George Freeman was elected in 2010 after a 15 year career in start-up business in
which he founded and raised over £50m for 5 new technology companies. A founder of the www.2020conservatives.com, he chairs the innovation economy
commission. As Government adviser
on life sciences to David Willetts mp at dept business he has been closely
involved in shaping and implementing
the Government’s life science strategy and is now coordinating a
parallel strategy for the UK agri-food sector. He has written and spoken widely on the need for bold
measures to unleash a renaissance of enterprise and innovation to drive
Follow George on Twitter.
With a predictably fragile economic recovery, Labour 5%-10% ahead in
the polls and a growing public doubt about whether we can have both public
sector deficit reduction AND economic growth, George Osborne’s mid term budget in 40
days is critically important.
Given the fiasco of last year it is vital that we send a strong signal
to boost confidence – in the markets and the electorate – that we are determined
to both restrain public sector spending and unleash a private sector recovery – and that the two can
feed off each other.
How? We need a bolder
vision of what went wrong in our economy and a bolder vision of how, by unleashing
the forces of entrepreneurial small business, we can both reduce the public
sector deficit AND create sustainable private sector growth.
Let’s explain to the electorate how the last Government presided over
a far too cosy cartel of Big Government, Big Banks, Big Utilities and Big
Corporations (across the board but especially in the banking, energy and public
sector procurement markets). Let’s set out how we intend to open up these markets to unleash a new
renaissance of enterprise to make markets more competitive, drive innovation
and get creating jobs and wealth again.
We need to open up markets like banking and energy and telecoms to
new entrants, and set out a bold ‘New Deal for New Businesses to help inspire a new generation of
What might a ‘New Deal’ look like? If you start a new business and employ 2 people within
12 months, we’ll get off your back: no tax or regulation for two years or until
your turnover is over £250k. No
National Insurance. No VAT. No forms to fill in. And how about a ‘micro-business’ exemption from all the
terrifying regulation passed by Europe, designed for big companies and too
often gold plated by Whitehall.
Before coming to Parliament in 2010 I had a 15 yr career starting,
and then financing, new business start ups. I know that the single biggest barrier to most first time
entrepreneurs is the fear of the tax and regulation liabilities from starting a
new business. For people coming out of a job in a safe company – or the public sector
from where we especially need to encourage voluntary switching to self
employment – it can be very intimidating.
I always used to ask first time entrepreneurs to estimate their
turnover. They nearly always estimated 80% of their former salary. They were always wrong. It was either nil, or very quickly far
higher: they either had a business, or they didn’t. Lets liberate them
from worrying about tax and Government regulation in that all-important first
year and let them get on and build their businesses quicker. They will be surprised how quickly they
reach the threshold for paying tax. And forever grateful for our getting off
their backs and helping them get there.
This is not plan B.
Its "plan A +++".
"Osborne-omics" is working well for big companies. Inward investment into the UK is
up. 1 million new private sector
jobs created. The low growth
figures are ‘net’. Strong growth in some parts of the economy (Life Sciences,
Automotive, IT) are getting lost in the average growth figure which combines
significant shrinkage in the public sector. We are rebalancing the economy. We shouldn’t be surprised that net growth is low. The key is that the long
term competitiveness is improving and that we are restructuring our economy so
that we have a sustainable business model and globally competitive private
sector capable of generating the revenues we need to pay for our ageing
The Chancellor has taken some important steps to make the UK an
attractive destination of choice for global businesses. Cutting corporation tax
to give us the lowest rate in Europe and the 4th best in the G20;
reversing Labour’s callous pre-election 50p income tax rate to signal that we ‘get’ the need to cut marginal
rates of tax on wealth creators to attract them here; and a willingness to
invest in the key R+D infrastructure required to attract global business. There are encouraging signs that
it’s working. GSK's announcement of a £500m investment in a new
advanced manufacturing plant in the North West, and the recent announcements by
Ford and Vauxhall of investment in Bridgend and Ellesmere Port respectively are
But we haven’t yet achieved ‘cut-through’ for the 'little guy': the self employed entrepreneurial strivers
who take the risk of setting up their own business. Their confidence and growth
is key to our economic AND electoral prospects.
We need to inspire a new generation of entrepreneurs to help
rebuild this economy driven into the ground by Blair and Brown’s love affair with big
banks and big debts which fuelled the Borrowed Boom. And let's be honest enough to admit that we were all in it
together: all of us with credit cards, insufficient pensions, and interest only
mortgages were part of this unsustainable boom, and the bust that followed.
Small and big businesses are very different and require and
respond to very different policy levers. We need to recognise that what drives the CEO and
boards of global corporations does not drive the owner managers of SME’s. No start-up
entrepreneur I've ever worked with was motivated by corporation tax. For the entrepreneur and SME manager,
juggling cash-flow and the burdens of fixed costs, employment regulations, VAT
and National Insurance are far more important. But the biggest factor is
confidence that Government is on your side, and confidence that cosy monopolies
will be opened to new entrants to create new markets.
Politically, I believe the British public could be quite forgiving
about the lack of strong immediate growth. They aren’t daft, and understand
well that we are clearing up Labour’s mess. But we’re not going to get an
electoral dividend without a compelling narrative about how we are laying the
foundations for long term recovery. We must show how we plan to move from debt
fuelled growth to a sustainable competitive economy in the global race; a clear
'values’ message and specific
measures for the strivers and visible signs of a new model army of ‘Osborne Entrepreneurs’.
