Andrew Griffith
Madam Deputy Speaker, I should make some progress, and we have got plenty of time to talk about defence—
The Secretary of State for Defence (Wes Streeting)
That is not an answer!
Andrew Griffith
No, no. I have a very good answer. In 2010, the Defence Secretary’s party wanted to reduce and cut further our armed forces. We were the party that will always stand behind our armed forces.
The Secretary of State for Defence (Wes Streeting)
I am proud to open this Budget debate on behalf of the Government, proud of the leadership of the Prime Minister and of the Chancellor, who is offering this country breathing space today and fresh hope for the future.
Before I turn to that, I need to talk about the threat this country faces—one that sabotages our economy, pushes out misinformation and attempts to undermine people’s trust in government. For once, I am not talking about the Russians, but the Trussian, not least the shadow Chancellor, the hon. Member for Arundel and South Downs (Andrew Griffith), who I fear is part of a Trussian sleeper cell operating in the shadows of the Conservative party. He did not say much about his plans today, but I do not think we do not need to look very far. In fact, there is a book out that tells us all about the secret plans he is no doubt saving up for the next manifesto: “Bank Job”, it is called, written by one Liz Truss. The shadow Chancellor knows her well; it is the Liz Truss for whom he helped write the mini-Budget, which crashed our economy and damaged Britain’s reputation, and which he still says contained, “lots of good things.” Maybe that is why, when I tried to obtain a copy of “Bank Job” this morning, I found that there were no copies available in bookshops for miles around. Presumably, the shadow Chancellor has gone around and bought them all up, just in case someone finds out exactly what the Trussians stand for.
Because that is the danger, Madam Deputy Speaker: they walk among us, the Trussians, hiding in plain sight— deep-cover sleeper agents masquerading as responsible fiscal Conservatives. But we will not be fooled. We remember when the shadow Chancellor cheered Truss on, and we all know the consequences of their misjudgements. If we are not careful, the Trussians will be coming—they are already winding up to play their own game of roulette with our public finances once again.
All joking aside, I think it is genuinely appalling that the arsonists have the audacity to complain as the firefighters are clearing up their mess—never forgive, never forget, and never let the Tories do it again. In fact, in one of the low points of an otherwise dull and inaccurate contribution to this Chamber, the shadow Chancellor had the audacity to level low blows against my right hon. Friend the Member for Leeds West and Pudsey (Rachel Reeves). Let me point out that, despite the economic global shocks that this country faces, along with security threats of a kind that we have not faced in generations, earlier this month the IMF upgraded its growth forecast for Britain for 2026. It said that the UK “stands out” among G7 nations, and it credited the Government’s responsible approach to handling the public finances. That is the legacy of my right hon. Friend, and I pay tribute to her leadership, her experience and her hard-headed stewardship of our economy. [Interruption.]
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. I can tell that the Defence Secretary has had his Weetabix, because he is very loud at the Dispatch Box—but he has to be loud, because there is so much heckling. Can everybody just calm down a little bit?
Wes Streeting
They can shout all they like, Madam Deputy Speaker. The fact is that the former Chancellor restored the confidence of the markets after the Conservatives trashed Britain’s reputation with their catastrophic mini-Budget. She created the platform for our Labour Government to invest in public services, protect the most vulnerable, foster innovation and navigate the headwinds of the last two years. During her time as Chancellor of the Exchequer, my right hon. Friend the Member for Leeds West and Pudsey established a record that the Conservative Front Bench could not begin to touch. Those are the facts.
None the less, against the backdrop of the enormous challenges this country faces, the Chancellor, as he set out yesterday, is taking action to tackle the cost of living and give households breathing space today: help for 20 million households to heat their homes this winter; freezing fuel duty to keep prices down at the pump; helping with the everyday cost of the weekly shop so that people have more money in their pockets; action on energy bills; and the minimum wage, the national living wage and the state pension all going up to help people out. No one is suggesting that these measures solve everything for everyone, everywhere, all at once, but people can see that we are doing everything we can, as fast as we can, to give them breathing space today and fresh hope for the future; to show that this Government and this Prime Minister have got their backs; and to show that we can still do big things as a nation, that Government can make a difference to people’s lives, and that Britain is a country we can still believe in.
