Autumn Budget 2026

Baroness Kramer Excerpts

Thursday 12th November 2026 Lords Chamber

[Baroness Kramer (LD)]

My Lords, this House justifies itself by the specialised expertise and practical experience of its Members, and we have heard those throughout this debate today. It was incredibly well illustrated by our four maiden speakers, who brought something new and very special to this House that we will use in future debates. I congratulate the noble Baroness, Lady Ussher, and the noble Lord, Lord Neri. There was delight on our own Benches, because how rare is it that the noble Baronesses, Lady Aglionby and Lady Kitching of Penistone—and I know I must always say Penistone—join our ranks today? I must say, as an extra sweetener, that I do not think I have ever been here before to hear plaudits from the Cross Benches, Labour Benches and Conservative Benches for that lifelong Liberal politician and activist Lord Keynes.

This Budget was described in the Financial Times as an “array of small measures”, and I have heard nothing today to make me think differently. Sometimes there is an argument that a Budget that does not shift the dial is the right one, but I am not sure that stalemate is suitable for long when people are under such pressure from the squeeze in the cost of living. If anyone doubts that that is serious and has consequences, they should simply look at the results of the American mid-term elections.

For me, the starkest message about this Budget is on page 38 of the OBR report. Under “Real household disposable income per person”, the OBR says:

“By 2029-30, our central forecast sees growth over the prior 10 years averaging less than 0.1 per cent a year”.


That is both shocking and a warning. People can take short setbacks, but they cannot deal with relentless pressure. The issue is, frankly, immediate. The Budget’s small giveaways to provide breathing space will be swamped by increases in energy costs in the new year, with the Ofgem energy price cap now forecast to rise by between 16% and 28% on 1 January, adding up to between £300 and £500 a year more to the bills of an average household.

The Budget also did not factor in additional costs to come—from Milburn, Timms, the Casey report and the Burnham 10-year plan. I support the proposal from my noble friend Lord Fox that this House should be given the opportunity seriously to debate that plan, because I am going to give the Government the credit of assuming that it is a plan of substance. All those, put together, look as though they will hope to deliver savings in the long term, and I support that, but they are going to mean costs in the near term, and those are not reflected in the Budget.

The Budget also continued the fiction, long used by the Conservatives, that huge savings can be made in public services at the end of a forecast period. The OBR said:

“‘unprotected’ areas of day-to-day spending could face a 2.6 per cent a year real-terms reduction in the final three years of the forecast”.

That simply is not credible.

We all look to growth as our saviour, but it is very uncertain. I am delighted with the third quarter results of 0.7% growth, which we heard today, but as my noble friend Lord Fox pointed out, it is off rather a low base of economic performance, and it is also very much focused just within the services sector. There are real consequences that must be considered and thought through. No one can possibly rely on the bet that wars in Iran and Ukraine will end any time soon. Again, as my noble friend Lord Fox pointed out, the recovery even after those wars end is going to be slow and difficult. I wish it was not true, because of the suffering it has caused, but we have to face reality.

I am very pleased, and I fully accept, that AI will help our economy, as we heard in speeches today, but the US election showed us that AI, on which the Government are pinning so much hope, is going to be a bumpy ride, not a stairway to the stars. AI devours resources and creates plenty of losers alongside the winners. We are going to have to take that into consideration, and I do not see it built into any of the thinking.

We also have a demographic problem. The realities of our ageing population, combined with a sharp ebb in immigration, are leaving us with an old-age dependency ratio of over 30%. The global average is 16%, and warning bells go off around 20%. We have a demographic problem, and we have not thought our way through it.

In 2027, CPI inflation is forecast at 3.5%, well above target, which means rising interest rates now potentially reach 5% next year, real GDP growth slows to roughly 1%, public sector net debt peaks at 97% of GDP and headroom under the fiscal mandate is reduced to £15 billion—and just a small shift in interest rates could eat that in one go. Taken as a share of GDP, taxes rise to 38%, surpassing previous historical records, largely as a result of fiscal drag. It is simply not pretty.

So, how do we get out of this? First, we need to give our businesses the opportunities to trade and get the investment they need by negotiating our way back into the EU single market and the customs union. Something that was considered contentious is now coming on to everybody’s menu as an absolute requisite if we are going to rescue this situation. The uplift would let us do something that my party considers very important, as it demonstrated when it was in coalition, which is to finally raise tax thresholds—a crucial relief for most people.

Small businesses are the backbone of our communities, and I want to explore some of the issues raised by the noble Lord, Lord Massey, and others. Entrepreneurship is deeply bedded in the success and growth of our small businesses. I want to better understand how this Budget is treating them, and I will continue to do that, but I hope we will get more from the Government on it.

I would go beyond that—I think I am picking up some of the concerns of the noble Lord, Lord Walker, but I do not want to put words in his mouth—and say that surely this is the time for a complete overhaul of business rates and moving over to a commercial landowner levy. The Government simply have to look again at small business national insurance, beyond just the hospitality industry and beyond just short-term measures.

To me, this requires a change in the way that the big banks behave. They are continuing to ignore much of small business, as we heard in detail from the noble Lord, Lord Eatwell. His solution was to force the banks to engage in investing in venture capital. I want to follow the US model, and force those banks that are going to ignore small businesses to invest in community development financial institutions, which can actually do the job properly of lending to small businesses because they know them and understand the risks in a way that banks currently do not. Our ambition should be to match the scale of the US, where CDFI funding is nearly all of the funding for small businesses and a key stabiliser in times of economic difficulty. If you want a good lecture on CDFI and its benefits, talk to Jamie Dimon, who has been attempting to use the vehicle of JP Morgan to provide CDFI opportunities in the UK, because he finds it so outrageous that it is not available to our businesses here.

We have to move much further on restructuring the energy market, especially to detach the pricing from global gas. I join my colleague, the noble Earl, Lord Russell, in saying it is crucial that there is a coherent energy policy that focuses on those who are suffering the most, rather than looking broadly across the population, because we are going to hit such a crisis, particularly in the new year. I also join him in saying we that have to hold firm on our climate change commitments. If we do not deal with climate change, it will come back and more than bite us; we will lose so much of what we gain if we do not deal with that issue in an aggressive way.

The noble Lord, Lord Fox, talked about the moves my party has been making to tackle regulation, very clearly keeping protections in place but looking at streamlining and unnecessary duplication, to make sure that regulation is truly effective. When that is tackled in an important way, it can provide relief to businesses across the board.

One last thing, which is essential, is this. I fear that, when we get into the new year, given the global context and the potential for wars to continue to rage and energy prices to stay high, the Government will need to have in their back pocket an emergency plan to make sure there is additional help available for ordinary people. My party has put together an 18-month plan, of which the Minister will know the details, to help with the cost of living: £14 billion, which would then be clawed back from the monopoly energy operators who are presently spending their huge windfalls on share buybacks, not even on investment.

As it looks today, in January, many people are going to need a great deal more help to make it successfully through the next year. I hope the Government will look again at their Budget and make sure they have the capacity to put in place that kind of support.