Below is the text of the speech made by Alistair Darling, the then Chancellor of the Exchequer, to the 2008 Labour Party conference on 22nd September 2008.
The true test of mettle comes when life is tough, not easy.
And the economic challenges we have faced in recent months – and recent days – are unprecedented in decades.
These are very uncertain times. But one thing I am certain about is that we have the right Prime Minister, the right team and the right policies to help the country through them.
A Prime Minister with experience and judgement who has helped deliver a decade of rising living standards.
These qualities are going to be needed here and across the world.
These are extraordinary, turbulent times. A crisis which has rocked the financial institutions around the world on top of huge rises in oil, food and commodity prices.
A twin shock to the global economy which has hit every country in the world. A financial system which will never be the same.
And it has left families concerned about their jobs, their houses, and how they are going to meet their household bills.
So I want to use this speech today to explain what is happening and why.
And to set out the steps the Government, at home and with our partners abroad, is taking to help families to guide the global economy into calmer waters.
I also want to offer reassurance.
To explain why, despite the problems facing us now, the strength of our economy and the talent and resilience of this country means we can be confident about the future.
That we are ready to grab the opportunities which globalisation brings as well as cope with its risks.
I will never be complacent. But Britain is in much better shape now than in the past to weather these global storms.
Our economy is strong. We have historically low levels of inflation and high levels of employment.
Achievements which owe a great deal to this party’s vision and values.
Values of fairness, of partnership and a belief in the role of Government which is more important than ever after the events of the last few months.
So I want to explain and re-assure. To be realistic but also optimistic.
Over the last few weeks, we have experienced a period of unprecedented turmoil in the financial markets.
Stock markets have fallen sharply. Some of the world’s biggest financial institutions have been brought to their knees.
If you want one symbol of how the world has changed, it is a Republican Administration in America nationalising two of their biggest mortgage banks.
The reasons for this turmoil are complex.
But they demonstrate the fundamental changes that have taken place in the world economy which sets challenges for all Governments.
Now it’s easy to blame globalisation. But don’t forget, it has brought – and will bring – many benefits. More jobs in this country, cheaper goods in the shops.
As an outward looking trading nation, we’ve benefited more than most.
But with these big benefits come increased risks. Problems in one part of the world can quickly infect everywhere and everything else.
And we’ve seen this, in the past year. Mistakes and problems in the mortgages markets in the United States have spread right across the world, weakening financial institutions and the financial system, spreading into the wider economy.
It’s clear we have to put in place measures to stop problems being repeated. It is clearer than ever that markets can’t do this on their own.
Nor can individual Governments.
In the past it was sufficient to ensure effective domestic regulation.
That’s not enough today.
And we need to strengthen global supervision.
The first priority is to stabilise the banking system. If we don’t the whole world economy is at risk.
At the time of last year’s conference, the credit crunch was already tightening its grip on the world economy.
When I spoke to you, we had already intervened to stop the problems of Northern Rock spreading further and protect savers.
As conditions deteriorated further, we brought Northern Rock into public ownership to help contain problems.
It was controversial at the time and opposed by many. But now it is seen by everyone but the Tories as the right thing to do.
We introduced legislation to make it easier to intervene if other banks got into trouble. Again fought every inch of the way by the Tories.
They may claim to be committed to financial stability but people should be judged on what they do not what they say.
Only last week, George Osborne claimed the causes of the problems were not the financial markets.
That’s come as news to everyone else.
And a year ago, the Tories were calling for complete deregulation of mortgage finance.
When the whole world sees that there must be a role for Government, the Tories still appear to want to walk away.
We believe there is a role for government.
To help stabilise the banking system, we have gone further by authorising the Bank of England to inject in excess of £100 billion.
Essential to enable the banking system to function properly. Essential for our economy, for business, for mortgage payers, for jobs.
All this will take time to work its way through. We are on a difficult road and there will, I am afraid, be bumps along the way.
But I will continue to do whatever it takes to maintain financial stability and I remain confident we will do so.
It is why last week, we acted decisively to help bring together two of the biggest banks in the country.
HBOS and Lloyds TSB – a merged bank which to gether will be stronger.
We changed the competition rules to make the merger possible in the interest of financial stability. Again a difficult decision. But also the right one.
And it was right, too, that we were the first major economy to ban the speculative practice of short selling to help bring calm back to the markets.
Short selling is not the prime cause of the present financial turmoil.
But it has made it far worse in recent weeks by undermining confidence in financial companies.
And working with other countries, we want to improve ways in which credit rating agencies work, ending conflict of interests and opening up the way they work.
We are putting in place, both here in the UK and internationally, the tougher financial regulation no one can doubt we need.
It is why I will introduce a new banking reform bill in the Commons in a fortnight.
Strengthening the supervision of the banking system. Making it easier to intervene if a bank gets into trouble. Giving new powers to the regulators.
We are also going to put in place measures to give added protection to savers.
I have asked the new chairman of the FSA to review urgently what we need to do to improve the system.
And to ensure that we play a full role in international decision making to design and implement more effective prudent system.
It’s not a question of light-touch regulation against heavy-handed regulation. It’s about effective regulation.
I can promise that wherever weaknesses are found in the financial system – whether in the powers of Government, the Bank of England or the FSA, I will take steps to deal with it.
We need to look as well at the culture of huge bonuses which have distorted the way decisions are made.
