Budget Resolutions

Tom Tugendhat Excerpts

Wednesday 26th November 2025 Commons Chamber

[Sir Desmond Swayne (New Forest West) (Con)]

I congratulate the hon. Member for Newcastle upon Tyne North (Catherine McKinnell). She caught my eye earlier when she was cheering the Chancellor with great enthusiasm, even more so than her colleagues who were making a pretty good fist of it. I recall cheering a Chancellor during a Budget speech—

[Tom Tugendhat (Tonbridge) (Con)]

Did you get a job?

[Sir Desmond Swayne]

Notwithstanding the misgivings that I had, I cheered with gusto. Somewhat later, I found myself on a train to Oxford to defend the Government in the annual Oxford Union debate of no confidence. While on the train, I received the news that the Chancellor who I had been cheering had been sacked—not a particularly good wicket to go out to bat on.

I am confident that those hon. Members who cheered today will fare no better, because the economy is still reeling from the last Budget that the Chancellor delivered, with her wholesale assault on enterprise, family undertakings, initiative and every employer in the land. In fact, business confidence had collapsed significantly before that Budget. It had collapsed in the summer, when the Government warned everyone that things were so bad that they were going to have to get very, very much worse. As a consequence, when the Budget was delivered, we discovered that things were even worse than we had imagined. The Government then announced after that Budget that they had stabilised the economy. It was over; they were not coming back for any more. They trumpeted throughout the past year the fact that we had the highest growth rate in the G7. That is what they inherited, but as their monstrous regiment has proceeded, that growth rate has become more and more anaemic. There is no getting away from the fact that last month the economy shrank.

This summer, the Government repeated the mistake. All we got throughout the summer was horror story after horror story and kites being flown about ghastly taxes that might be imposed on us. That was most unwelcome for businesses planning investment and for anyone planning to take on workers; these interventions move some markets and make others absolutely sclerotic. It is a disaster. When I challenged the Chief Secretary to the Treasury last week with the example of Hugh Dalton, who properly resigned over a Budget leak, I was astounded that he admitted at the Dispatch Box that he had no idea what I was talking about. That is extraordinary. Against that background, there is always the chilling presence of the huge increase in trade union power that is part of the Employment Rights Bill currently before Parliament.

However, the Government’s anti-growth agenda is only half the story. The other half of the problem was expounded excellently by the Father of the House, my right hon. Friend the Member for Gainsborough (Sir Edward Leigh). The Government’s bloated expenditure plans have overshot by 4%, and we have this enormous, growing benefits bill. The disaster was that the Government withdrew from their attempts to provide some mild or modest restraint to the growth of that bill, and as my right hon. Friend said, we now face a bill that is running annually at £300 billion—£212 billion of which is for the economic inactivity of 4.3 million people who are under no obligation to work. That number of people is growing at a rate of 130,000 per month. That is completely unsustainable, and it is to be paid for by increasing taxes that disproportionately attack those people who are already contributing the most—the entrepreneurs, the investors and the very people who can take their investment, vision, skills and employment to where the business environment is rather more friendly. They are doing that in droves and to such an extent that even the Business Secretary has remarked on and spotted it. We increasingly face a situation in which fewer and fewer people will be able to pay for the bills of the increasing burden of people who are economically inactive.

As we approach—

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[Richard Tice]

The good news is that when Reform wins more and more elections next May, we will be able to get better value for council tax across the whole country.

I will keep going. Over the next five years, welfare spending will increase by £70 billion per annum. That shows that this is not a Budget for workers; it is a Budget for those on welfare. It reduces the incentive to work, and it reduces the incentive to be an entrepreneur or a small business owner.

[Tom Tugendhat]

I am interested to hear the hon. Gentleman using the figure of £70 billion, and I agree with him. He knows that £30 billion of that results from the rise in the triple lock, so does he agree that the triple lock is simply not affordable?

[Richard Tice]

The truth is that if we carry on going this way, nothing will be affordable, because this Chancellor is heading us towards bankruptcy as a nation. The reality is that nothing becomes affordable if we go bust under the Minister’s and the Chancellor’s mismanagement of this economy, so we need to change course, because all the data is bad.

