Budget Resolutions and Economic Situation

Debate between Iqbal Mohamed and Mel Stride

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.