed them. The Chancellor told us of the difficult choices she had to make in this Budget, but it did not tackle the main problem, which she herself has identified: our relationship with Europe. If she negotiated a new customs union with Europe, as well as a youth mobility scheme to create new opportunities for our young people, she could fill the £90 billion-a-year black hole left by the Conservatives’ catastrophic Brexit deal. People are going to have to pay higher taxes for less public services because the Chancellor and this Government will not cure that £90 billion Brexit black hole.
Grahame Morris (Easington) (Lab)
I associate myself with the remarks of my right hon. Friend the Member for Doncaster North (Ed Miliband) about the potential of the renewable energy sector. I want to give a shout-out to Power Roll in east Durham, and draw the House’s attention to how important it is that that business is supported to move into volume production, which could create many hundreds of jobs.
I will start my speech proper by thanking my right hon. Friend the Chancellor of the Exchequer. I am going to confine my remarks to mineworkers’ pensions. For more than 30 years, successive Governments have profited from the miners’ pension funds, taking a staggering £8 billion in that time from funds built up by the hard work of miners, who powered this nation. Last year, at the first opportunity, the Chancellor honoured Labour’s manifesto commitment to transfer the £1.5 billion investment reserve fund of the mineworkers’ pension scheme. That decision delivered a 32% increase in the pensions of almost 4,000 former miners and widows in my constituency, money that has gone straight back into the local economy—into local businesses, shops and cafés. It was welcomed by all those who have campaigned for many years to secure pension justice for our retired miners.
Over the past year, the Labour group of coalfield MPs, alongside the British Coal staff superannuation scheme campaigners, have been relentless in our campaign of lobbying Ministers to secure a just settlement for the BCSSS pensioners. I am proud to say that my Government —this Labour Government—and our Chancellor have not only listened to our concerns, but have heard our plea, and have used the Budget to act. The transfer of the BCSSS investment reserve fund announced in the Budget means that a Labour Government have returned almost £4 billion to retired miners through the MPS and BCSSS schemes—a Labour Government standing up for the rights of working people and righting an historic injustice. These are real Labour values in action, showing the difference that a Labour Government can make after decades of neglect by the Tories.
James Naish
I want to acknowledge my hon. Friend’s own leadership on this issue within the House. There are almost 200 former British Coal staff living in my constituency who will see a 41% uplift in their pension, and my hon. Friend has played a large part in that, so I thank him on behalf of the House. [Hon. Members: “Hear, hear.”]
Grahame Morris
My hon. Friend is characteristically generous, and I appreciate his warm words. Many MPs representing coalfield constituencies will have cause for celebration. As chair of the coalfields group, I thank my right hon. Friends the Chancellor and the Chief Secretary to the Treasury for taking the time not only to listen but to understand the nature of this campaign over the past year. I also thank the Under-Secretary of State for Energy Security and Net Zero, my hon. Friend the Member for Stockton North (Chris McDonald)—he is a good friend—and his predecessor, my hon. Friend the Member for Croydon West (Sarah Jones), for meeting coalfield MPs, trustees and dedicated campaigners over the past year and for understanding the strength of feeling on this issue.
This Labour Government have gone above and beyond for coalfield communities, fulfilling their manifesto promise at their first Budget and, within a year, delivering justice for British Coal staff superannuation scheme pensioners. Our coalmining communities paid a heavy price—a legacy of shorter lives and industrial diseases. Ending this pensions injustice is a long overdue recognition of that service and sacrifice. It has been a long-fought battle to end one of the biggest occupational pension scandals in our country’s history, and let us be clear: it was only through this Labour Government that the change was delivered.
Just as this Labour Government have gone above and beyond for former mining communities, we must now build on that progress by addressing the entrenched inequalities that are breaking our nation. I welcome the lifting of the two-child cap. The Chancellor has listened on the issue of mineworkers’ pensions; I hope she will also reflect on the contributions that Labour Members have made this evening and throughout this Budget debate as we continue to work towards building a fairer and more prosperous country for all.
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
I will confine my remarks to the north-east of Scotland. Whether it is farmers, oil and gas workers, the fishing industry, local pubs and hotels, businesses, or families who are just about managing this festive season, no one—not one person—has approached me to say what a great Budget this was. People are angry and worried, and they are right to be. We are still in a cost of living crisis, and there was no change to the energy profits levy in the Budget, nor to the family farm tax. There was more punishment for Scotch whisky and no mention of the WASPI women. There was no review of the coastal growth fund to boost the local fishing industry and, worst of all, there was sleight of hand on the cost of living for so many families. When I recently led an Adjournment debate in this place on the Nolan principles, I voiced my fears that people are losing faith in politics. It now seems that that is not only because of Johnson or Truss, although they did not help; it is largely due to this Government.
Households in the north-east are facing harsher and colder winters than other parts of the country, and will continue to struggle as energy costs rise. That is even more unfair given the north-east’s contribution to energy production as the UK’s renewables powerhouse and, crucially, via our oil and gas sector, which is being hammered like a tent peg by this Labour Government. They are apparently hellbent on taxing our energy sector out of existence. Keeping the EPL in place until 2030 will mean haemorrhaging job losses in the tens of thousands. It will risk our energy security, incur eye-wateringly expensive carbon-heavy imports, scupper supply chain growth, and severely hamper our future renewables potential.
Just today, there have been a further 100 job losses at Harbour Energy in Aberdeen. People I know in my constituency are going abroad to get contracts because they lost their jobs in Scotland. Ninety thousand oil and gas workers in the north-east are bitterly disappointed. Why? This Budget was a chance to secure their jobs and to secure £50 billion of potential investment supported by the renewables sector, which needs the skills base of our workers. The hon. Member for Salford (Rebecca Long Bailey) talked about banking. The four big banks made a £44 billion profit last year, and there is not a word about a windfall tax on them. This is the politics of madness. Forget investment in a just transition; this is industrial damage on a grand scale.
Talking of industrial damage, why have the Government got it in for Scotland’s world-class Scotch whisky sector? Once more it has been treated as a Treasury cash cow, with duty rising again in line with inflation, although I—as well as many others, including numerous industry sources—warned the Treasury that an increase in duty would reduce the income to the Treasury. Who does not understand the maths? Furthermore, with the family farm tax still in place, generational family farms across my constituency face ruin by Treasury spreadsheet, with the Chancellor balancing the books on the back of our domestic food security. Finally, where are the WASPIs in this Budget? There is no mention of the Government’s plan to review their decision on compensating those 1950s-born women.
The truth is that Scotland cannot afford to be dragged back into Labour’s black hole, or whatever fiscal fiction they care to conjure up to justify their economic choices. We are expected to believe that the same people who told us that removing the two-child cap was deeply unwise now say that it is the centrepiece of the Government’s achievements. This begs the question, “What does Labour stand for?” It certainly does not stand for working people, families or businesses. We have, instead, a chaotic “cost of Labour” Budget, caught in a perpetual doom loop, while the north-east of Scotland pays a high price for the Government’s economic mismanagement. Brexit Britain is broken, trust is broken, and the north-east is bearing the brunt. Scotland wants out.
Frank McNally (Coatbridge and Bellshill) (Lab)
The actions of this Government will make life easier for thousands of my constituents and millions across the country, and let us be clear: action is needed. The Conservative party decimated our public services, entrenched austerity to push millions into poverty, and engaged in acts of fiscal vandalism that crashed the economy. Let us also be clear about what this Budget means. I am absolutely pleased that it will save the average family £150 by cutting levies on energy bills for all my constituents, and the extension of the warm home discount to a further 3 million of the poorest households in the country will save thousands of my constituents a further £150.
The Budget has also delivered an additional £820 million for Scotland, on top of the record £5.2 billion delivered to the Scottish Government last year. It is a sad reality that the Scottish National party Government have failed to make use of last year’s investment to fix Scotland’s public services, particularly the NHS, where one in six people—that is 1 million—are stuck on waiting lists; in fact, more people are waiting for two years or longer in my health board area of NHS Lanarkshire than in the whole of NHS England. It is imperative that the Scottish Government get off their hands and act in the short time that they have before, hopefully, being removed from office next May.
In the remaining time that I have, I want to focus on the important steps taken to eliminate the two-child benefit cap. In my constituency, one in four children are living in poverty, and in some areas the figure is as high as 50%. For far too long, parents have been forced to take decisions that no parent should have to take. They have been forced to choose between feeding their kids and turning on the heating, or forced to go without meals themselves. I recall, when I was a councillor, having a conversation with a lone parent who told me that she was often forced to decide which child would have a small lunch and which child would have a small dinner. It is unacceptable that children in my constituency leave school on a Friday having had lunch in the canteen, but do not eat a proper meal again until they return to school on the Monday. That is a shocking reality, which intensifies over holiday periods.
Anna Dixon (Shipley) (Lab)
My hon. Friend speaks with passion about child poverty. The fact that we have so many children in poverty is clearly a legacy of Tory economic mismanagement. Does my hon. Friend agree that the removal of the two-child benefit cap is a victory for compassion, justice and evidence-based policymaking?
Frank McNally
I absolutely agree. Let me also say, in response to some of our colleagues across the House, that the SNP Government could have eradicated the two-child cap eight years ago, but refused to do so. They chose to play politics with the cap; this Government have acted after 18 months to remove it. The two-child cap is the savage reality of austerity. It is the embodiment of cruelty, and it pushed children into the depths of poverty.
Seamus Logan
If the hon. Member feels so strongly about the two-child cap, why did he vote to keep it last year?
