Budget Resolutions and Economic Situation

Kemi Badenoch Excerpts

Wednesday 28th October 2026 Commons Chamber

[Mrs Kemi Badenoch (North West Essex) (Con)]

Thank you, Madam Deputy Speaker. I would have thanked the Chancellor for advance sight of his statement, but it was so redacted it was like reading it in the dark. The only numbers were the page numbers, quite frankly.

This is Labour’s third Budget in office—[Interruption.]

[Madam Deputy Speaker]

Order. I apologise for interrupting the Leader of the official Opposition, but if Members are leaving the Chamber, they should leave very quietly and very quickly.

[Mrs Badenoch]

This is Labour’s third Budget in office, this time with a new Chancellor. I welcome the right hon. Gentleman to his place. I believe there is a term in rugby called a hospital pass, which sums up the inheritance he received from his predecessor, the right hon. Member for Leeds West and Pudsey (Rachel Reeves). Last year, she gave us the Budget for “Benefits Street”; I said that it would be her last Budget, and I was right. The Chancellor may want to blame external events, but Labour’s last two Budgets weakened our economy before any wars. He has got a big job to do cleaning up her mess, and this Budget fails to do it.

The Chancellor is giving this Budget at a time of great economic danger. We are spending more on debt interest than on the Army and schools combined. The rate of interest we pay on our debts is higher than that in Greece, Latvia, Slovakia and even the Socialist Republic of Vietnam. Next year, under Labour, the tax burden will be the highest in our country’s history, and our benefits bill is going up by tens of billions of pounds because this Government have put welfare first. We are overspent, overborrowed, overtaxed and drowning in an out-of-control welfare system, and this is the Chancellor’s answer? It is simply not enough—not good enough, not strong enough, and not bold enough.

Last week, the Government published their resilience plan. I am afraid that three days of baked beans and a wind-up radio are not going to save us. Labour’s Britain has no resilience. There is no household resilience, because families are struggling to make ends meet. There is no fiscal resilience, because we are borrowing just to pay the interest on our debt. There is no economic resilience, because businesses have been taxed so much that they are closing down and shedding jobs, and there is no national resilience, because we are not ready to meet the security threats of today—certainly not after that speech. We all know why the Chancellor has delayed until tomorrow difficult decisions that he should have taken today. It is because the Prime Minister wants to keep the option of an early general election open, putting his party’s interests before the country’s.

There are, however, some things in this Budget that I welcome. Some of the Chancellor’s colleagues—the Deputy Prime Minister, the Defence Secretary and the Energy Secretary—were calling on him to increase capital gains tax. I thank him for ignoring them—they were wrong. Tens of thousands of wealth creators have already fled Labour’s Britain, and if he had listened to his colleagues’ bonkers ideas, many more would be heading for the departure lounge. I am also glad that he has broken Labour’s manifesto pledge on the minimum wage for young people; that pledge was wrong, and breaking it is the right thing to do to help young people get jobs.

I welcome the Chancellor’s U-turn on ISAs. He is reversing his predecessor’s raid on ISAs—thank you—but his new tax on savers will penalise the prudent and all those people who have done the right thing. I am glad that he has agreed with our campaign on the previous Chancellor’s fuel duty rise. Motorists will be pleased—that rise would have inflicted real pain, especially while petrol prices are so high—but those prices will go up in July. Why? We froze fuel duty for 14 years; Labour can do better than that.

I know that Labour MPs probably did not like those bits of the Budget, but can I take a moment to say to the right hon. Gentleman that I have been appalled to see the brutal briefing about him from his own side in this week’s papers? One Labour MP called him “slow”. “A dud.”

“Visibly out of his depth”,

said another. [Interruption.] We have all read it. They are not my words—they are Labour MPs’ words. One of them said it, and another came in after, but I can assure the Chancellor that he will not be hearing that kind of language from Conservative MPs today. With friends like that, who needs enemies?

Most people in the country listening to the right hon. Gentleman’s Budget will be thinking to themselves, “Is that it? Really, is that it?” The Prime Minister came in promising to reverse “40 years of neoliberalism”; instead, we got 4p off gherkins. Unfortunately, just like every other Labour Budget, the headline story is the same: more borrowing, more tax rises and—surprise, surprise—more money on benefits. This Budget does not come close to meeting the moment.

