Autumn Budget 2026

Lord Harper Excerpts

Thursday 12th November 2026 Lords Chamber

[Lord Harper (Con)]

My Lords, it is a great pleasure to follow the noble Earl, Lord Russell. We are blessed in this debate to have four maiden speeches. I am delighted to have listened to two of them and look forward to the remaining two.

I want to say a word or two about the noble Baroness, Lady Ussher. I am sorry that she is not in her place to hear them. It is always good when someone says something nice about you if you are there in person, but I am sure that she will have the chance to read it afterwards. She was in the House of Commons from 2005 to 2010, which was my first term in the House of Commons. I saw her in action as a Treasury Minister, and I thought her speech today demonstrated her enormous experience from that role and her considerable economic experience in a number of roles since. I am sure she is going to make a tremendous contribution to the House.

My noble friend on the Front Bench, Lady Neville-Rolfe, in the time she had, was able to set out a comprehensive critique of the Budget. I agreed with everything she said, so it is not necessary for me to repeat much of it.

There are a couple of points I want to focus on. Budgets are fiscal events, front and centre, and that means we should judge them on their tax and spending measures. The Treasury and the Chancellor seem to be very cross that people are judging the Budget on the tax and spending measures, but that is fundamentally what a Budget is. The IFS came to the conclusion that the tax and spending measures were minimal and are not going to make a significant difference.

The other big opportunity you have in a Budget as a Chancellor is to drive forward significant supply-side reforms that are going to improve the performance of the economy and drive up growth rates. I am afraid there were none of them either. The Budget was a big missed opportunity. It kicked into the future decisions on welfare, social care and defence. Those were missed opportunities. If you are a new Prime Minister, as Andy Burnham is, with a significant majority, my experience is that you need to take those decisions early because they take time to come to fruition.

The key thing I want to talk about is where we go in our relationship with the European Union. I am afraid I draw the opposite conclusion from that set out by the noble Lord, Lord Liddle. If we look at the growth figures today and the growth in the economy this year, the fastest-growing sector has been information and communication. The OBR itself says that a lot of that is driven by investment in artificial intelligence and related industries. That says to us that the debate about the EU is in great danger of being backward-looking, looking at the industries of the past rather than the industries of the future. If this country is to have high growth, we will have to be successful in those industries of the future.

I will give one example. On artificial intelligence, the regulatory regime that we have chosen in the UK is one much more likely to deliver fast growth in artificial intelligence and fast economic growth as a result. The EU has taken, as it does in many areas of policy, a much more risk-averse, anti-growth policy framework. If we are to get closer to the European Union, we will end up regulating artificial intelligence closer to its model rather than to the much more successful model that we have. That will set growth backwards. There may be advantages to be gained from industries of the past, those that are not fast-growing, and we may get some economic gains there, but any economic gains in those areas will be dwarfed by the gains we will miss out on by regulating areas of the economy that will be fast-growing in the future.

The final thing I want to say—again, this is connected to the Government’s European Union approach—is about unemployment, particularly for younger people. My noble friend on the Front Bench referred to the OBR’s forecast for unemployment going up. The big issue of today and the next week will be Alan Milburn’s report about NEETs. It seems to me that the Government have made two policy choices that make that more difficult: they put up employers’ national insurance contributions, particularly hitting hospitality and retail, the sectors of the economy that employ younger people; and they have put £5 billion of costs on businesses through the Employment Rights Act. Then there is the impact of the youth mobility scheme, which is a terrible idea. If we sign up to a scheme that will potentially see up to 100,000 young people coming to the United Kingdom from Europe, there is no way that it will help get British young people back into work.

The Government are therefore in great danger of having a backward-looking European Union policy that will damage our economic growth prospects and the unemployment rate, and will not deliver the economic growth prospects for the future that all of us in this House want to see.

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[Lord Pitt-Watson (Lab)]

I am quoting the noble Baroness, Lady Neville-Rolfe. We have the highest borrowing costs in the G7. Do noble Lords know how much we would save if we brought them back to the average? We would save £15 billion a year.

