Budget Resolutions

Paul Waugh Excerpts

Thursday 27th November 2025 Commons Chamber

[Paul Waugh (Rochdale) (Lab/Co-op)]

This is a Budget that cuts the cost of living for families in Rochdale, boosts apprenticeships, and helps the NHS and our public services—public services that were brought to their knees by 14 years of not just Tory cuts, but coalition cuts. This is a Budget that balances the books, with fairness at its heart, and it is also a Labour Budget that puts children at its heart. I want to focus, in particular, on the historic decision to lift the Tory two- child cap, a policy that has punished so many children in Rochdale and across the land, for the crime of simply being born.

As a journalist who worked up in the Press Gallery for 26 years, I reported on, reacted to and analysed Budgets over more than a quarter of a century. With any Budget, there is always talk of winners and losers, but when the two-child cap was introduced in 2016, the biggest losers were children. Think about that: children losing money because of the warped ideology that they were to blame for their parents’ poverty. I grew up on free school meals, so I know what it is like to be in a household where money is tight. Indeed, one of the reasons I stood for Parliament in the first place was to reverse the shocking rise in child poverty that occurred since 2010 under the last Tory Government, and particularly in Rochdale.

The decision to scrap the two-child cap would not have been possible without a Labour Government, but neither would it have happened without the many community groups and anti-poverty campaigners in each of our constituencies. Earlier this year in Rochdale we held a roundtable meeting on the Government’s child poverty strategy. It was a heartening gathering, because we in Rochdale are proud of the many things we do locally for our kids, from never closing Sure Starts—which was tough for the local council—to providing free breakfast clubs way ahead of any national roll-out, and giving kids a free lunch if they go to Saturday school.

However, our roundtable was also a sobering gathering, because despite everything we have done locally to combat poverty among toddlers and youngsters, many of the adults and campaigners there told us that the biggest problem was the national two-child cap, which has been a catastrophe for the incomes of many families on low pay or between jobs. I want to pay tribute to some of those campaigners and community workers in Rochdale: Jo Barker-Marsh, Aqub Nazir, Heather Madden and Nazrine Akhtar. Without their passion and commitment to helping our children, today would not have been possible.

I was not surprised by the Leader of the Opposition’s rant about welfare yesterday. She repeated the Tory misinformation about the two-child cap, basing it on the myth that penalising larger families will somehow stop others from having a third or fourth child. As the Chancellor said yesterday, and as my right hon. Friend the Secretary of State has made absolutely clear from the Dispatch Box today, there is no evidence that the two-child cap led to any change in family size. Why is that? It is because families have children for a whole host of reasons. Women certainly do not get pregnant to get more benefits. In fact, the real scandal in this country is that having children results in a substantial and long-lasting financial penalty for mothers, due to reduced earnings, unemployment and a lack of support. That is something this Government are addressing.

ONS research found that five years after the birth of a first child, a mother’s monthly earnings were, on average, 42% lower than they were one year before the birth. The important point to stress is this: people move in and out of work for a whole host of reasons beyond their control. Many people have had their third or fourth child before they lost the job, became ill or were widowed, disabled or had to care for a sick relative or a disabled child. There is a wider point, too, which is that welfare has become a pejorative term. We need to talk more about social security, a safety net that is there for families who fall on hard times through illness, redundancy and no fault of their own.

As has been said many times, more than six in 10 families on universal credit are in work. Many are on universal credit for only a few months until they can get back on their feet, or until their children are older, or they can sort proper childcare. No one in this party will defend the tiny minority who game the system, but the tabloid caricature of people lounging about on benefits is far removed from reality, particularly for parents. In the real world, many parents of kids in poverty go hungry themselves, rather than let their kids go without. Many cut back on essentials such as food and heating because they have to. The Joseph Rowntree Foundation found that the depth of hardship is particularly severe for families with three or more children, with around seven in 10 having to skip meals or go hungry.

[Daisy Cooper]

We Liberal Democrats welcome the decision by the Government to scrap the two-child benefit cap. Does the hon. Member agree that, as well as it being the right thing to do, it saves taxpayers money in the long term? We know that poverty has lasting impacts on people’s health and educational outcomes. In making the case to the British public, it would be helpful if the Government could explain the longer-term impact that poverty has for the taxpayer.

