This article was published in The Telegraph on 27 November 2025.
Budgets aren’t easy for chancellors because so many things are beyond your control. But being forced to make trade-offs reveals priorities. And in this Budget we saw that the priority was not economic growth but political survival.
That’s because there was one central call the Chancellor had to make: do we reform welfare or do we raise tax? Getting our welfare bill down to pre-pandemic levels would help save £47 bn a year within five years. It wouldn’t have been easy, but it could have meant no tax rises and plenty of headroom in public finances. Instead welfare spending is going up and jobs and growth are going down.
Half of the eight million people claiming universal credit are now exempt from having to find a job, mostly on health grounds. It’s a number that has exploded since the pandemic. A million more people are claiming the benefit than when Rachel Reeves delivered last year’s budget.
Many claimants cite mental health issues. But every doctor I ever spoke to as health secretary said people with anxiety and depression need social contact, which means being in work, not at home. So this could have been the budget to announce we will speed up treatment for people with mental illness, and not park them on welfare. It could have stopped fraud by banning all benefit applications by phone. It could have said that, rather than relying on migration to fill vacancies, we will make sure people at home are fit to join the workforce.
Instead, the welfare bill is going up by around £14 bn, not least because of the unfair abolition of the two-child benefit cap which will see families on low income in work pay more tax to subsidise the larger families of those out of work. It is also likely to increase the number of children in hardship with more living in the structural poverty caused when there are no working adults in the household.
And the taxes going up to pay for this are already killing off growth. 180,000 fewer people in payrolled jobs, meaning unemployment has gone up every month. Inflation is higher as employers have passed on the cost of last year’s national insurance hike. That has meant inflation is nearly double what Labour inherited, meaning interest rates will stay higher for longer. Poverty, which fell in absolute terms under successive Conservative governments, is now likely to rise under Labour as jobs vanish and welfare costs soar.
Apparently there is a growth plan – but it is very difficult to discern. We know that raising public sector productivity to private sector levels adds 0.4 per cent to annual GDP growth. We know that proper planning reforms would add 0.4 per cent. We know that welfare reform would add 0.3 per cent. We know that getting energy bills down just 20 per cent adds 0.3 per cent. Most exciting of all – but hardest to quantify – is AI, which according to Microsoft and Accenture could add 1 per cent or more to annual growth.
We didn’t hear any of that. Instead we have a Government that came to office saying “growth growth growth” without knowing how to deliver it. Growth needs a plan, not a soundbite. And that lack of a plan – or even a guiding philosophy – is why today we have ended up with a Budget that damages growth, damages investment, damages jobs and most tragically of all damages opportunities for young people of whom there will shortly be a million not in employment, education or training.
The Chancellor seems to think that it will all be fine because she’s not one of those evil Tories. Those terrible people got inflation down from 11 per cent to 2 per cent; they oversaw four million new jobs; they grew the economy faster than France, Germany, Italy or Japan and attracted more foreign greenfield direct investment than anywhere apart from China and the United States.
Tories who were regularly accused of privatising the NHS actually increased the numbers of doctors and nurses by nearly a third. Tories accused of being posh left behind state schools with the highest reading standards in the Western World.
That’s because so-called progressive instincts don’t actually pay the bills for good public services. Only a strong economy can do that – one that feels further away than ever.
Even in what may be a limited time left for both of them, the Chancellor and Prime Minister should remember that a government that at least tries to do the right thing is more likely to earn the trust of the British people than one that has given up.
But if they treat their time left as primarily an exercise in survival, it will be a betrayal of their position and their values. People with the broadest shoulders, as the Chancellor described them, will be angry today.
Many may find a way through despite the kicking they have just received. But people who depend on public services, people looking for a job, people on the poverty line – they’re the ones who need a strong economy more than anyone. They will finish today feeling more scared than ever about their future.