Budget Resolutions

Debate between Ed Davey and Nusrat Ghani

Wednesday 26th November 2025 Commons Chamber

[Sir Bernard Jenkin (Harwich and North Essex) (Con)]

Will the right hon. Gentleman give way?

[Madam Deputy Speaker]

Order. You are a senior Member of the House, and I made it very clear earlier that no interventions should be made on party leaders.

[Ed Davey]

I am happy to talk to the hon. Gentleman in the Tea Room afterwards.

The Government know the damage that the Conservative-Reform Brexit deal has done to every family and business across our country, yet they choose to reject the single biggest policy for ending the cost of living crisis, turbocharging economic growth and boosting tax revenues without raising tax: a new trade deal with Europe. We need to properly fix our broken relationship with Europe, with a new customs union. We can grow our economy by freeing British businesses from the costs, barriers and red tape favoured by the Conservatives and Reform. Rather than trying to tax our way out of debt, as Labour is choosing to do, the Liberal Democrats would grow our way out of debt.

To be fair to the Chancellor, she has recently spoken about the terrible damage that the Conservatives’ Brexit deal has done to our economy—a deal that promised to save us £350 million a week, but which ended up costing the taxpayer £1.7 billion every week. But where is the Chancellor’s urgency and ambition to fix the problem that she rightly identifies? Today she did not even mention the huge hit to the Treasury from Brexit. She is like a doctor who has diagnosed the disease but refuses to administer the cure. She is refusing to take up our plan for a brand-new deal with the EU—a much better deal for Britain than anything the Government have pursued so far, with a new customs union at its heart.

Everyone but the most extreme Brexiteers now realises what a costly economic disaster the Brexit deal has been. Whether they are a young family struggling with ever higher food prices or a high street business just trying to survive the Chancellor’s latest new cost or tax, people are understandably looking for a credible economic policy to change their futures for the better, and it is crystal clear that only the Liberal Democrats are providing the leadership on our economy that people are crying out for.

There are some measures the Chancellor announced today that we do welcome. At last, she has decided to tax the big online gambling firms by raising remote gaming duty, as the Liberal Democrats have been calling for. Problem gambling is related to hundreds of suicides every year, so of course online casinos and the like should pay more tax on their huge profits. Her decision to scrap the rape clause is an excellent one. I may not have heard the Leader of the Opposition, but I was not sure if she welcomed that. I hope the Conservative party will welcome it. The Chancellor’s decision to scrap the two-child limit is excellent. It was in our general election manifesto, and I am glad that she is now enacting Liberal Democrat policy. It is clearly the most effective way of lifting children out of poverty, and it will save taxpayers money in the long term.

The biggest relief today for millions of families and pensioners is the action the Chancellor is taking to reduce energy bills, and we welcome it, but even after the Chancellor’s changes, the Budget will leave the typical household paying hundreds of pounds a year more on their energy bills than five years ago. More action will be needed, but we need action on energy bills that works.

Reform and the Conservative party pretend that the answer to rising energy bills is to scrap our climate commitments and stop investing in renewables. They could not be more wrong. The Conservative-Reform energy policy would put up bills and make the UK even more reliant on imported fossil fuels, with their volatile and high prices. That would be a disaster for our economy, a disaster for our environment, a disaster for jobs and a disaster for people struggling with energy bills. A major winner from Reform’s energy policies would be Vladimir Putin, which might explain why the hon. Member for Clacton (Nigel Farage) is so keen on them. I urge the Government not to listen to the Conservatives or Reform, but to be more ambitious in cutting people’s energy bills and to take up our plan to cut energy bills even more right now and cut them in half within a decade, finally giving families and pensioners the relief they need from this cost of living crisis.

While there are some things to welcome, as I have just done, there are quite a lot of measures in the Budget that will cause a lot of pain and unfairness, all of which could have been avoided if the Chancellor had gone for growth with Europe instead. Her plans to tax salary sacrifice will be hugely damaging to savings and pensions, and it looks like it is another NI hit on workers. Why, oh why, when the electricity vehicle market still needs a boost to get going, is she taxing electric vehicles? If she was not spending £1.8 billion on digital ID, many of these tax rises would not have been needed in the first place. Her failure to U-turn on the family farm tax is a huge error. If the Chancellor was really looking to tax those with the broadest shoulders, why not put a windfall tax on the big banks that are making billions at the taxpayer’s expense due to the side effects of quantitative easing?