[Paul Waugh]

That is exactly what my right hon. Friend the Secretary of State for Work and Pensions set out at the Dispatch Box earlier, talking about the positive case for this move on child poverty.

In Rochdale, we feel child poverty more keenly than anywhere. The statistics for my constituency after 14 years of Tory cuts are shocking. Relative poverty in Rochdale went up between 2014 and 2024 from 33% to 44.1%. That is one of the highest rates in the country. The Conservatives like to talk about relative poverty, but absolute poverty went up from 31% to 39%. The latest figures show that the total number of children in absolute poverty in Rochdale was 9,380 in 2024, but that 44% child poverty rate in Rochdale is just the average. The figures are even worse in individual areas such as Wardleworth, Kirkholt, Deeplish, Smallbridge, Firgrove and Freehold, where up to 60% of children live in absolute poverty. Those children were the collateral damage in a Tory attempt to get a political dividing line. How disgusting is that?

The idea of the deserving and undeserving poor is as old as the Victorian workhouse. We should banish it to the dustbin of history, just as we are banishing the pernicious two-child cap to the dustbin of history. In Rochdale, more than 5,000 children will be lifted out of poverty by this Budget. That is 5,000 future nurses, plumbers, engineers, carers, teachers, entrepreneurs and soldiers who will now be given the best start in life that they need to achieve their dreams and fulfil their potential.

The last Labour Government, which did so much to help children escape poverty, once had a new policy called Every Child Matters. By putting hundreds of pounds in the pockets of Rochdale families, this Budget shows that this Labour Government are restoring that moral mission as a national priority, sending out the message loud and clear that all kids count.

[Dame Harriett Baldwin (West Worcestershire) (Con)]

It is a pleasure to follow the hon. Member for Rochdale (Paul Waugh). I will be picking up on some of the points he made later in my remarks, but I will start by characterising the whole Budget in the way that we heard from the Leader of the Opposition, which is that this was the “Nightmare Before Christmas” Budget. After last year’s Halloween Budget, another Budget has come back for more and more tax on the strivers, the entrepreneurs, the hard workers and the pensioners across our land.

In our scrutiny of the Budget as the Treasury Committee, we will be trying to draw out some of these decisions that the Chancellor announced yesterday from the Dispatch Box. It is clear that last year’s Halloween Budget was the biggest tax-raising Budget in UK history, and yesterday’s Budget was the third-biggest tax-raising Budget in UK history. It is an enormous burden that we have put on our country.

What we saw in the run-up to the Budget was also extraordinary, including the fact that the Office for Budget Responsibility’s report was leaked during Prime Minister’s questions. Madam Deputy Speaker, you will be aware that the Chairman of Ways and Means was rightly outraged about that on behalf of Parliament.

For the benefit of the House, I will outline the role that the Treasury Committee plays in relation to the Office for Budget Responsibility. It will appear before the Committee on Tuesday. We received a letter today from the chief executive, Richard Hughes, outlining the fact that he is undertaking an investigation. That has been published, but the House may not be aware that the Treasury Committee has a veto over the appointment of all three senior members of the Office for Budget Responsibility and, importantly, their dismissal. That is written into legislation. We take our responsibility to get to the bottom of what happened incredibly seriously, because on behalf of Parliament we have to find out.

There was a lot of skulduggery in the run-up to this Budget, with all these kites being flown by the Treasury. There was possibly speculation by the media, but all these ideas culminated on the morning of 4 November with the Chancellor breaking into the nation’s breakfast with her doom-laden pronouncements about the upcoming Budget. It was extraordinary and unprecedented, and it was rightly the subject of an urgent question by my right hon. Friend the Member for Central Devon (Sir Mel Stride). After that, we had a story in the Financial Times on the evening of 13 November that moved the gilt market the minute it opened on the morning of the 14th. It was about the decision not to proceed with an income tax switch with national insurance.

Extraordinary skulduggery has been going on somewhere in the Treasury. I hope that when the Parliamentary Secretary to the Treasury responds to this debate later, he can provide clarity on the instructions that the Chancellor has given to the permanent secretary to do a full skulduggery investigation of the Treasury. It should not just be a leak inquiry, as something significantly more widespread has happened in the run-up to this Budget, and I do not think that Parliament can accept it. We need to draw a line under this behaviour, and we need to get to the bottom of it. Apparently the Chancellor herself said to Labour Back Benchers that this decision—that she would not have to increase income tax—was going to be the rabbit she would pull out of her hat at the Dispatch Box yesterday.

