Budget Resolutions

Debate between Kit Malthouse and Yuan Yang

Wednesday 26th November 2025 Commons Chamber

[Kit Malthouse]

My hon. Friend is exactly right. It is worth remembering that if we had not gone through a period of austerity post the financial crash and the mess that we inherited, we would not have been able to rescue the economy during covid. We would not have had the headroom that allowed us to re-leverage the country in emergency circumstances. I wish that we now had the same foresight.

Paragraph 3.13 of the Blue Book points out that, in the OBR’s view, there is nothing in this Budget that will do anything for growth. The OBR has declined to revise its previous output predictions because the Budget does nothing for growth.

Finally, the fourth bullet point in paragraph 1.28 points out that the tax-to-GDP ratio will become the highest it has ever been in this country and will constrain business incentives for the future. I urge colleagues to read the Blue Book—the truth lies therein.

We find ourselves in a position where we have a Budget that is trumpeting itself as a triumph, but which is nevertheless producing the highest tax rate of all time, completely flat and anaemic growth, and inflation and interest rates—they are in the Blue Book—that will be higher for longer than they otherwise would have been. The outlook has worsened since March, to the extent that the OBR makes a point of it.

[Yuan Yang]

I, too, very much enjoy reading the Blue Book. While we are talking about our favourite passages, I wonder what the right hon. Gentleman makes of page 29, which says that

“persistent weakness in productivity growth relative to the pre-financial crisis period is more likely to reflect underlying structural trends.”

What was going on in the 2010s that meant that the structure of the UK economy was so bad?

[Kit Malthouse]

The hon. Lady raises a very good point, which I will come on to shortly.

All of this points to the fact that, let us be honest, this is not actually a Budget about growth. I only left the Chamber for half an hour to have a cup of tea, and all the speeches that I have heard from those on the other side of the House—the “far left” side, or whatever it might be—have been about redistribution. They have all been about how pleased Labour Members are at the redistribution that is going on. That is fine, but I wish their Front Benchers would be honest about what they are trying to do, because they are sacrificing the prospect of future growth for the economy in order to tick the box on Labour Members’ political demands about redistribution. That is fine, and we have been here before. As hon. Members have said, we have been through most of these scenarios before. I am only just old enough to remember, but it happened in the 1970s. That was when we last had an openly redistributive Government—forget Tony Blair, because he was not about that—and we saw what happened to growth as a result.

To me, four things were broadly missing from this Budget. First, there very obviously is no governing philosophy of the political economy that any of us can discern. There is no plan or strategy. There is maths, there are inputs and outputs, and there is political box-ticking, but there is no sense of what kind of economy we are trying to build. There was a nod towards it in the desire to review the enterprise investment scheme and venture capital trusts, but that is really about trying to keep the lobby groups in the City happy. There is no plan to build an energetic economy.

Secondly, as has been said by a number of Opposition Members, there is no comprehension of how this Government—and I have to say, sadly, previous Governments—have damaged the return on risk. A number of Members have said that capitalism relies on risk. People go out there to invest, to risk their own money and to buy businesses, and they do that calculating the return they are going to get. If we continue to tax that return, to regulate that return and to make that return less attractive, fewer and fewer people will take that risk. If we want a scale-up economy that takes advantage of the scientific and technological inventions that we are so good at producing, we have to reduce the impositions we put on risk and make it worth while.

Thirdly, we did not have any talk about frictional taxes. The Chancellor was trumpeting growth this year, but the only reason we had a bump in growth this year was the closing of the stamp duty window, when people rushed—