That is important, as we look beyond the optimism of the first 100 days of this new Government and our new Prime Minister to the brighter future that lies ahead for our country if we make the right choices. Yes, we face great challenges, but the character of a nation is not defined by the challenges it faces, but how it chooses to respond to them. And be in no doubt: it is a choice. We choose not to be daunted by the scale of the challenge, but to be motivated by it—to face the future not with fear, but with confidence, and to choose hope. We choose it because we know what hope can do.
Look at what this Labour Government have delivered in the past two years: half a million children out of poverty; waiting lists down by a quarter of a million; the asylum backlog down 60% in a year; small boat crossings at their lowest in six years; the fastest growing economy in the G7 in the first half of this year; free breakfast clubs feeding 680,000 children; six train operators brought back into public ownership; and defence spending up by £14 billion compared with the Conservatives’ final year in office. Lots done and lots more still to do, but so many reasons to believe that our best days lie ahead.
Steve Barclay (North East Cambridgeshire) (Con)
As the Defence Secretary is talking about defence spending, could I just point him to paragraphs 2.5 and 2.6 on page 31 of the Red Book? I am sure that one of his Treasury colleagues will have a copy. He will see that £10.3 billion of that spending is funded by reprioritisation, alongside £4.7 billion, £3 billion of which is from capital cuts elsewhere and £1.7 billion from the reserve. He will, of course, get the £1.7 billion from the reserve, but has he been told by the Treasury where that £3 billion of capital savings is coming from? How much of it, if any, is coming from his Department? Can he assure the House that the Government are on track on the more than £10 billion of efficiencies, given that the Institute for Government and many others say that it is highly unlikely to be delivered?
Wes Streeting
I can absolutely confirm that thanks to the responsible choices made by the Chancellor and his predecessor, we have headroom to weather shocks, and the Chancellor is drawing on that. On capital budget reprioritisation across Government, it is absolutely true to say that across the Cabinet, Ministers have been willing to prioritise within their own capital programmes in order to fund defence. We can be absolutely clear, beyond any doubt, that this is a Chancellor, a Prime Minister and a team who choose to prioritise defence. I bet the right hon. Gentleman wishes that he made the same choices when he was Chief Secretary to the Treasury, instead of leaving our armed forces “hollowed out and underfunded”.
It was another great Healey—my predecessor, Denis Healey—who said that without strong defences,
“we have no houses, we have no hospitals, we have no schools. We have a heap of cinders.”—[Official Report, 5 March 1969; Vol. 779, c. 551.]
The first duty of any Government—to keep our country safe—is a greater and more urgent challenge now than it has been for generations. The gravest dangers of the 20th century are returning, armed with the technologies of the 21st. Britain faces growing threats from state-sponsored terrorism, sabotage and hostile acts that are designed to disrupt our lives, undermine our security and spread fear.
Yesterday, the Chancellor gave his response to those threats at this Dispatch Box, delivering more support to the frontline for freedom in Ukraine, plugging the £4.7 billion gap in the defence investment plan and confirming our unshakeable commitment to NATO to spend 3.5% of GDP on defence by 2035. But he went even further, with a new target reflecting Labour’s commitment to fund defence spending at 3% of GDP by 2030. That is the commitment the Chancellor made at this Dispatch Box yesterday. That is a record the Conservatives cannot even begin to touch—
Wes Streeting
But I look forward to the hon. Gentleman defending the indefensible.
Ben Obese-Jecty
I just wanted to bring the Defence Secretary back to his comments about the defence investment plan and its being fully funded. According to the Red Book, there is a reallocation of capital spending that is £145 million this year and £2.1 billion next year. Can the right hon. Gentleman outline where that reallocated capital spending will come from?