Thatcher’s white van men and Blair’s dot.com entrepreneurs were powerful reinforcing symbols of
success. We need to turn the
crisis of Gordon Brown’s ‘Big Government overspend and zombie bank bailout into an
opportunity for the next generation through a package of radical programme of
deregulation and support for new entrants in key sectors like banking, energy
and Government outsourcing to create new markets for insurgent new enterprises.
This is the vision at the heart of the 2020 Conservatives
Innovation Economy Commission I set up and chair. It’s about developing a radical
vision of how we can unleash the twin drivers of technology and
entrepreneurship to drive the recovery.
Because this crisis was caused by an anti-competitive and
un-conservative symbiosis of big Government and big banks we need to be the
radical citizens army come to London to unleash the forces of the small, the
local and the entrepreneurial.
Governments always find this hard.
Officials find it much easier to deal with big business and its trade
associations. Ministers feel comfortable around board tables with white shirted
corporate directors. The machine
is not good at talking to the cutting edge entrepreneur insurgents at the
coalface of opening up new markets, who find the bureaucratic machinery of ‘stakeholder engagement’ unbearably cumbersome. Unless we open up this dialogue much
more boldly, there is a real danger of us being out of touch and starting to
look like part of the very technocratic elite the public increasingly blame for
the mess we’re in. We risk becoming far too quickly the defenders of the
This is true across a number of key sectors. In Banking and Financial Services we
need to be the voice of new entrants, critiquing Gordon Brown and Ed Balls’ profligate bail-out
which has propped up the failed institutions of the boom, starving our economy
of cash. America has 20,000 banks.
A new bank is started on average once a week. We have a banking sector dominated by the Big 5, and a
regulatory framework preventing new entrants.
Our energy market – and energy policy – is similarly dominated unhealthily by the ‘Big 6’. We were supposed to be the party
unleashing a revolution of decentralised energy, micro-generation, and consumer
In my field of Life Sciences, the rapid development of genetics
and health informatics is unleashing a revolution in patient empowerment and ‘personalised’ medicine which is
shattering the post war domination of ‘Big Pharma’ and unlocking a more vibrant and entrepreneurial ecosystem of
patient-centred medical innovation, with enormous benefits for patients, the
NHS, and UK plc. But the conversation between Government and industry is far too heavily
dominated by the producer interests (on both sides) and an outdated focus on
negotiating prices for ‘one size fits all’ drugs with 'Big Pharma'. We need a wider dialogue with the new
entrants pioneering the new diagnostics, lower cost preventative therapies,
personalised medicines and data transparency which are driving up health
benefits for patients in other countries.
The Lansley reforms have liberated the Secretary of State for Health
from defending NHS producer interests.
Jeremy Hunt rightly
describes himself as 'the first Secretary of State for Patients' which frees us
all up to align ourselves with the consumers of public services rather than the
And in infrastructure, too, where the Government is rightly making
huge commitments to invest in upgrading our rail, broadband and road capacity,
we won’t unleash the wave of
private sector co-investment without a more radical commitment to open up new
markets for local bond-financed infrastructure, as has been so successfully
demonstrated across so many US cities.
The Heseltine report set out a radical blueprint. Lets implement it.
This revolution of innovation and enterprise isn’t just about the private
sector. It is also key to
unleashing innovation in our public services and driving the efficiencies and
productivity we need. A properly
reformed NHS which is driving and adopting medical innovation can make us or,
unreformed, it will break us. Our
ageing society is driving a demographic tsunami of health costs in Dementia,
cardio-Metabolic and Osteo disease and cancer which will far outstrip our
ability to fund through the current structure.
These are enormous challenges. But as the last Conservative
generation to confront this sort of scale of crisis showed in the 1980’s, it is possible to use
the seriousness of the crisis to build public support for radical reform.
But to build that scaffold of support we first have to set out a
clearer picture of the problem.
Brown and Balls Borrowed Boom – and the bust that we’re now all paying for -was built on a far too cosy coalition of
big Government, big banks, and big business.
Their bail-out of zombie banks, neglect of public service reform
have saddled us with a structural deficit and ticking debt bomb: an economy
overly dominated by the bankrupt balance sheets of the big organisations of the
boom. The recovery needs a new insurgent entrepreneurialism.
We have to unleash a renaissance of enterprise.
To govern is to choose.
The scale and nature of this crisis demands that we choose whether we
are on the side of incumbency or insurgency.
We must be on the side of insurgent entrepreneurs. They rescued
our economy and our party in the 1980s and they can do it again. But we need to show we’re really on their side.
So let’s use the Budget to offer a New Deal for New Businesses: Start a
business and employ 2 people within a year and we’ll offer you a complete
exemption from all tax and big company regulation until your annual turnover is
£250k. No tax. No big company regulation. No
employers NI. Nil. Nicht. Nada.
Let’s use this Budget to unleash the little platoons. Enterprising risk takers armed
with empowering technology can disrupt cosy cartels and create new markets, to
the benefit of us all. We need them to get to work.