Budget Resolutions

Income Tax (Charge)

That income tax is charged for the tax year 2025-26.

I call Jonathan Reynolds.

It is a pleasure to open this final day of the debate on the Chancellor’s growth Budget. Can I welcome the new shadow team? It is lovely to see them in place. I think many of us on this side would admit that we were shadow Ministers for longer than we ideally would have been, and I know that it is a tough and thankless job at times. On a personal level, I wish them well for the future.

As the Chancellor rightly stated, growth is our only path to prosperity, to increasing living standards and to delivering the change that the British people voted for so decisively over the summer, and we on these Benches recognise that we cannot have growth without investment. Growth demands investment in our infrastructure, into our public services, into the cities and regions that have gone overlooked and under-invested in by past Administrations, and that is what this Budget chooses. It chooses investment over decline, with more than £100 billion of public investment into our roads and our railways, our parks and our playgrounds, our schools and our surgeries—all the things upon which a successful economy and a healthy society depend.

This was a Budget for affordable homes, for the NHS, for the school rebuilding programme and—a personal priority for me as MP for Stalybridge and Hyde—for the trans-Pennine route upgrade, including a new station at Mossley, which is something I am sure the whole House can be excited about and get behind. This is literally rebuilding Britain in action, and make no mistake, businesses need that public investment too, because it creates the right environment for them to thrive now and long into the future. That is why the Office for Budget Responsibility says that our increases in spending will drive up the long-term increase in GDP by up to 1.4%.

The Secretary of State makes much of growth. Of course we all want growth, but the OBR report actually says that growth in real GDP will start to slow over the next three years and that in years four and five of the Parliament it will go negative. It is telling us that the Government’s Budget is actually going to result in a smaller private sector, not a larger one. How is he going to explain that to business?

That is not what it says. First, on the figures, we cannot make a like-for-like comparison because we know that the information provided by the previous Government in their financial information was erroneous. They did not square their own spending pledges with what was in those documents. The analysis by the OBR shows that long-term improvement in GDP growth is vital, but the right hon. Gentleman will recognise that it cannot model some of the wider parts of the Government’s agenda. It cannot model those changes in the planning system that are so important to the Government. It cannot model the changes involved in having a long-term industrial strategy. It cannot model our changes to trade policy.

I recognise that there is more to do to prove the case of the Government’s overall commitment, but I can tell the right hon. Gentleman that fundamentally fixing the foundations, honesty and stability in the public finances, and a focus on long-term public investment are essential to the long-term growth of the country. Also, one thing that has not had sufficient recognition is that many of the real benefits of greater public investment do not accrue in this Parliament; they accrue beyond it, and it is about time we had some long-term focus again in this country. Not before time, if I may say so.

The right hon. Gentleman will, I hope, be aware that the long-term economic growth of this country relies not primarily on public investment or indeed public infrastructure, but on a healthy private sector—the wealth creators from whom we can take the funding to deliver into those goods that he talks about and that are part of a balanced and successful society. This Budget does not help them. It does the opposite.

I am sorry but, again, the right hon. Gentleman is wrong. I agree with part of his assessment, such as that a strong and thriving private sector is crucial to growth, but I find his analysis a little simplistic. Private firms will say that they also need skilled workers, and that they need a decent transport system so they can get to work.

Under the last Government, I would often get up in the morning and check my phone for updates from people using the trans-Pennine line I just mentioned—the one we are upgrading—and it would be full of people saying, “I cannot get to work.” I need the right hon. Gentleman to make a slightly broader analysis.

Despite the previous Government leaving us with a raging skip fire in many areas—we have to raise money, not to deliver our pledges but to deliver their pledges that they did not properly fund—we have had a regard and a heed for the level of competitiveness in the UK economy. For instance, on the rise in employers’ national insurance contributions, over half of all firms with national insurance liabilities will actually pay less or the same, not only because of the changes to the employment allowance but because of how we have removed the threshold so that all firms now qualify.

