Alistair Darling – 2013 Speech to Scottish Labour Party Conference


Below is the text of the speech made by Alistair Darling to the Scottish Labour Party Conference on 19th April 2013.

Thank you very much for your warm welcome.

One of things I have noticed in the three years since I stood down from frontline politics is just how nice people are about you when they are absolutely certain they are not coming back. But I am back, back for this referendum because it is one of the most important decisions that we will take at any time in our lifetime. Where Scotland will take one of the biggest decisions that has taken in the last 300 years.

Remember this, we are not electing another government for five years, where if you don’t like it you can kick it out. You are voting on something that – if we decide to vote for independence – is irrevocable. There is no way back. They only have to win once and by one vote. And there is no going back.

Now, as people have said in the last debate: this isn’t just about constitutions or intuitions they are there to serve us. This is about values. And we believe that we are better, we are stronger when we stand together. That’s why we joined the Labour Party. That’s why we joined trade unions because we can achieve so much more together than we can as individuals. And look at some of the things that we have set up that have given effect to that belief. The NHS – there when you need it no matter where you are in the United Kingdom. Or the minimum wage –avoiding a race to the bottom where workers in Dundee are pitted against workers in Durham. Or as some people have just been saying in relation to corporation tax – we do not want to get in to a race to the bottom where the Scottish Government might cut corporation tax then the rest of the UK does it and it gets lower and lower. The losers in that are the people in this country who would have to pay the taxes to make up the difference. We are better and stronger, when we stand together.

We are proud to be both Scottish and British. We don’t have to choose. We do not want to choose between the two of them.

And there is another element too – the influence we have to shape the world to be a better place. In the first debate that we had this morning we talked about developments in the world. Why walk away from the influence the UK has in the World Bank, in development, and the United Nations when we can be a force for good. We are better and stronger, when we stand together.

But of course, the key to this debate will be the economy. It’s about standards of living. It’s about the money that we could afford to spend on health and education.

It’s about jobs. It’s about what we are leaving to our children and their children.

Now, Douglas Alexander when he spoke earlier this morning talked about the changes that are taking place across the globe – where people are coming together, rather than breaking apart.

We are part of the single market of the United Kingdom – tens of thousands of jobs in Scotland depend on their firms being able to sell goods and services in to the rest of the UK. So we are sharing opportunities, and yes, we are also sharing risks. Anas just mentioned what happened four years ago. I know from my own experience that when I heard that RBS was within three hours of closing its doors and switching off its cash machines I had the strength of the United Kingdom to say: we will not let that happen.

Now, I don’t argue that Scotland couldn’t go it alone. Most countries can. I do think though that we would be very heavily dependent and very exposed to North Sea oil. Nobody is saying that the oil is going to run out tomorrow. We are not saying that. But it does not go on forever and we know that that its price is volatile and if you are dependent on nearly 20 per cent of your tax revenues from one source you are very exposed if something goes wrong. And it’s no wonder that John Swinney in his private moments told the Scottish Government cabinet that he was worried about the volatility of the North Sea oil price and the fact that ultimately it will decline. It’s no wonder that he was having to question how much he could spend on public services and the sustainability of the state pension. The only problem was that what they are saying in private. In public, they are saying something quite different. And when they were confronted with this, rather than saying to the people of Scotland: let’s be honest about the choices we have to make, let’s be honest about the realities that we are so dependent on North Sea oil. What did they do? They cooked the books and inflated the oil price – something their own financial advisers told them they shouldn’t do.

Now, central of course to the economic argument is the question of currency. But you know there is a pattern emerging with the nationalists – the more you ask questions, the more you find their arguments fall apart. Look at Europe, when they told us hand on heart they had a legal opinion that said that we would automatically remain members of the European Union. What happened? When we pressed, we found there was no legal opinion. Scotland had been quite deliberately deceived in to believing that nothing would change when of course the reality is that we would have to apply again to become members of the European Union. The same thing with NATO. And critically, when we came to the question about currency they are being evasive – they are not being straightforward with the people of Scotland. In the last 12 months alone, they have gone from being in favour of the euro (which is as popular in Inverness as it is in Essex), to using the pound (like Panama uses the dollar, where you would have no central bank which would completely undermine the financial services industry in this country), to now saying they will have a currency union.

And when you think about it, the practicalities of this – if we have actually vote to leave the UK we would actually then have left the bank that prints the currency that we presently use. The pound sterling is the currency of the United Kingdom. That is what it is at the moment – it’s not a currency union. In order to keep the pound, what the nationalists now say we would have to enter in to a currency union. Now yesterday Nicola Sturgeon was saying that of course within a currency union you could do what you want, there would be no constraints, you could spend money on what you want. That is utter nonsense. Imagine what would happen.

Just look at what has been happening in the Eurozone for the last four or five years. We know that in a currency union it is the large economies that call the shots.

We also know that a currency union would mean that another country – which would then be a foreign country – would have to approve our budget, our tax, our spending and our borrowing. That is not freedom. If you vote for independence you are voting yourself into a straightjacket from which you can never escape and the consequences of that would be very bad for Scotland.

It’s no wonder, when this squeeze comes on, and we start facing the challenges of an ageing population in Scotland or if you suddenly had a drop in oil prices, or if you had another banking crisis sometime in the future – you’re on your own. The burden, far from being shared across the United Kingdom, falls on six million people living in Scotland. Where is the sense in that? We are better and stronger, when we stand together.

Now of course some nationalists have twigged this. Some nationalist supporters and some academics now realise exactly the blind alley they are going down and what they are saying is lets have our own separate Scottish currency. Well let’s just think about that for a moment. Every time you go and visit somebody south of the border you would have to change your currency. Every time your granny, or your uncle or your auntie came up here they would have to get their currency in order to come and visit you. Or business is trying to trade with the rest of the UK would have to factor in the cost of the exchange rate. And of course, launching a new currency now in arguably the most turbulent economic times we have seen in modern times – that is what they would say in Yes Minister terms is “truly courageous”. You would be asking people to take a gamble on a currency that is wide open to manipulation and open to speculation as oil prices rise and fall. It is an absolutely ridiculous policy that would be gambling with Scotland’s future in a way that I think is totally unacceptable.

Now, of course, Alex Salmond has said that he won’t debate the currency issue with me. The reason for that is that he does not have the answers to these questions but he cannot hide for the next 17 months. Scotland is entitled to an answer. What currency would we use? What will the consequences be?

And Scotland will be entitled, as I suspect it will, believe that the nationalist stance on this is – as on so many other things – is incredible and is falling apart.

I believe there is a much better choice for our future than separation. The last thing we need at the present time is more uncertainty and divisions.

If we walk away from the UK, we give our children a one way ticket to a deeply uncertain destination and that to me is totally unacceptable.

You know, as Scots, we know that there is nowhere better but we understand that there is something bigger.

That is why we are better and stronger together.

Alistair Darling – 2009 Speech to Labour Party Conference


Below is the text of the speech made by Alistair Darling, the then Chancellor of the Exchequer, to the 2009 Labour Party conference.

Within months, the country faces a big choice.

A choice not just about who’s in Government, but about the values that will shape our country and the opportunities for our people.

A choice that will affect every area of our lives, every aspect of our future.

If we didn’t know a year ago the difference governments can make, we certainly know it now.

When I spoke at last year’s conference, I talked about the scale of the global economic crisis and warned that we may not yet have seen the worst.

Within weeks, the international financial system was in meltdown, the world economy on the edge of the abyss.

There was a real prospect of a repeat of scenes not witnessed since 1929.

Banks unable to give savers their cash. Firms unable to pay their staff.

In the face of such unprecedented global turmoil, no one government could hold back this economic tidal wave.

But I also said last year that the choices made by governments could reduce the severity and the length of the crisis – and help people through it.

That was the challenge.

And when the history of this period is written, this country and this party will be proud.

Proud that the people who led the way in stopping recession turning into global depression were our Government and our Prime Minister Gordon Brown.

We intervened to stop the banks failing.

Not for the sake of the banks themselves.

But because the alternative would have been an economy in paralysis and employment in freefall.

Let me assure the country – and warn the banks – that there will no return to business as usual for them.

