Autumn Budget 2026

Lord Wilson of Sedgefield Excerpts

Thursday 12th November 2026 Lords Chamber

[Lord Gadhia (Non-Afl)]

My Lords, I note my interest as a board member of the Bank of England but will speak in a personal capacity.

In my first Budget debate in this Chamber in 2017, I highlighted the Augustinian challenge of the repeated deferral of fiscal discipline: the desire to become virtuous but not quite yet. Almost a decade and several Chancellors later, I fear little has changed. The Chancellor’s “do no harm” Budget is understandable after recent turbulence, but a Budget which postpones difficult decisions today while leaving Britain more exposed to tomorrow’s shocks is not necessarily a harmless one.

The fiscal numbers should concern us. According to the OBR, Britain’s debt to GDP ratio has increased more than that of any other G7 economy since 2006. Public debt is forecast to peak above 97% of GDP while annual debt interest payments reach £160 billion by 2031-32. Much attention has focused on the Chancellor’s fiscal headroom, but the more fundamental issue is fiscal space: our capacity to withstand the next crisis without emergency measures or surrendering economic choices to financial markets.

The OBR’s sensitivity analysis illustrates the risks. Higher energy prices could increase borrowing by £17 billion in 2027-28. Weaker productivity could add £40 billion later in the forecast. Higher interest rates could increase the annual deficit by £16 billion. These are all plausible scenarios, not remote possibilities, and each one alone would blow the headroom. Yet fiscal consolidation remains largely promised for the future, including the inevitably sensitive period approaching the next general election. I am reminded of Lewis Carroll’s White Queen, whose rule was

“jam to-morrow and jam yesterday—but never jam to-day”.

Fiscal prudence is always promised in the later years of the forecast, but it somehow never quite arrives in the present.

Procrastination has a price. The OBR’s July Fiscal Risks and Sustainability report estimates that stabilising debt over the long term would require a permanent fiscal adjustment of 3.8% of GDP if undertaken in the early 2030s. Postpone that adjustment by two decades and the required correction more than doubles to 8% of GDP—roughly equivalent to the entire health budget. These are illustrative scenarios, but the message is unmistakable: the longer we delay, the more painful the eventual choices become. We cannot indefinitely kick the can down the road; eventually, we will run out of road.

Our problem extends beyond fiscal arithmetic. Britain’s economic malaise is often described as a growth problem; I suggest it is also a crisis of decision-making and national ambition. Consider the evidence. Britain had the lowest investment rate in the G7 in the second quarter of this year, at just 19% of GDP. Our productivity performance remains disappointing, despite world-class universities, financial services, scientific research and advanced engineering. We possess the ingredients for prosperity but struggle to turn potential into performance.

I see four mutually reinforcing constraints to growth. The first is political capacity: the willingness to make difficult decisions, the benefits of which extend beyond the electoral cycle. The second is institutional capacity: the ability to translate decisions into delivery, rather than endless planning, consultation and regulatory delay. The third is economic incentives: ensuring that work, investment, innovation and entrepreneurship are properly rewarded. The fourth is cultural aspiration: sustaining the belief that enterprise and effort can genuinely improve people’s circumstances.

These weaknesses reinforce one another. Political indecision discourages investment. Weak investment undermines productivity. Stagnating living standards erode confidence and aspiration. Declining confidence makes difficult political choices harder still. Britain risks becoming trapped in a low-growth, low-confidence, low-aspiration equilibrium. We have become remarkably adept at protecting existing prosperity, but less effective at creating new prosperity.

Perhaps the greatest danger is not that Britain lacks ambition but that too many people are losing faith in the rewards of ambition. The response cannot simply be higher taxes, more borrowing or another industrial strategy; it requires a political culture prepared to confront trade-offs, institutions empowered to deliver and an economic settlement that encourages productive wealth creation. Crucially, fiscal discipline and economic growth are not competing objectives; they are mutually reinforcing. The forthcoming spending review must therefore establish—

[Lord in Waiting/Government Whip (Lord Wilson of Sedgefield) (Lab)]

My Lords—

[Lord Gadhia (Non-Afl)]

I am just winding up. The forthcoming spending review must therefore establish a credible, deliverable path towards lower debt, while protecting the investment and reforms that are essential for future prosperity.