Budget Resolutions and Economic Situation

Iqbal Mohamed Excerpts

Wednesday 28th October 2026 Commons Chamber

[Sir Mel Stride]

We will have to look very closely at the wording that the Chancellor used, because my recollection is that he said that the Government would be committed to the NATO target of 3.5% by 2035, with a target to reach 3% by the end of 2030. The word “target” is not the same as the word “commitment” when it comes to reaching that particular figure. I recommend that the hon. Gentleman looks closely at that.

When it comes to this Chancellor and his principles, I am reminded of the late Groucho Marx, who said,

“Those are my principles, and if you don’t like them…well, I have others.”

It seems to me that that is where we are on this particular matter.

The Leader of the Opposition was perfectly correct in identifying the unrealistic expectations and assumptions contained within the numbers the OBR has had to work with. While the OBR sets out its assessment of what various interventions will mean for growth, inflation and so on, it has to take at face value the spending envelope that the Government come forward with, which was inherited from the Chancellor’s predecessor. As we know, that spending envelope sees a very strong squeeze in spending right at the end of the forecast period. In fact, if health spending increases in the spending review next year by 2.7% in real terms, as it did in the last review, and the 3% defence target is met, there will be a black hole of £20 billion in the figures that the Chancellor has just presented.

We have seen the march of the PuFins—public financial institutions—in the Budget measures that have just been announced. We have seen £20.4 billion placed in the National Wealth Fund. Make no mistake: it should be clearly understood that this is additional borrowing. It does not matter whether it falls within the current definition of debt—the public sector net financial liabilities definition—and would have fallen outside the old definition of public sector net debt; the reality is that it is more money that this Government are borrowing.

[Iqbal Mohamed (Dewsbury and Batley) (Ind)]

On the subject of a sovereign wealth fund, would the right hon. Gentleman comment on the fact that under the Tories we sold off our national treasures in North sea oil and gas? We should compare that with Norway, which put those assets into a sovereign wealth fund and now has £1.7 trillion available for public services, while we do not have anything. That was an absolutely catastrophic mistake for our country.

[Sir Mel Stride]

The hon. Gentleman should join us on the Conservative Benches, because we are the party that is standing four-square behind North sea oil and gas extraction. We do that for a very important economic reason.

It is right that the national minimum wage not going up by as much as it might otherwise have done will help business. The Leader of the Opposition welcomed that. We have also seen a lowering of business rates for some businesses. The mileage changes with HMRC will no doubt be slightly helpful, particularly for the self-employed.

However, the Chancellor also came forward with a reduction in the business asset disposal relief—he has halved it, making it less of an incentive for people to set up businesses. I looked at the figures in the Red Book, and it seems that there are £5 billion-worth of additional taxes on businesses across this forecast—an increase of £2 billion in additional taxes across inward investment into our economy.

In conclusion, the lights are flashing on the UK economy. We have huge challenges ahead, and it is not good enough simply to rely on saying that we can be steady as we go.

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[Sir Bernard Jenkin]

I beg the hon. Gentleman to listen to himself. What he is basically saying is that the reason there will be such gargantuan increases in welfare payments between now and 2031-32 is that it is all our fault—that it is because of what we did. [Hon. Members: “Yes!”] It is not. The Government have not begun to tackle the welfare state problem. We should have done; and they must do so, or we are heading for a fiscal crisis. It is interesting what the Red Book says about the forthcoming fiscal crisis.

[Iqbal Mohamed]

Will the hon. Gentleman share his assessment of the impact of increasing the retirement age to 66 and 67, with a target of 70, on the availability of junior jobs for young people to get into work?

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[Andrew Lewin]

I am going to make some progress.

Today the Chancellor has asked the banks to contribute more via a surcharge, and it is really important that we look at the context in which we are having this discussion. I looked at the figures, and all the major banks that operate in the UK are on course for record multibillion-pound profits. That often happens in cycles in which there are high interest rates, so it is the case that banks can make a contribution via the surcharge and still have an exceptionally good year.

I have to say that I am surprised by the Conservatives. If they want to have an election, whenever it may come, in which they go around saying, “We oppose a slight increase in the surcharge on the banks,” they will find themselves on the losing side of that argument.

In the years to come, we need our entrepreneurs and young people to succeed, which is why I was so pleased to learn of the founders’ relief scheme for British entrepreneurs this afternoon. It is a statement that we will back people with the vision and ambition to build a business here.

I will let you in on a secret, Madam Deputy Speaker: the first conversation that I had with our new Prime Minister in Parliament—actually, the first one was about cricket, but the second was more substantive—was about housing and home ownership. I said to him directly that it is so important that we as a Government make the case for giving people the opportunity to get on the housing ladder, especially those who cannot rely on support from the bank of mum and dad. That is why I am so pleased by the announcement of the Your First Home equity loan scheme this afternoon. It has the potential to change thousands of lives in my constituency and many more across the country. The introduction of a 2.5% deposit means that people living in Hatfield or Welwyn Garden City have a chance of getting on the housing ladder with a deposit well under £10,000, bringing it into reach for many more people.

[Iqbal Mohamed]

I welcome the Government’s announcement that they will reduce the deposit for first-time buyers. Does the hon. Gentleman agree that the price of housing is so extortionate that, on today’s average wages, someone with a 25-year mortgage will never, ever pay off the debt accrued? Mortgages will end up lasting 30, 40 or 50 years, and young people who get on the housing ladder will end up paying for the rest of their lives. They may not have paid off their mortgages before they retire.

[Andrew Lewin]

The housing crisis is a multifaceted problem. We have to build more homes of all tenures, but Your First Home is a really important part of driving demand, particularly because young people who are renting at the moment are paying more than they otherwise would if they could get a foot on the ladder. That is why the deposit scheme will make such a difference.

If you need extra support with energy bills this winter, it is coming. If you run a small high street business, business rates are coming down. If you are an entrepreneur, risk will be rewarded and your tax bill will come down in the future. If you are striving to buy your first home, this Government are on your side. The world remains unstable and we are not immune to it, but this is a Budget that I believe can give confidence to people in Welwyn Hatfield and across the country.