Finance (No. 2) Bill

George Freeman Excerpts

2nd reading
Tuesday 13th April 2021 Commons Chamber

[George Freeman (Mid Norfolk) (Con)]

It is a great pleasure to speak in this debate and to follow the hon. Member for Glasgow Central (Alison Thewliss), principally because I can say how wonderful it is that the Scottish people have enjoyed the benefits of this great British vaccine success. It has been enjoyed by the entire United Kingdom, and funded by our deep commitment to UK life science, which comes from the United Kingdom Government. The great Scottish cluster benefits from that hugely. I was surprised not to hear the hon. Lady accept and regret the fact that, had the Scottish Nationalist party succeeded in persuading the people of Scotland to leave, they would not now be enjoying the vaccine security that they currently are. It is a wonderful thing. We are stronger together in health as we are in economics.

As my right hon. Friend the Financial Secretary put it so eloquently at the start of this debate, covid has been not just a health catastrophe, a global pandemic on a scale that none of us in this generation has seen before, but an economic catastrophe. It has been an economic shock to this country and to the global growth engine, which is not yet over. It is a sign of the generosity of the Treasury’s support that it will be only when the furlough programme, which has been rightly extended, ends in the autumn that the beginnings of the full reveal of the economic damage will strike us all. It is for that reason that the measures in the Finance Bill and in the wider relief that the Government have put in place are to be so welcomed and are so important.

I will, if I may, start by echoing the comments of others and by thanking the Chancellor and his teams—both his ministerial and official teams. It is not that common to praise Her Majesty’s Treasury in this Chamber, and particularly not for moving with speed, compassion and an instinctive desire to spend money on behalf of the health of the British people. This happened both in the economic crisis in the crash, when the Treasury moved at pace over one weekend to put in place a phenomenal package to prevent the meltdown of the City of London, and in this crisis. Indeed, it is barely possible to think that, a year ago, the Chancellor stood here and took the nation by surprise with the pace, compassion and speed with which he announced his package. The fact that more than 1 million jobs have been furloughed and protected and £800 billion has been spent in immediate relief is an absolute cornerstone of the fact that the economic recovery that we are now beginning to see is so strong.

[Wes Streeting (Ilford North) (Lab)]

The hon. Gentleman makes a comparison between the Treasury’s response to the covid crisis and the Treasury’s response to the last financial crisis. I wonder, therefore, whether we ought to be blaming the enormous deficit and debt now on Conservative profligacy or whether we will finally accept that, in 2007-08, as now, the Treasury did exactly the right thing to prevent the economic situation being even worse than it would otherwise have been.

[George Freeman]

The hon. Member makes an interesting point that I relish responding to. My praise was for the Treasury in moving at pace to solve and sort a crisis incubated by the last Labour Government in leaving this country deeply vulnerable as a result of a whole series of measures put in place during the Blair and Brown years, not least the smash-and-grab raid on our pensions and the foolish and reckless deregulation. The Treasury moved quickly to solve a crisis, but I am not claiming, at the same time, that the Government of the day were not responsible for incubating that crisis. They are different points.

[Jesse Norman]

May I remind my hon. Friend of a fact that he will know well? The leverage ratio of the British banking system was 20 times equity for 40 years until the year 2000, after which it went up from 20 times to 50 times in seven years under a Labour Government.

[George Freeman]

I thank the Financial Secretary for pointing that out. I am tempted to remind everyone that the former Chancellor of the Exchequer and then Prime Minister sold the gold at a record low and various other things, but I shall not be distracted—I simply record that—and focus on this Budget. I will not list all the measures in it, but I want to highlight one or two that the people of Mid Norfolk and I particularly welcome and then highlight three points that we need to think about as we seek to drive a powerful recovery.

I particularly welcome the measures in the Budget for the self-employed, who, in the first part of covid last year, were hit hard. Many of them were living at risk, hand to mouth and on each month’s proceeds, without the stability of a company behind them.

There is also the support for apprenticeships and traineeships. In Norfolk, when the furlough ends, we are expecting to see between 30,000 and 50,000 unemployed. The Government have rightly moved quickly to make sure that a very powerful skills and training pathway package is in place, so that people who have left old jobs that have not survived this accelerated crisis—it has accelerated much of the challenge on the high street—can quickly find jobs in the new economy that we are creating.

