Tag: Jeremy Hunt

The speech made by Jeremy Hunt, the Chancellor of the Exchequer, in the House of Commons on 22 November 2023.

The speech made by Jeremy Hunt, the Chancellor of the Exchequer, at the Mansion House in London on 10 July 2023.

The speech made by Jeremy Hunt, the Chancellor of the Exchequer, on 12 June 2023.

Introduction

It is a pleasure to be with you this evening and a privilege to deliver this speech for an organisation founded 49 years ago.

Over that time the CPS can be proud of the profound impact it has had on the way we think about freedom and enterprise.

And I am delighted – as Chancellor – that even though you will soon reach the ripe old age of 50, there is absolutely no prospect of you taking early retirement, something impossible to imagine under the energetic leadership of Lord Spencer and Rob Colvile.

Today, I want to talk about one of the government’s five priorities – growing our economy – which alongside reducing inflation and bringing down debt, is central to our economic mission.

Because just as when the CPS was founded, it is growth that will prove declinists wrong, unleash prosperity through enterprise and give families confidence in their prospects.

Rob himself pointed this out in his excellent essay, “the morality of growth” when he said:

“If there is one thing that we all need to do – it is to remind people ceaselessly of the importance of growth.”

Productivity and growth

Growth is critical for many reasons.

It is the way we increase people’s living standards.

It is the way we increase opportunity with high wage, high skilled jobs based on the innovation that will define this century.

And it is the way we make sure our private sector is not strangled by an ever-expanding state.

According to the OBR’s long-term forecasts for the public finances from the end of this decade, our economy’s long term trend growth rate is 1.6% but public spending – even excluding debt interest – will grow by 2% a year.

So every year, the OBR’s projections suggest that the size of our state will be growing by nearly half a percent more than the size of the economy.

Now we are not the only ones facing this dilemma. OECD projections say Germany, Italy and Japan will have even lower growth over the next 25 years, with France about the same and the US only marginally ahead. Many of those countries have even steeper demographic challenges than we face and all face pressure to increase the burden on taxpayers.

You don’t need brilliant Treasury analysts to tell you the consequence of a state growing faster than the economy: higher borrowing, higher taxes or a combination of the two.

The OBR’s analysis suggests that without any action, the result of these demographic pressures could be a public sector debt of 217% of GDP by 2071, more than double the current proportion.

I think it is wrong – morally and economically – to pass on that level of debt to future generations.

Others might look to tax as the solution to this problem.

But to keep up with projected spending pressures that would mean increasing annual tax revenues by £200 billion by 2071 in today’s money, or to think of it more simply at least doubling the basic rate of income tax and main rate of employee National Insurance.

I reject that prospect, because that is the path to socialism: less freedom, less enterprise and less prosperity.

But to borrow an extra £28 billion would have exactly the same impact.

Higher inflation would lead to higher interest rates and higher debt repayments.

Rachel Reeves herself said such an approach would spook the markets.

It would be an illusory dash for growth which would increase the burden on taxpayers, shake confidence in the UK and pass on unsustainable debt to future generations.

So we need to find a smarter way out of the challenge faced by so many advanced economies.

Tackling inflation relentlessly must be the immediate priority. High growth needs businesses and investment and consumer confidence, none of those are possible with inflation.

High growth needs low inflation.

But tackling inflation is the starting point not the end point.

Higher living standards means growth in GDP per head, not just growth in GDP. That means growth driven by increases in productivity.

If we were as productive as Germany, our GDP per head would be £6,000 higher per annum. If it reached US levels, it would be £8,000 a year higher.

In my Bloomberg speech in January I identified the four pillars necessary to achieve productivity-rich growth. I called them the four ‘E’s: Education, Enterprise, Employment and Everywhere. Education, so we tap into people’s talents by investing more in skills; building an Enterprise economy by reducing the burden of tax and regulation; removing the barriers to Employment so businesses can recruit; and spreading growth Everywhere so all parts of the country are levelled up.

Now the productivity challenge applies to both the public and the private sector.

If we increase our productivity growth in the public sector by 0.5% a year, we stabilise the proportion of GDP consumed by the state by closing the gap between anticipated growth and anticipated spending up to 2050.[1]

And if we replicate that productivity growth in the private sector we start to increase living standards as well.

That would mean a boost not just to GDP, but GDP per capita. It would mean increasing tax revenues without increasing tax rates.

And it would put us on a sustainable path to lower taxes.

It is also the route through which union reforms, privatisations and support for competition delivered lasting growth and productivity.

Public sector productivity

Let’s start with the public sector. It is the sector over which governments have the most direct control – and that matters because, excluding benefit system transfers, it accounts for about 20% of our national output.

The long-term pressures, whether an ageing population or the need for stronger armed forces, won’t change.

But the way we meet those pressures can change. We can be much, much more efficient.

We start, I am afraid to say from a low base. Public sector output is 5.7% lower than pre-pandemic compared to private sector output which is 1.3% higher.

What does that tell you? Our innovators, job creators, entrepreneurs and risk takers have bounced back but the public sector is still feelings the effects of a once-in-a-lifetime pandemic.

But now, with that pandemic behind us, we need a renewed focus on public sector reform.

Patricia Hewitt’s review into how we significantly reduce the number of top down-targets in the NHS made a series of recommendations to help empower local leaders, something I am pleased the NHS has already started to take forward.

A recent review by the National Police Chiefs’ Council (NPCC) has already identified that 443,000 officer hours are spent filling in forms and dealing with unnecessary administrative tasks.

And it was recently highlighted that 10,000 public sector workers are focused predominantly on equality, diversity and inclusion initiatives, with nearly 800 of those in local councils alone.

Breaking down barriers for disadvantaged groups should be everyone’s responsibility not something you tick a box to achieve at further cost to taxpayers.

So I have asked John Glen, the Chief Secretary to the Treasury, to lead a major public sector productivity programme across all government departments which we will report on in the Autumn.

He will assess how we can increase public sector productivity growth, both in the short and long term, and look at what it would take to deliver that additional 0.5% every year that would stop the state growing ever bigger as a proportion of our output.

We also need to be better at measuring productivity.

The UK is one of the few countries to include public sector output measures as well as input data in its productivity statistics, which is a good start. But we can still do better.

Crime, for example, is down approximately 50% since 2010, great achievement. That excluded fraud and computer misuse (which wasn’t measured then.) But it barely makes a dent on their policing productivity figures because our productivity figures don’t capture crime outcomes.

Likewise on defence we measure what we spend, but not how safe that makes us.

And where we do measure outputs and the quality of delivery, mainly in the NHS, we count the number of hospital treatments but not the value of preventative care, even though that saves lives and reduces cost.

So I have asked the National Statistician to review how we can improve the way we measure public sector productivity which he has agreed to do.

I want this to be the most ambitious public sector productivity review ever undertaken by a government, with the Treasury acting as an enabler of reform. So we will spend time getting this right.

But if we do, the rewards are clear.

More innovation in the NHS, building on the success, for example, of the new surgical hubs that reduce waiting times and will give us 1 million extra procedures by 2024-25.

More innovation in our education system, building on the success of places like Oak Academy which has helped deliver over 150 million online classes.

And more innovation across our public services by harnessing the potential of AI to boost public sector productivity, building on cutting edge initiatives like the NHS AI lab and the Foundational Model Taskforce.

More innovation. Better public services. Less pressure on the public purse. A growth mindset that delivers more for less not just more for more.

Private sector productivity

Nor will we limit our ambitions to public sector productivity. When it comes to the private sector we can only enable reform rather than direct it, but we will play our part.

That’s why in my Bloomberg speech I announced the four pillars of our productivity plan: Education, Enterprise, Employment and Everywhere.

On education we have a huge skills programme in place already, including an expansion of apprenticeships, T levels and boot camps. Sir Michael Barber is advising me and the Education Secretary of where we need to go even further on the implementation of our reform programme.