Wes Streeting
I have just set that out. It is there in the Budget. The Government have reallocated from capital programmes across Government to ensure that defence is fully funded.
It is disappointing, Madam Deputy Speaker. This has become a running theme of the leadership of the Leader of the Opposition. When we sat on the Opposition Benches, I remember that Keir Starmer always made a virtue of standing with the Government on issues of national security and defence. We provided constructive challenge where we needed to, but we stood with the Government. This lot cannot help but try and score petty party political points at the expense of defence and national security.
What is even more extraordinary is the enormous brass neck of the Opposition, considering their record. Just look at it: we had the smallest army since the Napoleonic wars; every single recruitment target was missed; morale fell to a record low of 40%; almost every equipment programme was over budget or behind schedule, and often both; and defence spending faced a real-terms cut between 2010 and 2024, falling from 2.5% of GDP to 2.3%. [Interruption.] In the words of their own Defence Secretary, the armed forces were left “hollowed out and underfunded”. [Interruption.] And now the Conservatives have the audacity to turn up and criticise a Labour Government who are investing more, investing more quickly, and cleaning up their mess.
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. Mr Obese-Jecty, this is not good behaviour. After yesterday, Mr Cartlidge, I thought you would have had a much quieter voice. I cannot hear the Secretary of State. Can we just let him continue?
Wes Streeting
I am trying to make my voice heard from the Dispatch Box, Madam Deputy Speaker.
As I have said from my first day as Defence Secretary, I trust this Chancellor to give us what we need to keep our country safe, and yesterday demonstrated why. His Budget proves why Labour can be trusted on defence—[Interruption.] It does say that here, because I wrote it. We are delivering the biggest sustained increase in defence spending since the end of the cold war. That was Labour’s record before the Budget; this Budget takes us even further, and next year’s spending review will take us further still. What a contrast with the abysmal record of failure staring us in the face from the Opposition Benches.
I appealed in my first statement to this House for national unity on national security. It is important that our allies and our adversaries know that we agree far more than we disagree. We all believe that we should spend more on defence; we all believe that we should stand with Ukraine; we all believe that we should invest in homeland security. What a pity, then, that the Leader of the Opposition and her ragtag band of political vandals choose to play politics with national security. For the Opposition to do that in the current environment is bad enough; to do so with their abysmal record in government takes some brass neck.
Graham Stuart (Beverley and Holderness) (Con)
Will the Secretary of State give way?
Wes Streeting
Perhaps the right hon. Gentleman wants to defend that record.
Graham Stuart
I am grateful to the Secretary of State for giving way, but he will be aware that there is no plan to ensure that that 2030 target is met. At a time when we have short-term cuts in operational spending, the Secretary of State must feel a certain amount of disappointment that we do not have a firm plan in place, because if the Treasury do not sign off the numbers, then nothing really happens. That is true, is it not?
Wes Streeting
I just do not know what the Opposition have to moan about. We came into government with the abysmal inheritance that we faced, and we chose straightaway to invest more in defence to clean up their mess. We have now gone even further than the NATO commitment of 3.5% by 2035 by choosing to set our own target of 3% by 2030. That is not just about the future; it is built on our record in our first two years.
Defence spending has gone from 2.3%—
Mr Mark Francois (Rayleigh and Wickford) (Con)
Will the Defence Secretary give way?
Wes Streeting
In a moment. Just so that we are clear, we have gone from spending 2.3% of our GDP on defence when we came into office to spending 2.7% next year. It is very clear that we are on the right trajectory. That is not a record that they can speak to. I do not know how they can be so shameless—
Mr Francois
If it is true that the Defence Secretary has a plan for 2030, I ask him why the Labour Chair of the Defence Committee said yesterday in reaction to the Budget:
“some of the key decisions on defence spending have lamentably been delayed until next year’s spending review. There is a cost to inaction. Investment in our nation’s defence and security cannot be kicked into the long grass. Our adversaries are not bound by fiscal years and spending cycles.”