Frank McNally
I am more than happy to respond to the hon. Gentleman. This Government made it clear that when we had the economic ability to remove the cap, we would do so. It is the prudence of the Chancellor that has allowed it to be removed in full, and that has been done within 18 months. The hon. Gentleman’s Government could have done it eight years ago, and refused to do so. This decision will lift 2,000 children in my community, 95,000 across Scotland and 450,000 across the UK out of poverty. As Gordon Brown observed last week, the Chancellor has done more in this Budget to transform the lives of children in poverty and their families than any of the seven previous Tory Chancellors. This action, combined with significant uplifts in the national minimum wage by 8.5% and the national living wage by more than 4%, will help to tackle the scourge of poverty—and that represents a pay rise for more than 200,000 Scots.
This is a fair Budget, which builds on the Government’s efforts to grow the economy, tackle the cost of living crisis and fight poverty. It puts more money in our constituents’ pockets, and I am proud to support it.
Zarah Sultana (Coventry South) (Your Party)
The cost of living crisis is not a natural disaster. My constituents are not struggling because of so-called global pressures; they are struggling because an economic system built by the powerful and for the powerful is bleeding them dry. Yet this Labour Budget refuses to confront that truth. Instead, it protects profiteers while punishing those who keep this country running. Water companies siphon off billions in dividends while pumping sewage into our rivers, energy giants rake in record profits while families in Coventry South are terrified to turn on the heating, and rail and bus companies charge extortionate fares for failing services. This is extraction. It is privatisation functioning as intended, with wealth flowing up and misery pushed down.
And extraction does not stop at corporations. The people who run this country want us to believe that every refugee is a rapist, while they grab £12 million of taxpayers’ money to protect a parasite called Andrew Mountbatten-Windsor. He has never seen the inside of a cell or a courtroom, because what matters to the ruling class is not the safety of women and children; it is the peace and pleasure of the powerful.
What a sick society we live in when the political and media class bends over backwards to defend the royal family, including Andrew, who was close friends with the notorious paedophile Jeffrey Epstein. That is our money that provided him with housing, our money that defended him in court, and our money that put food on his table. We should not just abolish Andrew’s titles; we should abolish the monarchy itself.
It is an absolute scandal that the wealthy glide through this Budget untouched. Everyone except the richest 10% will feel the brunt. This is happening in a country where billionaire wealth has exploded beyond imagination. In 1990, Britain had 15 billionaires; today we have 156. The richest 350 families now hold more wealth than the entire economic output of Belgium. Make no mistake: this is not an accident; it is the direct result of political decisions by political parties that are too captured to challenge the super-rich.
Now this Labour Government expect applause for ending the two-child benefit cap, but let us be clear: it will take effect in April 2026, not immediately. They have knowingly left hundreds of thousands of children in preventable poverty for over a year and a half, and I am proud to have lost the Labour Whip for standing up and voting to scrap this cruel policy last July. Some of us do not need focus groups to know that punishing children is wrong.
Under this Labour Government, disabled people have seen their benefits slashed, and pensioners have been stripped of winter fuel payments. Food bank use has hit record levels, and this Government plan to funnel an extra £11 billion a year to arms companies. That is money flowing into the pockets of shareholders for the merchants of death, after two years in which our money has funded daily spy flights over the ruins of Gaza, aiding and abetting a genocide. This Labour Government are just as happy to oppress at home as they are abroad.
We cannot ignore the political damage of this extreme inequality. History teaches us a stark lesson: when inequality runs rampant and the super-rich hoard more wealth, the doors open to something dangerous. We have seen the poison of fascism return to our streets and screens, and what do we hear from this Government? Well, when the hon. Member for Clacton (Nigel Farage) says, “Kick an immigrant,” the Prime Minister asks, “How hard?” and shamefully uses the same fascistic language as Enoch Powell by calling us an “island of strangers.” We are not an island of strangers; we are an island that is suffering from a Government who protect the privileged and punish the vulnerable.
Tom Collins (Worcester) (Lab)
This Budget is designed to address the issues that people in Worcester really care about. The first is the cost of living. We will see a typical household energy bill reduction of £150, the first freeze on rail fares in 30 years, and an increase in the minimum wage. The Budget will boost the NHS through the roll-out of 250 new neighbourhood health centres; I will keep fighting for a new walk-in GP service in Worcester.
The Budget will begin the work of lifting hundreds of thousands of children out of poverty, including over 2,000 children in Worcester who will no longer suffer from the two-child cap on universal credit. The Budget also includes more funding for small companies to support apprenticeships; support for the midlands rail hub, which will improve our services to Birmingham; and, I am pleased to say, a fresh commitment to innovation and support for entrepreneurs. If we get that right, we can see a true industrial renewal in the UK.
I chair the all-party parliamentary group on hydrogen, and I welcome the climate change levy changes in this Budget that support hydrogen production, an area that is ripe for growth and well suited to the UK’s strengths, both industrially and geographically. In recent years, we have led the world technologically in this space. It offers real opportunities for us, if we have an ambitious plan. UK industry is not confined to city regions and clusters; it is in every town and every region. The UK energy system is being reconceived for resilience and sustainability, but we need new energy storage at large scale, and we will need much higher levels of dispatchable power than we have today. An ambitious vision for hydrogen, in which the Government directly invest in hydrogen, and actively lead a strategic roll-out of its storage and transmission, is a prerequisite for an industrial renaissance that the UK could have and deserves to have, so I look forward to the publication of the upcoming hydrogen strategy.
We cannot ignore the major disruptions sweeping the world. The climate crisis is a global emergency that demands urgent and assertive action, but there is also digitalisation. I cannot overstate the impact that the digital revolution is having. Debate on the Budget now takes place not only in echo chambers of opinion, but in echo chambers of reality, and people have completely different understandings of what is happening in our world and how it works. This new digital world means that our children are unsafe, and that all of us are unsafe from harmful or traumatic images and narratives, from addictive user interfaces in apps or websites, from personified artificial intelligence that encourages attachment —we cannot imagine the harms that could cause—and from algorithms that curate news, views and the voices that we hear, which reinforce bias and present misinformation as fact. These represent a fundamental societal threat that we can and must address in the same way that we address the risks of physical products. The Budget rightly increases taxes on online gambling, but we must do much more.
It is not just the cost of living that is causing a crisis in mental health; there are digital causes; there is poverty and our special educational needs and disabilities crisis, and there is trauma. I chair the APPG on family hubs, and I welcome the £500 million commitment the Secretary of State for Education has already made to them. Our APPG represents a diverse ecosystem of people delivering in real communities. We have seen the sector diversify, innovate and embed in communities over the last few years, and we want to maintain those strengths. As a mission-led Government, that is right up our street. We can break the cycles of trauma by wrapping integrated support around households and families. That approach is a stark challenge to everyone who, remarkably, is criticising our changes to welfare payments, which are on track to lift half a million children out of poverty. This is a Budget about fair choices. It recognises that people come first, and that we are here to build a more just, more prosperous and fairer society.
Wendy Chamberlain (North East Fife) (LD)
I spent the weeks before the Budget talking to constituents about what they wanted to see, and I spoke to them over the weekend. I have to say that when I met them, there was sadness and a degree of anger, because they know that last week’s Budget was a missed opportunity.
Yesterday was the first Sunday of Advent, and there is nothing like the start of the Christmas period to focus our minds on what really matters at home—as well as on what we need to buy. But this time is also about our communities. Every Christmas advert shows a buzzing high street, a glowing local pub and happy families safe together in their home. The Budget was the antithesis of that ideal. Our high streets have been caught in a perfect storm between increased national insurance contributions, increased energy costs and consumers with less money in their pockets to spend. Those main streets are vital because they give jobs, bring us together and create our communities. It is why so many of us across this House stand up in this place to bemoan the loss of banks and post offices. They are important for our local communities. They are the foundation of the high streets that bring people into our towns and make it easy for small businesses to operate, and I continue to be incredibly disappointed that this Government say that they are not minded to revisit the criteria for introducing more banking hubs.
I know that my English colleagues have concerns about business rates going up next April, and there has been the ending of the 40% pandemic relief, but things were already worse for businesses in Scotland, where the relief was never passed on by the Scottish Government. The 5% discount to the multiplier announced last week could indeed ease the burden for pubs, shops and cafés in Leven, Cupar and St Andrews, so I am a bit disappointed that we no longer have any SNP Members here, and cannot get answers from them about whether the Scottish Government will do something to help Scottish hospitality in their own Budget.
The energy company obligation is a short-term help to households, but if there is no replacement measure to tackle fuel poverty, energy costs will continue to soar over the long term. I have to tell the Government that scrapping ECO is not a solution to the complaints of poor workmanship—in some cases, homes were ruined—that we repeatedly heard about in relation to ECO4. All those homes still need resource—as yet unannounced—for remedial work, and the retrofitting and home improvement sector will improve only when there is long-term investment in its future.
Yesterday was St Andrews day, and I am sure that people had a dram yesterday to celebrate it. I am the MP for St Andrews, and whisky is a vital employer in my constituency; over 41,000 people are directly employed in the industry. In North East Fife, we are acutely aware of the fragility of the industry, as one of our distilleries, Eden Mill, went into administration just last month. I am hugely relieved that job losses have been avoided in that case, but this Budget has failed to offer any support to prevent similar closures in the months ahead.
To close, I do not know how the Government can justify reducing the digital services tax for people like Elon Musk while taking more tax from working people. Most importantly, we could have protected the personal allowance—that small but important amount that people can earn that is theirs to keep entirely—and we would not be asking young people dipping their first toe into the world of work, or those at the end of their careers who rely on the state pension, to pay tax.