So in the next few weeks we will introduce legislation to end the reckless culture that puts short-term profits over long-term success.

It will mean an end to automatic bank bonuses year after year.

It will mean an end to immediate pay-outs for top management.

Any bonuses will have to be paid over years, so they can be clawed-back if not warranted by long-term performance.

We won’t allow greed and recklessness to ever again endanger the whole global economy and the lives of millions of people.

Over the last 12 months, we’ve also acted to help businesses keep afloat and people stay in jobs and in their homes.

By cutting VAT, we put an additional £1billion each month into the pockets of shoppers and retailers.

Through the car scrappage scheme, we will continue to support jobs in the car and wider manufacturing industries.

Through targeted tax cuts for business and more time to pay, we have helped them weather the storm.

We knew that to have cut investment would have worsened the recession.

So instead of cutting, we brought forward planned capital projects, modernising schools, homes and hospitals.

Countries across the world have followed the same course and co-ordinated action through the G20 in a way which has never been seen before.

I can tell you, having been at every one of these meetings, that ministers around the world recognise this would not have happened without Gordon Brown’s leadership.

The results of this global intervention, led by the UK, is now beginning to come through.

Germany, France and Japan are showing signs of growth.

Many independent forecasters now believe the UK too is coming out of recession.

I think it is too early to say so with total confidence.

But I stick with my Budget prediction that, as long as we continue to support the economy, recovery will be underway in the UK by the turn of the year.

I also expressed my confidence in the underlying strength of the British economy and the skills and energy of its people.

And I believe that confidence will prove to be correct.

For if we continue to make the right choices as a country and the right investment for the future, we are ideally placed to make the most of the opportunities the global recovery will bring.

Investing in the new industries of the future, helping Britain lead the way in the move to a low-carbon economy, supporting the research and innovation at which this country shines.

But had we made different choices – Tory choices – the UK and global economy would be in a very different place.

So too would our prospects for the future.

For as well as being a test of leadership for the Government, this crisis was a test of judgement for the Conservatives.

It was a test they failed at every turn.

Every step to limit the severity of this recession and the damage to families, they opposed.

When the crisis began in the global mortgage markets, they thought the answer was less regulation, not more.

When we stepped in to save Northern Rock – protecting the savings of millions – they wanted to leave it all to the markets.

When we acted to prevent the widespread collapse of the banks, they protested we were wasting money.

As the financial crisis turned into the deepest global recession since the 1930s, they alone said we should do nothing to support the economy.

At every stage, the Tories have misunderstood the causes of the crisis. Underestimated its severity. And opposed the measures to limit its impact.

And why did they get it wrong? Because the natural response of the Tories is always to step back, not step in.

In this party, we believe it is our responsibility to make a difference, to help people help themselves.

People sometimes talk about the invisible hand of the market, but the last year has underlined how it must go alongside the enabling hand of government.

The Tories in their hearts believe the answer is always for the government to do less, leaving people to fend for themselves.

So just as the support we have put in place is getting the economy back on its feet, they want to withdraw this helping hand.

Having just come back from the G20 summit in Pittsburgh, I can tell you that no other government is following their lead.

Whether right or left, in Beijing or Berlin, they know that withdrawing support before recovery is secured risks plunging us back into recession.

We can’t sit back and relax.

Many businesses and families are still struggling to keep their heads above water.

If we followed the Tory route now recovery would be put at risk, prospects for growth damaged, borrowing would, in the long-run, be greater.

We cannot – must not – let that happen.

And we cannot – must not – repeat their mistakes of the 80s and 90s when short-term job-loss became long-term unemployment for a whole generation.

The result was the scandalous loss of potential and talent – and a huge welfare bill for the country.

And why? Again a deliberate choice by a Tory party to step aside and let people sink or swim.

It is why a key priority for us has been, and remains, to help people off welfare and into work.

And, of course, to make sure they were paid fairly, for the first time, through the minimum wage.

Introduced by this Government, and again opposed by the Tories.

The success of our approach was seen in record employment over the last decade.

And it continues to show its worth even as the global recession hits our economy.

Unemployment is rising here and across the world. Every job lost is a serious blow to that family.

But thanks to the support already in place, more than half of those who lose their jobs come off Job-Seekers Allowance within three months, and almost three-quarters within six months.

Since November, we have helped over two and half million people leave the claimant count.

It explains why unemployment here, although too high, is lower than in the euro area and in America.

But even when we begin to see growth in the economy again, unemployment is likely to keep rising for some time.

It is not within the power of any Government to protect every job.

But we believe it is our responsibility to support people in every way possible to find new employment.

To stop help now – as the Tories want – would be callous and counter-productive.

So rather than stepping back, we have stepped up our efforts.

Investing £5bn to provide high quality assistance and advice to those who have lost their jobs.

A guarantee for 18 to 24 year-olds of work or training – already 47,000 jobs have been agreed for take-up when needed.

A guarantee, too, for every school leaver of a college place or apprenticeship.

The difficult decisions we have taken – the choices we have made – have been driven by our belief in what Government can do, and our values of opportunity and social justice.

Yes, debt has risen.

Not just here, but across the world, as tax revenues have fallen as the global recession takes hold.

But had we not borrowed, we would have made a very difficult situation far worse.

The recession would have turned into depression, and debt would have been more, not less.

And this increased debt would be spent not in supporting jobs and families now but on long-term welfare bills.

It would have been irresponsible to walk away when the economic shock waves hit our country.

It will be equally irresponsible, once recovery is secured, not to take tough action so we can live within our means.

I welcome the chance of a mature debate on how we achieve this goal – even if it is hard to see the Shadow Chancellor playing much part.

There has, after all, been little that is grown-up about his performance so far.

And again, this country and this Government have set the lead – the first to set out firm plans to put our finances on a sustainable footing.

In the Budget, I laid out how we will halve the deficit over four years.

We are raising revenue by removing unfair pensions relief for higher earners.

And raising the top rate of tax for the very highest incomes.

Because it is right that those who earn the most should shoulder the biggest burden.

And to make sure people can’t avoid paying their fair share, we and other countries are cracking down on offshore tax havens.

We’ve already demanded details of over 100,000 offshore accounts.

And this will mean billions of extra unpaid tax returning to our country, with an expected £1bn from our agreement with Lichtenstein alone.

In contrast, what are the Tories doing? What’s their priority? Their priority is to cut inheritance tax for some of the richest families in the nation.

This cannot be the priority at a time like this.

But the steps we’ve taken to raise revenue are not enough.

In order to get borrowing down, spending will have to be tighter in the years ahead, against a background where public investment has tripled over the past decade.

I believe the public understand that difficult decisions will be needed.

The public know that adjusting to this new reality won’t be quick, it won’t be easy

They are right. But this makes it even more important that these difficult decisions are taken for the right reasons.

For just as there was a choice over tackling the recession and helping the recovery, so there is on public spending.

A choice between a Labour Government which believes passionately that front-line public services are vital to support everyone to meet their ambitions.

And a Tory party which has reverted to type and is relishing the chance to swing the axe at the public services millions rely on.

Cuts driven by ideology – not by what’s right for families and for the country.

We have already seen the damage such an approach inflicts on the fabric of our nation.

After 18 years of Tory neglect of our public services, the question was not whether every classroom had a computer, but whether every school had a proper roof.

In healthcare, the question for far too many was not whether you could get your operation in weeks, but whether you could get it at all.

A legacy of disdain and underinvestment, of shaming poverty among the young and old, a lack of hope among millions of families.

The result of a Tory party which deep down sees public services as essential only for those who have failed to do well enough to go private for their health care or education.

It was a legacy we have worked hard to put right.

Half a million children lifted out of poverty thanks to increased child benefit and tax credits.

Practical support for families through Sure Start Children’s Centres – like the one I visited today.

The best ever exam results for our children.

Average time on an NHS waiting list down from 13 to just four weeks.

Helping families through support for childcare and dramatically improved maternity leave and pay.

We won’t put these improvements at risk. We intend to build on them.

Tighter spending doesn’t mean a return to the Tory dark ages.

It does mean a determination to cut waste, cut costs – and cut lower-priority budgets.

