Budget Resolutions

Daisy Cooper Excerpts

Thursday 27th November 2025 Commons Chamber

[Daisy Cooper (St Albans) (LD)]

This time last year, Government Ministers told us repeatedly that their No. 1 mission was growth, but after Labour’s second Budget, it is clear that growth is nowhere to be seen. The OBR makes it clear that the Budget has almost no meaningful growth measures at all. The Confederation of British Industry has concluded that the Government’s growth mission has stalled, and others say that it is positively anti-growth. We Liberal Democrats have consistently said that the Government cannot just tax their way to prosperity; they must grow their way to it. The most effective way of doing that—the single biggest growth lever that the Government could pull—is fixing our relationship with Europe.

The Conservative-Reform Brexit deal has been a disaster for our country and for British business. It has left our public finances with a £90 billion Brexit black hole; the Labour Government know it, and the Secretary of State for Work and Pensions has just said it, but for some unfathomable reason, the Government will not just get on and fix it. We Liberal Democrats once again call on the Government to get serious about fixing our relationship with Europe.

Research by the House of Commons Library shows that a better deal—a deal within the Government’s red lines, that excludes a customs union, the single market and all the rest—could raise an additional £25 billion a year in revenue. With our proposal of a bespoke UK-EU customs union, we could raise even more. Members on the Labour Benches will say, “We have all these new trade deals. We are fixing this relationship,” but once again, the OBR report from yesterday spells it out in black and white. It says that the lasting effects of Brexit more than wipe out the combined benefits of all the Government’s new trade deals. If the Government want economic sustainability, it is clear as day what they need to do.

The same could be said about headroom. This time last year, we knew that Donald Trump was heading back into the White House, and we Liberal Democrats warned the Government that they had not left enough headroom to deal with the economic headwinds, which were predictable and predicted. We welcome the fact that the Government, as part of their mission to create a sustainable economy, have provided more headroom this time around, but we disagree with the way that they built it, relying on billions from unfair stealth taxes and other tax hikes on people and small businesses. That was not a fair choice; a fairer choice would have been to ask the big banks to do their bit.

The Government know that if they do nothing on the big banks, taxpayers will pay out approximately £30 billion to the big banks between now and April 2031—not because of any risk that they have taken, or any loans they have made, but because of a glitch in quantitative easing. In the middle of a cost of living crisis and a cost of doing business crisis, the Government seem happy for £30 billion of taxpayers’ money to be paid out to the big banks, but we Liberal Democrats are not. That is why we have called for a windfall tax on the QE-related parts of the profits that the big banks have received, which would raise £30 billion for the taxpayer over the next five and a half years. We propose that just less than half of that money be spent on slashing energy bills by removing levies from them, but we would not lose the revenue for the insulation schemes that the Government have just axed. Some of the money could also be used to slash VAT by 5% for hospitality, attractions and visitor accommodation over the next 17 months until April 2027. That would give a boost to local economies in every single village, town and city across this country to get our economy moving again. That is the kind of growth stimulus that we Liberal Democrats would pursue.

It is incredibly frustrating that the Government are not doing more for our high streets. They will say that they are looking to introduce permanently lower business rates multipliers. They may have done so, but the new, higher valuations were published this morning, and many businesses are warning that they could simply wipe out any benefit that businesses get from the lower multipliers. I saw a WhatsApp exchange between some of my pub landlords in St Albans this morning, and when one of them saw the higher valuation for their independent pub, they replied with a single word. It was the word that Boris Johnson used to describe his approach to business. I am very worried that the combined impact of higher valuations and the new multipliers could put even more of our high street businesses in jeopardy, so I ask the Government to come clean and publish the combined data as soon as possible. I hope that a Minister can tell us—if not today, I hope that they will promise to come back to the House and do so—how many businesses have been brought into paying business rates for the first time, and how many might see their business rates go up overall. If the picture is bleak, I hope that the Government will tell us what actions they will take to protect the great British high street.

Small businesses also need action on energy support. Just last week, my Liberal Democrat colleagues and I wrote to the Government asking Ministers to instruct the Competition and Markets Authority to launch an investigation into the lack of competition among energy suppliers, and into practices that we believe are preventing small businesses from getting the best energy deals. The Federation of Small Businesses is making the same call. This issue has to be fixed, and I hope that Ministers will look at it.

