Budget Resolutions and Economic Situation

Meg Hillier Excerpts

Wednesday 28th October 2026 Commons Chamber

[Dame Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The right hon. Member for North West Essex (Mrs Badenoch) needs to have a tough look at the reputation of her Government. She talks about welfare and she talks about defence, but it was her Government who crashed the economy. Under her Government, welfare spending rose by 0.7% of GDP in the last Parliament alone, and in the last year of the Government in which she served it rose by £33 billion. She knows—we all know—that reform is necessary, and reform is coming, because under this Labour Government we are reforming the social security safety net and ending the scandal of young people on personal independence payments, who, in droves, are being put on a benefit that they are less likely to come off than someone over the age of 55.

As the Prime Minister said earlier, Labour’s approach is a “names, not numbers” approach. There is a lot of thought going in, and I pay tribute to Alan Milburn for his thinking about how to reform the system as a whole. It is easy to talk about numbers and top-slicing, but that takes no account of the human beings at the heart of the benefits system.

[Graham Stuart (Beverley and Holderness) (Con)]

The hon. Lady is making a typically powerful speech, but, in my 21 years in the House, I have normally found that the person who holds her position gives a somewhat less partisan critique of the Budget, recognising that the primary role of all of us as Back Benchers is to hold the Executive—the Government of the day—to account, rather than just playing to our party political base.

[Dame Meg Hillier]

I look to the reputation of my predecessor in this role, who took her job very seriously but would still make a point. It would be very difficult for me to stand up and, from the Government Back Benches, not react to those in the Conservative party who crashed the economy in 2022 and left a lot of the mess that we are now dealing with. I am passionate about these issues because I spend a long time looking at public spending and at the waste of the previous Government, as does the Public Accounts Committee, quite rightly. It should challenge this Government on any waste of taxpayer pounds, because taxpayers work hard for their money and they need to be sure that someone is watching the Government to make sure that they are spending it as well as they can. We know that that is not always a simple task.

I look to welfare reform. Yesterday, I was with the Secretary of State for Work and Pensions in my constituency of Hackney South and Shoreditch. We met with Scope, which is doing amazing work with disabled people. Some 72% of the recent cohort supported into work were still in work 26 weeks later—people who had been written off by the system. If we make sure that it is done properly through some of the devolution measures that the Government propose, we can make sure that the “names not numbers” approach is replicated across the country, where there are already good examples.

I welcome the Chancellor’s decision to fund the defence investment plan—again, I looked at this issue for many years as Chair of the Public Accounts Committee. It is right that we stand with Ukraine—a cross-party position—and it is right that we spend the right money on defence. Unfortunately, the last Government reduced the money spent on defence to a ridiculously low level under austerity, leaving us exposed to the challenges we face in the world. I hope that we will have cross-party consensus that we need to increase defence spending and back the Chancellor in that mission.

[Chris Coghlan (Dorking and Horley) (LD)]

I was very pleased to see the Chancellor announce £5 billion more in the Budget for defence research and development, which—[Interruption.]

[Chris Coghlan]

Does the hon. Member agree that the announcement of £5 billion more in the Budget for defence R&D through the British Business Bank could have profoundly positive implications for our national security and growth, as I have urged, if the Government scale it further from here?

[Dame Meg Hillier]

I count the hon. Gentleman as a friend, because he serves on the Treasury Committee and is indefatigable in his attempts to ensure that the Government are listening about research and development in defence and across wider sectors. It sounds as though, between us, the Government have heard that message.

Before I move on to the main thrust of the Budget, I want to address the Leader of the Opposition’s comment about plan 2 student loans. The Treasury Committee looked at this issue, which is having a very big impact on that generation of young graduates—the engine room of Britain, and the people who will be funding and growing our economy in the years to come, and making sure that the ageing population is supported. We need to do everything we can, and intergenerational fairness is a big strand of the Treasury Committee’s concerns, but let us be clear: who set up plan 2 student loans? It was the previous Government.

I talk a lot about slow politics. Governments should make decisions that will stand the test of time in 10 or 20 years, as well as dealing with the challenges of today and the catastrophes that might occur, either globally or locally, next week. Plan 2 student loans were designed by the Conservative Government and left as a ticking time bomb for this generation to pick up. Although I am saddened that we have not seen a change to the threshold at which repayments are made, I hope that the Chancellor will consider that as part of his longer-term plans, to make sure that this generation has one fewer burden. I hope that we will see some talk about that in the weeks to come.