This will require difficult decisions.

I haven’t shirked them in the past, I won’t shirk them now.

We must keep the public finances on a sustainable path.

The long-term health of our economy depends on it.

That is why we will introduce a new Fiscal Responsibility Act to require that the Government reduces the budget deficit year on year, ensuring that the national debt remains sustainable in the medium term.

But we need to do that rationally, in a way that is right for the economy, not driven by dogma.

The Tories’ approach is wrong, is naïve, and down right dangerous.

It will damage our economy now and in the future.

In the next few weeks, I will set out in the Pre-Budget Report how we will protect front-line public services, bring the deficit down, and invest in the country’s future.

We will invest to make our economy grow.

Growth is the best way of reducing debt, creating jobs, and raising living standards.

The low-carbon economy will create tens of thousands of new jobs.

But this won’t happen on its own – government must work with business.

High-speed rail links will help us tackle climate change and boost our economy.

Again, they won’t happen without government support.

We need thousands of new homes for families – we will work with the industry to ensure they are built.

We are world leaders in innovation and technology – we will continue to invest, to harness this ingenuity and create new industries and new jobs.

Extending opportunities to all, removing the barriers which stop people playing their full role in our economy and society.

Fairness, opportunity and responsibility will underpin everything we do.

The last 12 months, more than any time in recent history, has demonstrated the difference Government can make.

The Tories have been wrong on tackling the recession. They are wrong on how to ensure recovery. And they will make the wrong decisions on our public services.

They are wrong because on every question, the Tory answer is to step back, to walk away, to leave people on their own.

So that will be the choice in the next few months.

Maturity and experience against the politics of the playground.

Investment in the future against a return to the past.

I am proud of the difference we’ve made to this country over the past 12 years.

Proud of our judgement and determination over the last 12 months.

And we should be confident we can win the support of the country to keep taking Britain forward.

We have a good story to tell.

It’s time for all of us to go out and tell it.

Alistair Darling – 2008 Speech to Labour Party Conference


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.

Alistair Darling – 2008 Mansion House Speech


Below is the text of the speech made by the Chancellor of the Exchequer, the Rt Hon Alistair Darling MP, at the Mansion House.

1. My Lord Mayor, Mr Governor, my Lords, Ministers, Aldermen, Mr Recorder, Sheriffs, ladies and gentlemen. It is a privilege to be asked to address you this evening.

2. It must also be something of a change for you as this event has been addressed by the same man for eleven successive years.

3. In preparation for tonight, I have read my predecessor’s speeches closely.

4. I have noticed that over the years, they tended to creep up in length. And in scope.

5. To allow you to enjoy your coffee earlier, the Governor and myself – another sign of the close co-operation between us – have agreed to copy the early Brown period rather than the later.

6. I do, however, want to talk about the global challenges our country faces and our determination to take action at home and internationally to ensure we meet them successfully.

7. This, of course, is exactly what the UK and the City of London financial sector has demonstrated over recent years.

8. Indeed, the talents, drive and commitment of the firms you represent are crucial to the prosperity of our country.

9. Our financial services sector supports over one million jobs and accounts for over ten per cent of GDP.

10. Over thirty per cent of the world’s foreign exchange trading and over 40 per cent of foreign listed equity trading takes place here.

11. We are the world leader, too, in international banking.

12. This success is underpinned by talent and achievement in many related professions and sectors, such as law and accounting.

13. Together you have made London the world’s main financial centre. And I agree with you, my Lord Mayor, that working in partnership, we must do everything to keep it that way.

14. That is why I meet regularly with you, a group of City firms, the FSA and the Bank of England.

15. Following our most recent meeting, we agreed to set up a forum to consider the challenges to the City’s competitiveness.

16. The group is also bringing together senior industry players to look at a range of issues, including the efficiency of our capital-raising around short selling.

17. All our efforts to strengthen London’s position must be based on our long-standing tradition of openness and welcoming investment from overseas including sovereign wealth funds.

18. We need also to be able to attract the brightest and best from around the world to the City and to our country.

19. The new Australian-style points system will be introduced this autumn to help ensure this happens.

20. We understand companies, like people, can choose where to do business. We want them to choose us.

21. Our approach to regulation is one of the reasons companies choose to come to the UK.

22. And a competitive tax system is also, of course, critical to our continued success.

23. Through the new multinational business tax forum I set up, we are talking to you about what more needs to be done to keep the UK and the City of London in the lead.

24. But, of course, the biggest single factor in helping you deliver your ambitions for the future are the decisions the Government takes to ensure the strength and stability of our economy.

25. It is an economy having to deal, as elsewhere in the world, with turbulence in the financial markets and the soaring cost of energy, food and commodities.

26. As an open economy, the UK, of course, has been well placed to take advantage of the opportunities that globalisation has brought.

27. For businesses, it has meant new markets. For consumers, it has meant, for example, electrical goods and clothing at historically low prices.

28. UK productivity, living standards and growth have risen as a result over the last decade, closing the gap with other major industrial countries and reversing decades of relative decline.

29. But this new interdependent world brings risks as well.

30. The twin global shocks of rising commodity prices and the credit crunch have led to growth forecasts for advanced economies being halved in the last year.

31. Earlier this month, we again saw the OECD revising down their growth forecasts for economies around the world for both this year and next.

32. No country can escape these consequences.

33. As I made clear in the Budget, I expect the UK economy to continue growing, but for growth to slow this year. This is already clear from recent official figures and in business surveys.

34. Lord Mayor, I have seen reports suggesting yesterday’s inflation figures show we are returning to the days of the 70’s.

35. They are wrong, both in the nature of the problems we face and also in the scale.

36. Today’s inflation must be tackled. We cannot be complacent.

37. But in comparison to the 1970s when it reached over 26 per cent, it remains low. Even in 1991, it was still at 8 per cent.

38. And it was home grown inflation which dogged our economy in the seventies and successive decades.

39. In 1992 for example, when the UK was ejected from the ERM the price of imported raw materials was falling. But despite that, home grown pressures pushed CPI inflation to 4.3% that year while growth was just 0.2%.

40. Eleven years ago we made the Bank of England independent.

41. The MPC has been a cornerstone of the successful economic policy frameworks that have delivered sustained growth and a level of inflation that has been, on average, lower than in the euro area and United States.

42. But while the inflationary pressures we faced in the past were primarily domestic, today they are global.

43. The Governor, in writing to me yesterday, explained that the dramatic increases in the prices of food, fuel, gas and electricity alone account for 1.1 percentage points of the 1.2 percentage points increase in inflation.

44. These sharp price increases reflect developments in the global balance of demand and supply for food and energy.

45. In the last year world agricultural prices have increased by 40 per cent.

46. Global oil prices have risen by more than 80 per cent to average $123 a barrel.

47. To put this into perspective a decade ago a barrel of oil cost less than $10; two weeks ago it jumped by more than that in a single day.

48. Lord Mayor, these are external shocks which are affecting every economy in the world.

49. In May, inflation rose to 3.7 per cent in the euro area and 4.2 per cent in the US – both above inflation here in the UK.

50. In fact so far this decade, inflation in the UK has been on average the lowest in the G7 except for Japan, which has suffered a long period of deflation.

51. I believe that we are well placed to continue this record.

52. Because of the UK’s flexible labour markets employment is at record levels, unemployment is low and half the level it was in the early nineties.

53. And pay growth has remained moderate. Average earnings growth, excluding bonuses, in the year to April was 3.9 per cent, a little below its average since May 1997.

54. But continued restraint on pay is required from both the public and private sector.

55. We must recognise the need to reward efforts of people who work hard.

56. But to return now to inflationary pay settlements would undermine rather than raise people’s living standards with a damaging circle of wage increases eroded by steadily rising prices.

57. We must never return to those days.

58. That is why the Government has agreed a number of multi-year pay deals that now cover 1.5 million public sector employees.

59. Global inflationary pressures mean I am likely to receive more letters from the Governor in the coming months.

60. The Government will continue to support the MPC in its decisions to maintain price stability and support the economy.