For an enterprise economy we need more business investment, so we introduced full expensing of capital allowances in the budget, long championed by the CPS and making us the only major European country to do so. We are following this up by looking closely at the way our pension funds operate to consider avenues for reform.

On employment we know businesses need to be able to recruit the labour they need. So in the budget we set out one of the most comprehensive ever plans to address labour shortages including cutting the cost of childcare by up to 60% for many families and abolishing the lifetime allowance on pensions.

Finally to make sure we level up the benefits of growth to everywhere in the UK, we are launching 12 investment zones in left-behind areas, mini-Canary Wharfs which will bring clusters of fastest growing industries to areas where they are most needed.

It has long been thought that emerging economies should be investment-led but advanced economies consumption-led. But if we are to emerge from the low growth trap facing Western economies we should re-examine that orthodoxy because increasing investment is one of the biggest ways we can raise productivity in both the public and private sectors.

Conclusion

So I finish where I started: meeting Rob’s challenge to explain to the country why growth is so important.

Growth gives hope to young people about their prospects.

It gives security to older people about the public services they need.

It gives reassurance to taxpayers about the burden they are being asked to bear.

But it needs productivity. A relentless focus on efficiency and innovation across both the public and private sectors.

A dynamic, high growth future is ours for the taking – and productivity will be at the heart of it.

Thank you.

The comments made by Jeremy Hunt, the Chancellor of the Exchequer, on 23 May 2023.

The speech made by Jeremy Hunt, the Chancellor of the Exchequer, in the House of Commons on 15 March 2023.

Madam Deputy Speaker, in the face of enormous challenges I report today on a British economy which is proving the doubters wrong.

In the autumn we took difficult decisions to deliver stability and sound money.

Since mid-October, 10-year gilt rates have fallen, debt servicing costs are down, mortgage rates are lower and inflation has peaked.

The International Monetary Fund says our approach means the UK economy is on the right track.

But we remain vigilant, and will not hesitate to take whatever steps are necessary for economic stability.

Today the Office for Budget Responsibility forecast that because of changing international factors and the measures I take, the UK will not now enter a technical recession this year.

They forecast we will meet the Prime Minister’s priorities to halve inflation, reduce debt and get the economy growing.

We are following the plan and the plan is working.

But that’s not all we’ve done.

In the face of a cost-of-living crisis we have demonstrated our values by protecting struggling families with a £2,500 Energy Price Guarantee, one-off support and the uprating of benefits with inflation.

Taken together, these measures are worth £94 bn over this year and next – one of the largest support packages in Europe.

That averages over £3,300 of cost-of-living help for every household in the country.

Today, we deliver the next part of our plan.

A budget for growth.

Not just the growth that comes when you emerge from a downturn.

But long term, sustainable, healthy growth that pays for our NHS and schools, finds jobs for young people, and provides a safety net for older people all whilst making our country one of the most prosperous in the world.

Prosperity with a purpose.

That’s why growth is one of the Prime Minister’s five priorities for our country.

I deliver that today …

…by removing obstacles that stop businesses investing;

…by tackling labour shortages that stop them recruiting;

…by breaking down barriers that stop people working;

…and by harnessing British ingenuity to make us a science and technology superpower.

Meeting the Prime Minister’s priorities

I start with the forecasts produced by Richard Hughes and his team at the independent Office for Budget Responsibility whom I thank for their diligent work.

They have looked in detail at the Prime Minister’s economic priorities.

Halving inflation

The first of those is to halve inflation.

Inflation destroys the value of hard-earned pay, deters investment and foments industrial strife.

This government remains steadfast in its support for the independent Monetary Policy Committee at the Bank of England as it takes action to return inflation to the 2% target.

Despite continuing global instability, the OBR report today that inflation in the UK will fall from 10.7% in the final quarter of last year to 2.9% by the end of 2023.

That is more than halving inflation.

High inflation is the root cause of the strikes we have seen in recent months.

We will continue to work hard to settle these disputes but only in a way that does not fuel inflation.

Part of the fall in inflation predicted by the OBR happens because of additional measures I take today.

Firstly, I recognise that even though wholesale energy prices have been falling, there is still enormous pressure on family finances.

Some people remain in real distress and we should always stand ready to help where we can.

So after listening to representations from Martin Lewis and other experts, I today confirm that the Energy Price Guarantee will remain at £2,500 for the next three months.

This means the £2,500 cap for the typical household will remain in place when energy prices remain high, ahead of an expected fall in prices from July.

This measure will save the average family a further £160 on top of the energy support measures already announced.

The second measure concerns over four million households on prepayment meters.

They are often the poorest households, but they currently pay more than comparable customers on direct debit. Ofgem has already agreed with suppliers a temporary suspension to forced installations of prepayment meters.

But today I go further, and confirm we will bring their charges in line with comparable direct debit charges. The energy premium paid by our poorest households is coming to an end.

Next I have listened to representations from the hon members for East Devon, North Cornwall, Colne Valley and Central Suffolk and North Ipswich about the risk to community facilities, especially swimming pools, caused by high costs. When times are tough, such facilities matter even more.

So today I am providing a £63m fund to keep our public leisure centres and pools afloat.

I have also heard from my RHF the charities minister and his Secretary of State about the brilliant work third sector organisations are doing to help people struggling in tough times.

They can often reach people in need that central or local government cannot, so I will give his department £100m to support thousands of local charities and community organisations do their fantastic work.

I also note the personal courage of one of my predecessors, my RHF from Bromsgrove, in talking about the tragedy of suicide and the importance of preventing it.

We already invest a lot in this area, but I will assign an extra £10m over the next two years to help the voluntary sector play an even bigger role in stopping more families experiencing such intolerable heartache.

My penultimate cost of living measure concerns one of our other most treasured community institutions, the great British pub.

In December, I extended the alcohol duty freeze until 1 August, after which duties will go up in line with inflation in the usual way.

But today, I will do something that was not possible when we were in the EU and significantly increase the generosity of Draught Relief, so that from 1 August the duty on draught products in pubs will be up to 11p lower than the duty in supermarkets, a differential we will maintain as part of a new Brexit pubs guarantee.

Madam Deputy Speaker, British ale may be warm, but the duty on a pint is frozen.

And even better, thanks to the Windsor Framework negotiated by my RHF the Prime Minister, that change will now also apply to every pub in Northern Ireland.

Finally, I have heard the representations from the Honourable Member from Stoke on Trent North, my Rt Hon Friend for Witham and my Rt Hon Friend from South Thanet and the Sun newspaper about the impact on motorists of the planned 11p rise in fuel duty.

Because inflation remains high, I have decided now is not the right time to uprate fuel duty with inflation or increase the duty.

So here’s what I am going to do: for a further 12 months I’m going to maintain the 5p cut … and I’m going to freeze fuel duty too.

That saves the average driver £100 next year and around £200 since the 5p cut was introduced.

Our Energy Price Guarantee, fuel duty and duty on a pint – all frozen in today’s budget.

Something that doesn’t just help families, it helps the economy too because their combined impact reduces CPI inflation by nearly ¾% this year, lowering inflation when it is particularly high.

Reducing debt

I now turn to the Prime Minister’s second priority, which is to reduce debt.

Here too our plan is on track.

Underlying debt is forecast to be 92.4% of GDP next year, 93.7% in 2024-25; 94.6% in 2025-26, and 94.8% in 2026-27, before falling to 94.6% in 2027-28.

We are meeting the debt priority.

And with a buffer of £6.5bn, it means we are meeting our fiscal rule to have debt falling as a percentage of GDP by the fifth year of the forecast.

As a proportion of GDP our debt remains lower than the USA, Canada, France, Italy and Japan.

And because of the decisions I take today, and the improved outlook for the public finances, underlying debt in five years’ time is now forecast to be nearly three percentage points lower than it was in the Autumn.

