The Economy

George Freeman Excerpts

Tuesday 11th December 2012 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

I cannot help but begin by noting that, with nearly two hours to go, there is not a single Tory MP rising to defend the Chancellor’s policies. That speaks for itself—I cannot remember the last time it happened.

[George Freeman (Mid Norfolk) (Con)]

rose—

[Mr Meacher]

No, I am not going to give way; I have not even started. I am just observing what has happened.

I congratulate my three new hon. Friends the Members for Middlesbrough (Andy McDonald), for Rotherham (Sarah Champion) and for Croydon North (Steve Reed) on what I thought were quite remarkable speeches—confident, informed, quite amusing in places and committed. When I first came to this House—a long time ago—new Members took their listeners on a tour of their constituencies, touching on the buildings, the people and the history, but saying nothing about politics. That was not the protocol. I am glad that that rule has gone. We heard passionate speeches today that were all about politics, including the national health service, child care services and the defence of the unemployed. I think that all three of my new hon. Friends will make a big contribution to this House.

--- Later in debate ---

[George Freeman (Mid Norfolk) (Con)]

It is pleasure to rise and to prove the right hon. Member for Oldham West and Royton (Mr Meacher) wrong through my passionate defence of the Chancellor, not that he needs it, and my welcome for the autumn statement.

I am old enough to remember the 1970s and when the economic history of that period is written, I think it will be rather simple: in 1979 a Conservative Government inherited bankrupt public finances and put them straight with an enterprise economy. A Conservative Government sorted out the mess of the European currency-inspired recession of the early 1990s and gave the future Labour Government a golden legacy in 1997. After two years of sound public finances following the previous Conservative Administration’s public spending commitments, the previous Labour Government embarked on an unprecedented spending spree—a boom disguised under various labels, such as cool Britannia—that left this generation with an historic debt legacy for which we, our children and our grandchildren will be paying the bills for many years to come.

[Sheila Gilmore]

One of the problems with the hon. Gentleman’s retelling of history is that the Labour Government paid down national debt so that it was lower after the first few years of that Government than it had been at the end of the previous Tory Government.

[George Freeman]

I am grateful for that intervention. If the previous Labour Government paid down the debt, why have we inherited this historic debt legacy—a legacy, it is worth reminding the House, that sees us paying debt interest payments that are set to rise to £76 billion a year, which is more than the amount spent on more than three Departments? This is a historic legacy, for which the Labour party should be ashamed.

[Kwasi Kwarteng]

I was wondering what my hon. Friend thought about the fact that the previous Labour Government ran consistent deficits from 2001 to 2007—even while the economy was growing.

[George Freeman]

My hon. Friend makes an excellent point, principally about the structural deficit. The public are not daft: they know the difference between a Government who spend more each year than they receive and one who wilfully disregard the underlying causes of the deficit, which were and still remain for us to tackle—the problem of an ageing society for the NHS, the public sector pensions bill and the out-of-control welfare state. I shall say something shortly about the Government’s important reforms in that regard.

I welcome this autumn statement, which begins the process of tackling once again the toxic debt legacy left to us by the Labour party. I welcome the fact that a Conservative Chancellor in a coalition Government has been able to deliver substantial savings—£33 billion in the welfare budget, £60 billion savings in interest repayments and £70 billion savings on the cost of government in Whitehall—allowing us to create the incentives for work, taking a million of the lowest-paid employees out of tax altogether, raising the tax threshold and abolishing Labour’s planned fuel duty rise, with the net result that over the last two years we have seen the creation of more than 1.2 million net new jobs in the private sector.

[Frank Dobson]

Does the hon. Gentleman not think it rather odd that the Government are unprepared to give any estimate of how many of those “new private sector jobs” are ones that have been outsourced by the public sector? Has it not been estimated that even in the field of further education, the total approaches 200,000?

[George Freeman]

I am grateful for that intervention because it gives me the chance to make the fundamental point that Labour Members seem constantly unable to grasp—that every penny they spend from this Dispatch Box is money that has to be taken off this country’s citizens in tax, and that they will receive it only if it is earned by the private sector. It is the private sector that ultimately earns the money that the public sector spends. This Government’s rebalancing programme to restore our public finances will allow us once again to spend on the public sector sustainably with moneys earned by the private sector. That is one of the most crucial and important reforms made by this Government, and I welcome it.