It’s essential that bonuses don’t result in people being encouraged to take on more and more risk without understanding the damage that might be done, not just to their bank, but to the rest of us in the wider economy.
When I made this point at the TUC, I was accused of pandering to the unions.
This is not an accusation many of you may think is often made against me.
But I don’t think the millions of families or businesses forced to pay more for the loans will think I was pandering.
Bonuses should encourage good long-term decisions, not short-term reckless ones.
But the problems we face are also global – and will require global solutions.
Just as no government on its own can combat global terrorism or tackle climate change, so no Government alone can put in place the right supervisory safeguards in this global economy.
In the next few weeks Gordon and I will be in the US and Europe working with our counterparts to put in place the measures internationally needed to prevent the mistakes and misjudgements which caused this crisis.
The credit crunch, of course, has not been th e only shock to have battered the world economy and hit business and families.
We have also had to contend in this country and around the world with an extraordinary surge in food, oil and other commodity prices.
Caused in part by short-term problems like bad harvests but largely by the growing demand of countries such as China and India.
It has led, in the last two years, to rises in oil prices of 60% even after the latest falls.
World agricultural prices up by 40%.
Wholesale gas prices by 160%.
It’s pushed inflation up here and across the world.
It’s increased the cost of filling your car and household bills.
It’s causing real difficulties for families – which is why I am so determined to make sure inflation does not become entrenched here in our economy.
Inflation is too high. But over the last ten years, thanks to the decisions, we have made, it has been much lower than in the past.
And the Bank of England beli eves it will peak soon and should fall over the next year.
The price of oil is down from its summer high. There are signs too that crop prices are falling which should eventually be reflected in the shops.
I believe families recognise – with inflation as well as the financial crisis – that these are global problems
But they also want us rightly to do what we can to help families now.
So to help with living costs, this month 22 million people on low and middle incomes will receive a £60 rebate – with an extra £10 each month until April.
To help with housing, we’ve brought in a stamp duty holiday. We’ve also announced we would spend an £1 billion now to help people facing repossession and speed up the delivery of social homes.
And nothing better illustrates how little the modern Tory party has changed.
Than when we announced £1 billion to help the many over housing, they unveiled &p ound;1 billion to help a few thousand avoid inheritance tax.
On energy costs, we’ve frozen petrol duty this year and increased the Winter Fuel Allowance.
We’re introducing measures to reduce heating bills not just this winter but every winter through energy efficiency.
Measures which will also help us tackle climate change. Measures, too, which will help us grab the opportunities of the switch to a low carbon economy.
For the global economy brings not only threats, but also opportunities. And we should be confident we can seize them.
The British economy has been a real success story in recent years.
We are world leaders in many sectors: biotechnology, pharmaceuticals and our creative industries.
Half of all British exports are manufacturing.
Globalisation means more markets for our goods and services.
And if you want reasons to be confident about our future, look no further than right here in Manchester.
Over the last decade this city has been transformed.
There are thousands more jobs and homes in a magnificent rebuilt city centre.
A credit to the vision of Manchester City Council to the efforts of the private sector and the energy of the local community.
But it’s also down to the stability we’ve built – and to the investment it allowed us to deliver here and up and down the country.
Investment to provide new schools, new hospitals, and new transport links, new skills, new hope.
Help for families through tax credits and increased child benefit.
Help for thousands in work through a minimum wage and guaranteed holidays.
Help in retirement through improved pensions – and, for the first time, every employer required to contribute to their employees pension fund.
Decisions to support families we’ve made and which the Tories never would.
Investment we provided and the Tories never would.
It doesn’t mean we have tackled every problem. There’s plenty more to do to spread opportunity to every corner of this city and our country.
But the economy is stronger and more stable, our public services improved, prosperity extended.
We have taken the right long-term decisions for our country. Just as we are doing now on energy, on planning, on transport.
Decisions which allowed us to triple public investment whilst at the same time reducing national debt to one of the lowest levels of any major developed country.
Enabling us now to let borrowing rise to support the economy and families now when they need it most.
Make no mistake, discipline in public finances is essential. Being clear about our priorities.
In the medium term, governments everywhere have to live within their means – so I will set out this autumn how I will continue to deliver sound public finances.
A country fairer, stronger, changed for t he better. Not at the expense of economic stability, but because of it.
That is the result of eleven years of Labour in Government.
A stable economy, essential to building a fairer country.
And it’s these same principles and leadership which must guide us through the present economic turmoil. Taking the right decisions at the right time.
I’ve made headlines by saying just how tough times are.
I draw little comfort from the fact that many people now understand what I meant.
Yes we are facing real problems. Our economy, along with every other developed country, is bound to slow.
It’s my job to be realistic. And these problems will take time to work their way through.
But as I also said – and this got a lot fewer headlines – that I was confident that Britain will come through these difficult times.
I am just as confident today.
Britain is strong. Our economy is sound. Times are hard but we must keep things in perspective.
Unemployment rose last week. But we still have near record numbers of people in work.
Inflation is higher than we would like but nowhere near past levels – and should fall soon.
Interest rates are at 5%, not the double figures of two decades ago.
And remember, too, the many good things about our country.
Our resilience, our determination, our talents. Our world-class industries. Our ability to innovate and invent.
With a Government with the experience to make the right long-term decisions.
A party with the values essential to guide our country through this new changed world.
We should have confidence in ourselves. And confidence in the future.