Jeremy Hunt has unveiled his ambitious four-point plan to turn the UK into “the world’s next Silicon Valley”.
During a keynote speech at Bloomberg’s headquarters in London, Britain’s Chancellor of the Exchequer set out his long-term plan for prosperity.
Appealing to innovators to be open to his plan for change, he vowed the Conservative government “will back you to the hilt”.
The four pillars of his vision to make the UK the most prosperous country in Europe are enterprise, education, employment and everywhere. The latter part refers to Mr Hunt’s plan to ensure the benefits of economic development are felt across the UK, not just in London and the south of England.
He said the pillars were “essential for any modern, innovation-led economy”.
While he praised entrepreneurs, businesses and tech firms, he said the attitude among Britons towards risk-taking must become bolder.
The Chancellor said that “Britain needs a more positive attitude to risk-taking”, as it is “too cautious compared to our US friends.”
Virgin Orbit’s attempt to make European history by sending a rocket into orbit may have ended in failure but “what we learnt from it will make future success more likely,” Mr Hunt said.
“Every big business was a start-up once and we won't build the world's next Silicon Valley unless we nurture battalions of dynamic new challenger businesses,” he said.
Mr Hunt also said Brexit affords the UK an opportunity not just to change regulations, “but also to work with our experienced, effective and independent regulators”.
The “pro-business climate” in the UK has led to the creation of more than 1 million new businesses since 2010, he said, as he promoted his agenda to set the stage for the next million new firms to be set up.
Low taxes are essential to attract investment, he said, as he pledged to put “restraint on spending”.
“High taxes directly affect the incentives which determine decisions by entrepreneurs, investors or larger companies, about whether to pursue their ambitions in Britain,” Mr Hunt said.
“With volatile markets and high inflation sound money must come first.
“Our ambition should be to have nothing less than the most competitive tax regime of any major country. That means restraint on spending.
“In case anyone is in any doubt about who will actually deliver that restraint to make a low tax economy possible, I gently point out that in the three weeks since Labour promised no big government chequebook they’ve made £45 billion of unfunded spending commitments.”
He also said there is misplaced “gloom” about the prospects for the UK economy, adding: “Declinism about Britain was wrong in the past and it is wrong today.”
Mr Hunt said the government is to proceed with reforms to so-called Solvency II — an EU directive that governs the amount of funds British insurers are required to hold in reserve.
An enterprise-centred culture built on low taxation, rewards for risk taking, access to capital and smarter regulation is key to help the country reach its potential, he said.
The role of education is also vital, he added, as he bemoaned the lack of literacy skills among parts of the population. Opportunity must be “as open” to people not educated at university as it is to those with degrees, he said.
On the third pillar, employment, Mr Hunt said about 6.6 million working age adults, 20 per cent of the UK workforce, are economically inactive — five million of whom do not want to work.
He described this as an “enormous and shocking waste of talent and potential” as he directly appealed to the unemployed saying: “Britain needs you.”
Fundamental reforms are needed to support people with long-term illnesses and mental health problems get into work, he said.
On the final component of his plan — everywhere — he said it is “socially divisive” and “economically damaging” if young people feel they need to head to southern England to get ahead in their careers.
The government's levelling up agenda is making headway in this area, he said, noting that since February 2020 70 per cent of new jobs created have been outside London and the south-east of England.
Tony Danker, the director general of the Confederation of British Industry, welcomed Mr Hunt's announcement.
He said it is right that the Chancellor has “shifted gear to renew his focus on growth” after being parachuted into No 11 last year to bring economic stability after Liz Truss’s disastrous mini-budget.
“It’s only by improving the UK’s languishing performance on productivity that we can realise the huge economic potential in every corner of the country,” Mr Danker said.
He backed the Chancellor’s plan to use innovation as the foundation for the UK’s future economy and praised him for “championing the strengths of the UK tech sector”.
“He now has a strong framework for growth,” the CBI chief added. “And we hope the Budget in less than two months will show strong actions to move us forward.”
Susannah Streeter, senior investment and markets analyst at financial services firm Hargreaves Lansdown, said the government must accept there are no fast solutions for economic woes.
‘’Jeremy Hunt shrugged off his firefighter image for that of a construction worker, determined to help rebuild Britain’s economy,” she said.
“But there is no quick-dry concrete available to provide an immediate solution to the stagnation the UK is languishing under.”
Ms Streeter said details are “sorely lacking” in Mr Hunt’s plan and suggested ministers are “clearly unsure how it will be paid for”.
Kitty Ussher, chief economist with the Institute of Directors, dismissed the Chancellor's words as “empty”.
“The Chancellor himself said today's speech was ‘not a series of measures or announcements’,” she said.
“We would therefore add a fifth E for ‘Empty’ to his 4 E's economic framework.
“Business needs government action to counteract the negative mood, for example through a continuation of the capital investment super-deduction, through tax credits for employers who invest in skill shortage areas and a plan to incentivise the net-zero transition for the SME sector.”
At a cabinet away-day at Chequers on Thursday, Mr Hunt said the government must maintain its “disciplined approach” to public finances if it is to get inflation under control.
Prime Minister Rishi Sunak and Mr Hunt emphasised that inflation was only predicted to fall because of the “tough decisions” made in the autumn statement to stabilise the economy.
“The Chancellor said it would be necessary to retain this disciplined approach to reduce inflation, because it is the greatest driver of the cost of living,” Downing Street said.
The gathering, at the prime minister’s residence in the Buckinghamshire countryside, took place amid frustration among some Conservative MPs who believe tax policies are stifling growth and investment.
But Mr Hunt is reported to be determined to stick to his guns after Ms Truss's mini-budget last September sent the pound tumbling to a 37-year low.
Jeremy Hunt — in pictures
The Bank of England was forced to make an emergency intervention in the markets after former chancellor Kwasi Kwarteng’s £45 billion ($56bn) package of unfunded tax cuts sent sterling into free fall.
Mr Hunt reportedly told ministers that “helping more people back into work was one of the most important steps which could have immediate benefits for everyone”.
Health Secretary Steve Barclay briefed the meeting on efforts to tackle the National Health Service backlog while Home Secretary Suella Braverman updated ministers on measures to stop migrants in small boats crossing the English Channel.
The gathering, which also included a meeting of “political cabinet”, without civil servants present, was largely overshadowed by the continuing row over Tory party chairman Nadhim Zahawi’s tax affairs.