On income tax, the Government have broken their promise in all but name by freezing income tax thresholds for a further three years. This policy, started by the Conservatives and continued by Labour, means that in the tax year 2030-31, British taxpayers will pay an additional £67 billion in income tax to the Treasury. The Institute for Fiscal Studies says that these stealth taxes are the largest single tax-raising measure since 1979. What will the result be? Well, the OBR says that disposable income—a byword for living standards—will go down, in large part due to this tax rise. Is it any wonder that people in all income brackets simply do not feel any better off?

Turning to the so-called mansion tax, we in this House all know that council tax is broken, but adding extra layers does not make it any fairer. Economists from left to right all agreed yesterday that the Government’s proposals are complicated and will cause bunching in the tax system. They are a messy compromise that does not raise very much money, and will raise none for around three years. These proposals could result in many appeals and could distort behaviour. This is not the way to fix property taxes. [Interruption.] The Parliamentary Secretary to the Treasury chunters from his seat. That was several Prime Ministers and several general elections ago. When the Liberal Democrats called for such a tax, the Conservatives wanted to stay in the EU; I think we can all agree that there has been a lot of water under the bridge since then. If the Government were serious about pursuing wealth, they could make a much fairer choice and go after the big banks and the tech giants.

On the tech giants, why did the Chancellor slip out a review of the digital services tax yesterday, without announcing it in the Budget? I think we all know the answer, but let me be plain: if the Government are gearing up to cut taxes for people like Elon Musk and Mark Zuckerberg, while raising taxes on struggling households, that would be a massive betrayal. As for the dividend tax, the Federation of Small Businesses summed it up when it said that

“Hikes to dividend tax mean the government continues to make investing in your own business one of the least tax-friendly things you can do with your money.”

Fundamentally, the root problem remains. This Budget, like last year’s Budget, is nothing more than a Treasury tax grab. The Government are still yet to outline a vision for the economy and for the country, and the lack of joined-up thinking is so stark. Last year they said that they were going for growth, and then they inflicted a growth-crushing jobs tax. This summer the Government’s own pension investment review said that four in 10 people are not saving enough for retirement, but now the Government have announced a measure that the OBR says will reduce pension contributions before the commission has even had a chance to report. This is a “spend now, pay later” Budget, with pension changes and other expensive additions pushed right to the end of the forecast. Clearly that is a way to buy time for some growth to emerge, but what happens if it does not?

The Government have had an opportunity to set out their path to delivering the change they promised, but I fear that they have squandered it. We Liberal Democrats wanted this to be a Budget that tackled the cost of living, that saved our high streets, and that was going to go for growth through a better deal with Europe. I am sorry to say that this Budget was botched; it was bungled; it was a missed opportunity. Whatever we call it, the bottom line is that this Budget does not deliver for the British people. I fear that the Government have run out of ideas. I fear that they are also running out of time.

[Paul Waugh (Rochdale) (Lab/Co-op)]

This is a Budget that cuts the cost of living for families in Rochdale, boosts apprenticeships, and helps the NHS and our public services—public services that were brought to their knees by 14 years of not just Tory cuts, but coalition cuts. This is a Budget that balances the books, with fairness at its heart, and it is also a Labour Budget that puts children at its heart. I want to focus, in particular, on the historic decision to lift the Tory two- child cap, a policy that has punished so many children in Rochdale and across the land, for the crime of simply being born.

As a journalist who worked up in the Press Gallery for 26 years, I reported on, reacted to and analysed Budgets over more than a quarter of a century. With any Budget, there is always talk of winners and losers, but when the two-child cap was introduced in 2016, the biggest losers were children. Think about that: children losing money because of the warped ideology that they were to blame for their parents’ poverty. I grew up on free school meals, so I know what it is like to be in a household where money is tight. Indeed, one of the reasons I stood for Parliament in the first place was to reverse the shocking rise in child poverty that occurred since 2010 under the last Tory Government, and particularly in Rochdale.

The decision to scrap the two-child cap would not have been possible without a Labour Government, but neither would it have happened without the many community groups and anti-poverty campaigners in each of our constituencies. Earlier this year in Rochdale we held a roundtable meeting on the Government’s child poverty strategy. It was a heartening gathering, because we in Rochdale are proud of the many things we do locally for our kids, from never closing Sure Starts—which was tough for the local council—to providing free breakfast clubs way ahead of any national roll-out, and giving kids a free lunch if they go to Saturday school.