There is this notion that we could suddenly slash welfare. Just last month, George Osborne explained that the welfare bill exploded under Johnson and Sunak, in the last Parliament, by 0.7 percentage points as a share of GDP. The Conservative Party is suggesting that we should cut VAT for foreigners shopping. Their shadow Chancellor reckoned that that would cost £2 billion, which would be funded by welfare cuts. If we, in this Government, find £2 billion extra to spend, we will not be spending it on foreign shoppers; we will be spending it on the defence of the nation and the health of our citizens.

From this very Dispatch Box, one of my predecessors, the noble Lord, Lord Agnew, resigned. Do noble Lords remember what he said? The reason for his departure was “arrogance, indolence and ignorance” in the management of public finances.

I want to set aside political points, because we are at our best when we are together, but it is simply not credible to suggest that this Government are doing nothing and that the Conservative Party, with that record, has some magic-wand solution.

[Lord Harper (Con)]

The Minister has provoked me slightly. He said that he was not going to make political points, then went and made them all. He quoted George Osborne very selectively, referring to the period between 2019 and 2024, when—if I may just remind the Minister—there was a once-in-a-generation global pandemic that crashed the economy by about 10%, and there was the war in Ukraine. During the whole of the rest of the period of the Conservative Government, we were actually successful in reducing working-age welfare, in real terms. So I argue that we can be very proud of our record on welfare reform and can demonstrate that we could do it again.

[Lord Pitt-Watson (Lab)]

As I say, welfare spending increased by 0.7 percentage points as a share of GDP during the last Parliament. However, I do want to step back from that and address some of the questions that have been asked.

In many of my discussions and debates with noble Lords, there has been a great degree of consensus, in particular on the Financial Services and Markets Bill. We agreed where we wanted that legislation to go and it has just gone through the Second Reading in the Commons without a vote against it. I pick out in particular the work on child trust funds and—she is nodding—the noble Baroness, Lady Kramer, but also others from across the House. The Financial Services and Markets Bill will mean the release of more than £2,000 each for 60,000 to 120,000 young people, as a result of the Government having listened and found a way round the legal difficulties. This House should be rightly proud of what we have achieved by working together. I have done my political bit, so will see whether I can continue in that spirit.

We live in tough times. As one friend said to me, the only predictable thing about the future is its unpredictability. Even since the Budget, who would have guessed what has happened in Iran and in the midterms, and who would guess where we are going from here? Of course, we cannot wish those economic storms away, but the core of the Budget is sticking to the fiscal rules in full—as I said, for the first time since 2022, and in the third year of the forecast.

But, look, this is good news: more widely, Britain continues to show growth in productivity and investment in the face of these global pressures. We are a wonderful, resilient people, served in the most part by fantastic, honest, creative and caring businesses, growing in the year to date by 1.9%. That is impressive. We are in difficult times, we have fiscal discipline and we have a resilient people, and I think they deserve breathing space.

I was quite taken by the noble Lord, Lord Leigh, saying that he does not want people giving up their seat for him. I have always taught my kids that, when there is an older person there, you should give up your seat for them, and that that is how my grandchildren should be taught as well. Maybe we come from a different sort of background on all that.

The breathing space is in two places: for consumers and for businesses. The noble Earl, Lord Russell, was right in saying that there are lots of proposals here. To the noble Baroness, Lady Wheatcroft, I say that I really was not so sure that all was quite so gloomy. A lot of the things she was talking about, such as tax simplification, are good points, but there is lots in the Budget.

Maybe they are small things, but they matter to people: 20 million getting the household payment for electricity; VAT on domestic electricity still removed until July, as is the 5p on fuel duty; gas standing charges and levy costs on bills coming off; an increased national minimum wage and national living wage; and a higher mileage allowance. It is a small thing, but there is the removal of tariffs on imports of 100 food products. There is also the £2 cap on buses, the support for parental leave and ending the cliff edge for carer’s allowance. Those are not nothing.