I cannot believe the borrowing numbers, Madam Deputy Speaker! The OBR is forecasting that borrowing in this year alone will be some £21 billion higher—

--- Later in debate ---

[Tom Tugendhat (Tonbridge) (Con)]

It is somewhat depressing to speak after this Budget, which has basically picked the pocket of anybody who is trying to earn any money in this country. It has sent a very clear message to everybody in our country—a message that many people are hearing—which is, “This Government are not on your side. This Government will do everything they can to keep you where you are. They will encourage you to leave the country, rather than invest in it.” We can see that in the numbers. There is £26 billion in extra taxes, and 800,000 people are paying more. This is a welfare Budget, not a work Budget.

Sadly, though, the issue is not just those bald figures; it is what they will do to so many citizens in our country. Among the most tragic bits of this Budget is the £7.5 billion extra tax on the young people who have got themselves a university degree—that is hidden nicely and quietly in the OBR report—but there are also the 1 million young people who will not end up in work. Let us just think about that. It is 1 million young people who will not end up in work for another year, or another year after that. Those 1 million young people, in a few years’ time, will not have a choice, because businesses will not hire them, and the world will not be one that they are adapted to. Worse than that, they will have become, quite literally, slaves of the state, waiting for the man or woman in Whitehall to decide what they get each month and year. They will have become totally dependent. It is a crime to leave our fellow citizens dependent on the state.

[Several hon. Members rose—]

[Tom Tugendhat]

Forgive me; I am going to make a little progress.

That is not all of it. This Budget looked hard at fixing the very real political problems faced by the Chancellor and the Prime Minister today, admittedly, but it also looked hard at how they can simply inflate the balloon today; there was nothing about tomorrow. We can see that in the way that farmers are being taxed; it is deliberately punishing investment. We can see it in the investment figures; despite the hon. Member for Sefton Central (Bill Esterson) claiming that there has been investment in this country, the investment figures in the UK per capita show a 4% increase. Okay, that is an increase, but the figure is 22% in Canada and 79% in the United States. This is not real growth or serious investment. Sadly, we see the knock-on effects. The right hon. Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), the Chair of the Business and Trade Committee, said that there was investment in start-ups. Well, I wish there was, but all the decisions made by this Government have convinced anybody with any entrepreneurial spirit to go either to Abu Dhabi, where they are filming some new version of “Auf Wiedersehen, Pet” with British workers who have fled this country, or to the United States, which at least has the capital to invest in start-ups.

All we see is a continuation of the Blair-Brown model of increasing nationalisation of savings—that creeping control that we see spreading over pensions and the insurance market. It has left 60% of our savings in bonds, and only about 40% in equities, which contrasts remarkably with Australia, Canada and the United States, which have 20% in bonds and 80% in equities.

[Bill Esterson]

I am grateful to the right hon. Member for quoting me, but when backing Liz Truss to be leader of the Tory party he said:

“I have no doubt that we will move with determination to make this country safer and more secure.”

Does that not rather undermine any claim of credibility he makes?

[Tom Tugendhat]

I will tell the hon. Member the honest truth: Liz Truss was wrong, and I made a mistake. That is the reality; that is what happened. But here is the difference: it is true that what she did put pressure on the economy, but this Chancellor has increased debt to the highest-ever levels and the cost of borrowing to the highest in the G7.

[Paul Waugh]

Will the right hon. Member give way?

[Tom Tugendhat]

There is no debate about that, so I will not give way on that point.

The reality is that we are looking at the politics of today and forgetting about tomorrow. We are seeing people left on welfare and not helped into work. We see a pretence at kindness that is actually long-term cruelty. We are failing to recognise that it is not the state, the Government or the civil servants, and certainly not the Minister, who employs people or creates any work, but free individuals freely associating and freely structuring their lives in order to create opportunity for themselves, their family and their community. But guess what? This Government do not believe in that. That is why we now see taxes at their highest-ever level at 38%—the highest since the second world war. This is a remarkable theft of liberty from the British people. Forget about digital ID, which is insane in its own right; this is a genuine theft of the liberty of free citizens to choose what to do with their resources. It is an appalling decision.

We need to look very hard at what the choices are. We can already see where the cost is going. Despite the Home Office estimates a few years ago that asylum seekers would cost £4.5 billion, this OBR report tells us that it will be £15.3 billion. That is a multiple of more than three. We are seeing any number of different areas where the costs are rising. All this would be bad enough in a normal situation where, with a bit of adjustment, we could get back to normal, but the truth is that this is not a normal situation. This is a situation that demands frank honesty.

