George Freeman is Minister for Life Sciences and MP for Mid Norfolk.

The front cover of last week’s edition of the Economist said it all: The new Conservatism. For those of us who came of political age in the mid-1990s, and have worn out two decades’ worth of shoe leather pounding the doorsteps ever since, the Budget last week felt like a watershed. Here, for the first time in almost 20 years, was the new settlement we have all been working so hard towards. A vision for Britain that wasn’t built on the sand of New Labour’s quick-fix solutions, but on the rock of fiscal responsibility: a low-tax, low-welfare, high-wage economy.

But all of us on the Government benches know the ongoing scale of the challenge in front of us. The bonfire in the basement of the public finances remains the structural deficit, which is why tough decisions on spending have to be made. Despite our success in the last five years, we still need radical measures to tackle chronic structural inefficiencies in our public services, in order to make sure we can continue to compete as a major world economy in this century of ever-greater global competition.

This means addressing one of the fundamental issues that is essential for our economy to thrive: productivity. That’s why the National Productivity Plan unveiled last Friday will arguably come to be seen as the most important part of this historic Budget. Improving productivity can sound arid and technical. ‘Innovation’ is perhaps a more digestible term, and it is the task of making our private and public sector engines of innovation that will allow us to drive a new cycle of growth. Britain led the agricultural and industrial revolutions by being the most innovative nation on the planet. This Government believes we can do so again. And the results could further transform our economy: for instance, matching the productivity of the US would raise GDP by 31 per cent, equating to around £21,000 per year for every household in the UK.

What does this new settlement look like? First, it means rebalancing: empowering all corners of our country, by devolving power to areas like Greater Manchester and linking up our world-leading cities with the Northern Powerhouse. The dictatorial centralism we saw under New Labour was a brake on innovation, stifling local enterprise. The single-budget localism of the Manchester Model is key to eliminating the structural deficit, allowing those closest to the issues to spot inefficiencies and drive reform.

Second, it means entrenching the recovery by facing up to the very real productivity challenges in our public services. That has been my mission as the first-ever Minister for Life Sciences, jointly at the Department of Health and the Department for Business, Innovation and Skills (BIS). With health being the largest driver of the structural deficit, improving productivity in healthcare is the holy grail of a thriving economy.

The task is clear: investing in our frontline services (with £8bn more a year), and getting more health from each pound by accelerating uptake of innovation in medical technology by the NHS and generating more jobs and tax revenues through Life Sciences growth. It also means continuing to get control of our welfare budget and departmental spending so we can invest in our world-leading science base and R&D by delivering our science capital commitment, investing £6.9bn in the UK’s research infrastructure and developing the UK’s network of Catapult centres for commercialising technology. This is the heart of Osbornomics: reducing past excess in order to invest in our future, empowering all of us as citizens to make Britain the innovation capital of the world.

Third, we need to continue building resilience into the system – unleashing the talents of our public servants through continued reform of Whitehall to encourage enterprise, new ideas and make the Richard Branson of tomorrow as comfortable in the conference rooms of Whitehall as the boardrooms of Canary Wharf. This means thinking internationally as a trading nation open to international investment: mobilising the whole of government behind exporting, building stronger trade links with emerging markets and helping to deliver a more dynamic and outward-focused Europe. And continuing to seek out ways to drive innovation, with a new Digital Transformation Plan to support the adoption of digital technologies across the economy.

The political, economic and philosophical bankruptcy of the Labour Party has become painfully clear since the morning of May 8, with a Back to the Future-themed leadership contest, promising a terrifying medley of the worst of Brown, Balls and Blair. The Budget marked the start of a new Conservatism and a new settlement. As a founder of the 2020 Conservatives group, I know there is an entire generation of us now in Parliament committed to this new politics of the progressive radical centre: a balanced budget, investing in our regional hubs and science base, making Whitehall a centre of digital innovation, thinking globally as a true trading nation. Just as Margaret Thatcher shattered the Keynesian consensus, this new Conservatism has secured the final victory over a discredited vision of a client state. Last week’s Budget saw a whole-scale economic vision for Britain, two decades in the making.

The Times wrote recently of a Labour Party on the verge of descent into ‘an irrelevance from which there is no escape’. The Lib Dems are shattered, UKIP embroiled in pantomime back-stabbing, the SNP battered by reality and the Greens disintegrating at first contact with the electorate. The stage is now set for a Conservative generation: progressive, modernised, addressing the challenges of the 21st century. A new dawn has broken, and it is true-blue once more.