The worst tax hike of this Budget by far—the biggest tax rise in this Budget—is the Chancellor’s decision to repeat the Conservative policy of freezing income tax thresholds. Freezing these thresholds reduces the amount that people can earn tax-free and hits the lowest-paid the hardest. I have to say that hearing the Conservative leader criticising it now rings incredibly hollow—and I think the “Member for Bark-shire” was objecting to her comments. The Leader of the Opposition cheered Conservative Budget after Conservative Budget that did exactly the same thing as the Chancellor has done—raising taxes on the low-paid. The Conservatives dragged an extra 4 million people on very low incomes into paying income tax, and an extra 3.5 million people into paying the 40p rate. The OBR says that this Government are now planning to drag a further three quarters of a million low-paid workers into tax and nearly 1 million people into the 40p rate. Someone on the average salary is paying an extra £582 this year because of the Conservatives’ policy, and under the Chancellor’s plans they will pay an extra £300 a year by 2031.

Contrast that with our record on income tax. We raised the personal allowance by £4,000. We cut income tax by £825 for millions of people, and took 3.4 million of the lowest-paid out of paying income tax altogether. It is clear that the Liberal Democrats are the only party that believes in cutting income tax for ordinary people; Labour and the Conservatives make them pay more.

As well as adding income tax pain to families struggling with the cost of living crisis, the Budget will add to the cost of doing business crisis facing Britain’s hospitality sector, on which the Chancellor went nowhere near far enough. Our high streets are suffering. Pubs, restaurants, cafés, caravan parks, zoos and even our beloved theme parks are struggling against higher business rates and the Government’s misguided jobs tax. The Liberal Democrats called on the Chancellor to help them with an emergency 5% VAT cut for hospitality for the next 18 months. That would have been a lifeline for some of our most beloved local businesses and for people’s jobs, boosting local economies across Britain, and it is very disappointing that the Chancellor has not listened to our calls.

Finally, can I say how disappointed I am at how little there was for carers in this Budget? As a carer myself for much of my life, I am determined to speak up for the millions of carers less fortunate than I am—the millions of family carers and care workers who make enormous sacrifices looking after loved ones, the carers who keep our NHS going and the carers who keep our society going. They deserve far more support from the Government, and I will keep pressing their case.

I do welcome the carer’s allowance review, but it confirms our argument that the carer’s allowance system is out of date and in need of urgent change, and we are yet to hear commitments to such changes. I welcome the decision to reassess cases where overpayment has caused huge hardship, but with those changes not coming into force for another year, the Government must instruct the Department for Work and Pensions to immediately suspend repayments during that delay and swiftly deliver compensation. More needs to be done to help family carers juggle their jobs with their caring responsibilities, and we urgently need the social care commission to actually start fixing the system on a cross-party basis and make sure that our loved ones get the care they need. The Chancellor cannot claim to be supporting our NHS properly, however much money she puts in, while she and Treasury officials keep blocking the social care reforms that alone can transform the health service across the country and boost our economy.

A caring society, a growing economy and a plan to drive down household bills, boost high streets and go for growth with Europe—that is the vision the Chancellor should have set out today. Instead we got a low-growth, high-tax Budget from a Government who I fear are just not listening.

Budget Resolutions

Debate between Ed Davey and Nusrat Ghani

Wednesday 30th October 2024 Commons Chamber

[Ed Davey (Kingston and Surbiton) (LD)]

It is a pleasure to follow the Chair of the Treasury Committee, the hon. Member for Hackney South and Shoreditch (Dame Meg Hillier), and I wish her all the best in her new role, especially given her promise to scrutinise this Budget very, very closely. I join her in noting that this is an historic day. This is the first Budget to be presented by a female Chancellor, and I congratulate the right hon. Member for Leeds West and Pudsey (Rachel Reeves). I am sure that she is blazing the trail for the women and girls who are watching our proceedings today.

