As the House will know, we have incoming news of a terrible disaster involving a flight out of Ahmedabad in India. I know that the Leader of the House will want to say a few words, but, from the Conservative Benches—I am sure that I speak for the whole House—let me wish everyone involved and their families the very best.
It would be a bad day this week if I did not mention the fantastic news of the knighthood of Sir Billy Boston—it is nice to be able to do that. I hope you will admire my restraint, Mr Speaker, in not mentioning your birthday and therefore not giving any incentive to any other Member of the House to mention it in their remarks either.
I had the dubious pleasure, as you did, Mr Speaker, of listening to yesterday’s spending review in this Chamber. It brought to mind President Abraham Lincoln’s immortal line about managing to compress the greatest number of words into the smallest amount of content. I am afraid that the statement was somewhat worse than that. It was, in both its design and delivery, an exercise in distraction and sleight of hand—a document not of economic strategy but of political evasion.
We should be clear from the outset that this was a spending review, not a Budget. Unlike a Budget, it was not subject to scrutiny by the Office for Budget Responsibility. The Chancellor’s figures have, therefore, not been externally verified. Her assumptions have not been stress-tested, and her projections have not been independently reviewed. She was not required to publish the full fiscal implications or to give the embarrassing numbers in her own remarks—and, of course, she did not.
Even within the confines of departmental budgets, the presentation was, I am afraid, somewhat disingenuous. A final year outside the actual spending review period was included, filled with speculative figures designed to suggest rigour and restraint in budgetary control. This is the illusion of discipline without the reality of delivery. In case any Member is interested, this is on page 13 of the document. Elsewhere, baseline figures were conveniently shifted; most comparisons began from the year 2023-24, not the current year, which had the effect of inflating the apparent scale of any increases.
Sizewell C is a classic example. The document trumpets a near 16% increase in investment. In truth, spending over the period is falling by 3.7%. That is on page 44. Similarly, on police funding, the Chancellor was very careful in her language to say that there would be an increase in “police spending power”, but what she meant was that there would be an increase in the local authority precept: in plain English, a tax rise.
The same obfuscation was at work with overseas development aid. The Chancellor has always said that ODA cuts were needed to fund defence, but the reality is that defence increases are almost entirely in capital spending, while ODA is a cash line. Far from funding our national defence, what has actually happened is that overseas development aid has been cut to prop up other Departments’ day-to-day budgets.
The most obvious case is defence spending: we were told in grand rhetoric that it would rise to 2.5%, and later 3%, of GDP at some undefined moment when fiscal circumstances allow. In fact, it is unlikely that even 2.5% will be reached this Parliament. The 2.6% quoted includes the single intelligence account, which suggests that the number is below 2.5%. The defence investment plan—the plan that will release the money—is unlikely to appear until the end of the year. That is nearly 18 months after the 2024 general election—this at a time of war in Ukraine, and with China potentially positioning itself for conflict over Taiwan by 2027.
On Monday NATO Secretary-General Mark Rutte, echoed yesterday by no less than Lord Robertson, said that unless NATO members raise defence spending to 3.5%, with an additional 1.5% in wider support, we may as well “start learning Russian”. That is the strategic context. The Government’s response has been to dither and delay.
The Chancellor’s U-turn over the winter fuel payment badly damaged whatever credibility she ever had. Yesterday’s statement has compounded the problem for her and the Government. No mention was made of the estimated 5% annual council tax increases now expected, as flagged by Paul Johnson of the Institute for Fiscal Studies. No admission was made that the review will add £140 billion in new borrowing. That is an extra £10 billion a year in interest payments, at current rates, by the end of the period. Meanwhile, the supposed efficiency savings of nearly £14 billion are widely regarded as illusory.
As the Chancellor herself said about the spending review, these are her choices. But the truth is plain: there will be a tax cut for the people of Mauritius. For the rest of us, the spending review was a gigantic speculative splurge of spending, presented via smoke and mirrors, which will end up, as it always does with Labour, with higher taxes, and British taxpayers will have to bear the impact.