Let me be honest and lay it on the line. The demographics of this country are going against us. We do not have enough young people for an ageing population. That means, I am afraid, that we do need to look at the triple lock. I know that those on my party’s Front Bench do not agree with me, but I have been clear that we simply cannot afford the level of welfare payments we are making. We need to be clear that health and pensions are now costing too much. We need to be clear that the security situation has changed.

I have heard that we are now raising more for defence—gosh, have I heard that?—but the reality is that it is all on the never-never. The Army is even now talking about cutting the number of soldiers, the Navy is talking about cutting the number of ships, and the Air Force is talking about cutting its numbers too. I have heard that from friends who are serving today, so I look forward to seeing what comes out of the Budget round for them. The reality is that while our enemies are arming, we are talking. It is simply not serious.

For all that I have said, there is one thing that is going so far against us that we are not even on the same field, and that is technology. Looking at the rise of AI across the world, there are only two countries that are serious players: the United States and China. The Unites States is heading for the exquisite, while China is heading for the quotidian. We are seeing a radical change in the way the economy is working, but here we are defending old jobs, punishing ideas and keeping back growth. We have a Government who simply do not understand that we have only a few years in which we can get back into the game. If we miss this chance, we will be like the old Chinese empire: we will have missed the boat, we will have burned our ships, and we will be replaced, as happened after European expansion to the Americas.

[Gurinder Singh Josan (Smethwick) (Lab)]

I thank the Chancellor of the Exchequer for her excellent Budget statement. I would take the right hon. Member for Tonbridge (Tom Tugendhat) and his colleagues more seriously on defence spending if the Conservatives had not wasted 14 years and cut back our defences to the bare minimum.

[Tom Tugendhat]

rose—

[Gurinder Singh Josan]

I will make my points.

I will focus on the benefits of the Budget and the choices made by the Chancellor for people in my constituency. It is worth first reminding ourselves of the disgraceful situation in which the Conservative party left the economy in July last year and the scale of the mess the Labour Government are having to deal with. The economy was broken, with high interest rates, high unemployment, borrowing and debt beyond our means, growth stagnating, and strikes across our public services in various sectors. The NHS was on its knees, with record waiting lists and a crisis in midwife services and mental health services—I could go on—and we had a debilitating cost of living crisis, with no plan to make things better for ordinary families in my constituency.

The Labour Government have already done so much to fix the mess, and the change is beginning to be felt in my constituency; I will go through some of those things. My constituents benefited from £20 million of plan for neighbourhoods funding in Smethwick. We have seen wage increases and growth upgraded to 1.5%. Rail fares and prescription charges have been frozen, the fuel duty freeze has been extended and pensions are increasing. We are seeing breakfast clubs and free school meals, along with more GPs and nurses. There is the 10-year NHS plan, and railways are coming back into public ownership—people said that could never be done, but it is happening. We are seeing local control over bus services, new protections for renters, and homes for heroes. We have launched the Border Security Command.

There is over £100 million in Government funding for five new research hubs, including one in Birmingham. We scrapped the ban on onshore wind and unblocked solar schemes—we have new solar schemes for schools in Smethwick. We are having lower business rates, along with the National Wealth Fund and the warm homes plan to deliver lower energy bills, with £150 off bills announced today. The child poverty taskforce was established, and 5,350 children in Smethwick will benefit from the lifting of the two-child limit. Change is happening, and my constituents are benefiting from it, but all that is in the face of a world that is changing around us.

Over the last year, global challenges have impacted the UK in an unprecedented way. We have seen the impact of President Trump’s tariffs, the Ukraine war, Russia and China, and the mess that the Tories made of Brexit. Many Labour Members have understood that the old way of doing things—leaving everything to free markets and global trade—is not working for families and workers in the UK. Essentially, we all want to buy things cheap, so they end up being made abroad, where labour costs and conditions are much lower. That in turn has meant that whole industries in the UK have shut down, with the loss of good quality jobs. Therefore, as well as the choices being made by the Chancellor and this Labour Government to cut NHS waiting lists, cut the debt and cut the cost of living, they are working to ensure that the UK becomes less reliant on other countries and more self-sufficient in defence, energy security and many other areas.