However, our roundtable was also a sobering gathering, because despite everything we have done locally to combat poverty among toddlers and youngsters, many of the adults and campaigners there told us that the biggest problem was the national two-child cap, which has been a catastrophe for the incomes of many families on low pay or between jobs. I want to pay tribute to some of those campaigners and community workers in Rochdale: Jo Barker-Marsh, Aqub Nazir, Heather Madden and Nazrine Akhtar. Without their passion and commitment to helping our children, today would not have been possible.

I was not surprised by the Leader of the Opposition’s rant about welfare yesterday. She repeated the Tory misinformation about the two-child cap, basing it on the myth that penalising larger families will somehow stop others from having a third or fourth child. As the Chancellor said yesterday, and as my right hon. Friend the Secretary of State has made absolutely clear from the Dispatch Box today, there is no evidence that the two-child cap led to any change in family size. Why is that? It is because families have children for a whole host of reasons. Women certainly do not get pregnant to get more benefits. In fact, the real scandal in this country is that having children results in a substantial and long-lasting financial penalty for mothers, due to reduced earnings, unemployment and a lack of support. That is something this Government are addressing.

ONS research found that five years after the birth of a first child, a mother’s monthly earnings were, on average, 42% lower than they were one year before the birth. The important point to stress is this: people move in and out of work for a whole host of reasons beyond their control. Many people have had their third or fourth child before they lost the job, became ill or were widowed, disabled or had to care for a sick relative or a disabled child. There is a wider point, too, which is that welfare has become a pejorative term. We need to talk more about social security, a safety net that is there for families who fall on hard times through illness, redundancy and no fault of their own.

As has been said many times, more than six in 10 families on universal credit are in work. Many are on universal credit for only a few months until they can get back on their feet, or until their children are older, or they can sort proper childcare. No one in this party will defend the tiny minority who game the system, but the tabloid caricature of people lounging about on benefits is far removed from reality, particularly for parents. In the real world, many parents of kids in poverty go hungry themselves, rather than let their kids go without. Many cut back on essentials such as food and heating because they have to. The Joseph Rowntree Foundation found that the depth of hardship is particularly severe for families with three or more children, with around seven in 10 having to skip meals or go hungry.

[Daisy Cooper]

We Liberal Democrats welcome the decision by the Government to scrap the two-child benefit cap. Does the hon. Member agree that, as well as it being the right thing to do, it saves taxpayers money in the long term? We know that poverty has lasting impacts on people’s health and educational outcomes. In making the case to the British public, it would be helpful if the Government could explain the longer-term impact that poverty has for the taxpayer.

[Paul Waugh]

That is exactly what my right hon. Friend the Secretary of State for Work and Pensions set out at the Dispatch Box earlier, talking about the positive case for this move on child poverty.

In Rochdale, we feel child poverty more keenly than anywhere. The statistics for my constituency after 14 years of Tory cuts are shocking. Relative poverty in Rochdale went up between 2014 and 2024 from 33% to 44.1%. That is one of the highest rates in the country. The Conservatives like to talk about relative poverty, but absolute poverty went up from 31% to 39%. The latest figures show that the total number of children in absolute poverty in Rochdale was 9,380 in 2024, but that 44% child poverty rate in Rochdale is just the average. The figures are even worse in individual areas such as Wardleworth, Kirkholt, Deeplish, Smallbridge, Firgrove and Freehold, where up to 60% of children live in absolute poverty. Those children were the collateral damage in a Tory attempt to get a political dividing line. How disgusting is that?

The idea of the deserving and undeserving poor is as old as the Victorian workhouse. We should banish it to the dustbin of history, just as we are banishing the pernicious two-child cap to the dustbin of history. In Rochdale, more than 5,000 children will be lifted out of poverty by this Budget. That is 5,000 future nurses, plumbers, engineers, carers, teachers, entrepreneurs and soldiers who will now be given the best start in life that they need to achieve their dreams and fulfil their potential.

The last Labour Government, which did so much to help children escape poverty, once had a new policy called Every Child Matters. By putting hundreds of pounds in the pockets of Rochdale families, this Budget shows that this Labour Government are restoring that moral mission as a national priority, sending out the message loud and clear that all kids count.