Autumn Budget 2025

Lord Willetts Excerpts

Thursday 4th December 2025 Lords Chamber

[Lord Willetts (Con)]

My Lords, I welcome the maiden speech made by the right reverend Prelate the Bishop of Portsmouth. My former constituency, Havant, was within the diocese of Portsmouth, and I recognise the valuable work that the diocese does.

The media story around this Budget has been about the downgrading of the productivity estimates from the OBR. As we now know, that downgrade, which reduced forecast revenues, was off-set by a forecast of higher wages than previously expected, boosting revenues. In the neat arithmetic of the Treasury, lower productivity was off-set by higher pay. In the real world, an economy where we are less productive and paying ourselves more is not one with the best prospects. That is why it is so important to raise the growth rate.

I look across the Chamber and think of the intervention we just had. We now have a definition from the Office for Budget Responsibility of the materiality of measures as having an effect of 0.1% of GDP, and there are no measures that pass that requirement. Indeed, I rather suspect that the vote in your Lordships’ House only a couple of weeks ago to increase the period before people enjoy full employment rights from day one to six months may have done more for youth employment and the economic prospects of our country than any specific measure in the OBR.

There has been a focus on the growth of benefit spending. It is worth, however, reflecting on where this growth comes from. Of the growth in benefit spending since Covid of approximately £45 billion, £21 billion is extra spending on pensions and £24 billion is extra spending on health and disability benefits, off-set by a £1 billion cut in benefits for families of working age. Whatever one thinks about the exact size of the welfare and social security budget, is this reshaping of the welfare state away from families and towards disability benefits and pensioners the right direction in which we should go? My belief is that we are in a situation where we should focus on the problem of where the growing spending lies and not expect further sacrifices from families who are clearly not the reason for a growth in social security expenditure.

Even now, this year, when there is going to be an uprating of benefits, benefits for families will go up by 3.8% and benefits for pensioners will go up by 4.8%—despite the fact that pensioners are now less likely to be poor than families. We need at some point to rebalance this system.

Finally, we have been distracted from these issues about the need for economic growth or the balance of the welfare state by a focus on exactly whether the fiscal rule for a balanced Budget in 2029 is £10 billion pounds off or not. That is a ludicrous focus for the debate about the state of the British economy and the state of public spending. I very much hope that the increased headroom that we now see in the Budget—the main reason for the increases in taxes—means that we can now focus on the things that really matter, rather than the micro-forecasting for that Budget. It is the Government’s intention, therefore, that there shall be no fiscal measures when the spring economic forecast is produced. I would be grateful if the Minister could tell the House exactly what the Government’s plans are for handling the announcement of the spring economic forecast and whether the Chancellor will be giving a Statement on that occasion.