My party leader, my right hon. Friend the Member for Kingston and Surbiton (Ed Davey), spoke about the measure not mentioned in the Budget that would really create growth, and that is a renegotiated customs union with the EU. We have been left with what my hon. Friend the Member for Bicester and Woodstock (Calum Miller) quite rightly described last week as a hopeless Budget for too many.
Gill German (Clwyd North) (Lab)
I came into this place driven to make life better for the struggling families I saw each and every day as a teacher, and as council lead for education. That purpose guides me every day. I have seen far too many families fighting to get by, so this Budget feels personal to me, because it makes fair, responsible choices, rooted in compassion, security and opportunity, for Wales and the whole of the UK.
For far too long, Britain has been held back. Now, it is starting to turn a corner. Our economy is performing better than expected, and wages are rising, but I know that too many families still feel the cost of living squeeze. This Budget takes real, practical steps to help families in Wales. It cuts bills, with £150 off energy costs and an expansion to the warm home discount; it freezes fuel duty; and it delivers the biggest wage boost in a generation.
But the change I am most proud of, the one that will transform lives in my constituency, is the removal of the two-child limit to universal credit. I am proud, too, that this is fully costed, as it always needed to be. Child poverty in Wales has hit record levels, with organisations such as Children in Wales and the Bevan Foundation sounding the alarm again and again. This action will help 69,000 children across Wales, including 3,100 children in my constituency. This is exactly the kind of change I came into politics to deliver—practical support that protects children, strengthens families and gives every young person the chance to reach their potential. These changes are not before time. Last week, the Welsh index of multiple deprivation showed yet again that areas in Rhyl in Clwyd North, my constituency, are among the most deprived in Wales. This cannot continue. Change is urgent, and the measures taken in this Budget could not be more crucial.
But make no mistake: economic growth and addressing the root causes of deprivation must also be at the heart of everything we do. Today, our Chancellor is at an international investment summit in Wales, and recent announcements show that north Wales is finally receiving the investment that our communities deserve. There is the Flintshire and Wrexham investment zone and the north Wales AI growth zone, and there are clean energy jobs at Wylfa. We are seeing meaningful action on regeneration. A £20 million neighbourhood fund in Rhyl will begin to deliver what our local community has called for: investment in our town centre, new skills for our workforce and real progress in tackling unemployment.
My priority as MP is to see that record investment in north Wales delivering a better future for the people of Clwyd North, and to ensure that every family and every community in Clwyd North can share in the region’s and the country’s future success. The Budget makes honest and hopeful choices, choices that build a stronger, fairer country where living standards rise, child poverty falls and communities like mine in Clwyd North can truly thrive.
Robin Swann (South Antrim) (UUP)
When I look to the Northern Ireland-specific page and a bit in the Red Book, and remove any paragraphs that refer to funding or programmes that have already been committed to by this Government, there are actually only a couple of paragraphs left. So far down is the Northern Ireland Office in the pecking order at the Cabinet table that there was not even anything in the Budget for Northern Ireland that was worthy of a leak.
The Chancellor’s statement on Wednesday said that Northern Ireland would receive £370 million, but let us be clear: despite the Northern Ireland Office’s puff piece on the impact of the Budget on business and public services, explaining how lucky we are in Northern Ireland to receive a Barnett consequential, the figure breaks down to just £18 million this year. We have even seen a Northern Ireland Office Minister on social media singing the praises of investment in Northern Ireland from the Government’s Innovate UK fund. That investment was welcome, but it was delivered in 2023. The Chancellor said in her statement last week that Scotland was getting £820 million because the leader of the Scottish Labour party asked for it—I think that was repeated by the hon. Member for Edinburgh West (Christine Jardine). My question to the Government is this: have Northern Ireland businesses not asked for recognition of the challenges that they face due to the impact of this Government?
Alan Lowry of the Federation of Small Businesses in Northern Ireland said that the £16.6 million that has been given for the internal market package
“will not be a quick fix, but by acknowledging that there is a problem in the first place means that we can work together to address it.”
It is good that the Government have finally acknowledged that the Windsor framework is an issue, but on other issues, such as veterinary medicine, they continue to ignore the impact of divergence.
Dr Luke Evans
Is the hon. Gentleman concerned that the Budget contains pay-per-mile charges on electric vehicles? How will someone crossing from Northern Ireland into the Republic of Ireland be impacted by that taxation? The Transport Secretary is present; I think it is a question that many people may well be asking.
Robin Swann
I thank the hon. Gentleman for his intervention—that is one of the issues I was going to raise. The Secretary of State for Northern Ireland was here earlier; when I asked that specific question, he could not answer it.
Our voluntary and community sector in Northern Ireland is facing a funding cliff edge with the end of the UK shared prosperity fund. The sector has a further ask that support be ringfenced, which now seems to be a common call from many sectors in Northern Ireland.
When I had the Young Farmers’ Clubs of Ulster here, the Prime Minister welcomed them to this place. Have those young farmers not made representations directly to Ministers on the impact of the family farm inheritance tax, which will have a disproportionate effect on them? The £1 million spousal transfer is a small token. What of the generational transfers so common in Northern Ireland farming—the transfer of a family farm from father to daughter, from mother to son, or from and to any other relative not mentioned in this case? Those asks have obviously fallen on deaf ears, tuned out by all but a select cohort of Back-Bench Labour MPs.
I have heard appeals from some noble Back-Bench Labour MPs, like the hon. Member for Montgomeryshire and Glyndŵr (Steve Witherden), asking their own Front Benchers to review the family farm inheritance tax. Will we see a reversal, or has No. 10 or even No. 11 made the calculation that a U-turn like we have seen in other areas would not save their seats and written them off already, like the farming families of the United Kingdom? I hope not, because some of those Members are among the most passionate the Government have.
We hear of the headroom that the Chancellor has established. I hope that she can use it to reimburse the £500 million that the change to agricultural property relief was set to raise, because there should now be the quantum to do that now.
I welcome the fact that the Transport Secretary is present, because I welcome the investment in the midlands rail hub and the trans-Pennine route upgrade. I have raised with her and the Northern Ireland Office investment in rail in my constituency, specifically the rail link from Antrim to Lisburn, and the Department for Transport has kindly funded the £1 million feasibility study. She has had sight of that, but our own Minister for Infrastructure in Northern Ireland has yet to release it, even though she said she would do so this summer.
Those are the specific Northern Ireland concerns that we have with this Budget.
Naushabah Khan (Gillingham and Rainham) (Lab)
I begin by expressing my gratitude to the Chancellor for her clear commitment to transforming the lives of my constituents. Over the past few days, she has set out a plan for investment in major infrastructure and to rebuild our public services. For the people outside the Chamber, the real significance of this Budget is far more personal; it represents a long-awaited acknowledgment of their struggles with the relentless cost of living. After 14 years of austerity and Tory-manufactured poverty, they finally see a Government who are willing to repair the damage that has been done.
The people I meet every day do not live in £5 million homes. Particularly in the Gillingham part of my constituency, their reality is starkly different: they have energy bills they cannot hope to meet, school uniforms they struggle to afford and the constant challenge of trying to provide a decent life for their families on a shoestring budget. One in three children in Gillingham lives in poverty and one in 10 households struggles with fuel poverty. According to the most recent indices of multiple deprivation, my constituents live in neighbourhoods ranked in the bottom 10% most deprived nationally.
When the Leader of the Opposition stands in the Chamber and dismisses vital cost of living support for hard-working families as a Budget for “Benefits Street”, the families I represent are not surprised. It is exactly that kind of disdain for the most vulnerable that shaped our fiscal landscape for 14 years, leaving ordinary people in desperate circumstances. It is this Labour Government who are finally taking them out of that cycle and restoring fairness and dignity.
I welcome that the Government are making essential transport more affordable and more reliable. The freeze on regulated rail fares is not simply a headline. For middle-income commuters travelling from Gillingham or Rainham, it means keeping hundreds of pounds a year in their pockets. Combined with targeted infrastructure upgrades, this Budget begins to reverse the chronic under-investment that left many towns disconnected and disadvantaged.
When I go knocking on doors over the coming weeks, I can tell my constituents that we are cutting their energy bills by hundreds of pounds, freezing rail fares and prescription charges, and keeping fuel duty low. I can tell them that we are raising the national living wage, increasing pensions and taking their children out of poverty.
The Conservatives may think that this is a Budget for “Benefits Street”, but I say that it is a Budget for many working families who have carried the burden of austerity for over a decade. It is a Budget for the 2,860 children in my constituency whose quality of life is about to drastically improve. It is clear to me that this Budget is about more than short-term relief; it is about laying the foundations for long-term stability and fairness. That that is why I will be backing it.
Bobby Dean (Carshalton and Wallington) (LD)
When we cut through it all, the central choices in this Budget were to increase the fiscal headroom and spend more on welfare, and to pay for it via an income tax threshold freeze. I am not sure why Labour Members are reluctant to describe it in that way, because it does contain some legitimate political choices.
I welcome the increase in fiscal headroom. It was creating far too much uncertainty in our economy. I pointed that out to the Chancellor when she was before the Treasury Committee in the spring, and I am glad that the Treasury has now corrected that mistake. I welcome the abolition of the two-child benefit cap, which the Liberal Democrats voted for—I think it was one of our very first votes in this Parliament. The Chancellor explained over the weekend that she was able to afford it because of taxes on the gambling industry, but that industry existed last year, so she could have done it then.
My issue is not with those measures but with how they are to be paid for. There are others that could have paid their fair share, the first of which is the banks, which have been completely let off the hook. They have made unforecasted windfall profits over the last few years, particularly because of the quantitative tightening programme and the interest rates. Many, including the Liberal Democrats, have argued that we should tax those windfall profits and put them to good use, but it seems like the banking industry’s lobbying efforts have paid off.