The recall of Parliament in April to save the Scunthorpe steelworks was a defining moment, with the realisation that we cannot be reliant on the US or China for steel and that we need to maintain our own capacity. I see the change delivered in last year’s Budget and this year’s Budget as being about a necessary reindustrialisation of our country to ensure that we are more self-sufficient. If we do that and get it right, we will bring good quality jobs back to our communities that allow people to buy a house and a car and to support their kids through university—the decent standard of living that people aspire to. If we get it right, we will also remove the opportunity for dog-whistle scaremongering by the nakedly populist opportunists in Reform and others who want to take advantage of economic uncertainty to peddle division.

A choice has been made by the Chancellor and this Labour Government to commit to increased defence spending, with an understanding that we will not just buy everything from America; we will make it here. There is also the investment in green energy, nuclear energy, the industrial strategy, semiconductors and AI. All those things will support and deliver growth in our economy.

It is interesting that Conservative Members have talked a lot about growth and business confidence. The Venture Capital Trust Association organised an open letter signed by 250 signatories, which included me and other Members of this and the other House, but the majority of signatories were from various start-ups and businesses, including the founders of Quantexa and Matillion, which are both billion-dollar-valued tech firms. They asked for changes to the VCT and EIS schemes, which have not been updated in more than 10 years. I would take the Opposition more seriously if they had not been asleep on their watch when in power.

The British Private Equity and Venture Capital Association has just said:

“We are delighted to see the Government signalling that the important EIS and VCT incentives will be reformed to support businesses as they scale, as well as early stage investments”.

Business confidence is there. People want to see the change that we are making, which will support growth in our economy. If we get that right, that future will deliver for my constituents and for the UK, and I am proud to stand with the Government on that.

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[Sammy Wilson]

Some of that redistributive impact is the result of taxes being taken off people who are on modest incomes for welfare increases. This is a figure that the Chancellor has quoted in the House time and again: one in seven under-25s is now fully reliant on benefits and is not in work. Where is that money coming from? It is coming from people who are working on a daily basis and, in many cases, for not a great deal of money, but who will be dragged into the tax system.

This is an unfair Budget, because it still relies on taking money from working people who are not mega-rich to pay for some of the Government’s grandiose schemes. Some people may argue that if it works, it is worth doing, but let us look at the record of the previous year. The OBR tells us that the outcome of the Chancellor trying the same tactic last year has been that investment is now predicted to fall as a percentage of GDP. Output growth is going to fall by a sixth, productivity is going to fall from 0.4% to -0.4%. Consumer expenditure is down by 0.5%. People are receiving less and profits for companies are going to fall from 12.5% to 10.75%, all of which will affect investment and economic growth, and undermine the very objective that the Chancellor says she is seeking to achieve.

Of course, many people will argue that that is fine, but we have levels of expenditure that we have to finance, so how do we pay for it? Let us look at some of the decisions that the Government have made over the last year. Welfare payments are going to go up quite substantially to £58 billion over the period of this Parliament. On net zero, environmental taxes are going up by 60%, affecting the profitability of companies, and the renewables obligation next year is going to cost us £3 billion. So net zero, the impact of which we are all experiencing on jobs, is going to lead to further costs. I think many people would question whether those are the kinds of things we should be spending money on at a time when we have an abundance of fossil energy in this country.

Tax avoidance has not been dealt with. I have heard tax avoidance being mentioned every time we have a Budget, including under the previous Government, but it is never dealt with. The Googles and Amazons of this world still sell goods here but do not pay taxes in this country. The budget for welfare in relation to immigration is now predicted to go up to £15 billion. Also, we have had debates in this House time and again about the bases in the Indian ocean that we had possession of. We gave them back to Mauritius and we are paying Mauritius for that. What is Mauritius going to do with the billions that we give them from taxpayers here? It is going to cut its own taxes. We are putting up our taxes in order to allow taxes to be reduced in another country when we did not even need to do it. So there are ways in which the money could have been achieved.

I welcome the announcement about the loan charge. As a vice-chairman of the loan charge and taxpayer fairness all-party parliamentary group, I trust that we will now see the Government treating the ordinary people who are affected by the loan charge in the way in which they treated big business. Businesses were given a concessionary payment of 15%, while some of the ordinary people who were affected were being charged nearly 100%. I hope that the McCann review leads to that being sorted out.

As far as Northern Ireland is concerned, I welcome the Barnett consequentials and I hope that the Northern Ireland Assembly and the Sinn Féin Finance Minister in the Northern Ireland Assembly will spend the £370 million wisely—

[Tom Tugendhat]

That is unlikely.