I want to highlight the £700 million package for the arts, culture and sport. In particular, we need to support the artists and creative people at the heart of those industries, not just the buildings. It is that genius—that creativity—which is so key to the British instinctive creative spirit, that we need to support. Rather too many of our great artists are working in all sorts of jobs and seeing their artistic careers disappear. We need to make sure that we keep them busy and get them back to work.

On levelling up, I highlight the Government’s phenomenal package of support, rightly making the crisis not just a moment to prop up the pre-covid economy but to drive growth out. The 45 town deals and the eight freeports are genuinely transformational for places such as Teesside that have been left behind by successive Labour Governments, who ought to have been representing them better. There is the move of the UK infrastructure bank to Leeds, the levelling-up fund, the community renewal fund, the Help to Grow for SMEs, the future fund and the substantial commitment to net zero and the green infrastructure that we need for a proper recovery. This was a Budget not just to repair the damage of covid, but to lay the foundations for a more sustainable and sustained economic recovery, creating jobs and opportunities for generations to come. I welcome it particularly for that reason.

That financial package is allied with the extraordinary success of the UK life sciences community, and perhaps at this point I could, as a former life sciences Minister, pay tribute to its extraordinary work. In particular, there are the scientists at Oxford and AstraZeneca, to whom we owe so much, and in Norfolk, there is the work of the Norwich Research Park and the Quadram Institute, which has done pioneering work in some of the genetic sequencing. At the same time, I welcome the work of the vaccine taskforce, led by the redoubtable Kate Bingham, with whom I know the Financial Secretary has a strong working relationship. I am tempted to channel my inner William Hague and remember the time when he commended Yorkshire for having more gold medals in the 2012 Olympics than France. In fact, he went further, saying that Mrs Brownlee had won more gold medals than France in those Olympics, and I do not think any couple has done more for the UK health economy than the Financial Secretary and the head of the vaccine taskforce.

I genuinely believe that this package is responsible, responsive and lays the foundations for a resilient set of public finances. The challenge now is to get the growth that we need from the private sector to build a really sustainable recovery, and I want to turn to that and make three key points. First, if we are really to escape debt—the debt legacy from the crash in 2007-08 and the debt legacy from covid—and to build a clean, green, smart economy, we need not just to get back to ticking over with 2% to 3% growth; to get to 4%, 5% or 6% growth, we will have to be able to host, or incubate, economies growing at 100% a year. That is the key to growth in this economy. We cannot escape debt by building over the whole of the south of England or building over any last rural area around Cambridge. To support growth, we have to make sure that we grow the economies that will grow our economy, building back better one local economy at a time and one sectoral economy at a time. To avoid the boom and bust of the City, housing and retail cycles that have left us in this state, the Treasury is absolutely right to commit to the deep infrastructure investment for tomorrow’s growth sectors. I am delighted that after my short period in the wilderness, the Prime Minister has asked me back to lead his taskforce on innovation, growth and regulatory reform to look at where, as we come out of covid and seek to lay the foundations for this recovery, free from the European Union’s regulatory frameworks but still able to trade with its market, we may be able to strike a blow for bold innovation and regulation for innovation.

I want to highlight some sectors that are growing spectacularly and that, if we were to invest strategically, would help to grow our national economy in the same way. The broader bioscience sector includes not just pharmaceuticals but the bioeconomy sector of food, medicine and energy, and, in particular, areas where those three support each other. In Norfolk I recently sat in a Lotus built at Hethel Engineering Centre that was powered by a Formula 1 low-carbon biofuel made by genetically modified bugs breaking down agricultural waste. That is what I mean by bioscience and the bioeconomy. In this century, it is biology and bioscience that will drive growth globally, just as physics did in the last century and chemistry in the one before. We are a phenomenal powerhouse in the biosciences, and if we invest in that, support it and commercialise it better, we will grow the industries of tomorrow.