Before the Chancellor rose to his feet it seems that some bank shares increased in value. I am concerned about that and, with the permission of the Treasury Committee, I will write to the Financial Conduct Authority to see if there is any evidence of leaked market-sensitive information that may have led to that movement, because that would be a very serious issue. On that point, I congratulate my right hon. Friend the Chancellor on his very strong clampdown on speculation and leaks ahead of this Budget. He knows, as we all do, that stability is so important. He cannot completely halt wild speculation, but clamping down on leaks from the Treasury and the wider system is very important.

Despite the headwinds, the debt forecast has only slightly worsened. We have seen a Budget that pushes stability, and I welcome some changes in particular. The Treasury Committee looked at cash ISAs and the changes that were proposed in last year’s Budget, and as we said then, it was not the right approach. Building societies use cash ISAs to lend to home purchasers, and they were going to be particularly badly hit. Most people have much less than £20,000 in a cash ISA, and many never get anywhere near £12,000. The average is between £3,000 and £7,000, depending on how we cut the figures, so it is right that the Chancellor has made changes. I look forward to seeing the starter ISA for investors, and the Committee will examine the changes in detail, but the previous proposal had overcomplicated the system. The ISA is a trusted brand, and the Chancellor has taken a good step.

On the subject of building societies and mutuals, in a hidden corner of the Red Book is the announcement that my hon. Friend the Member for Peterborough (Andrew Pakes) has been appointed as the Government’s co-ops and mutuals champion. I commend him for achieving that position following his many years of hard work in this area. As the chair of the Co-operative group of MPs in Parliament, I am delighted that the Government are further leaning into the progress they have already made in supporting co-ops and mutuals. That is important for getting growth and the involvement of people in every community up and down the country, because this is a way of people owning and having a say in the shaping of their services and their outcomes, whether it is a credit union, a food co-op or a childcare co-op—the list goes on. There are many opportunities.

I welcome the reform of lifetime ISAs—again, something that the Treasury Committee produced a report on. The removal of the penalty payment seems like the only just approach to that. We have a challenge when products such as ISAs are created but do not work as well as they could, so I welcome the Chancellor looking at that.

I am delighted to see some changes in housing. In my constituency, house prices are rocketing through the roof, rents are high and thousands of people are living in temporary accommodation, and those in housing are often severely overcrowded. Every weekend I visit people who are living with three children in a one-bedroom flat—a very typical picture—with no freedom or agency to move, because the cost of housing is too high, the cost of rent is too high, and we do not have enough social housing. Indeed, it is cheaper to buy back from a leaseholder who is selling their property than it is to build new houses, so the VAT reduction for housing associations is a welcome first step.

[Jamie Stone (Caithness, Sutherland and Easter Ross) (LD)]

I am a Member who represents a part of the United Kingdom where government is devolved. Despite the good intentions of this Government, the money that goes north sometimes goes into the tube and what comes out the other end is sometimes rather different, particularly on housing. Is that something the Treasury Committee could look at one day, to see whether what is delivered was the intention of His Majesty’s Government?

[Dame Meg Hillier]

The hon. Gentleman anticipates a further area of my speech. I believe very firmly in devolution, but there are some caveats. That is something that we may consider. Of course, I chair the Treasury Committee, but I do not make all the decisions for the Committee—it is not an autocracy, unless its members choose to make it that way—so we will discuss that issue.

On housing, there are areas that are too detailed to go into the Budget, but I hope there is some discussion in the forthcoming spending review about system-built housing. In Murray Grove in Hoxton, in my constituency, some millennium products built by Peabody still stand the test of time. They were system-built offsite, which reduces the cost of construction and makes it faster, but we do not have enough throughput in the factories that do this for them to survive and thrive. That is a potential opportunity for us in the UK.

The Chancellor has a huge challenge. We are facing very difficult fiscal circumstances, but the wider picture is that we are seeing some green shoots of hope. According to early estimates, the economy grew by 1.8% year on year in the three months to August—the fastest pace since the country was rebounding from the pandemic in 2022. GDP has grown at an annualised pace of 2.7% so far in 2026, with early estimates indicating that growth has continued into the third quarter, and productivity has grown by more than 1% per worker in every quarter since the end of 2024. There is a degree of hope that if we keep stability and keep focused, we will meet some of the challenges.