61. Lord Mayor, times are tough. It will take time for these global difficulties to work through.

62. But our economy will continue to grow.

63. Independent forecasters expect UK inflation to fall back next year.

64. Employment is at a record high.

65. Many order books are full.

66. British business is competing and winning all over the world.

67. Our economy is flexible and resilient.

68. In fact, both the OECD and the IMF expect us to be among the very best performers in all major developed economies.

69. I agree.

70. But, Lord Mayor, the global nature of inflation today highlights how the economic challenges we now face are different from 1997.

71. The UK then had a record of economic instability and home grown pressures driving inflation.

72. We had high levels of public debt and unemployment and a legacy of chronic underinvestment in our key infrastructure and public services.

73. In the past, to reduce borrowing, public investment was cut to historically low levels.

74. We have cut debt from 43 per cent of GDP in 1997 to 37 per cent last year.

75. It means that, with the world economy slowing, we can allow our borrowing to rise this year to support families and businesses, while maintaining sound public finances.

76. We have taken the decisions needed to provide stability and a platform where companies can invest with certainty and individuals can make the most of their talents.

77. Our macroeconomic framework is facing its toughest test in a decade. But we will come through it with renewed confidence.

78. And from this essential platform of stability, we also need now to show the same determination to meet the new global challenges facing our country.

79. We are determined to press for a new global approach to remove the barriers which are preventing an increase in the supply of oil and put in place long-term measures to reduce demand.

80. The Prime Minister will travel to Saudi Arabia this weekend for a summit between the main oil suppliers and oil consumers to see how we can work together to better balance the supply and demand for oil.

81. Both energy and food were discussed at last weekend’s G8 Finance Ministers’ meeting.

82. They will be high on the agenda at next month’s G8 summit when the UK will propose a global initiative to increase agricultural production.

83. And we must look again at the Common Agricultural Policy. It is unacceptable that at a time of significant food price inflation, the European Union continues to apply very high tariffs to many agricultural imports.

84. We must also do all we can to secure a global trade deal at Doha. We believe it is within our grasp and are pressing to achieve it.

85. And we must be on our guard against those who may use the present difficulties to push for new trade barriers and higher tariffs.

86. While other countries might make increasingly protectionist overtures, our message must be that we are open for business.

87. Lord Mayor, globalisation is not a choice. The clock can’t be turned back.

88. Indeed, as the City of London has demonstrated, it brings huge opportunities to those ready to seize them.

89. And we can see similar success stories across our economy. In the biotech sector, pharmaceuticals, and aviation – all knowledge-based industries.

90. And we are well placed to grasp the opportunities opening up as we move towards a low-carbon future – vital if we are to tackle the threat of climate change.

91. Lord Mayor, just as inflation now is a global challenge, so too is the need to maintain financial stability.

92. Over the past ten years financial markets have been transformed. They are increasingly fast-moving and international in scope.

93. This has brought real benefits but also increased risks.

94. In the past, if a bank failed it might affect a city or a country.

95. But as we have seen in America earlier this year, it can now spread to the entire world within days. And this new reality affects us all.

96. The challenge for governments now is to balance the need for innovation in markets while minimising systemic risk and protecting consumers.

97. This requires both a global and domestic response.

98. Internationally, the IMF and Financial Stability Forum need to play an increasing role in providing an early warning of the threats to the financial systems.

99. We have secured support for the expanded use of international colleges of supervisors recognising that financial institutions increasingly operate in many different countries.

100. Here at home we will continue to support the Bank of England’s special liquidity scheme.

101. We expected initial take up to be around £50 billion, although we have made it clear that it is not capped.

102. The scheme has helped stabilise the financial markets and bring greater confidence, which will, over time, support lending in the economy.

103. And I want to thank the Governor for his tremendous work and invaluable support over the past twelve months.

104. Lord Mayor, among the areas that have been transformed in recent years are mortgages.

105. A decade ago, almost all mortgages in the UK were funded by depositors. By last summer, a third of new mortgages were funded by the global money markets.

106. That is why I have asked Sir James Crosby to consider both the underlying problems in the wholesale mortgage markets and the steps the industry and government can take to restore confidence.

107. As we have seen, problems which began in the US housing market last summer soon meant financial institutions across the world needed support from their authorities.

108. Northern Rock tested our own system of financial regulation.

109. There were no easy answers to its problems. But we took the necessary steps to protect savers and wider financial stability.

110. We ensured that Northern Rock’s problems did not spread to the rest of the banking system. No savers lost money. And we will continue to do everything we can to protect financial stability.

111. I believe that our proportionate, principles based approach to regulation – and the single regulator model that has been widely copied since we put it in place a decade ago – remains the right one for our future.

112. As I have said before, the answer is not more regulation, but regulation that is more effective.

113. It is important that, for example, the FSA has the necessary powers to tackle market abuse and ensure investor confidence is protected. The Government will be bringing forward legislation to provide the FSA with additional powers.

114. And we are already working with prosecutors to help the FSA improve its prosecution rate.

115. I want to thank Sir Callum McCarthy for his leadership of the FSA over the last five years and welcome Lord Adair Turner, who takes over in September.

116. Lord Mayor, no system of regulation, of course, can or should prevent the failure of each and every institution.

117. But we must do everything possible to prevent problems which could pose a wider threat to stability.

118. At the centre of our banking reform proposals are new powers for both the FSA and the Bank and improved procedures for co-ordination between them.

119. These will reduce the likelihood of failure, lessen the impact if it happens and ensure that savers are properly protected.

120. The FSA will remain the sole banking supervisor.

121. But the Bank of England also has a critical role in protecting financial stability.

122. The Bank of England Act 1998 gave the Bank a statutory objective on monetary policy.

123. As I have said, the Government now intends to provide as well a formal legal responsibility for financial stability, alongside its existing role in monetary policy.

124. In doing so, we will build on the very positive experience of the Bank’s Monetary Policy Committee.

125. A slimmed down Court will have oversight and a new Financial Stability Committee, including Non-Executive members drawn from Court, will guide the Bank’s operations in this field.

126. It will bring valuable, external expertise with City experience to bear on the Bank’s decision making.

127. I shall set out full details tomorrow in a letter to the Chairman of the Treasury Select Committee and in a consultation document shortly.

128. The challenge for us is to ensure that the authorities can act quickly and decisively where necessary to support financial institutions. These proposals will give the authorities the full range of powers they need.

129. They do so by entrenching the model established a decade ago – the FSA responsible for individual institutions, the Bank of England for the stability of the financial system as a whole – but by providing each institution with new powers, and improving co-ordination between them.

130. I would like to take this opportunity to pay tribute to Rachel Lomax, who is retiring this year, for her distinguished service, not just as the Deputy Governor, but in the civil service too.

131. I expect to announce her successor tomorrow.

132. I am also taking the opportunity to strengthen the procedure for future appointments.

133. In future, we will also advertise the posts of the Governor, the Deputy Governors and also for external members of the MPC, consistent with the principles of open competition. to inject more openness and transparency to the process.

134. Taken together, these measures represent a major reform equipping us to deal with the challenges we face, and in particular giving the Bank of England and the FSA the mandate, the responsibility and the accountability to discharge the vital duty of ensuring financial stability.

135. A clear statutory objective to provide financial stability, a smaller and reformed Court, a new Financial Stability Committee and more transparency in appointments.

136. Lord Mayor, as we take the decisions needed to come through present difficulties, we are keeping our eye firmly on the long-term future of the country.

137. We are taking the hard decisions, many controversial, but I believe essential for our long-term interests.

138. We are, for example, addressing problems with our energy and transport infrastructure.

139. We have brought forward plans to streamline the planning process. To meet the challenges of the 21st century, we need a planning system which is both fairer and faster.

140. We have given our backing to a new generation of nuclear power stations to help meet our energy security and tackle climate change.

141. We strongly support new airport capacity for London and we are going ahead with Crossrail.

142. And we will continue to invest in skills, infrastructure, science and innovation, which are essential for our future success.

143. Over the last decade, we have taken the decisions needed to provide a strong and stable economy. We are now taking the right decisions to ensure the continuing prosperity of our country.