Madam Deputy Speaker (Ms Nusrat Ghani)
Order. Before the Secretary of State responds, may I point out that there are many people wishing to contribute? Hopefully his speech will be coming to a conclusion shortly.
Wes Streeting
I have been too generous with allowing interventions, but let me take that point head on. I think that is completely unfounded criticism—
Wes Streeting
I don’t care if he is the Chair of the Defence Committee. I would say it directly to him, and I am sure I will get the chance to say it to the entire Committee. It would be fair criticism if this Government had not already made decisions that are leading to the fastest increase in defence spending since the end of the cold war—not in future years but already, on the basis of our first two years in power. The Chair of the Defence Committee is a good friend, and I am sure that, just as I can take his criticism on the chin, he will take mine. I will gladly accept criticism where I think it is fair, but I robustly reject it where I think it is wrong.
I have referred to the Conservatives’ record of 14 years in power. Let me contrast that with what I have presided over in the last 14 weeks: armed forces recruitment showing its longest run of growth for half a decade; 400 contracts signed, worth £4 billion; £400 million for spy drones for the Army; £135 million for Royal Navy torpedoes; £700 million for next-generation fighter jets; over £8 billion for our nuclear submarine fleet; and the UK’s sixth attack submarine and first ever space squadron launched. We have returned gun barrel manufacturing to the UK for the first time in decades; we are backing British industry to build the docks for our nuclear subs; we have increased monitoring of Russian vessels in the English channel; provided 50,000 apprenticeship opportunities for young people; welcomed record-breaking investment in Scotland; deployed our armed forces to help Saudi Arabia defend itself from Houthi attacks; bolstered support for Ukraine; and signed a landmark AI deal to access cutting-edge battlefield data. We have strengthened our NATO alliances, as I have visited Washington, Paris, Copenhagen, Warsaw, Reykjavík and Kyiv. We have mobilised with our allies in the Ukraine defence contact group, the E5 and the joint expeditionary force, and hosted our friends from Italy, Japan, Canada, Australia, Qatar and Oman as well as the NATO Secretary-General. And in case the Conservatives missed it, as their party leader seemed to yesterday, on top of the biggest sustained increase in defence spending since the end of the cold war, we have set out our target to spend 3% of GDP on defence by 2030. That is our record, and it is a record that the Conservatives cannot begin to touch.
This is a Government who actually put our money where our mouth is—strengthening our armed forces, alliances and industrial base, and backing Britain by buying British. That is how to defend this country—not with the gimmicks and grandstanding of the Conservatives but by making this country ready with our allies to fight and win so that our adversaries think twice about launching an attack in the first place.
The truth is that this is a more dangerous world, and that makes greater investment essential. Delivering what the Chancellor announced yesterday requires choices and trade-offs. We will ensure that every pound that we invest is well spent and creates jobs and opportunities—not just a Ministry of Defence but one of growth and opportunity. We will help to deliver the Prime Minister’s domestic agenda—stronger regional economies, a rebuilt industrial base, good jobs and better opportunities for the next generation. We will have a more resilient United Kingdom built by the British people to keep Britain safe.
Spending on our defence is a measure of our commitment, but capability is a measure of our credibility. That is what this Labour Budget does, rooted in our values. It gives breathing space to working people. It gives us fresh hope for the future, and it strengthens the security on which we all depend. Building a Britain ready to fight and building a country worth fighting for—that is our record and plan. That is why I am proud to stand at this Dispatch Box and commend the Budget to the House.
The Economic Secretary to the Treasury (Lucy Rigby)
I thank all right hon. and hon. Members for their contributions to this Budget debate. It is an honour to respond on behalf of the Government.