Last week, Labour MPs were asking for a Budget that did no harm. That shows how little ambition they have for this country. Let me tell them: the harm has already been done. Not facing up to the tough decisions we need to take is itself an act of immense harm. Many Labour MPs do not understand that our national debt is now more than £100,000 for every household in this country. They do not understand why it is a problem that a quarter of all working-age adults are now claiming some form of benefits. They do not understand that if Russia launches an attack on NATO in the next three years, as the Government’s own intelligence suggests, we will be at war without the means to properly defend ourselves. [Interruption.]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. Ms Dawn Butler, Adam Jogee, and Mr Vince—what would baby Patrick say? Behave better than your child.

--- Later in debate ---

[Mrs Badenoch]

Look at them, Madam Deputy Speaker. If war comes, do we want this lot running the country—people so unserious that they do not understand that you cannot have social security without national security? If we cannot defend our country, there will be nothing left to defend. To be honest, I do not blame the Housing Secretary for stocking up on sauvignon blanc. If Russia attacks with these guys in charge, we will all need a drink.

[The Secretary of State for Defence (Wes Streeting)]

indicated dissent.

[Mrs Badenoch]

The Defence Secretary is chuntering; he could not even commit to 3% on TV the other day. He is still not doing his job. The fact is that there are huge problems coming down the road, and this Budget is simply trying to get through today. It is a Budget for getting by, not for getting on.

I was cautiously optimistic when the right hon. Gentleman was appointed Chancellor. This is a man who once seemed to grasp the danger that Britain is now in. I thought that he was putting country before party when he quit as Defence Secretary—he will remember that I said he was a man of principle. Let me remind him what he wrote in that resignation letter in June. He said:

“I am certain that a…date for 3% of GDP on defence in 2030 is what Britain must set.”

[Interruption.] I have not finished—Labour MPs will have to wait for the punchline. They are so slow. He went on to say that if that did not happen, he would be

“forced to make decisions that would…increase the risk to personnel on operations, and could make the country less safe.”

Today is the day he should have set that date. He is the man who has failed to set a plan for 3%. [Interruption.] Today is the day that we should have got the plan.

[Madam Deputy Speaker]

Order. I am not sure which side is the most noisy. The Defence Secretary will have to have a lie down in a dark room if he carries on like that.

[Mrs Badenoch]

The Chancellor should have set out a plan for 3% today. Now he is the man who is increasing risk to personnel on operations. He is the man who is making our country less safe. He has failed his own test. This is on him, and no one will ever forget. If he had any decency, he would resign again today. Yes, the Chancellor has funded the defence investment plan, and that is welcome, and yes, there is more support for Ukraine, and that is welcome, but he said himself in June that that was not enough. He has given himself a bit of breathing space until next year. Instead what we have is a plan to have a plan. I bet Putin is really scared now.

We know that finding the money is difficult, but it can be done. On the Opposition Benches, we have found the savings to get to 3%, because we know Britain is facing very serious threats. The defence funding that the Government have announced today relies on more borrowing. Let me explain why that will only make us weaker. The OBR confirmed today that Britain’s national debt is forecast to increase again. We are borrowing just to pay the interest on that debt. The credit card has been maxed out and the Chancellor is taking out new credit cards just to pay the interest on the old ones. The three Labour Budgets will have added more than £260 billion to the national debt. Our great grandchildren will be paying for Labour’s total lack of self-restraint.

Meanwhile, the Prime Minister is fantasising about rejoining the EU. There is just one problem: under Labour, Britain is now borrowing so much that we would not even qualify for EU entry. The Chancellor clings to the IMF’s praise of the Government’s deficit reduction plans, but the truth is that the IMF has to take at face value the idea that Labour will cut public spending massively just before the next election. Really? Are these MPs signed up to the cuts in those plans? These are the same MPs who voted down the most modest welfare reforms in the history of this House. They are never going to cut spending. That is why this month, the IFS described the Government’s plans as “a work of fiction”.