144. Lord Mayor, the forces of globalisation are becoming ever stronger.

145. They bring both opportunities and challenges.

146. We must never be complacent. But we should also be confident.

Alistair Darling – 2008 CBI Annual Dinner


Below is the text of the speech made by the Chancellor of the Exchequer, Rt Hon Alistair Darling MP at the CBI annual dinner, Grosvenor House.

1. Ladies and gentlemen, it is a tremendous privilege for me to be invited to address the CBI’s annual dinner.

2. The success of British businesses is the foundation on which this country’s economic prosperity is built. Your energy, your creativity and your commitment to wealth creation are the engine that drives the British economy.

3. I also want to thank the CBI for the crucial role it plays in promoting the interests of British businesses at home and abroad.

4. Over the past ten years – at Trade and Industry, Transport and now at the Treasury – I have been a great advocate of British businesses. The continued success of the British economy will rest on how government and business can work together, which is why the importance of the relationship between the Treasury and the CBI cannot be overstated.

5. I want you to know that I am listening to you, and even though there will be times when we do not agree, it does not mean that I have not heard what you have to say.

6. And you can be sure that on one issue, we will always find common ground – that the competitiveness of the British economy and British businesses should be at the heart of our economic agenda. We will do nothing to jeopardise that.

7. Our work with the CBI and TUC to get agreement on the Agency Workers’ Directive is a good example of how we can work together – protecting vulnerable workers – while at the same time ensuring support for business. John Hutton and I want to acknowledge the huge effort put in by the CBI in resolving this difficult issue.

8. On the Working Time Directive, we shall continue to argue for the opt out, so that we can balance fairness at work with the ability to remain competitive at all times.

9. For the last decade the foundation of our success as a country, and your success as businesses, has been a strong and stable economy.

10. While other countries have suffered recessions, the British economy has been growing continuously for over a decade – the longest period of sustained growth in our history.

11. And especially at this time, it is essential that we do everything in our power to maintain stability and to support business and the wider economy.

12. But it is equally important that we should not be diverted from our long-term aim – to equip our country for the competitive challenge of the next decade and beyond.

13. The world is experiencing the biggest economic upheaval it has seen in recent times. And every country is affected.

14. Continued uncertainty in the global financial markets, tighter credit conditions and rising world commodity prices – with the price of oil doubling over the past year – all this affects you and the way in which you do business.

15. Families are facing rising food and energy bills, companies too are facing increased costs.

16. Inflation, while at low levels compared to the peaks we have seen in the past, remains a threat to economic stability.

17. But while the global outlook remains uncertain, I remain optimistic about the underlying strength and resilience of the British economy – and confident that we will get through this difficult time.

18. Every major economy expects to see slower growth this year.

19. But despite this slowdown, the world economy will continue to grow by around four per cent this year. In China, by over eight per cent, India by over 7 per cent. The Euro-area, and sixty per cent of our exports go to Europe, by one and three quarters per cent.

20. And the British economy will also continue to grow, underpinned, as it is, by record levels of employment.

21. Let us not talk about what might go wrong and while the financial sector has experienced a particularly difficult time, industrial and commercial Britain as a whole is in sound financial shape.

22. As many of you know, many British businesses are doing well, with healthy order books here and abroad.

23. But we cannot be complacent. Here in the UK – and in every country across the world – there is a determination to do everything possible to support growth and maintain stability.

24. At the macroeconomic level, the Government fully supports the Monetary Policy Committee of the Bank of England in the difficult decisions it faces. As it balances the upside risk to inflation in the short term from global price shocks, against the longer term downside risk to growth and inflation, as a result of the global credit squeeze.

25. Debt is lower than in the past and low by international standards. Our fiscal policy is designed to support monetary policy to maintain stability in these uncertain economic times.

26. But we need to do more. That is why I agreed to the Bank of England’s special liquidity scheme launched last month.

27. It has helped stabilise the financial markets and it will contribute to greater confidence which will over time support lending in the economy – to businesses and especially in the housing market.

28. And I have asked Sir James Crosby to report to me shortly on what more can be done to support the wholesale and securitisation markets and increase the amount of money available for mortgage finance.

29. And tomorrow the Chief Secretary and the Housing Minister will meet with industry and consumer and debt advice groups to consider what they can do to support borrowers in difficulty.

30. Small and medium sized firms are facing pressures from the credit squeeze. That is why I took the decision to extend the Small Loans Guarantee Fund.

31. And why we are also asking the European Investment Bank to do more to provide funds for these firms here in Britain – to increase the support it provides by expanding the range of finance on offer to small and medium enterprise from traditional loans to, for example, equity finance.

32. In addition, I want to ensure that this finance is available to a broader range of businesses, so I will also be asking the EIB to take a larger share of the lending they back by banks to small business.

33. Many of you here have already seized the opportunities that come from operating in a truly global market.

34. London has grown to become the world’s leading financial centre. That success has been built on, our commitment to free trade, our openness to overseas investment and the flexibility of our product and labour markets.

35. But globalisation brings challenges too. A problem in America’s housing market last summer affected the whole world in just a few weeks.

36. We need to learn the lessons from that and will reform the banking laws to ensure we can deal more effectively with the risk of bank failure. But we will avoid a heavy-handed response which would be counter-productive and endanger London as the best financial centre to do business.

37. So we will maintain our risk-based and proportionate approach to regulation.

38. These are international problems which demand international action.

39. That is why are working through the IMF and the Financial Stability Forum to get better early warning of mounting problems and to strengthen co-operation between supervisors and regulators.

40. But here again, we will defend our approach to regulation in Europe and internationally, for example, by resisting the calls for direct regulation of executive pay. It is the role of Boards and their shareholders, not governments or regulators, to set the level of executive remuneration.

41. And we should adopt the same approach – one based on openness, free trade and flexible markets – in addressing the two big problems facing developed and developing countries alike – rising oil and food prices.

42. Now is not the time for putting up barriers to trade or increasing tariffs. Quite the opposite. Now is the time for all of us – governments and business – to make the case for more open and fair trade. It is time to reject calls for increased protectionism, wherever they come from.

43. A fair world trade deal is increasingly urgent. Not just for food, but for other goods and services. We need a successful conclusion to the Doha trade round.

44. The new World Trade Organisation papers move us significantly forward. There is now a deal to be done. But we are in danger of running out of time. Negotiators should return to Geneva and work full time until a deal is done.

45. And at this time perhaps more than any other, it is right to look again at the Common Agricultural Policy. It is unacceptable that at a time of significant food price inflation, the European Union continues to apply very high tariffs to many agricultural imports.

46. The European Union has a clear responsibility to play a full role in the international community’s efforts to address the consequences of spiralling food prices, but it also has a responsibility to its own citizens to ensure that its policies do not unnecessarily inflate the cost of food.

47. And it is time too for international action in the face of remorselessly rising oil prices. I shall be raising this issue at the G8 in Japan next month, and shall be proposing that we discuss with oil producers how we reduce these costs.

48. And while we need to act to try to ease constraints to supply, high oil and energy prices reinforce the need for us all to become more energy efficient, to keep down costs and support security of supply.

49. So there are significant challenges in the world economy.

50. Challenges that require government and business to work together to resist protectionism, bring down barriers to trade and continue to push the case for open markets.

51. But let us also remember the strengths and successes in the British economy.

52. Knowledge based businesses now account for over half our job growth in the last 20 years.

53. The biotechnology sector leads Europe in terms of capitalisation revenues and product development.

54. The pharmaceutical industry accounts for nearly a quarter of business R&D expenditure.

55. Companies invest over £3 billion in medical research. We have supported them with R&D tax credits, as well as measures designed to tackle animal rights extremism.

56. Public investment in science will rise to over £6 billion. Invention and innovation is transferring from universities to the market place across every sector of the economy.

57. In aerospace we are shaping the design and manufacture of the next generation, supporting over 270,000 jobs across the economy.

58. And British design and manufacturing is winning orders here and across the world.

59. Here is living proof of business success underpinned in many cases by public investment and support.

60. And the Treasury’s core purpose must be to maintain a strong macroeconomic framework and to promote growth.

61. But the Treasury must also be at the heart of making changes both in society and in the economy.

62. Working with you, we have a central role in increasing our longer-term competitiveness. And if we are to ensure economic growth we need to have a clear understanding of where the economy is strong and where its strengths will lie in the future. And to use that understanding to drive competitiveness in areas of that strength.