That means more money for our public services and a lower burden on future generations – deeply-held values which we put into practice today.

At the Autumn Statement I also announced that public sector net borrowing must be below 3% of GDP over the same period.

The OBR confirm today that we are meeting that rule with a buffer of £39.2 bn.

In fact our deficit falls in every single year of the forecast, with borrowing falling from 5.1% of GDP in 2023-24, to 3.2% in 2024-25, 2.8% in 2025-26, 2.2% in 2026-27 and 1.7% in 2027-28.

Even better in the final two years of the forecast our current budget is in surplus, meaning we only borrow for investment and not for day-to-day spending.

Day to day departmental spending will grow at 1% a year on average in real terms after 2024-25 until the end of the forecast period, and capital plans are maintained at the same level set at Autumn Statement.

We will uprate tobacco duty, and we will freeze the gross gaming duty yield bands. We are also maintaining the starting rate for savings and the ISA subscription limits, and we will bring forward a range of measures to tackle promoters of tax avoidance schemes.

But Madam Deputy Speaker, taken together today’s measures lead to a slightly lower overall tax burden for the rest of the parliament compared to the OBR’s Autumn forecast.

We are reducing borrowing and improving our public finances.

By doing so we make sure we are on track to…

… halve inflation

… get debt falling

…and grow our economy, which I turn to next.

Growth

Growth is the Prime Minister’s third priority and the focus of today’s budget.

13 years ago, we inherited an economy that had crashed.

But since 2010 we’ve grown more than major countries like France, Italy or Japan and about the same as Europe’s largest economy Germany.

We’ve halved unemployment…

… cut inequality

…and reduced the number of workless households by one million.

For the first time ever, because of the rises in tax thresholds made by successive Chancellors people in our country can earn £1,000 a month without paying a penny of tax or national insurance.

Those tax reductions have helped lift 2 million people out of absolute poverty, after housing costs, including 400,000 pensioners and 500,000 children.

That averages 80 pensioners and 100 children lifted out of poverty for every single day we’ve been in office.

Today we face the future with extraordinary potential.

The World Bank said that out of all big European countries, we are the best place to do business.

Global chief executives say that apart from America and China, we are the best country to invest in.

We became the second country in the world to have a stock of foreign direct investment worth 2 trillion dollars.

And London has just pipped New York and 53 other global cities to be the best place in the world for female entrepreneurs.

Declinists are wrong about our country for another reason, which is our newfound strength in the innovation industries that will shape this century.

Over the last 13 years we have become the world’s third trillion-dollar tech economy after the US and China.

We have built the largest life sciences sector in Europe, producing a Covid vaccine that saved six million lives and a treatment that saved a million more.

Our film and TV industry has become Europe’s largest, with our creative industries growing at twice the rate of the economy.

Our advanced manufacturing industries produce around half the world’s large civil aircraft wings.

And thanks to a clean energy miracle we have become a world leader in offshore wind.

Other parties talk about a green energy revolution, so I gently remind them that nearly 90% of our solar power was installed in the last 13 years – showing it’s this Government who fix the roof while the sun is shining.

Let’s turn now to what the OBR say about our growth prospects.

In November, they expected that the UK economy would enter recession in 2022 and contract by 1.4% in 2023.

That left many families feeling concerned about the future.

But today, the OBR forecast we will not enter a recession at all this year with a contraction of just 0.2%.

And after this year the UK economy will grow in every single year of the forecast period: by 1.8% in 2024; 2.5% in 2025; 2.1% in 2026; and 1.9% in 2027.

They also expect the unemployment rate to rise by less than one percentage point to 4.4%, with 170,000 fewer people out of work compared to their Autumn forecast.

Defence

Madam Deputy Speaker, that return to growth has direct consequences for our role on the global stage.

I am proud we are giving the brave people of Ukraine more military support than anyone else in Europe.

On Monday we were able to go further with my RHF the Prime Minister announcing a £5bn package of funding for the Ministry of Defence, an additional £2bn next year and £3bn the year after.

Today, following representations from our persuasive Defence Secretary, I confirm that we will add a total of £11 bn to our defence budget over the next five years and it will be nearly 2.25% of GDP by 2025.

We were the first large European country to commit to 2% of GDP for defence and will raise that to 2.5% as soon as fiscal and economic circumstances allow.

Following representations from my RHF the Minister for Veterans Affairs, I am today also increasing support for our brave ex-servicemen and women.

We will provide a package worth over £30m to increase the capacity of the Office for Veterans’ Affairs, support veterans with injuries returning from their service and increase the availability of veteran housing.

But to be Europe’s biggest defender of democracy, we must build Europe’s most dynamic economy.

That means tackling our longstanding productivity issues including two in particular which I address today: lower business investment and higher economic inactivity than other similar countries.

Too often companies struggle to recruit and even when they do, output per employee is lower.

So today I set out the four pillars of our industrial strategy to address these issues.

Colleagues will know from my Bloomberg speech, they all start with the letter ‘E’: Enterprise, Employment, Education and Everywhere.

I start with ‘Everywhere’, our measures to level up growth across the UK.

Everywhere

This government was elected on a mandate to level up.

We have already allocated nearly £4bn in over 200 projects across the country through the first two rounds of the Levelling Up Fund. A third round will follow.

Since we started focusing on levelling up, 70% of the growth in salaried jobs has come from outside London and the South-East.

Today we take further steps.

Investment Zones

Canary Wharf and the Liverpool Docks were two outstanding regeneration projects.

I pay tribute to Lord Heseltine for making them happen because they transformed the lives of thousands of people. They showed what’s possible when entrepreneurs, government and local communities come together.

So today I announce that we will deliver 12 new Investment Zones, 12 potential Canary Wharfs.

In England we have identified the following areas as having the potential to host one: West Midlands, Greater Manchester, the North-East, South Yorkshire, West Yorkshire, East Midlands, Teesside and, once again, Liverpool. There will also be at least one in each of Scotland, Wales and Northern Ireland.

To be chosen, each area must identify a location where they can offer a bold and imaginative partnership between local government and a university or research institute in a way that catalyses new innovation clusters.

If the application is successful, they will have access to £80m of support for a range of interventions including skills, infrastructure, tax reliefs and business rates retention.

Local investment

Working together with our formidable Levelling Up Secretary, I also want to give some further support to levelling up areas under the ‘E’ of everywhere.

First, I will invest over £200m in high quality local regeneration projects across England including the regeneration of Tipton town centre and the Marsden New Mills Redevelopment Scheme.

I am also announcing a further £161m for regeneration projects in Mayoral Combined Authorities and the Greater London Authority.

And I will make over £400m available for new Levelling Up Partnerships in areas that include Redcar and Cleveland, Blackburn, Oldham, Rochdale, Mansfield, South Tyneside, and Bassetlaw.

Having listened to the case for better local transport infrastructure from many hon members, I can announce a second round of the City Region Sustainable Transport Settlements, allocating £8.8 billion over the next five-year funding period.

And following a wet and then cold winter, I also received particularly strong representations from my hon friends from North Devon, South-West Devon and Newton Abbot as well as councillor Peter Martin from my own constituency about the curse of potholes.

The Spending Review allocated £500m every year to the Potholes Fund but today I have decided to increase that fund by a further £200m next year to help local communities tackle this problem.

For Scotland, Wales and Northern Ireland this Budget delivers not only a new Investment Zone but an additional £320m for the Scottish Government, £180m for the Welsh Government and £130m for the Northern Ireland Executive as a result of Barnett consequentials.

On top of which in Scotland, I can announce up to £8.6m of targeted funding for the Edinburgh Festivals as well as £1.5m funding to repair the Cloddach Bridge.

I will provide £20m of funding for the Welsh Government to restore the Holyhead Breakwater and, in Northern Ireland, I am allocating up to £3m to extend the Tackling Paramilitarism Programme and up to £40m to extend further and higher education participation.