Similarly, in nutraceuticals, where pharmaceuticals meet food and nutrition, there is a whole range of new crops that support growth and crops that are drought resistant and disease resistant, such as crops we export to Africa to help drive sustainable development. In biosecurity, and plant, animal and human health, we share much of the genomic sequence with most of the animals that we rely on in our agricultural system. There are huge opportunities for us to breed out susceptibility to disease and traits that will lead to huge suffering. There is a huge opportunity to harness genomics for the benefit of animal welfare, as well as progressive agriculture, in artificial intelligence, in immunotherapy, in space, in biofuels, in carbon capture and storage, and in biodiversity investment. These are huge sectors that this country is poised to grow into substantial industries, creating jobs and opportunities for tomorrow. If we get the regulatory regime for this right, which Brexit gives us an opportunity to do, and, as the Treasury is doing, we invest in the deep infrastructure and create the right commercial environment, I genuinely think that this is a moment when we could unleash a new cycle of growth, so that we look back at this, yes, as a crisis, but also as an opportunity, such that future generations will thank us for getting us off the boom and bust cycle of over-reliance on short-termism, the City, housing and retail booms, and laying the foundations for serious global growth based on technology transfer.

Secondly, from the perspective of rural Mid Norfolk—not 40 miles from Cambridge but at times feeling like 100 miles, or 100 years, from it—the small towns are fundamental. That is why I welcome so much the 45 town deals in the Budget. I hugely welcome all of them and the work that is being done. However, it is vital that as the Treasury launches these funds, we also think about how we can make it easier for the places and communities that have often been left behind because they do not have the resources of a metro Mayor or the big capacity to access multiple Government funds. Somewhere in the mix is a role for what I might call local regeneration corporations—small, fleet of foot, locally place-based public-private partnerships with powers to access money for multiple funds and deploy them over a five or 10-year plan to drive transformational local change and to pull in private finance alongside public. They would have the powers to do some compulsory purchase, to move in quickly and regenerate land left fallow after covid, to embrace some of the opportunities of land value capture and tax increment financing, and to raise infrastructure bonds and finance. Many investors around the world would love to contribute to and have a stake in this British recovery. Many places around our country will not be able to access on their own sufficient finance from the Treasury. We need to make it easy for them to drive local engines of growth that will go on in decades to come, in a similar way to the successes of the London Docklands Development Corporation, the Tyne and Wear Development Corporation and the County Durham development corporation in the ’80s and ’90s, which were so transformational.

[Kevin Hollinrake]

My hon. Friend makes a very good point about regional economies. On engines for growth, does he think that regional mutual banks might be part of the solution? They are very effective in places such as Germany and the US, focusing on regions, making sure that SMEs get lending into the productive parts of our economy. Would he look at that as part of his remit on regulatory reform?

[George Freeman]

With pleasure, and I can go further. My hon. Friend is typically astute and on the money—absolutely. It is true that in the pension funds of this country, we invest remarkably little in equities, remarkably little in small company finance and remarkably little in our own infrastructure. I am not for a minute suggesting that Norfolk County Council should put all of its money into the Cambridge to Norwich railway, although I think it would be quite a good investment, but it would be an awful lot better than finding it had quite a lot in the Iceland bank during the crash, where we lost a lot of money. There needs to be a reasonable balance. I think a lot of people in this country would quite enjoy having a stake in their own infrastructure.

People have season tickets. What about also having a share in the mutual railway company and a share in infrastructure that they are helping to fund and that they rely on? That is part of the revolution of place-based capitalism—one might even call it stakeholder capitalism, if one were on the Opposition Benches. We can call it what we want, but it is about giving people a stake in their own economic destiny.

The third area that I wanted to highlight is the importance of global markets. If we are really going to become an innovation nation, home to these incredibly exciting technologies that will drive tomorrow’s growth, we need to make sure we are better connected to those emerging markets around the world, which are growing at 10% or 20%. As the Foresight report highlighted, global population growth means that by 2050, we are going to have to double food production globally on the same land area, with half as much water and energy. That is a phenomenal global grand challenge, but it is one that this country is well positioned to respond to, with our historic strengths in agricultural science and technology and the biosciences I have talked about.

The real trick is how to link our leadership and innovation and commercialisation in the City to global markets. I suggest that our liberation through Brexit from the European trading structure, challenging though it is in many ways, does create an opportunity for us to embrace variable tariffs. Imagine if you will for a moment saying to countries in Africa, “Look, we are not going to charge you 40% on food tariffs, like the European Union—that is immoral. We will reduce it to 5% or 10%, but 0% is only for those who are growing and producing at the most responsible and progressive standards—the very highest standards of animal welfare and food quality. We will help you to do that by exporting the technologies that we have developed here using our aid budget.”

With those commitments to growth and local places, and to globalisation, this is an opportunity, given what the Treasury has done, to make this crisis a genuine moment to unlock a new cycle of growth for the benefit of this country and generations to come.