When comparing the top 10% with the bottom 10%, the Budget appears to be progressive, but a deeper analysis shows that the top 0.1% have been let off the hook, particularly with measures such as the dividend rates, where the additional rate has been left completely untouched, and the cap that has been introduced for non-dom contributions in inheritance tax. While we are on the non-dom regime, I know that some Members have said that all the non-doms have fled the country, but I point them to page 82 of the OBR’s Blue Book, which says that the estimated revenue from that regime will remain broadly unchanged.
Really, all this discussion is a dead end. We are just talking about redistribution. What is really important is what is not in the Budget. As the Federation of Small Businesses puts it, we must get out of this doom loop of tax measures to balance the books. The Budget is far too short-term in its thinking, and we need more long-term vision. Last summer the Chancellor seemed to get this. She promised that her focus would be on growth, yet her first Budget hit businesses with the rise in national insurance contributions, which has hit employment and set a mood of doom and gloom in our economy.
We had a zero-based spending review from which no significant changes to spending emerged. I cannot list a single area of Government spending that changed fundamentally after that review. We have seen tax measures that are piecemeal, and no significant efforts at reform. Economists from left and right all agree that the UK tax system is in a mess. Property taxation and the way that we treat different types of income are in desperate need of reform, and we have not seen that from the Government.
Then, of course, there is the elephant in the room, which only the Liberal Democrats are willing to address: our relationship with Europe. The strategy with Europe is to have tiny negotiations over small measures. We need a proper customs union. That will deliver the growth that our economy needs.
Ultimately, this Government lack the ambition to rewire our economy. We need to stop capital pouring overseas by changing the incentives to invest in this country. We need to look at corporate governance and make sure that it serves the British economy well. We need to look at devolving real economic power, not a reorganisation of local government, and we need to stop triangulating between the people who think net zero is a good or bad thing and ensure that Britain can be a green superpower in the 21st century.
The Budget gets us through another year, but it does not excite me for the future. The country was promised change—where is it?
Harpreet Uppal (Huddersfield) (Lab)
Poverty wastes potential and harms our country’s success and prosperity. The two-child limit has been the single biggest driver of increasing child poverty in this country, and by finally making the decision to remove that one policy, Labour will lift 4,560 children in Huddersfield out of poverty, which is something I am proud of.
I know that that matters to many of us in the Chamber and to many outside it. When I visited the Welcome Centre, which is the largest food bank in my constituency, Ellie the manager told me how she has seen more families coming through its doors, and this one policy has been one of the biggest drivers of that. When I visit schools, teachers tell me how child poverty impacts school readiness. When I attended a “Poverty Matters” event in my constituency, many of those working on the frontline spoke about why removing the two-child limit would be one of the most significant steps the Government could take.
That step, alongside other policies announced by the Government, means that this Parliament is set to see the largest fall in child poverty on record. This Labour Government will therefore ensure that every child—no matter where they are born, their background or their circumstances—is given the best possible start in life. There would be a cost in not doing so from the impact of children not meeting their potential, as well as in ill health, unequal economic growth across our regions and a reduction in productivity. We saw a significant slowdown in average annual productivity between 2010 and 2022 compared with the time of the last Labour Government.
Let us not forget that the Tory and coalition Governments saw the closure of over 1,000 Sure Start centres and 300 children’s centres in England. Between 2010 and 2018, overall Sure Start funding fell by two thirds in real terms; it was left to local people and local communities to pick up the mess.
The social contract in this country is important. Through our contribution, we all play a part in ensuring that this country—our country—thrives. It should not be about pitting one citizen against another or setting up a false dichotomy; it is about ensuring that we all do better through good, secure jobs. I know from my conversations with constituents that many continue to face financial struggles and that those who have not seen enough improvement in their living standards and pay since the financial crisis of 2008 continue to face an affordability crisis.
I therefore welcome the steps that the Government have taken on energy bills as well as freezing rail fares, boosting the national living wage and the minimum wage, delivering a rise in the state pension and freezing prescription charges. I also strongly welcome the fact that apprenticeships for the under-25s will now be free and that 18 to 21-year-olds will receive a guaranteed six-month work placement when they have been out of work or learning for 18 months. Those are significant steps in the right direction.
It is important that we support our local businesses, many of which are family-run in Huddersfield. Our manufacturing sector and textiles play a special part in our town, and it is good to see that UK manufacturing output across the sector rose last month and that business optimism has hit a nine-month high. We must continue to back those firms through our industrial strategy, investment in local infrastructure and Government procurement and by tackling high energy costs.
While the Transport Secretary is in the Chamber, I must mention that the Government are backing major transport projects, including Northern Powerhouse Rail and the trans-Pennine route upgrade. That is important for my constituency and provides much needed stability for supply chains and the sector.
There has been a bit of a hysterical response to the Budget from the Tories, but it has been well received by the markets, and we have seen UK borrowing costs come down—
Victoria Collins (Harpenden and Berkhamsted) (LD)
Although there is much that I welcome in the Budget, overall I cannot help but be disappointed by a botched Budget that raises taxes to a record high and increases costs for businesses, while avoiding using tax levers on the largest, highly profitable corporations and ignoring our biggest lever for growth: a better deal with the European Union.
The Chancellor insists that this Budget ensures that everyone pays their fair share, yet it seemingly allows the biggest tech giants, such as Elon Musk, off the hook through the absence of a digital services tax announcement. Freezing income tax thresholds continues the Conservative tax legacy of hitting people with years of stealth taxes, together costing 10 million taxpayers an extra £67 billion a year by 2030. Behind those numbers are families and individuals still struggling as costs go up and earnings do not catch up.
One constituent from Gaddesdon Row told me that this Budget is
“disconnected from the reality that families are under pressure today”.
Earning just too much to qualify for targeted support but not enough to absorb rising costs, this constituent is being both overlooked and penalised by frozen thresholds. Another constituent, Harriet, a single mother from Berkhamsted, feels “unheard, unrepresented and unsupported” by the Chancellor’s Budget. Despite the fact that she is working harder than ever before, this Government keep squeezing her financially from every direction. This does not sound like a fair plan for working families.
This Labour Government were elected on the promise of lowering the cost of living and stimulating growth, yet for the second consecutive year they are targeting businesses and employment, the very engines of growth. Richard, from Brash Solutions in Berkhamsted, shares the view of many by saying:
“Once again, the Autumn Budget risks disincentivising entrepreneurs and small business owners by increasing taxes and eroding rewards for those who take daily risks to employ staff and drive economic growth.”
For Hugh, a business owner in Potten End, this Budget is
“another kick in the teeth”.
Charlotte from Gatwards says:
“The government appears to have completely abandoned their growth ambitions”.
Angela from HJP Chartered Accountants says that their clients feel that the Government are treating them like a “cash cow” and warns that if this continues, investment in the people of the United Kingdom will reduce. Daniel, a general manager in Berkhamsted, warns of the tens of thousands in pre-profit costs yet again being placed on businesses such as his.
The Government have done nothing to improve the situation for family farms. Also, last year we warned about the negative impact that the rise in employer national insurance contributions would have on jobs. Since then, I have seen charities and businesses in Hertfordshire let go of staff and establish hiring freezes. The Office for National Statistics has confirmed that fewer jobs are in the economy over the last quarter. We are ringing those alarm bells again. The Federation of Small Businesses has warned that nearly one in three small firms expect to shrink, sell up or shut down in the next 12 months.
I recognise that this Government inherited a difficult economic landscape after a decade of Conservative mismanagement. However, I still cannot get over the missed opportunities for a fair and growing economy. If the Government were serious about growth, they would back Lib Dem calls to boost high streets with a 5% VAT cut for hospitality, accommodation and attractions, something that the Robin Hood pub in Tring would very much welcome. They would also follow Lib Dem policies on reducing energy bills, which would go beyond the three years and look to halve energy bills by 2035. They would tax the big banks and social media giants properly, with a new windfall tax and digital services tax. They would also back Lib Dem calls for a better trade deal with Europe to repair the £90 billion Brexit black hole in tax income. That is how we would tackle the cost of living crisis, bear down on inflation, revive our high streets, grow the economy and deliver for our communities, with the fair autumn Budget that this Government have failed to provide.
Kevin Bonavia (Stevenage) (Lab)
This Budget shows that after years of decline, this Labour Government are building a stronger and more secure economy, one that works for working people in Stevenage and the villages across our constituency. We are beating the forecasts, with growth upgraded to 1.5% this year and wages rising faster in our first year than in the entire first decade under the Conservatives. But this is all for nothing if working people cannot see and feel positive changes in their day-to-day lives. That is why this Budget makes the fair and necessary choices to cut the cost of living, renew our public services and bring stability to the economy.
For families in Stevenage, the cost of living has been a real pressure, so I welcome the measures that will put money back into people’s pockets, with £150 off average energy bills, rising to £300 off for those who need it most, alongside freezing prescription charges and, for the first time in 30 years, freezing rail fares. That means that commuters travelling from Stevenage or Knebworth will not see the annual hike that they endured year after year under the previous Government. Take, for example, one of our fantastic young apprentices from Airbus who wrote to me before the Budget asking the Chancellor to consider a rail freeze to ensure that he could afford to do the job he loves.
When working people call, this Labour Government answer. We are cutting NHS waiting lists, with 250 new neighbourhood health centres and millions more appointments, and we are freezing prescription costs. For Stevenage, where the Lister hospital serves not just our town but the surrounding villages, this investment in our infrastructure and in our patients is vital. We are doing all that while reducing borrowing every year so that interest rates—already cut five times since the election—can keep falling, helping families with mortgages and businesses with investment.