I can tell the House who else is not fooled by Labour’s fantasy figures: the bond markets. Britain is now paying more to borrow than at any point in the past 30 years. Those borrowing costs are hurting people today. Businesses are struggling to afford loans because of rising interest rates. Five-year mortgage rates are now above 6%. Rates are far higher now than they ever were under us. We have the utter cheek of the Chancellor and Labour MPs raising the mini-Budget when Government borrowing rates are far higher now. They are higher than under any Conservative Prime Minister. These are their interest rates; these are their borrowing costs; and this is their mess—they need to own it. The Chancellor knows that next week interest rates are expected to rise again. Only the Labour party would think that the answer is to spend more money. [Interruption.] I know the Education Secretary cannot count, so she thinks this is all fantastic. Come on, have you got something more to add? Can you add?

[Madam Deputy Speaker]

Order. We have to showcase the best of ourselves. Our constituents are watching. [Interruption.] I really do not need any help. Ms Emily Darlington, you are normally so polite and so well behaved, but today is not a great day.

[Mrs Badenoch]

They love to dish it out, Madam Deputy Speaker, but they cannot take it. [Interruption.] What was that from the Education Secretary? I am sorry, but I cannot hear her, because the rest of the class are making too much noise.

Inflation is eating away at our standard of living. Labour’s friends in the Joseph Rowntree Foundation have said that this could be the worst Parliament on record for living standards, but Labour has looked after its people. There have been plenty of pay rises for the unions. Benefits will go up. [Interruption.] It is true, there have been plenty of pay rises for Labour’s friends in the unions. Benefits will go up by inflation in April, but private sector wages this year are below inflation. People in the private sector are getting poorer. They can all feel it. Those on benefits are getting an increase, while those going out to work will not. That is not fair.

The problem is that Labour is addicted to spending other people’s money and addicted to welfare. The welfare Secretary said it himself. Talking about Labour MPs, he said:

“Every meeting I have is: ‘Who can we tax in order to pay benefits to others?’”

Since the last Budget just 11 months ago, the equivalent of the entire city of York has signed on to disability benefits. And why would they not, when sickness benefits pay more than the minimum wage? Jobs have been destroyed by Labour, and this Government have made it easier than ever to claim. It is honestly like their policies are designed to get people off work and on welfare. Just because it is called universal credit does not mean that everyone in the universe should be on benefits.

The issue is not just about cutting the benefits bill. This welfare burden is deeply unfair to those who are working hard and making ends meet—those people making tough decisions about whether they can move home or afford to have children. How do Members think they feel when they hear that working-age welfare is now costing every taxpayer £4,000 a year?

Cutting welfare is not just about saving money. A million young people in this country wake up with nothing to do and nowhere to go. Unemployment among 20 to 24-year-olds is now higher in London than in Bulgaria, the second-poorest country in the EU. Labour is creating a lost generation, isolated and powerless over their futures.

Britain is about to collapse under the weight of welfare. We have to start showing people some tough love. Deep down, the Chancellor knows that spending more money is not the answer. He talks about giving people breathing space, but the Government are the ones choking the economy. We have seen £70 billion of new taxes in just two years, and they have put them up again today. He said he would not be putting taxes on working people. That is what the last Chancellor said, too, but he has, because the Government are taxing everything that they can get their hands on. They have taxed jobs, pensions and cars. They have taxed the rental market today. They have taxed savings, investments and homes. He asked me whether I support the action that they are taking today. No, I do not support the action that they are taking today.

The Chancellor also said that this is a Budget for business that will unleash enterprise. That must be why the entrepreneurship adviser quit this week. There is nothing for business here. He wants to charge them more for the union learning fund, was it? Business does not want these random new schemes. Let me tell him: business confidence is negative not just this quarter, and not just the last quarter, but for seven quarters in a row. That has never happened before. In case Labour MPs do not understand what that means, the last time business confidence was positive was when we were in charge.