Local leadership

But Madam Deputy Speaker, for levelling up to truly succeed we need to unleash the civic entrepreneurship that is only possible when elected local leaders are able to fund and deliver solutions to their own challenges.

That means giving them responsibility for local economic growth and the benefit from the upside when it happens.

So the government will consult on transferring responsibilities for local economic development currently delivered by Local Enterprise Partnerships to support local economic development to local authorities from April 2024.

I will also boost Mayors’ financial autonomy by agreeing multi-year single settlements for the West Midlands and the Greater Combined Manchester Authority at the next spending review, something I intend to roll out for all Mayoral areas over time.

I have also agreed a new long-term commitment so that they can retain 100% of their business rates, something I also hope to expand to other areas over time.

Investment zones, regeneration projects, levelling up partnerships, local transport infrastructure and business rates retention…more control for local communities over their economic destiny so we will level up wealth generation and opportunity everywhere.

Enterprise

Today’s budget is about the Prime Minister’s promise to grow the economy.

We’ve talked about making that growth happen everywhere, so I now move on to my second ‘e’. Enterprise.

We need to be Europe’s most dynamic enterprise economy.

And under this government that is exactly what’s been happening.

Since 2010 we have one million more businesses in the UK, a bigger increase than in Germany, France or Italy.

But I want another million and another million after that.

So today I bring forward enterprise measures in these threeareas: to lower business taxes, reduce energy costs and support our growth industries.

Business taxes

Let’s start with business taxation.

We know the importance of a competitive tax regime. We already have lower levels of business taxation than France, Germany, Italy or Japan.

But I want us to have the most pro-business pro-enterprise tax regime anywhere.

Even after the corporation tax rise this April, we will have the lowest headline rate in the G7.

Only 10% of companies will pay the full 25% rate.

But even at 19% our corporation tax regime did not incentivise investment as effectively as countries with higher headline rates.

The result is less capital investment and lower productivity than countries like France and Germany.

We have already taken measures to address this.

For larger businesses we have had the super deduction, introduced by my RHF the Prime Minister, which ends this month.

For smaller businesses we have increased the Annual Investment Allowance to £1m, meaning 99% of all businesses can deduct the full value of all their investment from that year’s taxable profits.

If the super deduction was allowed to end without a replacement, we would have fallen down the international league tables for tax competitiveness and damaged growth.

I could not allow that to happen.

So today, I can announce that we will introduce a new policy of “full expensing” for the next three years, with an intention to make it permanent as soon as we can responsibly do so.

That means that every single pound a company invests in IT equipment, plant or machinery can be deducted in full and immediately from taxable profits.

It is a corporation tax cut worth an average of £9 bn a year for every year it is in place.

And its impact on our economy will be huge. The OBR says it will increase business investment by 3% for every year it is in place.

This decision makes us the only major European country with full expensing…

…and gives us the joint most generous capital allowance regime of any advanced economy.

Madam Deputy Speaker, I also want to make our taxes more competitive in our life science and creative industry sectors.

In the Autumn, I said I would return with a more robust R & D tax credit scheme for smaller research-intensive companies.

So today, I am introducing an enhanced credit which means that if a qualifying small or medium-sized business spends 40% or more of their total expenditure on R & D, they will be able to claim a credit worth £27 for every £100 they spend.

That means an eligible cancer drug company spending £2 million on research and development will receive over £500,000 to help them develop breakthrough treatments.

It is a £1.8 billion package of support helping 20,000 cutting edge companies who day by day are turning Britain into a science superpower.

This government’s audio-visual tax reliefs have helped make our film and TV industry the biggest in Europe. Only last month, Pinewood announced an expansion which will bring another 8,000 jobs to the UK.

To give even more momentum to this critical sector I will introduce an expenditure credit with a rate of 34% for film, high end television and video games and 39% for the animation and children’s TV sectors. I will maintain the qualifying threshold for high-end television at £1 million.

And because our theatres, orchestras and museums do such a brilliant job at attracting tourists to London and the UK, I will also extend for another two years their current 45% and 50% reliefs.

Energy

Madam Deputy Speaker, an enterprise economy needs low taxes. But it also needs cheap and reliable energy.

We have already announced billions of support to help businesses reduce their energy bills through the Energy Bills Relief Scheme and the Energy Bills Discount Scheme.

We have appointed Dame Alison Rose, Chief Executive of NatWest, to co-Chair our national energy efficiency taskforce and help deliver our national ambition to reduce energy use by 15%.

To support her efforts, I will extend the Climate Change Agreement scheme for two years to allow eligible businesses £600 million of tax relief on energy efficiency measures.

But the long-term solution is not subsidy but security.

That means investing in domestic sources of energy that fall outside Putin or any autocrat’s control.

We are world leaders in renewable energy so today I want to develop another plank of our green economy, Carbon Capture Usage and Storage.

I am allocating up to £20 billion of support for the early development of CCUS, starting with projects from our East Coast to Merseyside to North Wales – paving the way for CCUS everywhere across the UK as we approach 2050.

This will support up to 50,000 jobs, attract private sector investment and help capture 20-30 million tonnes of CO2 per year by 2030.

We have increased the proportion of electricity generated from renewables from under 10% to nearly 40%.

But because the wind doesn’t always blow and the sun doesn’t always shine, we will need another critical source of cheap and reliable energy.

And that is nuclear.

There have been no more powerful advocates for this than the hon members for Ynys Mon, Copeland, Hartlepool and Workington.

They rightly say that increasing nuclear capacity is vital to meet our Net Zero obligations.

So to encourage the private sector investment into our nuclear programme, I today confirm that subject to consultation nuclear power will be classed as “environmentally sustainable” in our green taxonomy, giving it access to the same investment incentives as renewable energy.

Alongside that will come more public investment.

In the Autumn Statement, I announced the first state-financed investment in nuclear for a generation, a £700 million investment in Sizewell C.

Today I can announce two further commitments to deliver our nuclear ambitions.

Firstly, following representations from our energetic Energy Security Secretary I am announcing the launch of Great British Nuclear which will bring down costs and provide opportunities across the nuclear supply chain to help provide up to one quarter of our electricity by 2050.

And secondly, I am launching the first competition for Small Modular Reactors. It will be completed by the end of this year and if demonstrated as viable we will co-fund this exciting new technology.

Boosting innovation

Finally under the ‘e’ of Enterprise I come to our innovation economy, a central area of national competitive advantage for the United Kingdom.

Over the weekend, I worked night and day with the Prime Minister and the Governor of the Bank of England to protect the deposits of thousands of our most cutting-edge companies.

We successfully secured the sale of the UK arm of Silicon Valley Bank to HSBC, so the future of those companies is now safe in the hands of one of Europe’s biggest and most creditworthy banks.

But those events show that we need to build a larger, more diverse financing system, where the benefits of investment in high growth firms are available to more investors.

So I will return in the Autumn Statement with a plan to deliver that. It will include measures to unlock productive investment from defined contribution pension funds and other sources, make the London Stock Exchange a more attractive place to list, and complete our response to the challenges created by the US Inflation Reduction Act.

However when it comes to our innovation industries, there are two areas I want to make progress on today.

Nigel Lawson made the City of London one of the world’s top financial centres by competitive deregulation.

With our Brexit autonomy, we can do the same for our high growth sectors.

So today I want to reform the regulations around medicines and medical technologies.

We are lucky with the MHRA to have one of the most respected drugs regulators in the world, indeed the very first to licence a Covid vaccine.

From 2024, they will move to a different model which will allow rapid, often near automatic sign-off for medicines and technologies already approved by trusted regulators in other parts of the world such as the United States, Europe or Japan.

At the same time from next year they will set up a swift new approval process for the most cutting-edge medicines and devices to ensure the UK becomes a global centre for their development.

And with an extra £10m of funding over the next two years they will put in place the quickest, simplest, regulatory approval in the world for companies seeking rapid market access.

