Budget Resolutions

Pat McFadden Excerpts

Thursday 27th November 2025 Commons Chamber

[The Secretary of State for Work and Pensions (Pat McFadden)]

It is a pleasure to open today’s debate on behalf of the Government, and to respond to the shadow Chancellor. He went through his lines and, as I expected, he talked a fair bit about welfare. If only he had ever been in a position to do something about it. That is the essential problem with the position of Conservative Members. It is not even that they failed to reform the system, it is that they created it in the first place. Their system created the fork in the road between those judged fit to work and those judged unfit to work. Their system forced people into a choice between poverty and being declared incapable of work, often permanently. It is their system that left millions of people with no contact and no support from the system, other than the payment of benefits. Perhaps most damningly, it is their system that saw the huge growth in inactivity among the young, about which they did nothing while they were in office.

As the shadow Chancellor knows, there is a wall in the Department for Work and Pensions, carefully placed between the microwave and the toilets, on which there is a very fetching portrait of the shadow Chancellor, along with portraits of all his predecessors as Secretary of State for Work and Pensions. They all sat in the same chair, in the same office as I do. They saw the same trends and the same graphs that I see, but they did absolutely nothing about the situation. He talked about the changes that he proposed to the work capability assessment, but he was a little quieter about those changes not happening, because they were so incompetent that they were struck down as being unlawful by the courts. He then said that he would have done more but he was interrupted by the general election—the Conservatives had 14 years and the election was called at a time of their choosing.

The shadow Chancellor is asking the House to indulge the fantasy that, having been relieved of the duties of ministerial office, he has suddenly stumbled upon the answer to the problem, like a reverse Nostradamus, granted a magical power that enables him to identify the solutions to problems, but only at the moment when he ceases to have responsibility for fixing any them. The Conservatives remind me of a messy 16-year-old who has turned his bedroom into a tip, but when his exasperated parents come in to clean it up, the teenager says, “I was about to do that.” No one believes the teenager and no one should believe the Tories, because they had their chance and did nothing about it.

On their watch, welfare spending went up by almost 1% of GDP over the last Parliament, the equivalent of about £22 billion a year. When they left office, did the OBR think that they had a credible plan to change the system? No, they did not. The OBR predicted that costs would rise by a further £100 billion. Sometimes the Tories say that they want more face-to-face assessments, which I want too. However, in September 2023, a little over six months before the election was called, they signed off a new set of contracts allowing 80% of the assessors to work from home. Who was the Secretary of State when those contracts were signed? We do not need ChatGPT to tell us—we just need to look on that wall between the microwave and the toilets, because it was the shadow Chancellor. And that was long after the covid pandemic.

The Conservatives created the system, but they did not change it when they had the chance and they increased the number of children in poverty by 900,000, so it falls to us to begin to change the system. We have begun. We are reducing the gap in universal credit between standard unemployment and the sickness rate, a change that the OBR estimates will get 15,000 more people into work and that starts to address the incentives for sickness built into the previous Government’s system, reform that we are carrying out that the Conservatives did not.

Changes to the Motability scheme will focus on value for money and ensure that if the UK taxpayer is paying for new vehicles, more of them are made here in the UK—reform that we are carrying out that the Conservatives did not.

[Ben Obese-Jecty (Huntingdon) (Con)]

The Secretary of State talks about trying to ensure that cars available under the Motability scheme are made in the UK. I looked at the Motability website yesterday and some of the changes have already been implemented, but there are an awful lot of Chinese cars listed. Yesterday, Omoda and Jaecoo, two of the Chinese companies on that list, announced that they would be implementing a 20,000 mile rebate to individuals to pay for the electric vehicle tax introduced in the Budget. That will allow China to get an even greater foothold in the UK economy. Those cars are built with Chinese IP that sends information straight back to the state, allowing it to track where those vehicles are. What will the Government do to address the impact of the growing number of Chinese vehicles and about the fact that the Budget is, perhaps unwittingly, encouraging the use of Chinese cars in this market?

[Pat McFadden]

The hon. Gentleman should be supporting our changes because they have done two things: they are removing a number of luxury brands from the system and they are ensuring that more British-made cars are part of the scheme, and that will continue going forward.

By the end of the decade, we will have provided an additional £1 billion for employment support for the long-term sick and disabled through the pathways to work programme, so that people are not just signed off and written off—more reform that we are carrying out that the Conservative party did not. We are fixing the long-running injustice to carers that they ignored for years, which is more reform that we are carrying out that the Conservatives did not. There is more reform in this Budget than the shadow Chancellor implemented in his 20 months as Secretary of State for Work and Pensions.

But I know that we have to go further, because the greatest crisis is among the young. We inherited a situation with close to a million people not in employment, education or training. That is terrible in human terms, expensive in financial terms and deeply unequal, because the numbers are often highest in the most deprived parts of the country. Those are often places where there are already multiple problems and where the loss of hope seems the deepest. Addressing this problem is a cause around which we should rally. That is why in this Budget we offer a youth guarantee, with £820 million of investment, that will offer the young unemployed a training place, work experience or ultimately a job, giving hope and opportunity where previously there was none—more reform that we are carrying out that the Conservative party did not.

[Sir John Hayes]

I am very interested in that part of the Budget and I am grateful to the right hon. Gentleman for setting it out in more detail. One part of the youth guarantee is the boost for apprenticeships, particularly in small and medium-sized enterprises, but looking at the fine print, is that not already supplied by the apprenticeship levy? What small and medium-sized enterprises need, as I learned when I was the apprenticeships Minister, is some grant funding to get them started in the process. Does the Government have that in mind or is this simply a rehash of the apprenticeship levy?