Then we come to the measures for businesses. Some 20 million consumers and 70,000 businesses—70,000 small retail and hospitality properties—are being taken out of paying business rates. My noble friend Lord Walker, who said we need a larger high street strategy, is absolutely right; there is a larger high street strategy, which I would very much like to have him involved in. My noble friend Lady Gill also talked about how things would work locally.

For other businesses, there is the freezing of the duty on red diesel and reducing the bills by 25% on eligible businesses through the British industrial competitiveness scheme. My noble friend Lord McTague mentioned that 14 out of 15 deregulatory proposals had been agreed, the Federation of Small Businesses having helped with all that. Some of the things that the noble Lord, Lord Fox, mentioned may be covered in that agreement. My noble friend Lord Pitkeathley talked about business improvement districts, which I think have a huge future.

On tax, I think my noble friend Lord McTague and the noble Lord, Lord Mackinlay, are right: I think this is the right thing to do, but it needs to be introduced with very great care. There are two years to prepare for this, and we are working with stakeholders to think about how we do it. I would be delighted to continue the conversation later with both noble Lords.

We are building for the future, and not just by spending. I sometimes think that economists think that, unless it has a huge ticket by it—and some of the things we are talking about do have quite a big ticket by them—then it will not be significant, and they throw out Keynesian economics. But it is not Keynesian economics; it is institutional and behavioural economics. My noble friends Lady Gill and Lord Smith, and the noble Lord, Lord Docherty, had it: if you can devolve power, that is a potent economic catalyst for what you will be able to do. If you can create incentives for localities, that really will make a difference.

On energy systems, there is the buying and building of new projects when they lower bills and can connect to the grid, getting out of the grip of international gas prices, and ending the practice of putting levy costs on bills.

On entrepreneurship, there were a lot of excellent contributions. To my noble friend Lord Neri, I say that I can imagine, and I hope, some musical people will take advantage of the fact you can earn £3,000 on a side business. At the other end, to the noble Baroness, Lady Bottomley, on the unicorns, I say that that is what the capital gains founders’ relief is for. I think the noble Lord, Lord Bilimoria, mentioned that, and I know that the noble Lord, Lord Massey, had some questions about it. Again, I would be more than happy to talk about that.

On big numbers, to mobilise private investment there is £20 billion of capital for the National Wealth Fund and the British Business Bank. As the noble Lord, Lord Eatwell, said, this is not crowding out; this is crowding in. It is about primary investment, not secondary investment, and that is a key point. I would be more than happy to talk to the noble Lord and hear his further thoughts on that. It also speaks, I hope, a bit to the questions that were raised by the noble Viscount, Lord Stansgate, about scaling up science companies and keeping them in the UK. I hope that feels like it makes sense.

Before I finish, I will touch on some of the other points. We are funding defence. I do not know how often I need to make this speech. Let me give noble Lords the numbers: 2.7% in 2027, 3% in 2030 and 3.5% in 2035—that is what the Government intend to spend on defence. The point made by the noble Lord, Lord Doyle, about frozen assets and Russia was a good one. In answer to the noble Lord, Lord Howell of Guildford, the numbers, which I have certainly given to the House before, on the defence investment plan are known. This is a huge commitment; it is the biggest since the Cold War. We all agree that it is what we should do, so let us leave it there.

On housing, the right reverend Prelate the Bishop of Manchester talked about council tax bands A to D. There is a fund of £100 million for people who should get that allowance but are unable to get it. I hope that addresses to some extent the issue that he was thinking about. Housing has been disappointing, but we are certainly not giving up on it. I hope that reassures the noble Lord, Lord Jamieson, and the noble Baroness, Lady Nargund. The noble Baroness, Lady Warwick of Undercliffe, asked whether some of the £1.5 billion for social and affordable housing might be available to housing associations. I believe it can be. Again, let us have a conversation about that after we have finished this debate.

In reply to the noble Lord, Lord Altrincham, on welfare, the Prime Minister and the Chancellor have been clear that the bill needs to come down, but it is planned to do this in a sustainable way, following what we learn from the Milburn and Timms reviews. Saying that you have the answer now is just not good management; you need to have the facts in front of you before you make those decisions.