Some of the briefing that Treasury spokespeople did after this leak to the Financial Times related to the fact that the OBR had improved its economic forecasts, but we saw in its document yesterday that it had not changed its main economic forecasts since 31 October, so that cannot be right either. There has been some unbelievable leaking or briefing—“skulduggery” seems to sum it up—from Treasury special advisers, and the role of the Office for Budget Responsibility has been tainted. We as a Committee, on behalf of Parliament, take our responsibility in relation to the OBR incredibly seriously.

I want to highlight a couple of the measures in the Budget, and the first relates to productivity. Both Front Benchers mentioned the importance of focusing on productivity and the impact that the downward revision in productivity had on the Office for Budget Responsibility’s forecast, but everyone knows that this country’s private sector has continued to become more productive, whereas the problem with productivity in the public sector was very much exacerbated in the last Parliament and during the pandemic. Public sector productivity has still not recovered to the kinds of levels that we had before the pandemic. There is some incredible productivity scarring in our public sector, and I think it would be welcome if the Minister could outline from the Dispatch Box how the Government plan to tackle public sector productivity.

If productivity in the national health service returned to pre-pandemic levels, it would be worth £20 billion. Possibly all the tax rises in yesterday’s Budget could be removed if we got to that level of productivity again. I do not think that giving NHS doctors a 30% pay rise, with no requirement for them not to strike again, helps productivity. I do not think that the Government’s decisions align with getting better productivity out of our public sector, but I am sure that the Minister will be able to elaborate on that.

Finally, I will pick up on the powerful speech that the hon. Member for Rochdale made about child poverty. He will be aware that over the last 14 years, absolute child poverty—not in his constituency, but in aggregate across the country—has fallen. That is largely down to higher employment but also, importantly, more help with childcare. Those are important things to focus on in terms of people’s ability to work and to earn more.

Last week, the Treasury Committee asked experts what the child poverty line is in this country, and it is important for the House to understand the figures that we got back from the Institute for Fiscal Studies. After a household with two children and two adults have paid all their taxes and housing costs, the relative poverty line, which is what the Secretary of State mentioned earlier, is £24,650 a year. For a household with three children and two adults—again, after they have paid their taxes and housing costs—the figure is £28,176. We need to recognise that many people who will be caught by the tax rises in the Budget have much lower incomes than that. Widowers who have a small widow’s pension will pay more tax because of the decisions in yesterday’s Budget.

[Paul Waugh]

I have a lot of respect for the hon. Lady’s record in government and as the Chair of the Treasury Committee. She talks about tax rises. Does she accept that the bulk of the tax rises this Parliament—covering four of the five years—are Tory tax rises through the threshold freeze that she and her colleagues voted for?

[Dame Harriett Baldwin]

I am talking about yesterday’s Budget. The Chancellor herself announced that she was freezing the thresholds for a further three years, and I dare say that the hon. Gentleman will be asked to vote for that in the Aye Lobby next week. I disagree with him, because the Chancellor has just announced that the thresholds will be frozen for an additional three years.

Another person who will pay more tax as a result of the Chancellor’s decisions is a single young person on minimum wage. I do not know whether hon. Members have seen the emigration statistics that were published today, which show that hundreds of thousands of our young people are fleeing this country. That is something that we should all be very concerned about.

A single mother who has just received a lump sum in a divorce settlement will pay more tax as a result of yesterday’s Budget. A sole trader or entrepreneur who runs a business and perhaps pays themselves in dividends will pay more tax as a result of yesterday’s Budget. A driver in my rural constituency who needs to drive to go to work will pay more tax because of yesterday’s Budget. We can see that the choices made by the Chancellor punish the employers, the farmers, the family businesses, the workers, the savers, the pensioners and the drivers—everyone who tries to do the right thing and tries not to be a burden on the state.

I will leave the House with one final point.

--- Later in debate ---

[Paul Waugh]

What would happen if the hon. Gentleman had three or four children, and he were to fall ill or had to care for a sick child? Would he want those children to suffer from that plight?

[Sir Geoffrey Clifton-Brown]

It is always possible to find cases that are very difficult to deal with. In government, we have to make decisions about the totality of the population. I think it is up to parents on benefits to think very carefully about how many children they have and the circumstances in which they may find themselves.