The Chancellor says that he is helping with the cost of doing business. Businesses need cheaper energy, flexible labour markets and lower taxes. They are getting none of those. Nearly half of businesses say that they have cut employment because of Labour’s jobs tax. There are now fewer vacancies in the economy than at any point in the last 12 years, outside the pandemic. Graduate vacancies are down by almost 50% this year. They were the worst on record last year, and under Labour they are again even worse—the worst on record this year. I was hoping that the Chancellor would do something on plan 2 student loans today, but he has not even done that. When was the last time any of them spoke to a graduate looking for a job? Parents are watching their children receive rejection after rejection. Companies report 140 applicants chasing every job. Unemployment has risen by a quarter of a million people since Labour came in: a quarter of a million people, under this lot.

So let me tell them some home truths. They have made wages expensive with their jobs tax. They have made energy expensive with their net zero policies. They have made capital expensive by increasing the cost of borrowing. What happens when wages, energy and capital are expensive? Nothing gets built. That is why the economy is grinding to a halt. Labour said that it was going to build 1.5 million new homes. I remember when the Housing Secretary first started, and I told her that she had been stitched up. Do you know what she is saying now, Madam Deputy Speaker? She says that now there is a “slim chance” that Labour will build 1.5 million new homes. They are not going to build them. They are not even going to build as many as we did, despite their lofty ambitions. They promised to secure the future of Britain’s steel industry. Now taxpayers are spending £1.3 million a day propping up British Steel alone. They promised to create 650,000 clean energy jobs. Where are they? Nothing has been created except unemployment.

Let me tell you, Madam Deputy Speaker, what has actually happened since last year’s Budget for “Benefits Street”. Inflation—[Hon. Members: “Up!”] Government spending—[Hon. Members: “Up!”] They can join in now on the Labour side, because they know the words—we heard them. Debt interest—[Hon. Members: “Up!”] Mortgage rates—[Hon. Members: “Up!”] Benefits claims—[Hon. Members: “Up!”] Unemployment—[Hon. Members: “Up!”] Welfare spending—[Hon. Members: “Up!”]

The report card is not looking good. They are making the same mistake with banking that they made with oil and gas: tax one of Britain’s flagship industries until it packs up and leaves. The result? The country gets less money in tax. [Interruption.]

[Madam Deputy Speaker (Ms Nusrat Ghani)]

Order. Mr Gemmell, yowling for so long will be very bad for your throat, so simmer down.

[Mrs Badenoch]

I see that the Minister for Pensions is leaving. I guess he could not handle the truth.

Everything in our economy is being made more expensive by Labour’s taxes. Next year, under Labour, Britain will have the highest tax burden in our country’s history—higher than in the 1970s, higher than in the second world war, higher than in the Napoleonic wars. [Interruption.] She asks, “Whose fault is that?” It is your fault. She is asleep at the back of the class. The Education Secretary might want to take a look at that student.

What have we learned from the Office for Budget Responsibility today? Growth next year: downgraded. Inflation: up every year until 2030. Real household disposable income: lower every year. We have learned that the Chancellor’s debt interest bill will be £14 billion higher than expected, and the debt will be higher in every single year compared to the previous plan. How is this giving us breathing space?

There is a better way that would actually deliver for the people of this country. There is a logical order to creating growth in an economy. You have to create value, prosperity and wealth first, before you distribute it. That is how it works. Labour is only interested in the distribution; it has no plan to create any value at all. We on the Conservative side of the House want to see Britain richer, more prosperous and thriving—not just a little bit of breathing space. That is why Conservatives are proposing tough love. We will cut spending by £70 billion, including £36 billion from welfare—cuts that are fair to taxpayers, and fair to those who really need support. We would use half of that money to cut the deficit, so that Britain does not go bankrupt and borrowing rates start to come down. That is how we get cheaper mortgages. And we will fund our defence properly, because keeping our country safe should be the first priority of any Government.

Getting the public finances under control and living within our means will allow us to cut taxes, because that is what really gives people breathing space. Scrapping the carbon tax to bring down energy bills, scrapping stamp duty, abolishing inheritance tax on family homes—that is what people want. So let us cut spending, cut the deficit, fund defence, and cut people’s taxes. That is the Budget that the Chancellor should have delivered today. That is the Budget that Conservatives would have delivered. And that is going to be the choice at the next election.

[Madam Deputy Speaker]

I call the Chair of the Treasury Committee.