Yesterday, the Chancellor delivered a Budget that will steer Britain through a period of global volatility and the economic storm that has increased pressures on families and firms across this country. It is a Budget that doubles down on our fiscal discipline, and that strengthens our economic resilience and national security, making responsible choices in an uncertain world. It is a Budget that offers households and businesses breathing space from cost pressures in the here and now, and one that makes critical structural changes that will drive our future prosperity.
Over the course of the debate, the Defence Secretary and Labour Members, including my hon. Friends the Members for Buckingham and Bletchley (Callum Anderson) and for Blaydon and Consett (Liz Twist), have rightly emphasised the importance of our commitment to fiscal responsibility, which underwrites every promise this Government make to the British people. As was made clear yesterday, in this Budget the Chancellor has met his fiscal rules, and for the first time this Government are meeting them in the third year of the forecast. The headroom against the stability rule is £15 billion, rising to £22 billion in 2030-31. Last year, we cut borrowing to its lowest level in six years, and the OBR’s economic and fiscal outlook confirms that borrowing will fall over the forecast.
Madam Deputy Speaker, you will forgive Government Members for taking the advice of the shadow Chancellor, the hon. Member for Arundel and South Downs (Andrew Griffith), with not so much a pinch of salt, but a whole bucket of it, because not only is he the architect of the mini-Budget, but he maintained just a few weeks ago that the mini-Budget, as the Defence Secretary said, contained lots of good things. Perhaps the shadow Chancellor would like to tell us what those good things were. Were those good things the sky-high mortgages for millions of people right across this country, including in my constituency, the disastrous market impact, or the cratering of our international reputation?
Britain’s economic reputation was so badly damaged under the Conservatives that the IMF publicly warned them to change course. [Interruption.] You can tell that they do not like to be reminded of it, Madam Deputy Speaker. The shadow Armed Forces Minister, the right hon. Member for Rayleigh and Wickford (Mr Francois), does not like that either, because he was one of the mini-Budget’s chief architects and, indeed, one of its most ardent fans. The reality is that the contrast between their approach and ours could not be clearer.
Dr Luke Evans
Talking about structural problems and difficulties, a press release has just come out from the Labour party that says: “Exclusive. Chancellor tells Krishnan Guru-Murthy that Labour will not bring welfare bills down in this Parliament”. Does the Minister stand by that?
Lucy Rigby
We are reforming welfare, and the Prime Minister has made it clear today—[Interruption.] The welfare Budget ballooned under the Conservative party. The Prime Minister has been very clear today that the welfare bill will come down.
As I have said, the contrast between our approach and the Conservatives’ could not be clearer. The IMF forecast earlier this month that our deficit would be the lowest in the G7 by 2029. Fiscal strength matters because our economic security and our national security are inseparable. That is why this Budget strengthens Britain’s capacity to withstand global volatility. It funds the defence investment plan by reprioritising capital budgets, so that Britain can respond to a more dangerous world. It also strengthens our defence industrial base and supports skilled jobs across the country. As has been pointed out by the right hon. Member for Maldon (Sir John Whittingdale) and the hon. Member for Edinburgh West (Christine Jardine), it also—
Steve Barclay
On a point of order, Madam Deputy Speaker. The Economic Secretary has just said at the Dispatch Box that the welfare bill will come down. The BBC has been reporting, following the Chancellor saying the same thing this morning, that No. 10 and the Treasury have informed the media that that is not the case, and the welfare bill will not be coming down. How do we ensure that the House gets the true position, because it is rather hard to keep up when the message keeps changing?
Lucy Rigby
Let me talk now about energy security, because it is part of our national security, too. We are reforming our energy system so that Britain is less exposed to volatility. We will freeze new policy costs on bills, pending a comprehensive cost control framework. We are accelerating investment in the grid and we are procuring clean power only where it lowers bills and can connect properly.
When it comes to our public services, this Government have stabilised spending after years of under-investment by the Conservative party.
