Contribution
It is a pleasure, I think, to follow the right hon. Member for New Forest West (Sir Desmond Swayne), but may I challenge a couple of his points? He talked about the risk of higher mortgages. I might remind him that there have been six interest rate cuts since 2024, which will have supported his constituents by bringing down their mortgage bills. He also mentioned productivity. I remind him that the upgraded growth forecast from the OBR is due to productivity gains from investment in AI. There is positive news, and I am sorry that he has missed it so far, but he may want to spend a bit more time looking.
I welcome today’s Budget, because in these tough times we need to put in place the foundations to build the base for a competitive future and prosperity for all. I was surprised by the rather extraordinary response from the Leader of the Opposition, who almost denied the impact of the Liz Truss mini-Budget. Perhaps it may be worth reminding the House that the unfunded £45 billion of tax cuts led to bond prices plunging, sterling falling and the Bank of England having to intervene to prevent a financial stability crisis. It is important that we recognise what happened. That, alongside the fact that the welfare bill rose by £33 billion in the years to 2024, might help bring some honesty to the debate.
Let me speak about today’s Budget from the point of view of three key tests, because it needs to be a Budget for stability, growth and easing the cost of living. The Budget comes amidst unprecedented economic shocks, with conflict in the middle east and Europe, which has disrupted international energy and commodity supplies. The Bank of England identified the energy shock from the middle east as a major source of uncertainty in July 2026, so I welcome the Budget and, in particular, the Chancellor’s determination to combine fiscal discipline with a relentless focus on growth and tackling the cost of living.
Fiscal discipline matters. It is not simply about an accounting exercise at the Treasury; it is about credibility and national economic security. Indeed, the bond markets matter. In 2022 we saw what happens when investors lose confidence in the sustainability of public finances. However, fiscal discipline and growth are not competing objectives. Ultimately, having sustained economic growth, higher productivity, higher investment and more people in good employment is the surest foundation for sustainable public finances.
I am pleased that the UK economy has shown resilience, for which I pay tribute to my right hon. Friend the Chancellor and to the stewardship of the former Chancellor, my right hon. Friend the Member for Leeds West and Pudsey (Rachel Reeves). It is important not to talk Britain down, because we were the joint fastest-growing economy in the G7 in the first half of this year, alongside the US. Borrowing last year fell to the lowest level for six years, the IMF has upgraded our growth to 1.3% for this year, and the IMF’s chief economist has said that we “stand out” on deficit reduction. I know that the Opposition may be disappointed by the OBR’s revision of the forecast.
I welcome the Government’s commitment as a priority to get energy costs down not just today, but for the future. I would welcome more clarity from the Government on whether they are reconsidering the expansion of the British industrialisation competitiveness scheme, which I believe may be coming forward in the 10-year plan. However, with global headwinds from the conflict in the middle east impacting us here and economies throughout the world, it is vital that we have our own plan for growth and for tackling the cost of living.
On growth, I will briefly speak about fiscal devolution and entrepreneurship. Business and industry must be at the heart of our plans for growth. It is important that we have a plan for building the principles of stability, partnership and innovation, with unleashing potential in every corner of the economy in the UK at the heart of our plans. That is why I was pleased to welcome the fiscal devolution road map, which is bold, ambitious and game changing. It recognises that we need to deal with the challenges of today and address the structural challenges to achieve higher growth tomorrow.
For too long Britain has been one of the most centralised major economies in the developed world, with only 5% to 6% of total tax revenue raised locally, while the OECD average is closer to 11%. However, fiscal devolution means more than devolving spending decisions; it is about enabling greater responsibility and stronger incentives to expand local economies and tax bases.