[Tim Farron (Westmorland and Lonsdale) (LD)]

The hon. Member is making an excellent speech, as always. Given that there is some underlying positivity, is she concerned that although there is ongoing support for people with their energy bills, there is nothing for the tens of thousands of people in Cumbria, and the hundreds of thousands across the country, who are off grid and who rely on heating oil? Does she think that the Chancellor had room for a formal cap on energy bills for people who are off grid, whose bills have gone up threefold in the last year?

--- Later in debate ---

[Dame Meg Hillier]

The hon. Gentleman is a good campaigner for his constituency and raises these issues repeatedly, but there has been some support from the Government on that issue. The Treasury Committee will be poring through the detail of what the Chancellor has announced today, so he may take my plaudits today, but we will go through that detail to see how much this delivers cumulatively for a household, which I know is the mission of the Chancellor and the Prime Minister. On that point, we will wait for the detail, but there is a limited pot of money, and it must be targeted at those who need it most, notwithstanding the challenges the hon. Gentleman’s constituency faces. There are choices to be made.

[Chris Vince (Harlow) (Lab/Co-op)]

The House will be determined to know how this Budget is going to benefit Harlow. Does my hon. Friend agree that the £100 direct payment into the bank accounts of Harlow residents will make a huge difference this winter? By the way, it will help over 39,000 households in council tax bands A to D.

[Madam Deputy Speaker]

I am surprised that the hon. Member failed to get the Chancellor to use the word “Harlow” multiple times during the Budget statement.

[Dame Meg Hillier]

I thank my hon. Friend the Member for Harlow (Chris Vince)—I say that just to up his constituency’s mention count. Around 48,000 households in my constituency households will benefit from the council tax rebate for those in bands A to D. I am assuming the Government took this approach because it is a simple way of getting the money into people’s pockets, but how that works will need a lot of unpicking. It is an instructive figure, in fact, because people think that London’s streets are paved with gold, but one in two children in my constituency are living in poverty, it is among the top three for the pensioners deprivation index, and it has a very high level of deprivation overall, while there are also challenges with the cost of living.

[Richard Tice (Boston and Skegness) (Reform)]

The hon. Lady may not have read the Budget Red Book, but GDP growth is forecast to reduce from 1.6% back in March to just 1% in 2027, and indeed GDP per capita is also forecast to reduce from 1.3% to 0.9%, so the numbers in the forecasts are actually getting worse, not better.

[Dame Meg Hillier]

As the hon. Gentleman rightly highlights, I have not had time in the moments since the Chancellor sat down to go through every graph in the Red Book or, indeed, the OBR’s forecast. Obviously, the Chancellor laid out the figures very clearly at the Dispatch Box, and we will be raising these issues in the Committee. It is easy to pick one measure that has gone down, but sometimes the figure will go up in a later year, and despite the headwinds, there is some room for optimism.

Let me let me be very clear—I think the Chancellor would expect me to say nothing less, as Chair of not only the Treasury Committee, but the Liaison Committee—that Chairs of Select Committees see our role as robust scrutineers of the work of the Government of the day, whichever party is in power and whichever party we are from, as a core part of what we do. There will be nowhere for the Chancellor to hide when he comes before us on 11 November, but I am sure he is robust enough to be prepared and to take on all comers.

[Sir Geoffrey Clifton-Brown (North Cotswolds) (Con)]

The trend started by my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt) when he was Chancellor of providing £3.5 billion to spend on AI and digital in order to make all Departments, but particularly the national health service, more efficient, was sadly lacking from this Budget. As Chair of the Treasury Committee, could she suggest how Government spending on digital and AI might improve Government productivity?

[Dame Meg Hillier]

The hon. Gentleman raises quite a detailed point, but we know that AI can add about 0.2% to productivity in the economy overall. I do not have direct figures for the NHS, but my sister Committee—the Health and Social Care Committee, ably led by the hon. Member for Oxford West and Abingdon (Layla Moran)—will no doubt be looking at these issues. As he knows, the Committee corridor is examining the power of AI, covering both the costs and the opportunities, and I am sure the House will continue to discuss the opportunity to improve productivity in various guises and to scrutinise the Government very robustly on that.