Let’s deal with the nonsense we have heard from the Opposition Benches. We have been told that this is a Budget for “Benefits Street”, that Labour is hiking taxes to pay for welfare and that borrowing is spiralling out of control. Here are the actual facts: borrowing will fall every single year of this Parliament, moving to surplus by 2028. That is fiscal responsibility, not the chaos of unfunded tax cuts that crashed the economy under the last Conservative Government. Scrapping the two-child benefit limit is not a handout; it is an investment. A child growing up in poverty is less likely to work as an adult and earns 25% less by the age of 30. Lifting 450,000 children out of poverty is both morally right and economically smart.
On taxes, the biggest changes fall on those with the broadest shoulders: high-value property owners, landlords who pay less tax than their tenants and online giants who have dodged their fair share for too long. Compare that with the Conservatives, who now talk of £47 billion of spending cuts, hitting working people the hardest and still leaving public services crumbling—they have some cheek, after 14 years of doing just that. That figure would be the equivalent of firing every police officer twice over. Reform’s fantasy economics, with billions of cuts and no plan as to where they fall, would mean complete, unbridled chaos. That is why we need a sensible Labour Budget. That is what we have, and that is why I will support it tomorrow night.
Clive Jones (Wokingham) (LD)
After the Budget last Wednesday, it is clear that the Chancellor does not listen to good advice. The Liberal Democrats have given her so many opportunities of where she could raise extra money for the Treasury. We have called for a windfall tax on the big banks, which could raise £30 billion between now and 2030. The Chancellor could raise an extra £4 billion a year from the likes of Elon Musk by raising the digital services tax on tech giants from 2% to 10%, but Donald Trump will not let the Government do that.
We know that we need to grow our economy, and the quickest way to do that is to repair the damage done by the Conservatives’ terrible Brexit deal. Brexit has lost us £90 billion in tax revenue just this year. That is a black hole that does need fixing. The Government should negotiate a new bespoke EU-UK customs union, cutting the endless red tape and freeing up businesses to concentrate on what they do best: selling their products to Europe. That could raise more than £25 billion a year for the Exchequer. That would benefit many businesses across the country, including in Wokingham. Business owners have told me of their once large and expanding relationship with the EU, but since Brexit they have seen their exports and profits reduced, so why has the Chancellor instead chosen to raise taxes across the board and offered no help to our businesses, having hammered them in the last Budget?
A new deal with the EU would benefit local businesses, help tackle the cost of living crisis, lower import costs, lower food prices and boost investment. The revenue raised for the Exchequer could prevent the Chancellor from placing further taxes on working people, perhaps meaning that income tax thresholds might be unfrozen earlier than 2031, as planned, and ahead of a 2028-29 general election. I urge the Government to listen to our calls and the calls of businesses in Wokingham and across the country and to begin negotiating a bespoke customs union with the EU, which would be a major contributor to the growth that we all agree the economy desperately needs.
Dame Siobhain McDonagh (Mitcham and Morden) (Lab)
I welcome this Budget and the difference that it will make to families who have endured the cost of living crisis for far too long. I welcome the £150 cut to energy bills from April—a lifeline for households that have stretched every pound as far as it will go. I welcome the freeze on rail fares, because for many families even a small rise means a choice between essentials. I welcome the uplift in the national living wage and the minimum wage—a long-overdue recognition of the people whose work keeps our economy alive but who rarely see that reflected in their pay packets. These measures help. They are real, they are practical and they will be felt immediately in constituencies such as mine.
However, every week in Mitcham and Morden I meet people who tell me the same thing: the only way they can manage the cost of living is by going back to cash—cash to budget, cash to separate the heating money from the food money, cash because a contactless tap can feel like losing control. Despite the fact that nearly one in five people now rely on cash to manage their household finances, access to cash and face-to-face banking facilities is becoming rarer for the people who need those things most.
We are seeing an unprecedented number of bank branch closures. Lloyds Banking Group recently announced 136 closures between 2025 and 2026. That would have meant Mitcham losing its last bank this coming January. The closure sparked an access to cash review by Link—an assessment of our suitability for a banking hub. We met every criterion for a banking hub except one: the nearest full-service bank must be more than 15 minutes away by public transport. Mitcham has 115 shops and 48,000 people living near the high street, but the Transport for London timetable determined that we could not have a banking hub because it took only 14 minutes by bus to the nearest bank.
What was there to do but galvanise the great people of my constituency into getting on the bus and recording it? Those recordings clearly showed that the bus took between 18 and 20 minutes to get to Tooting, so we have had those decisions reversed. Mitcham will get the first banking hub in south-west London and only the fifth in London. In the coming days, I will work with Cash Access UK to discuss the next steps for our new banking hub, and with the local community to ensure that the hub fits our needs.
I raise all this to say to Members that the criteria for banking hubs, which I hear discussed all the time by Members of all parties, do not meet the needs of the suburban and urban areas that are losing their banks. The Government should reconsider the target of creating 350 new banking hubs in the next year. On behalf of all my colleagues, I ask for that number to grow, because people do not just need Budget measures; they need a way to manage their budgets through the use of cash.
Wendy Morton (Aldridge-Brownhills) (Con)
The Budget is built on fantasy. The Chancellor claimed that there was a fiscal black hole so deep that she had no choice but to hammer working families with the highest tax burden since the war, but we now know the truth: the OBR told her in October that the so-called black hole did not exist. She actually had a surplus, but she deliberately told the public the opposite.
This is now a political crisis of the Chancellor’s own making. Even a Cabinet Minister has said:
“At no point were the Cabinet told about the reality of the OBR forecasts”,
and called this Budget
“a disaster from start to finish”.
The Chancellor promised the country that she had “wiped the slate clean” and would not “come back for more”, but we now know how wrong she was.
Labour Members can dress it up however they like, but this is the “Benefits Street” Budget—tax hikes to fund a welfare splurge, paid for by ordinary, hard-working people who get up, go to work and do the right thing. Labour promised not to raise taxes on working people. That was printed in its manifesto, but within weeks of coming to power it did exactly that. A Chancellor who breaks her word cannot expect to command the public’s trust. She must come to this House and explain herself, and I hope she does the winding-up speech tomorrow evening at the close of the debate.
While this Government play politics with the public finances, it is working families in my constituency, and others up and down the country, who are paying the price. In Aldridge-Brownhills, families who have never been higher rate taxpayers in their lives will now find themselves pushed into a higher band, with no increase in real pay. That is not fairness; it is failure. Businesses reached their verdict within hours. The Institute of Directors found that 80% of business leaders felt negative about the Budget. They know that Labour Members do not understand what business is.
Labour’s job tax has hit employers hard. On Friday, businesses in my constituency told me that they have frozen recruitment and investment, that they have no choice but to pass costs on to customers, and that in some cases they are beginning to think about redundancies. Small businesses—the backbone of our economy—were forgotten entirely in this Budget, and the Federation of Small Businesses has said that dividend tax hikes punish people for investing in their own companies. New employer charges are a bad idea, and the business rate measures fall far short. Small Business Saturday is on this coming weekend, and I am sure that many Conservative Members will be going out and supporting small businesses in their constituencies. Why? Because we understand what business is.
Wendy Morton
I am sorry—I do not have time. Connectivity drives growth too, yet we see reheated announcements. The midlands rail hub is crucial for our region, but we do not know whether this is new money or recycled rhetoric. There was no reinstatement in the Budget of the £27 million for Aldridge train station—money that was siphoned away by the Labour mayor—and my constituents deserve better.
Let us be clear: households are being squeezed, food price inflation is running high at nearly 5%, and our farmers are still being hit by the Government’s decisions. This Budget raises taxes, weakens growth, ignores business, hits farmers, sidelines communities and breaks promises. Above all, it is built on fantasy—a black hole that did not exist. My constituents, and this country, deserve better.
Kirsteen Sullivan (Bathgate and Linlithgow) (Lab/Co-op)
Prior to last Wednesday I wanted to see a Budget that tackled the cost of living crisis while delivering the investment that would allow people and businesses to prosper—not an easy task, but this Budget has delivered. With the removal of the two-child limit, in one policy change this Labour Government will directly benefit 1,700 children in my constituency. Scrapping the cap will be transformational to the life chances and outcomes of children across the country. People in my constituency welcome the £150 reduction in energy bills, with a £300 saving for those on the lowest incomes. That will ease pressure on household budgets.
One of the biggest scandals of the 14 years of Tory government is the fact that so many people in work rely on welfare. By bringing fairness back to pay, we rebuild financial resilience and protect more families from hardship. Thanks to the Budget, over 200,000 Scots will receive an above-inflation pay rise, including over 9,000 people across West Lothian and Falkirk. This puts more money in their pockets.
The Government are also backing much needed investment in Scottish public services, with an extra £820 million taking the additional funding for the Scottish Government to over £10 billion since July 2024. That is the choice that this Government have made, yet Scots are not seeing the improvements that the funding should deliver, and councils are forced to find ever greater and more damaging cuts. West Lothian council has just closed a public consultation on an additional £23 million in cuts over the next two years, on top of the £184 million cut since the SNP took power in 2007. That is £184 million cut from services in our towns and villages—services that our residents, including our most vulnerable citizens, rely on. There are no good choices. It is austerity on stilts, and it is wholly driven by the SNP Government. It is their political choice, and there are no excuses.