Despite the frankly terrible inheritance bequeathed to us, we have done our best to meet those needs and to deliver a long-term focus on the future.

Will the Minister give way?

I was going to move on, but I cannot resist the hon. Gentleman.

I hope the Minister will not be disappointed.

There are many good things in what the Government have brought forward, but what is missing, unfortunately, is support for farmers on inheritance tax. Farmers are the backbone of Britain, and they produce almost all the food we eat across this United Kingdom of Great Britain and Northern Ireland. Farmers will be impacted greatly.

I declare an interest as a member of the Ulster Farmers Union and the National Farmers’ Union, and all the farmers I talk to in Northern Ireland have indicated that every farmer in Northern Ireland will be affected by inheritance tax. If the Government want to get it right, the threshold needs to be raised, and it is not too late. Raise the threshold to £4 million or £5 million so that family farms, the backbone of Britain, can continue.

I always listen to the hon. Gentleman because he is genuine and conscientious in representing his constituency’s interests. I will always listen to what he has to say. We can judge the exact impact of these changes by looking at the value of claims to date. The Conservative party’s analysis has forgotten to aggregate the impact of the changes to those allowances, such as agricultural property relief, alongside the existing nil-rate band and the ability to transfer the allowances between spouses in all cases. The total number of farms across the UK that will be affected by this change is actually only 500 for the 2026-27 financial year. That has been missed, and I remind colleagues that any inheritance tax liability has a 10-year, interest-free payment period. To be frank, there has been some scaremongering from the Opposition, and we have to be clear with people.

We have had to restore economic stability to deliver that investment, and we should not shy away from explaining why this has been so necessary. The previous Government’s scattergun approach to growth left our country starved of investment, economically divided and struggling to maintain a competitive edge in the global economy.

The previous Government’s claim to have delivered the fastest-growing economy in the G7, based on its performance in the first half of this year, is laughably false. I believe that The Sunday Times likened it to someone walking a marathon in six hours but, because they ran the last 100 yards, claiming to be the fastest runner in the world. The truth is that consistency and stability have been sorely lacking. We have had seven growth strategies since 2010 and 11 Business Secretaries in as many years, to say nothing of the UK’s revolving door of Prime Ministers.

Will the Minister give way?

I have already given the right hon. Gentleman a go. I will make a little progress, and we will see whether he can do a better one next time.

The result was a protracted period of anaemic growth. Had our economy grown at the average rate of other OECD countries over this period, it would have been £171 billion larger. Imagine the difference that would have made to all of our communities and to today’s Budget debate. British firms, facing such uncertainty, have not seen investing domestically as a sufficiently attractive proposition. They have been reluctant to adopt new technology, to upskill their employees or to plough money into research and development. We have even heard that, in any given year, roughly 40% of UK firms choose not to invest at all. We want to change that for good. We want to give businesses certainty, confidence and stability so that they can make decisions for the long term.

That is why, at the Budget, the Chancellor reaffirmed our new modern industrial strategy. Invest 2035 will be a central pillar of our growth mission. The strategy will allow businesses to plan not just for the next 10 months, but for the next 10 years. It has already won the backing of Make UK, which has told us that businesses will no longer have to

“fear the constant chop and change in policy we have seen over the last decade.”

Instead, they can focus on the long term.

Our industrial strategy will create a strong pro-business environment, making it simpler and cheaper for companies to scale up and invest. It will unleash the potential of our high-productivity services and industries, because our recent economic history has taught us that we have to play to our strengths. Over the last 25 years, high-productivity sectors were responsible for roughly 60% of our economy’s entire productivity growth. Looking at the figures since 1990, over half of the UK economy’s GDP growth has come from just three sectors—information and communications technology, financial and professional services, and advanced manufacturing.

How does that all gel with the fact that the OBR is saying that business investment will fall by 0.6%, as a share of GDP, by 2029? It sounds great, but it does not add up in the OBR’s eyes. Will the Minister please elaborate?