Nick Timothy

What a relief, Madam Deputy Speaker—thank you. Before the election, Labour promised to increase taxes by £8.5 billion, spending by £9.5 billion and borrowing by £3.5 billion, but last week it raised taxes by £40 billion, spending by £76 billion and borrowing by £36 billion. There is no mandate whatever for this Budget. I agree with one claim made by the Chancellor: our economy does need investment to grow. The pity is that her Budget will fail to do it. The Red Book says that the capital budget for the Department for Transport will be cut by 3.1% by 2025-26. The Chancellor says that she wants to crowd in private investment, but the OBR says that her Budget crowds it out. We know that much of the public investment will be wasted on the Energy Secretary’s schemes. The Chancellor is giving him borrowed billions to guarantee returns to investors for technologies that the market does not back. Because the Chancellor has changed the accounting rules—something that in opposition she said she would not do—we know that the cost of failed investments will be hidden and they will be presented as assets with fictional value. This is where the Chancellor is leading us into dangerous territory. She has already made Government borrowing more expensive, and the bond markets are trickier than they were. British pension funds now own only about a quarter of outstanding gilts. Demand is falling as defined-benefit schemes have closed and existing schemes mature. The value of gilts needing to be sold each year is about £140 billion, which is 5% of GDP, and gilt yields have risen since the Budget. Even if interest rates are cut this week, they will stay higher for longer because of her decisions. And for what? The Chancellor admits that growth in GDP per capita will average only 1.2% a year for the rest of the decade. She is taxing family farms. She is taxing businesses and GPs. She is taxing jobs, and businesses are already planning to reduce headcount. We know she will be back for more, because she will not cut departmental budgets as she forecasts from 2026-27. We know that the priority is not growth. If it were, the Chancellor would not have announced such a relentlessly anti-business Budget. Instead, the priority is Labour’s own vested interests, because if public sector productivity is the goal, why hose money at the unions without linking pay to reform and why make it easier to strike? Where is the supply-side plan to reduce the cost of building infrastructure? There is no sign that the Government want to strip back the layers of regulation, when its beneficiaries are Labour-supporting vested interests such as environmental and administrative lawyers. This Budget does not fail because of its dishonesty and absence of mandate, but because it fails in its own terms. It taxes and borrows and spends, and its own small print says that it will fail to improve growth, wages, public services and the public finances.