This is a fair and balanced Budget, but I would like reassurance from Front Bench colleagues on a few points. Some constituents have flagged the Motability situation, especially in relation to the availability and affordability of automatic cars. Many disabled drivers can only drive automatics, and many require larger cars to accommodate wheelchairs and mobility aids. I would therefore be grateful to the Minister for reassurance that any definition of “luxury car” will not just consider price, because doing so would limit the availability of larger vehicles, permanent adaptations and automatics. Some constituents are also concerned about the freezing of the tax thresholds beyond 2028, so I ask the Government to reconsider the extension if economic projections are consistently outperformed.
Changing the country is not going to be easy, but this Labour Government are putting in the hard yards, through meaningful choices and a rejection of austerity and debt—building a country and an economy that works for everyone and leaves no one behind.
Dr Ellie Chowns (North Herefordshire) (Green)
With sky-high bills, unaffordable, cold and mouldy homes, and one in three children growing up in poverty, our country is in crisis. Life has become unaffordable for millions of people, and years of devastating cuts to our public services, from hospitals and schools to social care, mean that those who most need support are too often unable to access it. Every day I hear from my constituents in North Herefordshire, who are living through this crisis and crying out for change.
Instead of delivering change, this Government have repeatedly claimed that there is not enough money to go around. That simply is not true. Last year, billionaires saw their collective wealth increase by £35 million a day. Britain’s 50 richest families now hold more wealth than half the population combined. A wealth tax of 1% on assets over £10 million and 2% on assets over £1 billion could raise nearly £15 billion. If we also aligned rates of capital gains tax with income tax and introduced national insurance on investment income, so that wealth is taxed at the same rate as work, we could raise over £30 billion a year.
This Budget needed to mark a turning point and an end to the politics of the past 18 months—a politics that has, sadly, scapegoated refugees and migrants while failing to tackle the inequality and the real issues that drive people into hardship. Of course, I welcome the long overdue scrapping of the cruel and counterproductive two-child benefit cap. That should have been done on day one after the general election. Instead of delivering a transformational Budget that confronts the cost of living crisis and taxes extreme wealth fairly, this Labour Government have, sadly, chosen to paper over the cracks —to tinker, not transform.
For example, take the Chancellor’s decision to remove policy costs from energy bills. Nearly 3 million households in England were fuel poor in 2024—that figure could be more, depending on how it is calculated. This is a huge problem, especially in the west midlands and especially in my North Herefordshire constituency, where fuel poverty is particularly high because of the nature of our housing and low wages. It is therefore essential that we do everything in our power to cut bills. But the decision to lower bills by cutting vital funding for home insulation by a quarter is not a real solution; it is robbing Peter to pay Paul. Home insulation is one of the most effective ways to bring down bills: upgrading the average UK home to a decent standard saves households £210 a year.
Analysis from the New Economics Foundation shows that, because of the Government’s decisions regarding the energy company obligation and the warm homes plan, the poorest households living in the coldest homes have now lost two thirds of the support they were due to receive for energy efficiency upgrades. When the UK has some of the worst-insulated homes in western Europe, we should be scaling home insulation up, not down, and using progressive taxation to pay for it. I am delighted that the Secretary of State for Energy Security and Net Zero is back in his place to hear me make these arguments.
Dr Chowns
I will not, because many Members want to get in.
Frankly, given that a typical energy bill in October 2025 was £478 a year higher than four years before, it is indefensible that this Budget does nothing to address the structural factors that keep costs high. In 2024, almost a quarter of the average energy bill went straight to the pre-tax profits of the major electricity generators, networks and household suppliers. If we are serious about tackling the cost of living crisis, we must stop private companies profiteering while ordinary people cannot afford life’s basics. Those basics should not be a luxury. We can have lower bills and more investment in affordable, warm homes, all while protecting our planet at the same time.
In ordinary times, a Budget that tinkers at the edges might be acceptable, but after the financial crash, a decade of Conservative and Lib Dem austerity, the pandemic and the fuel price crisis, the country is at breaking point. This Budget needed to go further and be bolder. That is what a Green Budget would do.
Baggy Shanker (Derby South) (Lab/Co-op)
I welcome this Budget as it cracks on and delivers for our kids, for our NHS and for hard-working families up and down the country. Importantly, it also delivers for Derby. It is no wonder the Tories do not like it.
I have said it before and I will say it again: in Derby, we are proud to be a city of makers. What we build in Derby keeps our country and beyond powered, but for far too long, people in our city from Alvaston to Arboretum have put in a shift but still are left struggling and find it hard to make ends meet. For years, they have been left to face the grinding reality of Tory austerity, and it is hurting. They are left to pay sky-high energy bills, left waiting for their kids’ education, health and care plans in a buckling special educational needs system, and left out of our city’s success as a manufacturing powerhouse.
It is not right that families are turning to food banks because their pay packet does not cover the essentials any more. It has left Derby telling a tale of two cities. Whether it is raising the minimum wage, freezing train ticket prices, freezing prescription fees or knocking £150 off energy bills, this Budget is cracking on with tackling the cost of living crisis for families in Derby and across the country—not sometime in the future, but now.
Instead of accepting that in some parts of our city the majority of kids will live in poverty, the Labour Government have said enough is enough: enough of families paying the painful price of Tory austerity, and enough of kids going to school on empty stomachs. By scrapping the two-child benefit cap, we will give 5,500 kids in Derby South a better start in life. Nationally, we will lift 450,000 kids out of poverty. That is the difference a Labour Government make.
That is not all. The Budget also delivers for young people as they take their next steps in life, because university is not for everyone. It was not for me, and I want every young person in Derby to know about the opportunities that apprenticeships can offer them in getting on. To take up the opportunity and run with it, apprenticeships need to be available for them in local businesses and in the local area. This Budget delivers exactly that. It commits £725 million for the growth and skills levy to help support apprenticeships for young people. They are this country’s future. That funding includes fully-funded SME apprenticeships for eligible under-25s. We know that when we back our fantastic young people, the whole community benefits.
This Budget delivers for the whole of our city by backing the Team Derby initiative. The Tories underestimated and undervalued Derby for years locally and nationally, and that left our community feeling locked out of our city’s success as a manufacturing powerhouse, but I have always been on Team Derby, and this Government are, too. We are committed to making sure that record investments in our city’s industry also work hard for our community, delivering the change that residents want and that they can see. I thank my right hon. Friend the Chancellor of the Exchequer and my right hon. and learned Friend the Prime Minister for backing families, backing business, backing our young people and, importantly for me, backing Derby.
Sir Ashley Fox (Bridgwater) (Con)
Last year, the Chancellor increased public spending by £72 billion, financed by £40 billion of extra taxes and £32 billion of extra borrowing. That was all justified, we were told, by a mysterious black hole that only the Labour Front-Bench team could see. The OBR certainly could not find it. These tax rises were so large that the Chancellor felt it necessary to reassure the country that
“I’m not coming back with more borrowing or more taxes.”
One year later, the Chancellor is back for more, raising Britain’s tax bill by a further £26 billion. These extra taxes will be paid by working people, like my constituent Rowena, who wrote to me after the Budget. She said:
“I have worked in education for over 10 years and have only recently reached the top of the pay scale after years of dedication and hard work. I manage long hours, increasing responsibilities, and rising needs within schools, all while striving to maintain high standards for my students. I do this as I care deeply about educating future generations and also to pay my mortgage and support my three children. I do not claim any benefits, other than child benefit, and I have always taken pride in being financially independent. However, the changes announced today leave me questioning the value of this commitment.
Under the new thresholds, I will be dragged into the 40% tax bracket, making additional work—such as examining during the summer—financially unviable. If I stop examining, students and schools will feel the impact. But what’s the point when 40% of that exam fee will disappear. Teachers are not high earners, yet these changes treat us as if we are. Calculators suggest I will be approximately £1,500 worse off annually. In fact, under the new rules, I would be financially better off and under less stress if I had two more children and claimed Universal Credit now that the two-child cap has been lifted. That is a deeply troubling message for hardworking professionals.
I also want to share a personal perspective: my 15-year-old daughter is in Year 11 and about to take her GCSEs. I encourage her every day to work hard and aim for a successful career. But what is the purpose when she sees her parents struggling and effectively penalised for being hardworking? What message does this send to the next generation?”
I hope that the Secretary of State will answer Rowena when she winds up.
Twelve months ago, the Chancellor was opposed to removing the two-child benefit cap. It was too expensive and not the best way to tackle child poverty, and seven Labour MPs had the Whip removed when they voted against that. So what has changed? Well, nothing, except the collapse in the Prime Minister’s authority. He is buffeted by events because he has no principles and no vision for where he wants to lead our country. He is raising taxes on Rowena, and others like her, to increase benefits, because that is what Labour Back Benchers want. Devoid of any real purpose, his Government’s only guiding philosophy is to survive, so Labour is now doing what it has always done: taxing and spending, without thought for the consequences. Taxes on working people are rising to their highest level ever, all to pay for higher benefits for those who do not work. A Budget is about choices, and Labour has made its choices, because this is a Budget for “Benefits Street”.
Ruth Cadbury (Brentford and Isleworth) (Lab)
I will start by welcoming some of measures in the Budget relating to transport, and if I have time, I will pick up on a couple of others.
I welcome the freeze on rail fares, and I welcome the growth-enhancing capital investment projects like the lower Thames crossing. I note that that capital investment will be the final tranche of Government support for that project before the private sector takes over construction and long-term operation. It cannot always be assumed that the Treasury will write cheques to cover the cost of building infrastructure, particularly where a solid income stream—in the case of the lower Thames crossing—or high land values can be used to leverage private funding. I welcome the announcement about funding for the docklands light railway extension. I see that the Secretary of State for Transport is in her place; I hope that we can soon have similar good news about kick-start funding for the west London orbital rail link.