Mr Francois
I am sure the right hon. and learned Lady can confirm to the House that she is a Treasury Minister. I have here the press release issued by—the Treasury—which says, “Exclusive. Chancellor John Healey tells Krishnan Guru-Murthy Labour will not bring welfare bill—”
Mr Francois
I apologise, Madam Deputy Speaker. I was reading the press release, but I accept your admonition.
Anyway, it says that the bloke who is in charge of the Treasury has told Krishnan Guru-Murthy that Labour will not bring the welfare bill down in this Parliament and the Economic Secretary to the Treasury—to give the right hon. and learned Lady her correct title—has just said that it will. Who is right? Is it the right hon. and learned Lady, or is it her boss? They cannot both be, can they?
Lucy Rigby
The Prime Minister confirmed earlier today that we will bring the welfare bill down as soon as possible. I am very happy to confirm that.
As the Chancellor said yesterday, when it comes to public services we will insist on reform, prioritisation and value for money. That is what resilience looks like: sound public finances, secure energy, strong defence and a state that is able to act when the country needs it to.
As hon. Members have made clear, including my hon. Friends the Members for Gloucester (Alex McIntyre), for Shipley (Anna Dixon) and for Leeds South West and Morley (Mark Sewards), the measures in the Budget will provide breathing room for families and businesses now, while also helping to bring bills down over the long term. We know that energy pressures are not just felt by families but by businesses, too. That is exactly why we are increasing the small business rate relief threshold for retail hospitality and leisure properties, taking around 70,000 more businesses out of business rates altogether. For other businesses in the sector, rates will be frozen in real terms for two years.
We are supporting high streets and the businesses that give them life. We are backing pubs, clubs and music venues. We are reducing the supply-side barriers that firms repeatedly tell us hold them back: energy costs, slow infrastructure decisions, red tape and access to finance. And because of our commitment to fiscal responsibility, all those measures are fully funded.
Anna Dixon
I thank my right hon. and learned Friend for her closing remarks and for responding to the points raised during the debate. Will she confirm that business rates relief will not apply to the vape shops that are popping up on our high streets and blighting them?
Lucy Rigby
I can.
On that commitment to sound finances, our plan is to double down on the conditions that will allow for the growth that will drive this country’s future prosperity. We are determined that Britain will be an even better place to start a business, to scale it and then to stay. A new founders’ relief will offer a 10% capital gains tax rate on eligible lifetime gains of up to £10 million for founders of high-growth companies. We are doubling the CSOP—company share option plan—limits and we are tripling the trading allowance, too.
Recognising that artificial intelligence is the defining technology of our time—it is already turbocharging productivity—we are putting more than £700 million behind making it safer, more secure and easier to adopt. I am pleased to confirm to the hon. Member for North Cotswolds (Sir Geoffrey Clifton-Brown) that we will continue to safely adopt AI within the public sector, improving public services and productivity while securing better value for taxpayers.
The Chancellor also talked yesterday about significant change to our energy policy, because we know that affordable, secure energy is a platform for growth. By accelerating grid connection, controlling costs and lowering electricity bills, we will strengthen industrial competitiveness and unlock investment across the country.
We are putting our public finance institutions at the heart of Britain’s growth mission with an additional £20.4 billion of capital for the national wealth fund and the British Business Bank.
To conclude, in the first half of this year, our economy was the joint fastest growing in the G7, alongside the United States. The OBR has raised its forecast for growth this year. Whole economy investment, business investment and productivity are all up. That progress is being tested by global pressures, which is exactly why the Chancellor has delivered a Budget that will steer us through the storm. It is a Budget underpinned by fiscal discipline, it provides support to families and firms now, it will strengthen our resilience, and it will put this country on the better, more secure and more prosperous course that the British people deserve.
Ordered, That the debate be now adjourned.—(Liam Conlon.)
Debate to be resumed on Monday 2 November.
Petition