63. Thirty years ago there was much debate about whether governments could pick winners. There still is such debate in some countries today.

64. Now I do not believe that governments can pick out individual companies or industries, nor should they. But what we do can make a difference; supporting industries which are thriving and encouraging those that are developing and have the potential to succeed. We need a new approach.

65. We are not talking of subsidies or protectionism. Rather we want, sector by sector, to look at how government action impacts on, and can promote, business success. In some areas, it might be a case of getting out of the way. But I believe that it is important that we are ready to reinforce what we are good at.

66. And I am working across Government to ensure the impacts of what we do on specific industries are taken into account.

67. There are opportunities too for business as we meet the challenges ahead.

68. Climate change, and the need to reduce our dependence on carbon fuels provides new opportunities.

69. We need more renewables and have given the go ahead for replacing nuclear power stations. That is work here in Britain. Let us seize the opportunity, so that British industry can benefit. Not just from construction, but from research and development too.

70. Supporting science. Spending more on universities and skills. It comes at a cost, but it is essential.

71. So too is investment in transport. Crossrail was vital for London and the UK and we need to spend more on rail. More will also need to be spent on road transport, and the need to provide more airport capacity remains essential.

72. And whether it is transport or energy, we will not do what we need to do without reform to the planning system, which is why it is so important to get that legislation through.

73. As I have said before, we also need effective public services that support a competitive economy by providing the services individuals and businesses need.

74. Governments do have to be more efficient. And public services need to be reformed to provide value and better services.

75. Many businesses play a major role in delivering public services and I want to see more of that.

76. To get best value for money, we will continue to ensure that there is fair access for businesses trying to enter public markets. The public service providers of the future must be those who can offer the best quality to users at the best price for taxpayers.

77. We will ensure that there is fair access and competition between businesses that want to deliver public services.

78. And we will continue too, building on Peter Gershon’s review, to get more efficiency from public service.

79. We are cutting the administrative burdens faced by UK companies by 25 per cent.

80. And this morning’s Cabinet discussed John Hutton’s plans to consult on new proposals to impose a limit on the amount of regulation that can be imposed by Whitehall departments.

81. Businesses are acutely aware of the costs they face and, in particular, the taxes they pay. So are we all.

82. We now have two rates of personal income tax – the starting rate of twenty pence, the lowest rate for 75 years.

83. And corporation tax has been cut to 28 per cent from this April, the lowest in the G7.

84. A few years ago, one of our airlines used to say ‘we never forget you have a choice.’ Today, governments should remember that. Business does have a choice. Business is increasingly mobile.

85. Tax rates have to be globally competitive.

86. I am determined that British business will not be the fiscal fall guy. Business is the lynchpin of the British economy.

87. Business creates jobs, wealth and generates growth.

88. And government must ensure the right framework within which business can prosper. And tax is an essential part of that framework.

89. Getting business tax right is not easy. We recognise that the need to fund public services – like universities and transport – from which you benefit, must be weighed against the need to maintain competitiveness. We need to get the balance right.

90. I also have to ensure that tax rates encourage investment by providing incentives to innovate and encourage growth.

91. We listen carefully to what you have to say, and we will consult on significant changes which will affect your future competitiveness.

92. But we need the right corporate tax structure in order to be able to compete in the next 10 or 20 years. That is why I set up a group of business experts to examine what we need to do to ensure that Britain remains a good place to do business.

93. I intend to use that forum to discuss current and future pressures on globalisation; to put tax issues for business in the context of wider business decision-making; and, to ensure that the tax system is forward looking to future challenges.

94. We want to work with the forum to see how we can, in the longer term, deliver our aim of bringing the corporation tax rate down.

95. The forum can also contribute to the debate on the taxation of foreign profits, which we began last year in response to business concerns.

96. We have been clear that we want to deliver a revenue neutral package that would enhance the competitiveness of our tax system, while protecting existing UK tax revenues.

97. In recent months, pharmaceutical, and other intellectual property-rich companies, have raised concerns about the potential impact of changes to the rules.

98. Any changes to the rules will be taken forward in close consultation with businesses and the final proposals should take into account the impact on individual sectors, including those that deal with intellectual property.

99. We need to ensure that the tax system is competitive and predictable, as well as ensuring that the business environment is attractive to increasingly mobile businesses.

100. Everyone here is well aware of the pressures this country – and others right across the world – face today. Government and industry both have difficult decisions to make.

101. We have a lot going for us. Britain is a good place to do business and we can do better still.

102. We have world-class companies, an excellent research base – some of the world’s leading universities – an ability to innovate that is recognised the world over.

103. I believe we can face the future with confidence.

104. Confident about our country. Confident about our business. Confident in ourselves.

Alistair Darling – 2008 Speech at Chatham House


Below is the text of the speech made by the then Chancellor of the Exchequer, Alistair Darling, at Chatham House in London on 29th April 2008.

1. Your conference today is about new financial frontiers. And I want to talk about the impact of those changing frontiers on the UK and indeed other developed economies.

2. The benefits of globalisation are undoubted; and you will find no greater champion of fair and open markets than us.

3. Our future depends on our being able to seize the huge benefits that globalisation brings. But we also need to make sure that we anticipate and respond effectively to the huge challenges that come with it.

4. Today, Governments the world over are dealing with greater and more complex cross border activity; the increasing value of intangibles and intellectual property, and changes in production chains across countries and continents.

5. Nowhere are these challenges more acutely felt than in financial services, one of the most integrated parts of the global economy.

6. And since last summer, global financial markets have suffered a prolonged period of turbulence with liquidity being squeezed.

7. The events of the last few months have demonstrated how a problem that might once have been confined one city or state, or even one country, can today spread rapidly to affect the whole world within a few weeks.

8. As we have seen, problems that started in the US housing market last summer have affected every other country, and Britain is no different.

9. The UK mortgage market now facing challenges as a result of the US sub-prime crisis.

10. Borrowers face tighter lending conditions as a result of higher funding costs.

11. Mortgage approval figures for March – released today by the Bank of England – show that mortgage lenders are continuing to reduce lending.

12. These events present real challenges both here and abroad. That is why the Bank of England announced its support scheme last week.

13. We need to deal with turbulence and uncertainty in the financial markets by acting together with other Governments and Central Banks.

14. We need to act both internationally and here at home to resolve these problems. And let me take the international response first.

15. It is clear that the international institutions set up 60 years ago need to change and adapt to reflect today’s realities.

16. And in Washington two weeks ago, the Financial Stability Forum agreed a range of action – some of it implemented in the next three months, others for the longer term.

17. The immediate priorities were to ensure that banks were as open as possible, in order to remove the continuing uncertainty as to their true positions.

18. Banks writing down losses and rebuilding their capital will help rebuild confidence because it provides greater certainty.

19. We also agreed to strengthened oversight of risk management, including capital and liquidity; clearer standards for valuation and transparency; and changes in the role and use of credit ratings.

20. We will also strengthen international co-operation, so we are better able to prevent crises and deal with problems that occur.

21. We are also working with the IMF and FSF to allow it to play a greater role in providing an early warning of the threats to financial stability, so that the authorities can take early action to prevent these problems in the future.

22. The use of international colleges of supervisors should also be expanded along with more concerted action between countries to deal with this problem.

23. And in the European Union we will next month be discussing how regulators can work closer together, recognising that banks operate in many Member States.

24. Improved co-operation between regulators is essential. Systemically important banks trade in many different jurisdictions in Europe, as well as in other parts of the world.

25. Closer to home, the British economy remains resilient and strong.

26. It has proved resilient to a number of shocks over the past decade, as a result of our macroeconomic policy framework and the promotion of open and flexible products, labour and capital markets.

27. As a result of this resilience, in the past decade, the UK is the only G7 economy to have avoided any negative quarter of growth. But none of us can be complacent. And all of us have to be vigilant.

28. With low inflation, record employment, and numbers claiming unemployment benefit at their lowest level for a generation, and with the action taken last year to curb inflation, Britain is well-placed to withstand the slowdown in the global economy.