There can be no doubt about the enormous task facing the Chancellor. After years of chaos and decline under the Conservatives, their appalling economic legacy, set out so clearly in the figures today, is being felt by people across the United Kingdom. People were looking to this Budget for a clean break with those failures of the past few years, and for a sense of hope and urgency and the promise of a fair deal, but I fear that the Budget will not deliver all that. The Conservatives left behind an enormous mess in our NHS, but I am afraid it will not be fixed unless the Government fix social care, too. The cost of living crisis will not be solved by hitting families, pensioners, family farms and struggling small businesses, and our economy will not grow strongly again unless we repair our broken relationship with Europe. Liberal Democrats will continue to stand up for our constituents and press the Government to be far bolder and act much faster on people’s priorities.

Having said that, let me recognise that there were some good things in the Budget. I welcome the Chancellor’s decision to move away from the Conservatives’ broken fiscal rules to allow the capital investment that our country so desperately needs. I was genuinely surprised that there was no recognition from the Leader of the Opposition of the difference between capital and current spending, which is at the heart of this change. I welcome the promise of full compensation for the victims of the contaminated blood scandal and the Horizon scandal, and I hope that that can be delivered quickly.

I also welcome the extra investment in our NHS. Fixing the crisis in our NHS is literally a matter of life and death. It is also essential for growing our economy, by getting people off waiting lists and getting them fit and healthy and back into work. The Conservatives left the health service on its knees. We on the Liberal Democrat Benches have consistently argued for more investment across the NHS—in hospital buildings, extra GPs, cancer nurses, new radiotherapy machines and much more—so I am glad that the Government and the Chancellor have been listening.

However, people have heard bold promises of extra GPs and new hospitals before. The Conservatives made similar promises on the NHS and then broke them, so what we need now is a guarantee that this Government will deliver. I can assure the Chancellor that Liberal Democrats will hold the Government to account on their NHS plans, and I hope that the Budget document sets out in full the answers to some obvious questions. When will the funding be in place for desperately needed hospital projects, and when will those projects be completed? When will the Government be able to guarantee that people can see a GP or an NHS dentist when they need one? When will all cancer patients be able to start treatment within the 62-day target and not have to wait for months? When will people know once more that when they call an ambulance it will be there within minutes, not hours?

Above all, as I have said before, I worry that despite the welcome extra investment announced today, the Government will not be able to fix the NHS because they are ignoring the elephant in the NHS waiting room: the crisis in social care. We all know how bad it is. Hundreds of thousands of people are waiting for care, and many are stranded in hospital beds because the care is not in place for them to leave hospital. That is bad for them, bad for their loved ones and bad for the NHS. I am afraid that today’s announcement on social care just will not touch the sides. It is only a standstill in a crisis. Unless we finally tackle this problem and agree a long-term solution for social care, we will never end the crisis in our health service, so I urge the Government once again to start cross-party talks on care without further delay and to take action now.

Any solution must involve paying care workers properly to fill the 130,000 care worker vacancies, so that elderly and disabled people can get the care they need. The Government’s plan for a fair pay agreement is a step in the right direction, but it is nowhere near enough, so will the Chancellor look at our plans for a special higher minimum wage for carers? And we must not forget the vital role of unpaid family carers—the heroes keeping the entire system afloat. I strongly welcome the Chancellor’s decision to raise the earnings limit for carer’s allowance. It is a good first step, but as she accepted in her speech, on its own it will not end the repayments scandal or fix the system. Will she confirm whether the earnings limit will, in future, be pegged to at least 16 hours a week at the minimum wage? Although I am glad that the review will look again at getting rid of the cliff edge for carer’s allowance and the earnings limit, I hope she and her colleagues will consider a broader review to give family carers the support they deserve.

The Conservative cost of living crisis has hit family carers particularly hard, but they are not alone. Practically no one has been left untouched by rising bills, higher mortgage payments and soaring food prices. Our small businesses and the self-employed have experienced a crisis of their own, having had to deal with the pandemic and now spiking energy prices and other input costs. The Conservatives only added to that pain by hitting struggling families with stealth tax rises, by betraying pensioners when they broke the triple lock, and by raising national insurance for our small businesses.