--- Later in debate ---

[Helen Whately]

This Budget is simple: taxes are going up on working people to pay for more benefits. That is the story of this Budget.

The Chancellor told the country that she was spending to bring down the cost of living. Really? For whom? Inflation is up, tax is up and wage growth is down. The only group of people who are going to be better off are those on benefits—the 10 million people of working age whose benefits will be uplifted by inflation, the thousands more who will go on to sickness benefits in the year ahead, and the half a million households who will get money from the lifting of the two-child cap. Those households will receive £5,000 more on average by the end of this decade, at a cost of £3 billion to the taxpayer, and some will get much more. A family with five children could get an extra £10,500, while a family with eight children will be able to get an extra £21,000, nearly as much as the annual pay before tax of a full-time worker on the minimum wage.

Labour Members have told us again and again today how Labour is fixing child poverty by giving out that extra money. We all care about children—we all want children to get the best start in life. [Interruption.] Come on. Labour Members are chuntering at me, but they cannot doubt the fact that everyone in this place wants children to get the best start in life. Handing out money might improve the poverty statistics that they like so much to crow about, but it will not solve the problem. Work is the best way out of poverty, and the Government’s handout will make parents less likely to work.

There are couples across the country—couples in work—who are wondering whether they can afford another child. Thanks to this Budget, their taxes are going up, and their incomes may well go down. Thanks to this Budget, some of them will decide to have no more children, or no children at all. That is sad, and it is unfair. Labour Members have been crowing about the Budget, but as my hon. Friend the Member for West Worcestershire (Dame Harriett Baldwin) said earlier, the threshold rises it contains could even drag some working families below the relative poverty line that they like to talk about so much.

[Paul Waugh]

The hon. Lady refers to the threshold freeze. Why did she vote for seven years of frozen thresholds?

[Helen Whately]

The sad fact is that the country went through a pandemic and we had to get the country’s finances under control. This Chancellor promised that she would not increase taxes on working people, but that is exactly what she has done. Who can trust her? I know that people out there do not.

If all we heard about this Budget was the speeches of Government Members, we would think something wonderful was going on. I hate to shatter their delusions, but the fact is that people out there are despairing. People have been saying to me, “If all the Government are going to do is take your money in taxes, why work? Why bother?” We are seeing those who can, from successful business people to talented future entrepreneurs, leaving the country. The Government are killing aspiration and growth, and, in fact, savings. The OBR says that household savings will fall as a result of the Budget, from 6% to 2% by 2030. The Budget is an attack on people who are simply doing the right thing: working, saving, trying to pay their way in life and trying to build a better future.

The Government could make different choices. If they were willing to get a grip of the welfare bill and bring it down, they could cut taxes on working people. We have heard from several Ministers, and from the Secretary of State for Work and Pensions himself, that the system needs reform, but their actions say otherwise. Working-age welfare spending is up £40 billion in this Budget. The Timms review’s terms of reference tell us that there are no savings to see here. The Secretary of State will not even say the word “savings”. They say one thing, but do another. It sums them up. After all those promises not to put taxes up on working people, here we are with two Budgets in a row hiking taxes on working people.

It does not have to be this way. We have identified £47 billion of savings from public spending. Of that, £23 billion is welfare savings from doing the right thing, such as stopping giving sickness benefits to people with anxiety and attention deficit hyperactivity disorder and stopping handing out benefits to foreign nationals. It is not kind or compassionate to trap people on benefits. It is not fair on people who are working to pay the bills, and it is simply not affordable for our country to go on like this.

The Minister likes to chat a lot during debates, and he has said that he stood for office “to stop drawing charts”—[Interruption.] He might like to listen to what he actually said, although he does not like to listen to other people. He said that he stood for office

“to stop drawing charts and start changing them.”

He has certainly achieved that. Inflation is up, unemployment is up, borrowing is up and public spending is up. Perhaps he can tell us which of those he is most proud of.

The Minister, the Chancellor, the Prime Minister and the entire Government will all leave their mark on our country with this Budget. At their last Budget, they dug a hole. With this Budget, they have dug it deeper. Instead of cutting the welfare bill, they are adding to it. Instead of getting people into work, they are putting them on benefits. Instead of backing workers, they are funding stay-at-homers using the hard-earned money of Britain’s taxpayers. That is the choice they have made, and we reject it.