29. But we will see the effects and the slowdown like everyone else.

30. So how do we respond?

31. First, by understanding the causes of the present problems. And putting in place measures to deal with them and to try to keep them from happening again.

32. The global economic stability that has characterised the recent years – low inflation and low debt – has coincided with a wave of innovation and restructuring in financial markets.

33. Financial innovation has brought considerable benefits.

34. It has increased the access to finance, with the easier and more efficient allocation of capital with, and between, economies

35. It has also increased the scope for risk to be diversified. That is all to be welcomed.

36. But there are also more unwelcome effects. And the first line of defence has to lie with the directors of a company.

37. The prevailing culture in the past few years has been one of achieving the greatest returns in the shortest period of time.

38. This has been driven, in part, by what is known as ‘the search for yield’ during a period where we have experienced historically low interest rates.

39. This has led to people developing, and others investing in, more and more exotic products.

40. As products have become increasingly complex, there has been less understanding of the risks they bring. Boards have not always fully understood what their organisations were doing, and the risks to which they became exposed.

41. Let us be clear: banks have a clear responsibility to manage risk in their lending, and institutional investors a corresponding duty to be diligent in their investments.

42. Primary responsibility must lie with the banks, their boards and their shareholders.

43. And banks will want to look at their own governance arrangements.

44. But it also means that we need the right level of supervision, and that regulators co-operate with each other in what is an increasingly international industry.

45.The problems in the wholesale markets are beginning to spill over into the retail markets, there continues to be a clear public interest to act.

46. Recognising this, the Government is taking action, to help ensure a fair and well functioning UK mortgage market.

47. Last week, I met mortgage lenders to discuss what the industry could and should be doing to address concerns of borrowers in difficulty.

48. I welcome the arrangements that the industry has in place, which they will continue to build upon, to help ensure borrowers are treated fairly and are helped through this period.

49. And last week, the Bank of England announced its special liquidity scheme designed to improve conditions in the financial markets.

50. The Governor of the Bank has made it clear that the Bank will take whatever action is necessary to provide the banking system with the liquidity assistance it needs to function normally.

51. It is not a case of more and more rules and regulation. There are gaps that need to be plugged. But you cannot have a rule or regulation for every possibility: overregulation brings its own problems.

52.But we do need to have the right supervisory and regulatory regime to make sure that we can respond. And we need to ensure that regulators do what they are supposed to be doing more effectively.

53. We need to close gaps within the system – that is why we consulted on changes to our supervisory system earlier this year.

54. Here we are proposing reforms to the banking system with legislation later this year.

55. These reforms will make it easier to intervene in the event that a bank gets into trouble, in order to protect depositors and maintain the stability of the financial system.

56. We will also make changes to the Bank of England to strengthen its role in maintaining financial stability – alongside its responsibility for monetary policy.

57. We will continue to discuss these proposals to make sure that we get them right. But we must have legislation ready for early next year.

58. Today’s turbulence in the financial markets is one issue.

59. But there are others too, such as how governments respond to multinational companies’ increasing mobility and the impact that has on tax.

60. We need to anticipate a growing problem for all governments – how to protect revenues in an increasingly global market place for goods and services while promoting the competitiveness of our businesses so that they can take advantage of open markets.

61. This is another example of the new financial frontiers we all need to respond to.

62. The UK’s open and flexible markets and light-touch approach to regulation mean that the UK is a good place to do business. Tax is one element of this strong business environment that makes the UK competitive at a global level. We have one of the most competitive tax systems among major economies, including the lowest corporation tax rate in the G7.

63. What should a modern corporate tax regime look like in 10 or 20 years time? How do we respond to the changing world?

64. We are determined that Britain remains one of the best places in the world to do business, but we can never afford to be complacent about that. Our future depends on being able to seize the huge benefits that globalisation brings. But we also need to anticipate and respond effectively to the fresh challenges we are facing.

65. I am therefore bringing together a group with industry representatives to discuss ways in which the tax system can provide the long-term certainty multinational companies need, considering the competitiveness and other challenges facing both businesses and government.

66. Like the USA, Germany or France, the protection in the UK tax system includes rules covering the diversion of profit into foreign subsidiaries – the Controlled Foreign Companies rules.

67. We need to keep these rules under review, as an integral part of our work to reform the taxation of foreign profits: something which business has long asked for.

68. We will do so in a way which reflects the vital importance of maintaining a competitive tax framework. We are determined that Britain remains a good place to do business.

69. We have been working closely with businesses, and as a result of those discussions our thinking has developed substantially.

70. So in the consultation document that we will produce shortly, we will show that we have made progress on issues such as how we apply intellectual property rules; our treatment of income already subject to levels of taxation comparable to those in the UK and a set of exemptions to lessen compliance burdens.

71. We are committed to continuing to engage with business in this area to ensure that the detailed proposals that we are bringing forward in the summer respond to businesses’ concerns.

72. The long-term stability of the economy remains our key priority.

73. We have taken steps to make our economy more dynamic and competitive – and globalisation drives us further down that road.

74. We are determined to remain one of the best places in the world to do business – but we can never afford to be complacent about that.

75. London’s history as a trading and financial centre over the last three centuries, and our long standing tradition of openness, internationalism and flexibility explain why modern Britain is responding to the challenge of financial globalisation, without the protectionist and nationalistic reactions that hold back many of our trading partners.

76. Such openness and transparency has also helped instill market confidence in investors – and we welcome that.

77. Here we have taken advantage of this rapid change, and as a result we have one of the world’s strongest financial centres.

78. New financial frontiers require new responses.

79. I am determined that we do what is necessary to remain one of the world’s best places to do business – and critically to ensure that we maintain our strong and resilient economy, as well as the world’s leading financial centre.

Alistair Darling – 2008 Budget


Mr Deputy Speaker, the core purpose of this Budget is stability – now and in the future.

And its core values are fairness and opportunity, founded on stability and strength.

Mr Deputy Speaker, in every country in 2008, every government has one aim – to maintain stability through the world economic slowdown.

Britain with its central role in the world’s financial system is no exception.

With low inflation. Record levels of employment. And unemployment at its lowest level for a generation.

And with the action taken last year to curb inflation, Britain is better placed than other economies to withstand the slowdown in the global economy.

Mr Deputy Speaker, this year’s Budget is a responsible Budget that will secure stability in these times of global economic uncertainty.

And we will do everything in our power to maintain stability – keeping inflation and interest rates low and maintaining our record of growth.

While other countries have suffered recessions, the British economy has now been growing continuously for over a decade – the longest period of sustained growth in our history.

Because of the changes made by this Government to entrench stability and increase the flexibility and resilience of our economy, I am able to report that the British economy will continue to grow through this year and beyond.

Even in today’s difficult and uncertain times, we are determined that we will not be diverted from our long-term aim – to equip our country for the challenges of the future, confront climate change and to end child poverty in this generation.

Mr Deputy Speaker, this Budget is about equipping Britain for the times ahead. Making sure that everyone – no matter what their circumstances – can exploit their potential.

It’s about building a fairer society, offering more opportunity, a fair Britain in which everyone can succeed.

Mr Deputy Speaker, throughout the world economies have benefited from the globalisation of trade and investment, which has delivered strong world growth.

Here in Britain, our openness, our global reach, our history of scientific invention and creative success, make us uniquely placed to succeed in the global economy.

But with the benefits of globalisation we see too how problems in one part of the world can quickly spread to another.

Turbulence in global financial markets – which started in the American mortgage market – has affected all economies from the United States to Asia, as well as Europe.

We have seen significant disruption across many credit markets: with a number of them barely functioning at all.

And since the turn of the year, global stock markets have also been affected. This poses a major risk to the world economy.

And so we welcome yesterday’s commitment by the world is central banks including, the Bank of England to address these concerns.

Here, the action we took last autumn to support Northern Rock and protect depositors and savers mean that – despite seeing the worst period of financial disruption for a generation – we have maintained confidence and stability in the banking system.

Mr Deputy Speaker, between the early 1970s and the mid 1990s the UK was one of the least stable economies in the G7. Today we are the most stable.