We are proud of our life sciences sector which received more inward investment than any in Europe last year.

Today’s change will make the UK an even more exciting place to invest – as well as speeding up access for NHS patients to the very newest drugs.

Today together with our talented Science, Innovation and Technology Secretary, I also take measures to strengthen our position in artificial intelligence, where the UK hosts one third of all European companies.

I am accepting all nine of the digital technology recommendations made by Sir Patrick Vallance in the review I asked him to do in the Autumn Statement.

That means I can report to the House that we will:

…launch an AI sandbox to trial new, faster approaches to help innovators get cutting edge products to market;

…work at pace with the Intellectual Property Office to provide clarity on IP rules so Generative AI companies can access the material they need;

……and ask Sir Patrick’s successor, Dame Professor Angela McLean, to report before the summer on options around the Growth Duty for regulators.

Because AI needs computing horsepower, I today commit around £900m of funding to implement the recommendations in the independent Future of Compute Review for an Exascale supercomputer.

The power that AI’s complex algorithms need can also be provided by quantum computing.

So today we publish a quantum strategy which will set our vision to be a world leading quantum enabled economy by 2033 with a research and innovation programme totalling £2.5 billion.

I also want to encourage the best AI research to happen in the UK so will award a prize of £1m every year, for the next ten years, to the person or team that does the most ground-breaking British AI research.

The world’s first stored-programme computer was built at the University of Manchester in 1948, and was known as the “Manchester baby”.

75 years on, the baby has grown up, so I will call this new national AI award “the Manchester Prize” in its honour.

Madam Deputy Speaker we want the UK to be the best place in Europe for companies to locate, invest and grow so today’s enterprise measures strengthen our technology and life science sectors, invest in energy security and for three years – but I hope permanently – cut corporation tax by £9 bn a year to give us the best investment incentives of any advanced economy.

Employment

An enterprise economy can only grow if it can hire the people it needs, which brings me to my third pillar after ‘Everywhere’ and ‘Enterprise’, the ‘E’ of Employment.

Brexit was a decision by the British people to change our economic model.

In that historic vote, our country decided to move from a model based on unlimited low skill migration to one based on high wages and high skills.

Today we show how we will deliver that with a major set of reforms. The OBR say it is the biggest positive supply side intervention they have ever recognised in their forecast.

We have around one million vacancies in the economy…

… but excluding students there are over seven million adults of working age who are not in work.

That is a potential pool of seven people for every vacancy. We believe work is a virtue.

We agree with the road haulage king Eddie Stobart who said: ‘the only place success comes before work is the dictionary.’

So today, I bring forward reforms to remove the barriers that stop people who want to from working. I start with over 2 million people who are inactive due to a disability or long-term sickness.

Long term sick and disabled

Thanks to the reforms courageously introduced by the Rt Hon Member for Chingford and Woodford Green, the number of disabled people in work has risen by two million since 2013.

But even after that we could fill half the vacancies in the economy with people who say they would like to work despite being inactive due to sickness or disability.

With Zoom, Teams and new working models that make it easier to work from home this is more possible than ever before.

So for that reason, the ever-diligent Work and Pensions Secretary, today takes the next step in his ground-breaking work on tackling economic inactivity.

I thank him for that, and today we publish a White Paper on disability benefits reform.

It is the biggest change to our welfare system in a decade.

His plans will abolish the Work Capability Assessment in Great Britain and separate benefit entitlement from an individual’s ability to work. As a result, disabled benefit claimants will always be able to seek work without fear of losing financial support.

Today I am going further by announcing that in England and Wales, after listening to representations from the Centre for Social Justice and others, we will fund a new programme called Universal Support.

This is a new, voluntary employment scheme for disabled people where the government will spend up to £4,000 per person to help them find appropriate jobs and put in place the support they need. It will fund 50,000 places every single year.

We also want to help those who are forced to leave work because of a health condition such as back pain or a mental health issue.

We should give them support before they end up leaving their job, so I am also announcing a £400m plan to increase the availability of mental health and musculoskeletal resources and expand the Individual Placement and Support scheme.

And because occupational health provided by employers has a key role to play, I will also bring forward two new consultations on how to improve its availability and double the funding for the small company subsidy pilot.

Young people in care

There is another group that deserves particular attention, which is children in care. They too should be given all possible help to make a normal working life possible when they reach adulthood.

Often, they depend on foster families who do a brilliant job, so I am today nearly doubling the Qualifying Care Relief threshold to £18,140 which will give a tax cut to a qualifying carer worth an average of £450 a year.

I will also increase the funding we provide to the Staying Close programme by 50% to help more care leavers into employment.

And I will support young people with Special Educational Needs and Disabilities with a £3m pilot expansion of the Department for Education’s Supported Internship programme to help them transition from education into the workplace.

Madam Deputy Speaker, no civilised society can ignore the contribution that can be made by those with challenging family circumstances, a long-term illness or a disability.

So today we remove the barriers we can with reforms that strengthen our society as well as strengthening our economy.

Welfare recipients

The next set of employment reforms affects those on Universal Credit without a health condition who are looking for work or on low earnings.

There are more than 2 million jobseekers in this group, more than enough to fill every single vacancy in the economy.

Independence is always better than dependence, which is why we believe those who can work, should.

So sanctions will be applied more rigorously to those who fail to meet strict work-search requirements or choose not to take up a reasonable job offer.

And for those working low hours, we will increase the Administrative Earnings Threshold from the equivalent of 15 hours to 18 hours at National Living Wage for an individual claimant, meaning that anyone working below this level will receive more work coach support alongside a more intensive conditionality regime.

Older workers including doctors

The next group of workers I want to support are those aged over 50.

My younger officials have termed these people “older workers”, although as a 56-year-old myself I prefer the term “experienced.”

Fully 3.5 million of pre-retirement age over 50 are not part of the labour force, an increase of 320,000 since before the pandemic.

We now have the 23rd highest inactivity rate for over 55s in the OECD.

If we matched the rate of Sweden, we would add more than one million people to our national labour force.

Madam Deputy Speaker, I say this not to flatter you, but older people are the most skilled and experienced people we have.

No country can thrive if it turns its back on such a wealth of talent and ability.

But for too many, turning 50 is a moment of anxiety about the cliff edge of retirement rather than a moment of anticipation about another two decades of fulfilment.

I know this myself from personal experience. After I turned 50, I was relegated to the backbenches and planned for a quiet life. But instead I decided to set an example by embarking on a new career in finance.

So today I take three steps to make it easier for those who wish to work longer to do so.

First, we will increase the number of people who get the best possible financial, health and career guidance ahead of retirement by enhancing the DWP’s excellent “Mid-life MOT” Strategy.

They will also increase by fivefold the number of 50+ Universal Credit claimants who receive mid-life MOTs from 8,000 to 40,000 a year.

Second with my RHF the Education Secretary, we will introduce a new kind of apprenticeship targeted at the over 50s who want to return to work.

They will be called Returnerships, and operate alongside skills boot camps and sector-based work academies.

They will bring together our existing skills programmes to make them more appealing for older workers, focussing on flexibility and previous experience to reduce training length.

Finally, I have listened to the concerns of many senior NHS clinicians who say unpredictable pension tax charges are making them leave the NHS just when they are needed most.

The NHS is our biggest employer, and we will shortly publish the long-term workforce plan I promised in the Autumn Statement.

But ahead of that I do not want any doctor to retire early because of the way pension taxes work.

As Chancellor I have realised the issue goes wider than doctors.

No one should be pushed out of the workforce for tax reasons.

So today I will increase the pensions annual tax-free allowance by 50% from £40,000 to £60,000.

Some have also asked me to increase the Lifetime Allowance from its £1 million limit.

But I have decided not to do that.

Instead I will go further and abolish the Lifetime Allowance altogether.