Yes, the Office for Budget Responsibility has made clear what the Chancellor has consistently said—that this will be a long a fragile recovery and that it has been made worse by the crisis in the sclerotic eurozone, with the debts of the 2008 recession now being clearer than they were at the time. That has become clear not least because we now have the OBR—another of this Government’s important reforms—putting some transparency and honesty at the heart of Government statistics. That is not always comfortable, but it is an important—

[Frank Dobson]

Will the hon. Gentleman give way?

[George Freeman]

No, I have already given way to the right hon. Gentleman.

Of course we are in the process of a long and slow recovery, but the evidence—in terms of new jobs, the data on private sector growth, and the business community’s strong support for this statement and the measures previously announced by the Government—suggests that the policy of rebalancing the economy is right and working. We must have an economy that is led by the private sector. We need to do more to support industry and the knowledge economy, which this Government are doing, and we need to do more to support regional growth outside Greater London and the south-eastern area.

It is an irony of the last Labour Government that, despite preaching the language of regional economics, what it came down to was a vast tax transfer through the regional development agency structure. In my own field, more than £15 billion was spent on business support, but according to the Richard report, only 0.5% of that was received by businesses on the ground floor, as it were. The last Government embarked on a major boom in regional spending, but it was not sustainable. One of the sadnesses of this crisis is that many of the people who were offered jobs during that boom in the public sector are paying the price now. That is not their fault; it is the fault of those who were running the economy at the time, and I for one am waiting for them to say sorry.

The net growth figures are low at present, but that disguises a very important and profoundly positive change. We have rightly taken money out of the public sector in order to rebalance the economy and bring our public finances under control. The fact that the net growth figures are positive is a sign of the profound growth that is beginning to happen in the private sector, and which bodes well for our public finances in the long term.

I welcome the Government’s plan A-plus, which is intended to restore our public finances and get the deficit under control, and I welcome the fact that the annual deficit is now down by 25%, although there is more to be done. The plan is also intended to free up money to be invested in infrastructure. More than £20 billion has been committed to infrastructure projects that are long overdue, and last week £600 million of extra investment in science and the knowledge economy was announced. I shall say more about that in a moment. The truth is that we need a plan A-plus plus plus, but we do not need the plan B espoused by the Opposition. That B stands for borrowing, it stands for the bankruptcy of our public finances, and it stands for Balls.

[Nigel Adams (Selby and Ainsty) (Con)]

My hon. Friend said earlier that he remembered the 1970s. I wonder whether he remembers the late 1960s, when Viv Nicholson, the pools winner, said that she would “Spend, spend, spend.” She eventually went bankrupt. Does my hon. Friend agree that even she would be embarrassed by the Opposition’s approach to spending and debt?

[George Freeman]

My hon. Friend has made an excellent point. One must choose one’s advisers carefully. When taking advice from rock stars, one should listen to the music, but not spend accordingly. “Spend, spend, spend” is exactly what the last Government did, and we are all paying the price now.

I entered the House after a 15-year career starting companies in the life sciences sector—which involves some of the most exciting parts of the country’s economy: medicine, agriculture and the clean technologies—in Cambridge, Norwich, Scotland and some of the northern cities, and in London. I believe that that sector represents a hugely exciting opportunity for the country as we rebalance our trade away from the sclerotic eurozone and towards the faster-growing emerging nations of the world—some of the BRIC economies, and the “next 11” that were identified by Jim O’Neill in his seminal paper.

Those economies are growing at a rate of 7% or 8% a year, which, compounded over 10 years, amounts to 100% growth. They are the vibrant markets of tomorrow, and we have an opportunity to support them with our knowledge economy and our life sciences. Today that means helping them to develop the basics of public health care, such as nutrition, food security and medicine, but tomorrow they will quickly grow and develop much more sophisticated needs and markets.

The life sciences sector is crucial to our economic recovery and to a sustainable model of economic growth, and I strongly welcome the support for it that has come from the Chancellor and his team. Last week a further £600 million was announced for our science base, which is already paying dividends—in the last year alone, more than £1 billion has been invested in early-stage life science ventures funds in this country—and GlaxoSmithKline has announced a £500 million investment in an advanced manufacturing facility. The strategy is working, and I encourage the Government to stick to it.

I am the Member of Parliament for Mid Norfolk, a rural area which, in recent decades, has been viewed as something of a rural backwater, and has received all too little investment. In our region, the dualling of the A11, the investment in the Cambridge-to-Norwich rail link between the two life science clusters and the £90 million announced recently for support for our research and innovation centres have all been extremely welcome, and are already having positive effects locally. I was in Cambridge on Monday with the Prime Minister, launching the new cancer genomics centre.

There is a spirit of optimism afoot in our region. That speaks for the success of this strategy, which I welcome and commend to the House.