I welcome the increase in the national minimum wage as it addresses the cost of living, although I urge the Chancellor to extend this higher wage to apprentices, too. However, it is concerning to see the Chancellor repeat a number of the Conservatives’ past mistakes. Raising employers’ national insurance is a tax on jobs and people. The OBR report published today shows that the Budget will reduce real household incomes and worsen the health and care crisis by hitting thousands of small care providers. Hitting family homes with changes to inheritance tax will not help, and cutting winter fuel payments will leave millions of vulnerable pensioners worried sick this winter.

Instead of adopting Liberal Democrat proposals to raise the money we need, such as by reversing Conservative tax cuts for the big banks or by asking the social media giants to pay a bit more, the Chancellor has chosen unfair tax hikes that will hurt small and medium-sized businesses, which are the engines of our economy. They have already paid too high a price for Conservative economic failures, and forcing them to pay even more simply is not right.

Another Conservative mess that I fear this Budget will not begin to clean up is the crisis in local council funding. Year after year, the previous Government slashed funding while asking councils to do more and more. The result has been nothing short of a disaster. Spiralling social care costs are a huge part of this, which is yet another reason why reform is so vital.

There is another black hole in council budgets due to the broken system for special educational needs and disabilities. The extra £1 billion announced by the Chancellor is therefore welcome, and I pay tribute to my colleagues, not least my hon. Friend the Member for Twickenham (Munira Wilson), who have campaigned so hard on this. However, I fear that the crisis in SEND budgets left by the Conservatives is much bigger.

Last week, the National Audit Office laid bare the sheer scale of the problem, with half of children waiting more than the 20-week limit for an education, health and care plan, and with 43% of councils at risk of bankruptcy. The severity of the crisis left by the Conservatives speaks for itself, so we need to act with even greater urgency to tackle it. We will press the Government to give the House a clear timeline for reform, because neither children, parents nor councils can wait any longer.

The Chancellor has said that her main objective is economic growth, and she is right. We all agree that we need to get our economy growing strongly again to create jobs and opportunities for everyone, and to raise the money that our public services need, but we need a real plan to do that and not just stop things getting worse or return to business as usual. We need to build the economy of the future—one that is genuinely innovative, prosperous and fair.

Part of that is about fixing the health and care crisis, which will be crucial, as will managing the public finances responsibly and giving businesses the certainty and stability they need to invest in our economy. We must also invest in cheap, clean, renewable power to drive a strong recovery, to bring down energy bills and to create secure, well-paid jobs. I welcome the steps that the Government have taken so far, but we must do more to back small businesses. They are the beating heart of our local economies, so I urge the Chancellor to go beyond today’s announcement on business rates by making an historic change to overhaul the broken business rates system that is destroying our high streets and town centres. Tinkering around the edges is simply not good enough any longer.

One final crucial ingredient of growth is fixing our broken relationship with Europe. Removing the Conservatives’ trade barriers would be a massive boost for British jobs, British business and the British economy. By ruling out important steps such as a youth mobility scheme or key long-term goals such as membership of the single market, the Government are trying to grow our economy with one arm tied behind their back.

In July, the British people kicked out of office one of the most damaging Governments in our country’s history. On the Conservatives’ watch, we saw living standards fall, the economy stagnate and public services decline. Although no Government would have an easy time turning that around, people were looking to this Budget for hope and a genuinely new direction. They were looking for urgent action to fix the health and care crisis, for a break from the previous Government’s tax mistakes, for a plan to grow our economy and to rescue local councils that are on the brink, and for a fair deal.

Yes, the Chancellor had to make big, difficult decisions, but I fear that she has got too many of them wrong. We needed a different Budget to repair the damage done to our country and to give people the fair deal they deserve. For our constituents, Liberal Democrat Members will push the Government to do far more for our economy, for the NHS and for care—those are the things that the Liberal Democrats will always champion.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the Chair of the Business and Trade Committee, which is my old Select Committee.