It’s a pension tax reform that will…

… stop over 80% of NHS doctors from receiving a tax charge.

… incentivise our most experienced and productive workers to stay in work for longer.

… and simplify our tax system, taking thousands of people out of the complexity of pension tax.

Madam Deputy Speaker, a comprehensive plan to remove the barriers to work facing those on benefits, those with health conditions and older workers. That is the ‘e’ of the employment pillar of today’s growth budget.

Education

Which brings me to the final pillar of our growth plan. After Employment, Enterprise and Everywhere I turn to the ‘e’ of Education.

Over more than a decade, this government has driven improvement in our education system.

We have risen by nearly 10 places in the international league tables for English and maths since 2015 alone.

In the Autumn Statement, I built on this progress with an extra £2.3bn annual investment to our schools.

We are reviewing our approach to skills with Sir Michael Barber.

We have set out our plans to transform lifelong learning with a new Lifelong Loan Entitlement…

…and My RHF the PM announced plans to make maths compulsory till 18.

But today I want to address an issue in our education system that is bad for children and damaging for the economy.

It’s an issue that starts even before a child enters the gates of a school.

Today I want to reform our childcare system.

We have the one of the most expensive systems in the world.

Almost half of non-working mothers said they would prefer to work if they could arrange suitable childcare.

For many women, a career break becomes a career end.

Our female participation rate is higher than average for OECD economies, but we trail top performers like Denmark and the Netherlands.

If we matched Dutch levels of participation, there would be more than one million additional women working.

So today I announce a series of reforms to start that journey.

Supply

I begin with the supply of childcare. We have seen a significant decline in childminders over recent years – down 9% in England in just one year.

But childminders are a vital way to deliver affordable and flexible care and we need more of them.

I have listened to representations from my hon friend from Stroud and decided to address this by piloting incentive payments of £600 for childminders who sign up to the profession, rising to £1,200 for those who join through an agency.

I have also heard many concerns about cost pressures facing the sector.

We know this is making it hard to hire staff and raising prices for parents, with around two thirds of childcare providers increasing fees last year alone.

So we will increase the funding paid to nurseries providing free childcare under the hours offer by £204m from this September rising to £288m next year.

This is an average of a 30% increase in the two-year-old rate this year, just as the sector has requested.

I will also offer providers more flexibility in how they operate in line with other parts of the UK. So alongside that additional funding, we will change minimum staff-to-child ratios from 1:4 to 1:5 for two-year-olds in England as happens in Scotland, although the new ratios will remain optional with no obligation on either childminders or parents to adopt them.

UC claimants

I want to help the 700,000 parents on universal credit who, until the reforms I announced today had limited requirements to look for work. Many remain out of work because they cannot afford the upfront payment necessary to access subsidised childcare.

So for any parents who are moving into work or wants to increase their hours, we will pay their childcare costs upfront.

And we will increase the maximum they can claim to £951 for one child and £1,630 for two children, an increase of almost 50%.

School age children

I turn now to parents of school age children, who often face barriers to working because of the limited availability of wraparound care.

One third of primary schools do not offer childcare at both ends of the school day, even though for many people a job requires availability throughout the working day.

To address this, we will fund schools and local authorities to increase supply of wraparound care so all school-age parents can drop their children off between 8 am and 6 pm.

Our ambition is that all schools will start to offer a wraparound offer, either on their own or in partnership with other schools, by September 2026.

Pre-school children

Madam Deputy Speaker, today’s childcare reforms will increase the availability of childcare, reduce costs and increase the number of parents able to use it.

Taken together with earlier reforms, they amount to the most significant improvements to childcare provision in a decade.

But if we really want to remove the barriers to work we need to go further for parents who have a child under 3.

For them childcare remains just too expensive.

In 2010 there was barely any free childcare for under 5s.

The government changed that with free childcare for 3- and 4-year-olds in England.

It was a landmark reform.

But not a complete one.

I don’t want any parent with a child under 5 to be prevented from working, if they want to, because it is damaging to our economy and unfair, mainly to women.

So today I announce that in eligible households where all adults are working at least 16 hours, we will introduce 30 hours of free childcare not just for 3-and-4 year-olds, but for every single child over the age of 9 months.

The 30 hours offer will now start from the moment maternity or paternity leave ends.

It’s a package worth on average £6,500 every year for a family with a two-year-old child using 35 hours of childcare every week…

… and reduces their childcare costs by nearly 60%.

Because it is such a large reform, we will introduce it in stages to ensure there is enough supply in the market.

Working parents of two-year-olds will be able to access 15 hours of free care from April 2024, helping around half a million parents.

From September 2024, that 15 hours will be extended to all children from 9 months up, meaning a total of nearly one million parents will be eligible.

And from September 2025 every single working parent of under 5s will have access to 30 hours free childcare per week.

Today we complete a landmark reform…

…we help the economy

…transform the lives of thousands of women

…and build a childcare system comparable to the best.

A major early years reform for our education system, the ‘E’ of education alongside the three other pillars of our growth plan, enterprise, employment and everywhere.

Madam Deputy Speaker in November we delivered stability.

Today it’s growth.

We tackle the two biggest barriers that stop businesses growing – investment incentives and labour supply.

The best investment incentives in Europe.

The biggest ever employment package.

For disabled people, more help.

For older people, barriers removed.

For families feeling the pinch…

…fuel duty frozen.

…beer duty cut.

…energy bills capped.

And for parents, 30 hours of free childcare for all under 5s.

Today we build for the future with…

…inflation down

…debt falling

…and growth up.

The declinists are wrong, and the optimists are right.

We stick to the plan because the plan is working.

And I commend this statement to the House.

The comments made by Jeremy Hunt, the Chancellor of the Exchequer, on 13 March 2023.

The UK’s tech sector is genuinely world-leading and of huge importance to the British economy, supporting hundreds of thousands of jobs. I said yesterday that we would look after our tech sector, and we have worked urgently to deliver on that promise and find a solution that will provide SVB UK’s customers with confidence.

Today the government and the Bank of England have facilitated a private sale of Silicon Valley Bank UK; this ensures customer deposits are protected and can bank as normal, with no taxpayer support. I am pleased we have reached a resolution in such short order.

HSBC is Europe’s largest bank, and SVB UK customers should feel reassured by the strength, safety and security that brings them.

The speech made by Jeremy Hunt, the Chancellor of the Exchequer, at Bloomberg in London on 27 January 2023.

Good Morning

Thank you for that welcome, thank you all for joining us at Bloomberg.

From the way we communicate and collaborate, to the way we buy and sell goods and services, digital technology has transformed nearly every aspect of our economic lives.

How do I know that?

Because I too, just like Matt asked ChatGPT to craft the the opening lines of this speech.

Who needs politicians when you have AI?

Like other countries, the UK has been dealing with economic headwinds caused by a decade of black swan events: a financial crisis, a pandemic and then an international energy crisis.

And my party understands better than others the importance of low taxes in creating incentives and fostering the animal spirits that spur economic growth.

But another Conservative insight is that risk taking by individuals and businesses can only happen when governments provide economic and financial stability.

So the best tax cut right now is a cut in inflation.

And the plan I set out in the Autumn Statement tackles that root cause of instability in the British economy.

The Prime Minister talked about halving inflation as one of his five key priorities and doing so is the only sustainable way to restore industrial harmony.

But today I want to talk about his second priority, to grow the economy. (In case you weren’t sure, I have them on the screen behind me.)

We want to be one of the most prosperous countries in Europe and today I’m going to outline the 4 pillars of our plan to get there.

Just as our plan to halve inflation requires patience and discipline, so too will our plan for prosperity and growth.

But it’s also going to need something else which is in rather short supply – Optimism, but we can get there.

Just this month columnists from both left and the right have talked about an “existential crisis,” “Britain teetering on the edge” and that “all we can hope for…is that things don’t get worse.”