What is interesting about the Budget is that some of its measures are for today, but it is clearly rooted in longer-term reforms, which I welcome, because we need to be thinking about the long term. One of those measures is devolution, and I am a firm believer that power should be devolved to the most appropriate level. In fact, when I was a baby councillor with the now chief of staff to the Prime Minister back in 1994, he and I were both responsible for devolving powers to areas within pram-pushing distance. I should say for younger Members that this was before the days of the internet, which perhaps dates me too much. Giving people a say over spending in their own local area can be a really powerful way of engaging people with the decisions that are made—not seeing politics as something distant and remote, but very much part of their communities.

[Max Wilkinson (Cheltenham) (LD)]

Will the hon. Lady give way?

[Dame Meg Hillier]

I have given way several times, and a lot of Members are waiting to speak.

Whitehall is often just too distant—not just physically and geographically, but in attitude—from communities and towns up and down the country. I always say that we should not make decisions about people without people. However good our civil service is—and I pay great tribute to the many civil servants I have quizzed over the years about public spending—there will still be a challenge if we do not have the right people around the table, and that may be because they just do not know what is going on in a geographical area.

Our mayors have a very important role, but if money is to be devolved to them, there needs to be very strong local accountability. Of course, the last Government abolished the Audit Commission, which I think is a great sadness, and we have seen huge challenges in local government audit. The Mayor of London has the strongest accountability, with 25 London Assembly members able to challenge him openly and regularly about his spending, and powers to delve into the detail, but mayors in other areas do not have that.

I would say to the Government and the mayors that there is very good reason to have very strong accountability. First, a mayor will want to prove to their constituents that they have spent money effectively, and to be transparent about that, so that when they come up for re-election, people know that their mayors are not frittering away their hard-earned tax pounds and that they are delivering the things they want. Secondly, if a mayor spends money well in their area, they might prove to the Government that they can get more bang for the taxpayer pound than Whitehall achieves by doing it from a distance. Dare I say it, but there may even be times when the Government of the day do not give quite enough money to deliver what was promised, and mayors need the figures to prove that they have been short-changed. In all those circumstances, we need a stronger accountability process, and I hope that we do not go so fast in the drive towards devolution that we do not have those checks and balances in place.

I am very pleased about the moves on cheaper energy and clean power. The Chancellor mentioned GB Grid, which is a start, but about 400 projects are needed to upgrade the grid, and I believe that GB Grid covers 10 or 11 of them, so there is still a huge challenge to get the grid up to speed to meet the target of net zero by 2050. I think the pledge to buy and build only when new technologies will lower bills and be connected to the grid may be an important driver in that area. We may want to quiz the Chancellor about that—as, I am sure, our sister Committee, the Energy Security and Net Zero Committee, will want to do with the relevant Ministers in due course. I welcome the energy cost reductions for businesses, because I think all Members across the Chamber have heard that businesses have been really struggling in that regard. I have also been pushing for the closure of the loophole on VAT for online marketplace sales, so I am pleased to see that.

On the face of it, this Budget looks as though it has done a good job, but the devil is of course in the detail, so I again put the Chancellor on warning that we will be looking through that detail over the next few weeks. We have the Office for Budget Responsibility before the Treasury Committee next week, alongside other economists, and we will have the Chancellor himself on 11 November, when we will have had a chance to go through all the figures in detail and can challenge him on what he has promised today and the promises for the future.

Overall, I think we must see cross-party support for the approach to support households in these challenging international times, when a lot of the things that buffet the Government are very difficult for them to control. We must support small businesses. Quite rightly, we all are lobbied a lot by our small businesses. People invest their energy in their businesses, and they need support. We need a long-term vision. Part of our challenge as scrutineers of the Government on the Committee corridor is to hold them to account for their 10-year plan—which we have yet to see—for reshaping the state and devolution. I again warn all Ministers sitting on the Front Bench that the Budget may feel good after the statement today, but we will be challenging them in detail about the money they are spending, whichever Committee they appear before.

[Madam Deputy Speaker (Ms Nusrat Ghani)]

I call the leader of the Liberal Democrats.