George Freeman was elected MP for Mid Norfolk in 2010 after a fifteen year career in start-up venture capital in the technology sector. He worked closely with George Osborne's office in Opposition on the Richards and Dyson Reports reviewing innovation and business support policies, and has contributed to the Growth Review.
Tonight the Chancellor will make his second annual Mansion House Speech. Last year’s was seen as a test of his maturity, but the Coalition Government aren’t the new boys and girls of 2010 anymore. Today the debate is whether George Osborne is on the right path. Is Plan A the right course?
For me the Budget’s focus on rebalancing our economy away from over-dependence on debt and unsustainable boom and bust was spot on.
Building a sustainable recovery with a rebalanced economy is the only way that we can move from "rescue to recovery and reform" as the Chancellor put it in his Budget speech.
Big surprise, I’m a Conservative. But I applaud the Chancellor’s strategy not out of blind party loyalty, but as a former venture capitalist with a 15-year career financing technology start-ups. I have felt first hand the barriers that hold back entrepreneurs in this country and have long campaigned for a more enterprising economic model.
New Labour’s reliance on debt-fuelled booms in housing, cheap credit, retail and the public sector meant that whilst the City got rich, small towns, like Watton in my own constituency of Mid Norfolk, struggled for survival. For too long we have allowed our economy to be over-reliant on the public sector, Greater London bubble and booms in housing and retail, at the expense of investment in the local and regional infrastructure required to drive sustainable growth. The result? We were left with a government debt, including the bank bailout, of 155% GDP, and 2.5 million people unemployed. We need a new economic model – a new Business Plan for Britain – in which we can play our part in the fast emerging global enterprise economy.
After the decade of irresponsibility, the deficit is now under control and the private sector is beginning to drive a recovery. We must never forget, as Ed Balls appears to, that in a sustainable economy every penny of public sector expenditure has to be earnt by the private sector first. The Chancellor has put in place a package of measures to support regional business growth – and unlike the 1980s this regional growth does not just mean the South East of England. Unsurprisingly, the weight of expert opinion is also with the ‘A team’, with the IMF and European Union backing the Government’s policies.
‘Plan A’ is the only sustainable route. We don't need an alternative direction. We need only to accelerate in the drive for growth.
The most exciting foundations laid by the Government are those for a sustainable private sector recovery with measures to boost enterprise and job creation. Making Britain ‘open for business’ is spot on. Businesses are built by people. People taking huge risks with their careers and destinies in pursuit of rewards. Yet the incentives to set up a new business have been systematically reduced whilst new regulatory constraints have been spawned. The Government has made a good start in cutting regulations, and signalling its support for enterprise.
I believe more can be done to help the risk takers who start businesses, and I believe the Chancellor does too. I hope that in this year's Mansion House speech we hear further details about just how we can get reduce the taxes on earnt income and start-up businesses to help get Britain back in business.
What about a zero tax on all fast growth new business? Start a business in Britain and re-invest its profits in growing it and employing more people and you will not pay any tax. That would pay for itself in new tax revenues many times over.
Whether it's cutting or lowering taxes on the creation of wealth and jobs, or even lowering income taxes, we need to send an unambiguous signal to these risk takers and wealth creators that Britain is the place to come and start, build, and finance a new business. Let's give the City of London – itself an incubator of tens of thousands small entrepreneurial financial services firms – back a role it can be proud of: financing the businesses of tomorrow.
Where will these fast growth new businesses come from? Britain's science, technology and innovation sectors lead the world. As global population rises to 9 billion, we have the skills to lead in the big new 'life science' markets for biomedicine, clean energy, and agricultural technology. Just yesterday we heard on BBC news about scientists from the University of Glasgow developing new microchip DNA technology which could revolutionise the treatment of infectious disease. This is revolutionary stuff coming straight out of the UK with the potential to transform health care. Which is why the Government is right to have been so strong in it's support for our life science sector.
Collaboration is the key to these long term growth markets. Our world class universities have the potential to collaborate much more with industry to drive new products and sectors. The department for Business Innovation and Skills is rightly collaborating with Dr Herman Hauser to frame UK innovation centres along the lines of the successful Frauhoffer Institutes. We need better collaboration between the research corridors and clusters in Scotland, the Northern University cities, and the Cambridge, Oxford and London research triangle.
To link and unlock the potential of these cluster will need us to modernise our communications infrastructure. We need to be bold in unlocking new models of infrastructure funding like Tax Increment Financing used successfully in the US.
Let's be bold in pursuit of new sources of economic growth. Let’s free up UK plc to win business overseas. Let's get every department to re-evaluate its assets and think what it can do to unlock growth in its field. Let's allow the brightest public sector employees to go out and win business overseas and raise new revenues for public services. Let's embrace true Localism and empower local authorities to take more responsibility for infrastructure and sustainable growth in the areas they have most stake and expertise in.
We don't need a Plan B. The Chancellor has followed the right course since the May 2010 election and laid out a serious vision and platform for a long term economic recovery through enterprise, innovation, exports and financing the high growth businesses of tomorrow.
In 1910 when Britain was at the height of an enterprise driven Age of Confidence, public sector spending was only 9% of the GDP, in 2010 it was 53.4%. A reflection of a growing nation? Yes. But also an indicator of a key correlation between state spending and economic freedom and confidence.
Confidence in our economy, yes. But confidence also in our prospects as a nation, in our role in the world, and in the opportunities for each of our citizens in the global economy of tomorrow.