I welcome the debate – but Chancellors, too, are allowed their say.

And I say simply this: declinism about Britain is just wrong.

It has always been wrong in the past – and it is wrong today.

Some of the gloom is based on statistics that do not reflect the whole picture.

Like every G7 country, our growth was slower in the years after the financial crisis than before it.

But since 2010, the UK has grown faster than France, Japan and Italy. Not at the bottom, but right in the middle of the pack.

Since the Brexit referendum, we have grown at about the same rate as Germany.

Yes we have not yet returned to pre-pandemic employment or output levels.,

But an economy that contracted 20% in a pandemic still has nearly the lowest unemployment for half a century.

And while our public sector continues to recover more slowly than we would like from the pandemic – strengthening the case for reform – our private sector has grown 7.5% in the last year.

Yes inflation has risen – but is still lower than in 14 EU countries, with interest rates rising more slowly than in the US or Canada.

And yes we have to improve our productivity. But output per hour worked is higher than pre-pandemic.

And last week a survey of business leaders by PWC said the UK was the third-most attractive country for CEOs expanding their businesses.

Economists and journalists know you can spend a long time arguing the toss on statistics,

But the strongest grounds for optimism comes not from debating this or that way of analysing data points but from our long term prospects: because when it comes to the innovation industries that will shape and define this century the UK is powerfully positioned to play a leading role.

Let’s just look at some of them.

In digital technology, as we heard from Michelle, we have become only the third economy in the world with a trillion-dollar sector.

We have created more unicorns than France and Germany combined with eight UK cities now home to two or more unicorns.

The London / Oxford / Cambridge triangle has the largest number of tech businesses in the world outside San Francisco and New York.

PWC say that UK GDP will be up to 10% higher in 2030 because of AI alone. Fintech attracted more funding last year than anywhere in the world outside the US.

Or life sciences, where we have the largest sector in Europe. And a brilliant advocate with our superb Science Minister George Freeman.

We produced one of the world’s first Covid vaccines, estimated to have saved more than 6 million lives worldwide.

We identified the treatment most widely used to save lives in hospitals, saving more than a million lives across the globe.

We are behind only the US and China in terms of high-quality life science papers published, and every one of the world’s top 25 biopharmaceutical firms has operations in the UK.

Another big growth area is our green and clean energy sector.

The UK is a world leader here, with the largest offshore wind farm in the world. Last year we were able to generate an incredible 40% of our electricity from renewables. But on one day, a rather windy December 30th, we actually got 60% of our electricity from renewables – mainly wind.

McKinsey estimate that the global market opportunity for UK green industries could be worth more than £1 trillion between now and 2030.

And we are proceeding with the new plant at Sizewell C, led by our excellent Business Secretary who also spoke very wisely and surprisingly classically earlier on.

I could also talk about our creative industries which employ over two million people and grew at twice the rate of the UK economy in the last decade.

They have made the UK the world’s largest exporter of unscripted TV formats and help give us a top three spot in the Portland Soft Power index.

Or our advanced manufacturing sector, key to exports, where we produce around half of the world’s large civil aircraft wings and its biggest aeroengines as well as around half of the world’s Formula One Grand Prix cars.

The golden thread running through the industries where the Britain does best is innovation.

Amongst the world’s largest economies, the Global Innovation Index ranks us fourth globally.

Those innovation industries now account for around a quarter of our output. They have been responsible for nearly all our productivity growth since 1997.

And they’re also the reason that all of you are here.

In the audience we have leaders from Meta, Microsoft, Amazon, Apple and Google, the world’s largest tech companies all with major operations in the UK.

We have Monzo and Revolut, shining examples from our world-beating fintech sector.

And we have founders and CEOs from some of our most exciting UK technology companies, like Proximie and Matillion.

You are all vital for Britain’s economic future, but Britain is vital for your future too.

So I want to ask all of you to help our country achieve something that is both ambitious and strategic.

I want you to ask you to help turn the UK into the world’s next Silicon Valley.

What do I mean by that?

If anyone is thinking of starting or investing in an innovation or technology-centred business, I want them to do it here [in the UK].

I want the world’s tech entrepreneurs, life science innovators, and green tech companies to come to the UK because it offers the best possible place to make their visions happen.

And if you do, we will put at your service not just British ingenuity – but British universities to fuel your innovation, Britain’s financial sector to fund it and a British government that will back you to the hilt.

Our universities are ranked second globally for their quality and include three of the world’s top ten.

In order to support the ground-breaking work they do in so many new fields the government has protected our £20 billion research budget, now at the highest level in history.

And as you look for funding to expand, we offer one of the world’s top two financial hubs and the world’s largest net exporter of financial services.

The capability of the City of London combined with the research strengths of our universities makes our aspiration to be a technology superpower not just ambitious but achievable – and today I am here to say the government is determined to make it happen.

But like any business embracing new opportunities, we should also be straight about our weaknesses.

Structural issues like poor productivity, skills gaps, low business investment and the over-concentration of wealth in the South-East have led to uneven and lower growth. Real incomes have not risen by as much as they could as a result.

Confidence in the future though, starts with honesty about the present.

We want to be one of the most prosperous countries in Europe, so today I set out our plan to address those issues.

That plan, our plan for growth, is necessitated, energised and made possible by Brexit.

The desire to move to a high wage, high skill economy is one shared on all sides of that debate.

And we need to make Brexit a catalyst for the bold choices that we’ll take advantage of the nimbleness and flexibilities that it makes possible.

This is a plan for growth and not a series of measures or announcements, which will have to wait for budgets and autumn statements in the years ahead.

But this plan is a framework against which individual policies will be assessed and taken forward.

I set out that plan, those priorities under four pillars. They build on the “People, Capital, Ideas” themes set out by the Prime Minister last year in his Mais Lecture and as such are the pillars essential for any modern, innovation-led economy.

For ease of memory the 4 pillars all happen to start with the letter ‘E’ . The Four ‘E’s of economic growth and prosperity. And they are Enterprise, Education, Employment and Everywhere.

So let’s start with the first ‘E’ which is enterprise. If we are to be Europe’s most prosperous economy, we need to have quite simply, its most dynamic and productive companies.

There is a wide range of literature citing the importance of entrepreneurship on business dynamism, whereby more productive firms enter and grow and less productive firms shrink.

But I don’t just believe the theory, I have put it into practice.

I set up and ran my own business for 14 years. It was one of the best decisions I ever made – and I actually owe it to Margaret Thatcher and Nigel Lawson.

Because by the time I got to university and was thinking about my career options, they had changed attitudes towards entrepreneurship. Had they not, I would have probably ended up in the City or the Civil Service.

Instead I took a different route to end up at the Treasury – less the Fast Stream, more the Long Way Round.

Like thousands of others setting up on their own, I learned to take calculated risks, live with uncertainty and work through failures (of which there were many).

Every big business was a start-up once – and we will not build the world’s next Silicon Valley unless we nurture battalions of dynamic new challenger businesses.

Today, we are already ranked by the World Bank as the best place to do business amongst large European nations and second only to America in the G7.

And the result of that pro-business climate is that since 2010 we have created more than a million new businesses in this country.

But the question I want to ask is how are we going to generate the next million?

Firstly, we need lower taxes. In Britain, even after recent tax rises, we have one of the lowest levels of business tax as a proportion of GDP amongst major countries.

But we should be explicit: high taxes directly affect the incentives which determine decisions by entrepreneurs, investors or larger companies about whether to pursue their ambitions in Britain.

With volatile markets and high inflation, sound money must come first.

But our ambition should be to have nothing less than the most competitive tax regime of any major country.

That means restraint on spending – and in case anyone is in any doubt about who will actually deliver that restraint to make a lower tax economy possible, I gently point out that in the three weeks since Labour promised no big government chequebook they have made £45 billion of unfunded spending commitments.

But it isn’t just about lower taxes. We also need a more positive attitude to risk taking.