Drivers and fleet managers of petrol and diesel vehicles will welcome the further extension of the temporary 5p cut in the rate of fuel duty to September 2026. While I congratulate the Chancellor on the support given to the automotive sector and our carbon commitments, including £1.5 billion for electric car grant funding and investment in EV charging infrastructure, the Government have also introduced a mileage charge for EVs that risks sending mixed signals to manufacturers and sellers of EVs, as well as fleet managers and individual buyers. That may be the right move, but I fear that it comes at the wrong time. For too many owners, the cost of running an EV is no lower than the cost of running a petrol or diesel vehicle, particularly because of the unit cost of non-domestic charging. I note that when New Zealand passed a similar piece of legislation, EV uptake fell off a cliff.
I have some questions for the Secretary of State. What measures has the Department taken to assess the overall effectiveness of its EV policies? What impact assessment has been carried out in respect of EV taxation and subsequent displacement? How is the measure consistent with the Government’s agenda to decarbonise private transport? Is the Secretary of State planning to introduce a simple odometer check, which will carry with it all the risk and problems associated with fuel duty, or will she look at satellite-based tracking, which is more accurate and is based on equity, and which better manages the demands on our roads? It could be introduced for all vehicles on a non-mandatory basis, just as water metres were originally not mandatory.
As for other measures to address the cost of living that my constituents welcome, we have the ending of the two-child benefit limit. I called for that, and I am glad that the Government have listened. It will make a measurable difference to almost 3,500 children in my constituency. The vast majority of their parents work full time but on low pay. They are forced to pay extremely high rents, and have little left over at the end of the month. We have £150 off home energy bills, freezes to prescription charges and fuel duty, and another big increase in the national minimum wage, on top of public sector pay increases and more children getting free school meals.
Iqbal Mohamed (Dewsbury and Batley) (Ind)
At a time when families in the four corners of our nation are struggling just to get through the week, the test for any Budget is simple: does it make life easier for ordinary working people? Does it put money in the pockets of low-income and middle-income earners? Does it strengthen our public services? Does it support those who are working hard, yet falling behind because of rising prices, high inflation and chronically stagnant wages?
The first thing I welcome is the lifting of the two-child benefit cap. I welcome the Chancellor finally bowing to pressure from campaigners, my independent alliance colleagues, and the seven Labour Back Benchers who defied the whip last year to vote for its abolition, but telling families that they must wait until 2026—nearly two years after Labour came into government—is not the Labour way. While children go hungry now, today and this winter, that is unconscionable.
For many winters, families have been choosing between heating and eating. Food banks remain at record high levels of usage, and warm banks are now a thing that we accept in our society. Every month, millions are one broken boiler or late pay check away from crisis. A modern economy cannot function when its people are too poor meaningfully to participate in it. That is why we need radical tax reform that prioritises a fairer tax system that funds our future.
One of the great myths of our political age is that there is not enough money to fix these problems. That is simply not true. Our tax system is full of holes wide enough for billionaires to sail yachts through; we must get a grip in this place.
Ayoub Khan (Birmingham Perry Barr) (Ind)
In my constituency, child poverty is at some 50%, so I certainly welcome the scrapping of the two-child benefit cap. Does the hon. Member agree that a wealth tax is the only way that we can resolve the underlying issue, which is the cost of living?
Iqbal Mohamed
I will come to that in the short time I have remaining.
It is not true that we do not have enough money to fix these problems. If the Chancellor was serious about rebuilding Britain, she would adopt straightforward, fairer tax reforms. As many Members across have said, we could raise tens of billions of pounds by closing loopholes that allow foreign multinationals to shift profits offshore and avoid paying UK corporation tax while onshoring expenses and taking advantage of subsidies and tax relief. We could implement the digital services tax that was originally promised, ensuring that big tech finally pays its fair share of its record profits. We could end the preferential treatment of income from wealth over income from work by taxing capital gains at closer parity with earnings. We could introduce a genuine windfall tax on excessive profits, particularly in energy, finance and banking, and reform tax reliefs that disproportionately benefit the wealthy, and instead redirect revenue to public services.
These are not radical ideas; they are basic principles of fiscal fairness. The Budget is a moral statement, and today’s Budget shows us a Government who still choose war over welfare, profits over people, and short-term headlines over long-term stability. To borrow a phrase, they are choosing the few over the many.
Madam Deputy Speaker (Caroline Nokes)
I call the shadow Secretary of State.
Mr Richard Holden (Basildon and Billericay) (Con)
The real issue here is hiding in plain sight. It is on the annunciator. This is all about bearing down on inflation, because this Government have already catastrophically failed to keep it at 2%, where the Conservative party left it at the time of the general election. That is having an impact on the cost of living up and down the country. From every single business I visit, and every single person I meet on the street in Basildon and Billericay, I hear, “Since Labour got in, things have got worse.”
Unemployment is up, as is inflation—it is now double what it was at the general election. It is the highest inflation in the G7, as my right hon. Friend the Member for Stone, Great Wyrley and Penkridge (Sir Gavin Williamson) said. Rents are up, as my right hon. Friend the Member for East Surrey (Claire Coutinho) said. Part-time jobs are being hammered, and as my right hon. Friends the Members for North East Cambridgeshire (Steve Barclay), and for Aldridge-Brownhills (Wendy Morton), have mentioned, taxes on employment are really hurting people. Growth is down, particularly in the North sea, as my hon. Friend the Member for Gordon and Buchan (Harriet Cross) said in her fantastic speech.
As my hon. Friend the Member for Weald of Kent (Katie Lam) said, energy prices are through the roof. That is hitting our ability to deliver growth for businesses, particularly our manufacturing sector. Right across the piece, this Government are hammering businesses; as my right hon. Friend the Member for Salisbury (John Glen) said, business rates for high-street firms are up by at least 40% since the general election, despite what we are constantly told by Ministers. Despite the election pledges, tax rises are hitting working people up and down the country. Under this Government, taxes are up by £66 billion a year, and alongside that, debt has risen by tens of billions of pounds.
The real issue for the cost of living is Labour’s doom loop—higher taxes, higher prices, lower growth and more unemployment, followed by higher taxes, higher prices, lower growth and more unemployment—but this Government simply do not get it. They have apparently tried educating their Back Benchers, but their Back Benchers have made their position clear. Regarding welfare, one was quoted as saying,
“I don’t understand why this means tax rises when it’s only a few billion pounds”.
Imagine how that is going down with those who have to lend us billions of pounds every year.
The Government want us to believe that they are at least trying to help, but it is clear that this is a Janus-faced Government. As my right hon. Friend the Member for East Surrey said, the costs have not come off people’s bills, because the Government are just moving those costs to their tax bills. That is true, is it not? We are told to be grateful that energy bills—which are already up—are being shifted to our tax bills. The electric car grant that is coming in is not actually helping anyone. It is not a result of energy prices having gone down; it is being paid for with pay per mile, despite the fact that the Secretary of State for Transport said to my hon. Friend the Member for Bridlington and The Wolds (Charlie Dewhirst) at Transport questions that that would not happen. There have been more questions today from Members right across the House about how on earth one could implement such a scheme.
Let us have a look at the freeze on train fares. That is not being paid for through more efficient trains or more productivity; it is being paid for by tax rises. Fuel duty will rise by 5p next year, and bus fares are already up by 50%. That measure is fully funded—by taxpayers. It is funded by bus users and motorists up and down the country. That is the cost of this Government. When I saw the numbers in the Budget, I was quite astonished, because they totally contradict the figures that the Department for Transport has put out. The Department has said that the cost of this policy is £600 million, but the Budget says £150 million. When the Transport Secretary speaks, can we have some honesty and transparency about the cost?
The issue does not stop there—it goes even further. Taxes on flights are up to £400 for a family holiday, and those taxes are going up next year, and the year after. The taxi tax is coming in, hammering our night-time economy and leaving women with a choice between paying 20% more for a private hire vehicle, and being vulnerable late at night when trying to get home. The Government are raising business rates again on the high street, but also snuck out on the same day as the Budget were multiple-times increases resulting from the revaluation of airports and a 10-times rise for the channel tunnel rail link, from £10 million to £100 million.
Sir John Hayes
I endorse the point about automatic cars and Motability, and the very important point about banking hubs and the extension. Does my right hon. Friend recognise that when we add costs to businesses such as the retailer in my constituency that I visited recently, we pay the price in terms of the jobs that they might create, or otherwise? These are lost opportunities for constituents to get jobs in meaningful businesses, because business costs are rising as a result of this Government.
Mr Holden
My right hon. Friend has made an extremely important point. These taxes are hitting across the board, and they are hitting the employment of his constituents. That is on top of the tax rises that we saw last year: the changes in business property relief, business rates and agricultural property relief, and the national insurance tax rises. It is hammering working families up and down the country, while the Government pretend that it is not.
How on earth can the Secretary of State claim that this Budget will keep inflation down? Every policy choice that the Government make fires costs straight back into the system. It is happening with policy after policy, as if some giant socialist Gatling gun were spraying costs on to businesses, passengers, taxpayers and, indeed, the entire country.
Mr Holden
I am afraid that I have no time to give way further.
Do the Government not understand that every time they hike up taxes, the cost of food goes up? Do they not understand that an indiscriminate tax hike means that the cost to the producer rises, the cost of getting the food to the shops rises, and the cost to the supermarket selling the food rises? It is a conveyor belt of wholly avoidable costs.
That brings me to the core of my argument. What are this Government actually for? Disposable incomes have been revised down, along with growth, while taxes, inflation and business rates are all up. What else is up? The number of entrepreneurs leaving the country. We thought it would be capital flight—in fact, that is what the Treasury was briefing out: real worries about capital flight—but it is not just capital flight; it is entrepreneurial flight. It is labour fleeing the country as well. People are leaving. The only thing left is land, and the Government are taxing that as well.
