Autumn Budget 2025

Baroness Penn Excerpts

Thursday 4th December 2025 Lords Chamber

[Baroness Penn (Con)]

My Lords, in my four minutes, I thought I would focus on the good, the bad and the ugly of this Budget. Starting with the good, there was the welcome emphasis from the Minister in his opening speech on some of the measures for growth. These included: raising the threshold for the enterprise management incentive scheme; expanding the limits for the EIS; stamp duty exemptions for companies listing in the UK; and, after a little extra effort and persuasion, committing to delivering the nuclear regulatory review. The problem is that this represented so little of the Budget that we are debating, which brings me to the bad.

Growth forecasts are down and taxes are going up, hurting working people, as the Minister acknowledged. Inflation and interest rates will be higher for longer. Business investment will be down, housebuilding forecasts are down and rents are forecast to go up. Living standards are forecast to be lower than they would otherwise be, and debt interest is going up. As my noble friend Lady Noakes and others noted, according to the OBR not a single measure in this Budget will have an appreciable impact on growth.

That brings me to the ugly. As the Minister acknowledged, there has never been a Budget so dominated by speculation, with briefing before, during and after the event. Before last week, the Minister valiantly claimed there was nothing unusual in this process. At least by Monday, he recognised the unique nature of the Chancellor’s pre-breakfast pre-Budget speech. Unique is one word for it, and we do not need to relitigate who said what when. The heart of the matter is that trailing the expected downgrade to productivity without the more-than-offsetting unexpected upgrade to tax receipts left people feeling misled, and that is still unacknowledged. That unexpected upgrade was still unacknowledged in Monday’s Statement and in the Minister’s speech today.

That matters for two reasons. First, we have heard from my noble friend Lady Neville-Rolfe and others that the speculation damaged growth. Secondly, and more than this, it has damaged people’s trust in the Government. People were told before the election that every policy was costed and funded. Then, in last year’s Budget, we had record tax rises. The Chancellor and the Minister told people they had wiped the slate clean and there was no coming back for more, but last week they came back for £20 billion more.

The reason the Government have been tying themselves in knots is the attempt to justify this through claiming that the facts and circumstances have changed. But the facts have not changed; it is just that the Government have changed their mind that fairness does not mean taxing working people to fund increased welfare spending. Fundamentally, they have changed their mind that growth was the number one priority and only once you have that growth can you—to coin a phrase—share the proceeds of that growth. That is the reason I ask the Minister not who said what and when, but whether he can understand why people feel misled by the Chancellor and acknowledge that the speculation in advance of the Budget did real harm? If it cannot be acknowledged, then we cannot hope that the Government will learn from the events of this Budget and the last.

If the Government can learn those lessons, we can end on a note of hope. We are only 18 months into this Government—it may feel like more—so there is still time to change course, to genuinely focus on growth. We have heard ideas today for tax reform, welfare reform, cutting energy costs and increasing private investment, because it is growth that is the means to deliver everything else, whatever the Government determine that to be: tax cuts, spending increases, driving down waiting lists, or driving up housebuilding. I hope, therefore, that the Government will return to their number one priority of growth next year, and that is something in a Budget that we can all welcome.