Let’s start with one of the most public risks taken this year. Richard Branson, his team and the UK Space Agency deserve massive credit for getting LauncherOne off the ground in Cornwall.

The mission may not have succeeded this time, but what we learn from it will make future success more likely.

We should heed the words of Thomas Edison who said: “I have not failed 10,000 times – I’ve successfully found 10,000 ways that will not work.”

Edison was American – and our attitude to risk in this country can still be too cautious compared to our US friends.

But we are capable of smart risking in this country: at the start of the pandemic we bought over 350 million doses of vaccine without knowing if they would actually work – and ended up with one of the fastest and most effective vaccine programmes in the world.

We also need, if we are going to deliver those competitive enterprises, smarter regulation.

Brexit is an opportunity not just to change regulations but also to work with our experienced, effective and independent regulators to create an economic environment which is more innovation friendly and more growth focused.

Our Chief Scientific Adviser, Sir Patrick Vallance, is currently reviewing how the UK can better regulate emerging technologies in high growth sectors and the government is identifying where to reform the laws we inherited from the EU.

In the digital space Patrick is working with the brilliant , Matt Clifford – who we heard from earlier- and our amazing Culture Secretary Michelle Donelan, both of whom gave excellent speeches.

Before we conclude those findings, we want to hear from you. That why we’ve invited you this morning – and we will repeat the process for green industries, life sciences, creative industries and advanced manufacturing.

Finally when it comes to the ‘E’ of Enterprise there is a critical need for easier access to capital, particularly scale ups.

I am supporting important changes to the pensions regulatory charge cap and I have used the regulatory flexibility provided by Brexit to change the Solvency II regulations which will begin to be implemented in the coming months.

Alongside other measures announced in the Edinburgh reforms, this could unlock over one hundred billion pounds of additional investment into the UK’s most productive growth industries.

But there is much more to be done and I want to harness the ideas and the expertise in this room to turn the ‘E’ of enterprise into an enterprise culture built on low taxes, reward for risk, access to capital and smarter regulation.

The next ‘E’ is Education.

This is an area where we have made dramatic progress in recent years thanks to the work of successive Conservative education ministers.

The UK has risen nearly 10 places in the global school league tables for maths and reading since 2015 alone.

Our teachers and lecturers are some of the best in the world.

And as the Prime Minister has said, having a good education system is the best economic, moral, and social policy any country can have.

That is why the Autumn Statement we gave schools an extra £2.3 billion of funding and why the Prime Minister recently prioritised the teaching of maths until 18.

But there is much to improve. We don’t do nearly as well for the 50% of school leavers who do not go to university as we do for those who do.

We have around 9 million adults with low basic literacy or numeracy skills, over 100,000 people leaving school every year unable to reach the required standard in English and maths.

That matters.

We are becoming an adaptive economy in which people are likely to have to train for not one but several jobs in their working lives.

Not having basic skills in reading and maths makes that difficult, sometimes impossible.

And equally important is what happens beyond school.

We have made progress with T-levels, boot camps and apprenticeships and Sir Michael Barber is advising the government on further improvements to the implementation of our reform agenda and we want to ensure our young people have the skills they would get in Switzerland or Singapore.

If we want to reduce dependence on migration and become a high skill economy, the ‘E’ of education will be essential – and that means ensuring opportunity is as open to those who do not go to university as to those who do.

So, Silicon Valley enterprises; Finnish and Singaporean education and skills; let me now turn to the third ‘E’ which is Employment.

If companies cannot employ the staff they need, they cannot grow.

High employment levels have long been a strength of our economic model.

Since 2010, the UK has seen a record employment rate, the lowest unemployment rate in nearly fifty years and labour market participation at an all-time high.

Partly thanks to the coalition reforms of a decade ago we are at 76% ,employment levels higher than Canada, the US, France or Italy.

But the pandemic has exposed weaknesses in our model. Total employment is nearly 300,000 people lower than pre-pandemic with around one fifth of working-age adults economically inactive.

Excluding students that amounts to 6.6 million people – an enormous and shocking waste of talent and potential.

Of that 6.6 million people, around 1.4 million people want to work. But a further five million do not.

It is time for a fundamental programme of reforms to support people with long-term conditions or mental illness to overcome the barriers and prejudices that prevent them working.

We will never harness the full potential of our country unless we unlock it for each and every one of our citizens.

Nor will we fix our productivity puzzle unless everyone who can participate does.

So to those who retired early after the pandemic or haven’t found the right role after furlough, I say: ‘Britain needs you’ and we will look at the conditions necessary to make work worth your while.

That is why employment is such a vital third ‘E.’

Enterprise, Education and Employment – three key components for long term prosperity.

I conclude with my final ‘E’ – Everywhere. That means ensuring the benefits of economic development are felt not just in London and the South-East but across the whole of the UK.

It is socially divisive if young people feel the only way to make a decent living is to head south. But it is also economically damaging.

If our second cities were the productive powerhouses we see in the other major countries, our GDP would be nearly 5% higher – making us second only to the United States and Germany for GDP per head.

That is why levelling up matters. And why last week it was so exciting to see the progress being made.

Since February 2020, when the levelling up agenda really got underway ,70% of new employed jobs have been created outside of London and the South-East.

Thanks to our powerhouse regions we remain one of the top 10 manufacturers globally, and the same is starting to happen with new industries: whether fintech in Bristol, gaming in Dundee or clean energy in Teesside.

Every region has seen pay grow faster than London since 2010, which shows that our approach to regional growth is working.

But there is much more to do, and whilst government grants can play a galvanising role they are not the whole answer.

We also need the connectivity that comes from better infrastructure.

That is why in the Autumn Statement we protected key projects like HS2, East West Rail and core Northern Powerhouse Rail.

Digital connectivity matters as well. Under Michelle’s leadership, full-fibre broadband now available to more than 40% of all homes in the UK.

Last year four million more premises got access, with the biggest increases in Scotland and Northern Ireland.

But the ‘E’ of Everywhere has to be about local wealth creation as much as about local infrastructure.

So this year we will announce investment zones, mini-Canary Wharfs, supporting each one of our growth industries, and each one focused in high potential but underperforming areas, in line with our mission to level up.

They will be focused on our research strengths and executed in partnership with local government, with advantageous fiscal treatment to attract new investment.

We will shortly start a process to identify exactly where they will go.

But spreading opportunity everywhere needs local decision making alongside local infrastructure and local enterprise.

So we must also give civic entrepreneurs the ability to find and fund their own solutions without having to bang down a Whitehall door.

Shortly over 50% of the population of England will be covered by a devolution deal and two thirds covered by a unitary authority and that’s a very important part of that.

But we need to move more decisively towards fiscal devolution so that fantastic local leaders like Ben Houchen and Andy Street have the tools they need to deliver for their communities.

Four ‘E’s – Enterprise, Education, Employment and Everywhere – four ‘E’s to unlock our national potential to be one of Europe’s most exciting, most innovative and most prosperous economies.

Bill Gates is supposed to have said people overestimate what they can do in one year and underestimate what they can do in ten.

When it comes to the British economy, we are certainly not going to fall into that trap.

We will remember the essential foundation on which long term prosperity depends, namely the sounds money that comes from bringing down inflation. But right now, starts our longer-term journey into growth and prosperity.

World-beating enterprises to make Britain the world’s next Silicon Valley.

An education system where world-class skills sit alongside world-class degrees.

Employment opportunities that tap into the potential of every single person so businesses can build the motivated teams they need.

And as talent is spread everywhere, so we will make sure opportunities are as well.

Yes there are many structural challenges to address. And working our four pillars we will do just that. Never forgetting though the combination of bold ingenuity and quiet confidence that defines our national character.

Ladies and gentlemen, being a technology entrepreneur changed my life.

Being a technology superpower can change our country’s destiny.

So let’s make it happen.

Thank you very much.