George Freeman speaks in the Budget debate and highlights the particular problems facing rural areas where the cost of living crisis caused by the pandemic and the Ukraine war has hit particularly hard. He especially welcomes measures to support innovation-led growth which drives up productivity, creates new industries and drives global inward investment.
George Freeman (Mid Norfolk) (Con)
It is a great pleasure to follow the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones), not least to inject a little context into this afternoon’s debate. The truth is that this country is reeling, but it is not reeling from 14 years of Tory cuts. It is reeling from the most extraordinary period of economic shocks that this country has ever seen.
I remind Opposition Members that the City crash in 2007-08 cost us £875 billion in quantitative easing under the then right hon. Member for Kirkcaldy and Cowdenbeath. Brexit cost us £70 billion in QE, the pandemic cost us £400 billion and the support that the Government put in place to help hard-pressed families with the energy crisis following the war in Ukraine cost £40 billion. This country has been through a perfect storm of unprecedented, once in 400-year or 500-year events with which we are all struggling.
I welcome this Budget. I will say something about the cost of living relief for rural areas such as Mid Norfolk, and something about growth and how we can get this country out of the huge risk of stagflation arising from the sequence of events that I have just described. In a global race for science and technology investment, we have to move faster and be bolder to unlock that investment.
The pandemic and the Ukraine war have been unprecedented shocks, particularly to the rural economy. Unbelievable cost of living inflation has hit rural areas particularly hard. How much harder? The Treasury calculates that the differential cost impact is about 150% harder in rural areas because of higher transport costs; higher heating costs; higher dependence on agriculture, food processing and high-energy industries; lower incomes; marginality and rurality; a very high proportion of retired pensioners on fixed incomes; and rural councils that have been structurally underfunded for decades by a Whitehall that does not understand rural areas. We put up with it for years during an era of cheap energy, but high energy costs have hit our public services, our charities, our businesses and our households hard.
I am very grateful for the support that the Chancellor has provided, but I will continue to make the case that rural areas deserve more support and more targeted support for a very particular set of rural problems. In this Budget, I welcome the fuel duty freeze, the household support fund, the cost of childcare relief, the child benefit measures, the alcohol duty freeze, the national insurance cut worth £800 for the average worker—including the self-employed—the SME recovery loan scheme, the SME VAT threshold move and the pension triple lock being fixed at 8.6%, which is four times the forecast rate of inflation. This is a Chancellor doing everything he possibly can to help the most vulnerable and the most deserving in our society.
In Norfolk, I particularly welcome the investment in new special free schools for children with special educational needs and disabilities—that cause is close to my heart—the accelerated east-west rail delivery that is crucial to unlocking our region’s potential, and the 10 sports facilities in rural Mid Norfolk. There was good news in a very tough Budget.
Most of all, I welcome the Chancellor’s measures to support growth in the innovation economy, including the £2.5 billion for the NHS, in addition to the £3.4 billion productivity plan, that will unlock an extra £30 billion according to the NHS. There is funding for the Faraday discovery fellowships; this country’s low Earth orbit leadership; the expert advisory group on R&D tax relief; the £100 million for the Alan Turing Institute; the £45 million for our life science research charities; the £5 million for the agrifood launchpad; and the £10 million for the Cambridge cluster. That is investment in the long-term growth of tomorrow, on which we all depend in order to get out of this extraordinary 15-year triple whammy of crises that this country has gone through.
Opposition Members do not seem to understand that we cannot tax our way to prosperity and we cannot spend our way to it. [Interruption.] I know they do not want to hear it, but it is the truth. For prosperity, we need to do two big things, the first of which is reform our public sector to tackle the productivity crisis properly. I am proud to say that this Government, in the 14 years I have been here, have increased health spending by a third, but we cannot see that outcome on the ground. That is because the healthcare system is structurally geared—it is not any one party’s fault—in a way that says, “If you deliver more for less, we give you less from the Treasury.” We punish innovation and we reward inefficiency, and that has to change. I welcome quite a lot that the shadow Health Secretary has said about reforming it.
The real key, however, is growth. As I have consistently argued for 14 years, we have to do more to support innovation-led growth, as that is the only form of growth that drives up productivity, creates new industries and drives global inward investment. With stubborn debt and the risk from all of the shocks that I have outlined still with us, that is more urgent than ever. We will never get out of this crisis by short-term house price booms, short-term consumer booms and booms in the City. We have to do it by attracting private sector investment into the high-growth sectors of life science, agritech, bioengineering, clean tech, fusion energy, semiconductors, robotics, tidal energy, satellite manufacturing and quantum computing. We are a powerhouse in science and research, but we are not yet a powerhouse in attracting the global billions into those sectors and turning them into solutions around the world. That innovation is the key, both to private sector recovery and, of course, to public sector reform, particularly in health, which is the biggest public service driving the structural deficit. We need to introduce a much faster wave of innovation in artificial intelligence and all sorts of digital health, with earlier prevention and better diagnosis. In that way, we can reduce the appalling problem of pouring money in and getting less out on the ground.