Budget Resolutions

Yuan Yang Excerpts

Wednesday 26th November 2025 Commons Chamber

[Sir Jeremy Hunt]

Labour Members might find that hard to hear from a former Conservative Deputy Prime Minister, but they might want to listen to the Resolution Foundation, which has been saying exactly the same thing on the airwaves today. No one disputes the progressive credentials of the Resolution Foundation. It has been warning against this rise in the minimum wage and all the extra workers’ rights, which it says could lead to a crisis in youth unemployment.

[Yuan Yang (Earley and Woodley) (Lab)]

rose—

[Sir Jeremy Hunt]

I do not want to leave the hon. Lady out, but I promise that this will be my last intervention.

[Yuan Yang]

I thank the right hon. Gentleman for giving way. Does he find it fiscally responsible that with his two Budgets, he left us with the lowest amount of fiscal headroom since the OBR was created at £8.9 billion in 2024? Is he proud of that? That left the current Chancellor and this Labour Government a mountain to climb to get us back to £22 billion of solid headroom.

--- Later in debate ---

[Kit Malthouse]

My hon. Friend is exactly right. It is worth remembering that if we had not gone through a period of austerity post the financial crash and the mess that we inherited, we would not have been able to rescue the economy during covid. We would not have had the headroom that allowed us to re-leverage the country in emergency circumstances. I wish that we now had the same foresight.

Paragraph 3.13 of the Blue Book points out that, in the OBR’s view, there is nothing in this Budget that will do anything for growth. The OBR has declined to revise its previous output predictions because the Budget does nothing for growth.

Finally, the fourth bullet point in paragraph 1.28 points out that the tax-to-GDP ratio will become the highest it has ever been in this country and will constrain business incentives for the future. I urge colleagues to read the Blue Book—the truth lies therein.

We find ourselves in a position where we have a Budget that is trumpeting itself as a triumph, but which is nevertheless producing the highest tax rate of all time, completely flat and anaemic growth, and inflation and interest rates—they are in the Blue Book—that will be higher for longer than they otherwise would have been. The outlook has worsened since March, to the extent that the OBR makes a point of it.

[Yuan Yang]

I, too, very much enjoy reading the Blue Book. While we are talking about our favourite passages, I wonder what the right hon. Gentleman makes of page 29, which says that

“persistent weakness in productivity growth relative to the pre-financial crisis period is more likely to reflect underlying structural trends.”

What was going on in the 2010s that meant that the structure of the UK economy was so bad?

[Kit Malthouse]

The hon. Lady raises a very good point, which I will come on to shortly.

All of this points to the fact that, let us be honest, this is not actually a Budget about growth. I only left the Chamber for half an hour to have a cup of tea, and all the speeches that I have heard from those on the other side of the House—the “far left” side, or whatever it might be—have been about redistribution. They have all been about how pleased Labour Members are at the redistribution that is going on. That is fine, but I wish their Front Benchers would be honest about what they are trying to do, because they are sacrificing the prospect of future growth for the economy in order to tick the box on Labour Members’ political demands about redistribution. That is fine, and we have been here before. As hon. Members have said, we have been through most of these scenarios before. I am only just old enough to remember, but it happened in the 1970s. That was when we last had an openly redistributive Government—forget Tony Blair, because he was not about that—and we saw what happened to growth as a result.

To me, four things were broadly missing from this Budget. First, there very obviously is no governing philosophy of the political economy that any of us can discern. There is no plan or strategy. There is maths, there are inputs and outputs, and there is political box-ticking, but there is no sense of what kind of economy we are trying to build. There was a nod towards it in the desire to review the enterprise investment scheme and venture capital trusts, but that is really about trying to keep the lobby groups in the City happy. There is no plan to build an energetic economy.

Secondly, as has been said by a number of Opposition Members, there is no comprehension of how this Government—and I have to say, sadly, previous Governments—have damaged the return on risk. A number of Members have said that capitalism relies on risk. People go out there to invest, to risk their own money and to buy businesses, and they do that calculating the return they are going to get. If we continue to tax that return, to regulate that return and to make that return less attractive, fewer and fewer people will take that risk. If we want a scale-up economy that takes advantage of the scientific and technological inventions that we are so good at producing, we have to reduce the impositions we put on risk and make it worth while.

Thirdly, we did not have any talk about frictional taxes. The Chancellor was trumpeting growth this year, but the only reason we had a bump in growth this year was the closing of the stamp duty window, when people rushed—

--- Later in debate ---

[Mike Wood (Kingswinford and South Staffordshire) (Con)]

This Budget underlines the cost of a Labour Government who are making bad choices that are hurting working people. Once again, the Government talk about growth, but it is clear that the biggest growth that will come from the Budget is in people’s tax bills. This is a Budget that takes £12 billion from people who work or who have spent most of their adult lives working hard and doing the right thing, and gives it to people on benefits. It doubles down on the mistakes that the Chancellor made in last year’s Budget that have killed jobs, damaged our high streets and made our country poorer.

The proof is there for all to see in the OBR forecasts, which were helpfully published early. Unlike last year, when the Chancellor told the House that the OBR was going to back up her claims of a £22 billion black hole, but when we read the document it said nothing of the sort, today we could see the gaping chasm between the Chancellor’s claims and the reality contained in the report as she was delivering the Budget. The OBR is clear that it is downgrading growth forecasts not since Brexit or anything that happened under the last Government, but since March. These are downgrades under this Labour Chancellor, caused by this Labour Chancellor.

The Chancellor boasted that this year’s projections increase expected growth to 1.5%, which is still less than was being predicted at the time of last year’s Budget when she told us that 2025 would see 2% growth, but she was silent about the growth forecasts being slashed for every subsequent year of the forecasting period.

The OBR says that inflation will stay higher for longer. At a time when the cost of living is falling and inflation is at low levels in other countries, we are the outlier. That is the result of the Chancellor’s choices. It is clear that, despite the claims of the hon. Member for Rugby (John Slinger) a few moments ago, debt will rise as a proportion of GDP, not fall. That is a direct result of the Chancellor’s extra borrowing.

It is also clear that the OBR expects the cost of that borrowing to be higher—to cost the public purse more money each year. While long-term borrowing rates have fallen for most major economies since July last year, the rate that we must pay on UK Government bonds has risen.

[Yuan Yang]

Given the hon. Gentleman’s interest in the bond yields, will he celebrate with me and other Labour Members today’s rally in yields, as well as the increase in the value of sterling and in the FTSE?

[Mike Wood]

I think the hon. Lady is extremely brave to come to that point so early, given the levels that bonds are still trading at.

The OBR report is clear that the extra cost of borrowing, which is not replicated in other major economies, amounts to an extra £3 billion a year by 2030—more than the OBR expected just in March. In short, we are paying what I understand the markets call a “moron premium” because of the Chancellor’s choices.