Contribution
Yes, I welcome it.
The OBR has marked down economic growth for each of the next four years, which is bad news. We have a ballooning debt, which now sits at £2.9 trillion. Our debt costs have tripled in the last five years—yes, that is the Conservatives’ fault—and our Government debt is now more expensive than Italy’s. Yes, this all happened on the Conservatives’ watch, but we now have a situation in which 11% of Government spending goes on covering the interest payments, not on paying down the debt itself, and the Chancellor has given no indication that she is serious about addressing that.
Across the five years of the forecast, the Chancellor proposes to deliver a reduction in our net borrowing of just 0.04% of GDP, and I question her tactics. What is the sense in taxing salary sacrifice schemes when we know the strain that the state pension and social care systems are under and when we need people to save more, not less? Does common sense not tell us that discouraging people from saving for retirement now will only lead to a greater burden on the public purse in the long run?
Then there is the desperate state of our special educational needs and disabilities provision. The SEND national deficit overspend is forecast to reach £17.8 billion by March 2028. The Government have said they will cover costs directly from that point on, but they have given no answer as to how this huge bill will be settled up. In Oxfordshire alone, the SEND annual overspend is expected to reach £153 million by March 2026. Why are we waiting two and a half years to do something about that?
As per policy decision 37, the Government determine that they will go further on efficiencies and savings in public services, but not just yet. There are zero governmental cost savings in each of the next three years and then, miraculously, we expect £4 billion in savings in 2029-30—the other side of a general election. How can the country take the Government seriously when they take this approach?
That last instance highlights the problem with the fiscal framework the Government have set themselves. The rule that the current Budget must be in surplus in 2029-30, and the aim of ensuring that debt is falling as a share of the economy by ’29-30, are all well and good, but entirely excluding the intermediate years from the calculation serves our country extremely badly. This Government are gaming the system, in the same way the Conservatives did before them, by adjusting everything in year five to perfectly line up, with more spending early on and tax rises deferred, possibly into the never-never.
Let us look at international examples of how national Budgets are set to understand why the UK is so ineffective at controlling its debt. The Government could take inspiration from the Swedish model of tax scrutiny. Thirty years since introducing changes, and aided by strong economic growth, Sweden has reduced its national debt from nearly 80% to 32%—and yes, Sweden had covid too. Meanwhile, our national debt stands at around 95%. A key component of the solution is that we need to substantially strengthen the scrutiny powers of this Chamber when it comes to the Government’s financial management. This four-day debate clearly does not provide an effective scrutiny function, and there is no meaningful ability for Parliament to amend the Budget once it is announced. Our country is the poorer for this approach.
Secondly, of course, we need to seek a deal with Europe that captures the economic benefits of the European market, which is five times bigger than our own, while maintaining control of our borders. This should start with negotiating a new customs union with the EU. Last month, the US’s National Bureau of Economic Research published a paper that found that Brexit had cut UK GDP by between 6% and 8%, with the economy now £170 billion smaller than it would otherwise have been. The House of Commons Library found that we are losing £90 billion in tax revenues every year as a result of Brexit—an enormous number. That is equivalent to two thirds of the UK’s entire annual Budget deficit of £138 billion; to nearly 80% of our entire annual debt expense of £114 billion; or to our defence, security, prisons and courts budgets combined. The Government now finally acknowledge that Brexit has left our country poorer, weaker and more divided, but they are still unwilling to do almost anything material about it.
I was elected by my Witney constituents in 2024 to do all that I can to make their lives better and our country better. This Budget is a key lever through which to do so, and I am deeply dismayed at the lost opportunity that it represents.