My right hon. Friend the Member for Salisbury made a very good point in his speech. He said that he had never seen such speculation ahead of a Budget that had worried family businesses—family businesses in his constituency and in mine. I have never known a Budget to be talked about as much as this Budget was in advance of its production. It is quite incredible. The economy is being harmed just by the briefing put out by the Government. They were doing it on the Prime Minister’s own plane. It is unbelievable.
However, it is not just small businesses that are being affected. We hear today that Zipcar, which is important to a great many people in London, will be closing its operations from the end of the year. That will have a huge impact, and it is happening because of the taxes on the company and the congestion charge imposed by the Mayor of London.
My hon. Friend the Member for Isle of Wight East (Joe Robertson) made a good point earlier when he said that, once upon a time, Labour talked of being the party of a hand up, not a handout. Well, Labour is now, quite clearly, the party with its hand in the pocket of working Britain. The hon. Member for Leeds East (Richard Burgon), the hon. Member for Salford (Rebecca Long Bailey) and my hon. Friend the Member for Bridgwater (Sir Ashley Fox) all made the same point; they are not normally on the same page, but they were today. They pointed out that it would be working people paying the price for those extra tax rises, because of thresholds that are frozen year after year owing to decisions made by this Labour Government.
The Government are not on the side of motor manufacturing either. Real concerns have been expressed by that sector, as was pointed out by the hon. Member for Brentford and Isleworth (Ruth Cadbury), the hon. Member for Ellesmere Port and Bromborough (Justin Madders), and my hon. Friend the Member for Hinckley and Bosworth (Dr Evans). How on earth, as the hon. Member for South Antrim (Robin Swann) asked earlier, will a pay-per-mile scheme work when people are crossing the border? Is the Labour party really going to tax people for driving on foreign roads? We shall have to see.
The hon. Member for Buckingham and Bletchley (Callum Anderson) made a very sensible point when he said that fiscal prudence was a means to an end. It is a means to the end of getting debt interest down, and keeping borrowing rates for businesses and families down. That is exactly right, but we did not see it from this Government. They think that people will not notice, but the Chancellor determinedly obfuscated about the figures. She talked of a black hole imposed on her, but in truth, taxes on working people are rising to pay for more welfare.
The Government think that people will not notice that they are being bribed with their own money, taken from them via the tax on electric vehicles and energy. They think that small businesses will not notice business rates going up, or national insurance taxes going up. But people have noticed. They have noticed the broken promises on tax, on working people and on bills. They have noticed the smoke and mirrors. The Government are robbing Peter, but not to pay Paul; they are robbing Paul too. People were worried ahead of the Budget this year, and now they are worried about what the third Labour Budget next year will deliver, because they know that this failing Government will be coming back for more.
The Secretary of State for Transport (Heidi Alexander)
It is a privilege to respond to today’s debate on the Budget. We have heard some excellent contributions from many colleagues, particularly those on this side of the House, and I hope my hon. Friends will forgive me if I do not mention them all by name. I will respond in writing to the specific questions put to me by my hon. Friends the Members for Ellesmere Port and Bromborough (Justin Madders), for Bathgate and Linlithgow (Kirsteen Sullivan) and for Brentford and Isleworth (Ruth Cadbury).
We have also had some thoughtful and measured contributions from Opposition Members, including the hon. Member for Dorking and Horley (Chris Coghlan) and the right hon. Member for Belfast East (Gavin Robinson). It is a shame that some of the other contributions from those on the Opposition Benches can best be described as heavy on indignation and light on contrition. You would have thought that the right hon. Members for Salisbury (John Glen) and for North East Cambridgeshire (Steve Barclay), as well as the shadow Transport Secretary, had no responsibility whatsoever for the economic inheritance that the last Government passed on to this one. We all know that the last Parliament saw living standards fall, and it is not a record to be proud of.
This Government were elected on a promise of change, which was the demand of a weary public. People were fed up with rising bills and falling real wages, fed up with schools and hospitals that had been cut to the bone, and fed up with trains and buses that they could not rely on. The economy—indeed, the country—felt broken in the very places that mattered most. In this Budget, I am proud that we are answering the public’s call for change, and making the fair and necessary choices to repair our public finances and deliver on the nation’s priorities.
We are cutting the cost of living through cheaper energy bills, frozen prescription charges and frozen rail fares. We are putting record investment into our NHS, bringing waiting lists down and creating 250 new neighbourhood health centres. We are righting a moral wrong by lifting hundreds of thousands of children out of poverty, not just through school breakfast clubs and by lifting the minimum wage, but by scrapping the two-child universal credit cap. And we are doing all this while meeting our fiscal rules. After years of decline, this is what rebuilding our country looks like.
Gavin Robinson
I understand that the Government want to accelerate their plans to remove the two-child limit as soon as possible, and it may be too soon to get a legislative consent motion passed by the Northern Ireland Assembly. May I ask the Secretary of State to undertake to engage with the Social Security Minister? If there is political willingness at Stormont for this to proceed quickly, perhaps she could do it on our behalf.
Heidi Alexander
I will certainly undertake to have those conversations with colleagues.
Heidi Alexander
In the interests of time, I will not give way.
It is because we understand what life is like for ordinary people that we have taken decisions in this Budget to provide real help with the cost of living. We know that an average household spends more than 10% of its income on getting around, getting to work and school, and making essential daily trips. That is why this Budget has not only extended the fuel duty freeze beyond the spring of next year, but restated our commitment to protect the bus fare cap.
For the first time in 30 years, we are freezing rail fares. If someone has a season ticket, is a commuter on a peak return or is travelling off-peak between major cities, they will get to keep more of their hard-earned cash. It is good news for millions of passengers, some of whom will save hundreds of pounds a year. That means extra money in people’s pockets, and it means that we will continue to keep a lid on everyday costs that drive inflation.
Heidi Alexander
I am not going to give way.
Budgets are about choices, and I know that not everyone agrees with our decision to freeze rail fares. Indeed, just days before the Budget, I received a letter from the shadow Transport Secretary effectively proposing a 4.8% hike in fares. I considered his request, but an increase in line with the retail prices index, as the right hon. Member pretty much suggested, would have put passengers’ fares up by hundreds of pounds next year. We should not be surprised that the shadow Transport Secretary wanted passengers to pay more—after all, his party increased fares by 60% when it was in office—but Labour Members believe in cutting the cost of living and putting money back into passengers’ pockets. As we set up Great British Railways, bringing together 17 different organisations into one public organisation, we will build a railway where passengers, not profits, come first.
While rail may often dominate newspaper headlines, this Government will never ignore the roads that carry most of our daily journeys. That is why, earlier this year, I gave the green light to the lower Thames crossing. After years of being stuck in planning limbo under the Conservative Government, it is now set to become the largest road building project in a generation. Thanks to this Budget, we are confirming a further £891 million of public funding, after which the private sector will take forward construction and long-term operation. Along with our commitment to extend the docklands light railway to Thamesmead, this is further proof that this Government are firmly on the side of the builders, not the blockers.
Before we came into power, our roads were a symbol of national decline. Poorly maintained and riddled with potholes, they were a nuisance at best and downright dangerous at worst. That is why, by the end of this Parliament, we will commit over £2 billion annually for local road maintenance, doubling funding since coming into office. We will fill millions of potholes every year, protecting drivers from having to shell out hundreds of pounds on costly repairs.
Investment and reform are my watchwords as we work to improve everyday journeys, but throughout all this we cannot be blind to the impact of transport on our climate. The truth is that most transport emissions come from our roads, which is why reducing costs for drivers while cutting emissions will be at the heart of the EV transition. The trends are already clear. EVs are often cheaper to run and maintain than more polluting cars, and consumers have noticed that, with EV sales accounting for a quarter of new car purchases in October.
However, this Budget enables us to go further. By committing an extra £1.3 billion to the electric car grant, we will keep saving buyers thousands of pounds on dozens of EV models. We will increase the expensive car supplement threshold for EVs to £50,000, and invest a further £200 million in the roll-out of EV charging infrastructure. My ambition is to make it as easy to charge up as it is to fill up, so I am pleased that the Budget confirmed a decade of 100% business rates relief for eligible EV charge points, and a review of the cost of public charging, including the impact of energy prices. Fairness remains at the heart of this Budget, and as the Chancellor rightly said, “everyone must contribute”, so electric and plug-in hybrid vehicles will start paying a new electric vehicle excise duty from April 2028. Above all, that ensures that all those who use our roads and all those who depend on our roads help to maintain our roads.
For years, the British people were resigned to poorer living standards, stagnant wages and public services that were not fit for purpose. This Government promised change, and despite the state of the economy when we entered office, we are delivering that change and doing so fairly. We promised no return to the long winters of austerity, and we meant it. An extra £120 billion in public capital investment over this Parliament will build new infrastructure and homes across the country. It will strengthen our energy security, and it will give the NHS its biggest ever capital settlement. For transport, it is a downpayment for better, more reliable journeys—trains people can rely on, buses that turn up on Sundays, roads that make driving easier and infrastructure that connects not just people with places, but the aspirations of the next generation to the opportunities of tomorrow. That is what this Budget is about: fair choices for a fairer Britain, where the cost of living falls, real wages rise, and our towns and cities get the connectivity they deserve. This is a Budget that delivers on the public’s priorities, and I am proud to support it.
Ordered, That the debate be now adjourned.—(Deirdre Costigan.)
Debate to be resumed tomorrow.