[Pat McFadden]

I note the right hon. Gentleman’s request for more public expenditure and I am coming on to the growth and skills levy in a moment. What we will do with that is tilt it more towards young people and towards more short courses, and this Budget puts a further £725 million into that, which will enable the full funding of apprenticeships for the under 25s for small businesses. That is good for young people and good for employers. It is important, because no matter where they are from, what their background is or who their parents are, every young person should have the chance to make the most of their life. I want the country’s young people to know that through our youth guarantee, the apprenticeship support and the other measures outlined in the Budget and outside it, we will support them, we believe in them and we want them to succeed.

Even after that, I know that we need to go further, and that is why I have asked former Health Secretary Alan Milburn to report in the new year on the issues of young people, work and inactivity, looking across departmental boundaries and recommending policy responses that will offer young people more opportunity and a better chance in life.

After the Conservatives either neglected all that or opposed that which they did not neglect, what have they got left? Arguing that instead of our approach, people’s wages should be lower. We saw where that led during the last Parliament. The shadow Chancellor talked about living standards—during the last Parliament, living standards declined more than at any time in living memory. Now living standards are rising in this Parliament and wages have risen more in a matter of months than they did in 10 years when the shadow Chancellor’s party was in office.

As people sometimes remind me, I have been around for quite a while. I am proud to have served in the last Labour Government, which lifted 600,000 children out of poverty—and almost all the measures delivered were opposed by the Conservative party. In fact, the Conservatives’ record was a rise in child poverty of 900,000. Their argument was that the two-child limit would force people to make different choices about the number of children that they would have, but that is not what happened; it simply forced more children into poverty.

The real indictment goes deeper, because, as the right hon. Member for Central Devon knows, the two-child limit was not really a welfare policy at all. In the end, it was not even about saving the money. The truth is that it was about political dividing lines. It was a device used by the Conservative Government, in which children were the weapon of choice. That is what it was about, but not any more. Tackling child poverty is an investment in the future of those children and in the country, because children who do not grow up living in poverty will have a better life. This policy is not just about the distribution of money; it is an investment in opportunity. That is why the Chancellor announced the abolition of the two-child limit in the Budget. As my hon. Friend the Member for Calder Valley (Josh Fenton-Glynn) said, the clear majority of households that will gain from this measure already have someone in work. The policy will lift 450,000 children out of poverty, and that number will rise, thanks to other measures, such as the expansion of free school meals, help with energy bills, and the expansion of free childcare so that more parents can take up work.

This will be the largest reduction in child poverty over a Parliament since records began. As the Chancellor spelled out, it can be funded by a combination of tackling fraud and error in the system, the Motability and other changes, and the changes to online gambling taxation that she announced yesterday.

We understand that the health and welfare systems are deeply connected, so we will continue to get waiting lists down, and to treat more patients. We announced 250 new neighbourhood health centres in the Budget. Waiting lists and waiting times rocketed when the Conservatives were in office, and that was not just a health issue; it was an economic and benefits issue. A system that treats people more quickly, rather than having them wait in pain, is good for the economy, too. Through the reforms that we are making on incentives and support in the system, and on opportunity and tackling poverty, we are beginning to change the welfare state from a passive distributor of benefits to a platform of opportunities to get people back into work. However, we need to go further, and we will.

No one on the Labour Benches underestimates the scale of the challenges we face. There is no escaping the fact that the OBR’s decision to downgrade its assessment of productivity is the official verdict on the Conservatives’ years in office. They left this Chancellor with a £16 billion hole to fill. That hole is not because of the decisions she took, but because of the scarring effects of the Conservatives’ time in power. A botched Brexit deal, austerity that impoverished the public realm, and cuts to capital investment—the OBR is clear that they all caused long-term damage to the UK’s productivity and economic growth. That has to be owned by the Conservatives.

The shadow Chancellor attacked the Budget in the strongest terms, and he is right that it is a contrast with the Conservatives’ record, because they took the country to the very precipice of economic disaster. They used the British public as a test bed for a giant ideological experiment that saw mortgages go through the roof. The Bank of England had to launch an emergency rescue package for the country’s pension system. The Conservatives shook international confidence in the UK economy and destroyed whatever economic credibility they had by their own hand. There is a difference in our approaches—a very welcome one.

We have trade agreements with the world’s biggest economic powers—agreements that eluded the Conservatives. We have a reformed planning system, which will get the country building. Public investment is at its highest level for four decades, and inflation is coming down faster, as a result of the measures that we are taking. It will come down by a full 0.4 percentage points next year, according to the OBR. Borrowing is down in every year of the forecast. We are keeping corporation tax at the lowest level of any G7 country. We have help for high streets, and permanently lower tax rates for 750,000 businesses. We are doubling eligibility for our enterprise tax incentives, so that new businesses can not only be created, but can grow and scale up here in the United Kingdom.

We are cutting energy costs for 7,000 businesses to make manufacturing more competitive. We are providing help with the cost of living through the first rail fare freeze for 30 years. We are freezing prescription charges. Energy bills are being cut by £150 per year. We are raising the national minimum wage for millions of workers, as recommended by the independent Low Pay Commission. We are expanding free breakfast clubs, and there are free school meals for all children in families on universal credit.

This is a Budget for the whole country. It helps with living standards and helps people to meet their monthly bills. It fixes some of the problems of the past, and gives the country strong foundations for the future. It is a Budget that believes in maintaining the public square, and it continues the progress that we have made on the NHS. That progress is, for us, not just a social goal, but an economic goal. It is a Budget that protects the state pension and raises its value by £575 next year. It is a Budget that continues with welfare reforms, reduces child poverty and offers hope to young people for the future. That is the difference, and that is why we should support the Budget today.

[Madam Deputy Speaker (Judith Cummins)]

I call the Liberal Democrat spokesperson.