In the past our economy suffered from high unemployment and high inflation but today unemployment is lower than in Germany, France and Italy.

Welfare reform makes work pay and encourages people off benefits. The strengthened competition regime has increased the flexibility of product and labour markets, backed by fair employment laws.

So, the reforms we have made since 1997 – independence for the Bank of England and tough fiscal rules – mean that Britain is now more resilient and better prepared to deal with future shocks. And is better equipped to meet the challenges of rapid global change.

We are developing new strengths in the industries of the future – creative industries account for 7 per cent of the economy; pharmaceuticals account for a quarter of the UK’s research and development.

Ours is the only major industrial economy to see an increasing share of trade in global services – from 7 per cent a decade ago to 8 ¼ per cent today.

In knowledge-intensive services, the UK is second only to the United States. High-tech manufacturing has grown by 30 per cent in the last ten years.

Driven by improved productivity, the UK’s GDP per head – the average income for every man, woman and child – has gone from the lowest amongst the group of seven leading industrial economies in the early 1990s to being second only to the United States last year.

Mr Deputy Speaker, right across the world, countries have lowered their forecasts for growth in the coming year.

In Japan, growth is forecast to be 1.4 per cent, in the Euro area and the United States 1.6 per cent, and in Canada, 1.8 per cent.

And even the fastest growing markets: China, India and Brazil, which have enjoyed record growth in recent years, are expected to slow.

Despite the slowdown in the world economy, in 2007 the British economy grew by 3 per cent – the fastest growth of any major economy.

This year my forecast is that – as growth in the world economy slows further – growth in the British economy will be between 1¾ and 2¼ per cent in 2008 – but faster than Japan, the US and the Euro area.

I expect growth to shift towards companies and exports with growth rising to 2 ¼ to 2 ¾ in 2009 and 2 ½ to 3 per cent by 2010.

So Mr Deputy Speaker, my forecast shows the UK economy will continue to grow throughout this period of global uncertainty – a view supported by the Bank of England, the International Monetary Fund and the Organisation for Economic Co-operation and Development.

Mr Deputy Speaker, in the past, inflation has overshadowed many Budgets. From the 1970s until the early 1990s, the British economy suffered through the failure of successive governments to deliver economic stability.

Mr Deputy Speaker, we have seen recent increases in world food, fuel and energy prices.

The reforms we have made since 1997 mean we can be confident about the inflation outlook. There will be no return to the inflation rates of the early 1990s.

As is happening in many countries because of commodity prices, inflation in the UK will rise in the short term as higher oil and food prices feed through into domestic inflation.

But inflation is forecast to return to target in 2009 and remain on target thereafter.

The success of the Monetary Policy Committee and the resilience of the UK economy is clear. Energy prices have tripled since 2002, but over this period inflation has averaged just 2 per cent and growth has averaged 2 ¾ percent.

To provide certainty, and to build on this foundation of stability, I am today writing to the Governor of the Bank of England to re-confirm that the inflation target for the Monetary Policy Committee remains 2 per cent on a CPI basis – entrenching our commitment to low inflation.

And the discipline we have shown on pay in the public sector will support the Bank of England in maintaining low and stable inflation.

The reforms we made, this hard-won stability, means that – whereas in previous decades the UK economy suffered more than other economies in the face of global economic downturns – we enter this period of uncertainty, better placed than any other major economy.

Mr Deputy Speaker, our fiscal policy, like our monetary policy is designed to support stability.

It is founded on tough fiscal rules, underpinned by the Code for Fiscal Stability and forecast on the basis of cautious assumptions audited by the independent National Audit Office.

Our fiscal rules – to keep debt low and stable and to borrow only for investment over the economic cycle – deliver sound public finances in the medium term.

They protect public investment and allow fiscal policy to support monetary policy at the right time to sustain economic stability and growth.

Over the past ten years at all times we have taken the action necessary to meet our fiscal rules.

The disciplines we have imposed mean that borrowing is much lower than it was before 1997 – and so too is debt.

And between 1979 and 1997 borrowing was 3.4 per cent of national income.

Since 1997 it has averaged just 1.2 per cent.

And debt which – at the start of the economic cycle in 1997 – was 43.3 per cent has now fallen to 36.6 per cent of GDP.

It is precisely our commitment to this discipline and stability that gives us the flexibility now to respond to the global economic challenges we face today.

Given the fundamental strength of our public finances, it is right to allow fiscal policy to support monetary policy over the period ahead in helping to maintain stability in the face of the global downturn.

For environmental reasons we will increase fuel duty by ½ pence per litre in real terms from 2010.

Fuel duty is due to rise again in April but because I want to support the economy now and help business and families I will postpone that increase until October.

Mr Deputy Speaker, I can tell the House with our Budget projection for the current budget balance in 2007/08 will come in at £8 billion as forecast.

And our projection for net borrowing at £36 billion is £1.4 billion lower than forecast at the time of the Pre-Budget Report.

Debt too this year is forecast to be lower than the Pre-Budget Report at 37.1 per cent.

As a result of decisions in this and recent Budgets that come into effect this year – including a reduction in the main rate of income tax from 22 to 20 pence – fiscal policy is able to provide real support to the economy this year.

This is a responsible approach – within the disciplines of our fiscal rules – that will help entrench the resilience of the UK’s economy.

So borrowing next year, which peaked at 7.8 per cent of national income by 1993, equivalent to £110 billion today, next year will rise to £43 billion, some 2.9 per cent of national income, less at its peak than the average level of borrowing between 1979 and 1997.

Because of the decisions taken in this Budget it will fall to 2.5 per cent, then 2 per cent, then 1.6 per cent and then 1.3 per cent by 2012/13, supporting stability and resilience in the economy. That is £38 billion and then £32 billion, £27 billion and £23 billion by 2012/13.

Even taking into account the turbulence in financial markets and the support we are providing to the economy now, the current balance this year is in line with my forecast at Pre-Budget Report at minus £8 billion.

Next year it will be minus £10 billion, then minus £4 billion, returning to a surplus in 2010 of £4 billion, then £11 billion and then £18 billion by 2012/3, forecast to meet the Golden Rule over the economic cycle.

And so Mr Deputy Speaker, the Budget shows that we are meeting our first fiscal rule – the Golden Rule – with the current budget in surplus over the economic cycle.

In the previous 2 cycles the then Governments failed to meet the Golden Rule; in the cycle from 1986 to 1997 they failed by a margin of £240 billion and in the cycle from 1977 to 1986 by £140 billion.

In the past, the then Government borrowed to fund the immediate pressures of the day with no long-term return to the taxpayer.

Today our fiscal discipline means that over the cycle we will borrow only to invest.

Vital investment – in transport, schools and hospitals – has been protected and increased.

So whereas in 1996-7 public sector net investment was £5.4 billion, over the forecast period it is set to rise further from £33bn next year to £37bn in 2010 – the highest in three decades.

Borrowing for investment within the fiscal rules, means that we will meet our second fiscal rule – the Sustainable Investment Rule. In each year and over the cycle.

This year debt will be lower than the US, Euro area and Japan.

Debt levels are forecast to be 38.5, 39.4, 39.8, 39.7 and 39.3 per cent of GDP by 2012 /13. Every year lower than in 1997.

Mr Deputy Speaker, in the 18 years between 1979 and 1997 investment increased by only 20 per cent in cash terms and reached a low of just 0.3 per cent as a share of national income.

But by 2011, I can tell the House that investment will have increased by 500 per cent since 1997 and will have trebled as a share of national income.

Mr Deputy Speaker, by 2011 we will have seen the longest sustained expansion of investment in public services since 1945.

It is an achievement to be rightly proud of.

And we remain committed to continued investment in these public services.

And building on the platform of stability provided by the new fiscal rules, successive Spending Reviews delivered sustained increases in spending addressing the backlog of underinvestment in public services.

Mr Deputy Speaker, public spending grew by 3.6 per cent a year in real terms between 1997 and 2007.

Following the Comprehensive Spending Review last October, public spending in the coming three years will grow by 2.2 per cent, building on past increases and underpinned by our stretching value for money reforms.

In 10 years, spending on health has almost doubled; spending on education is up by 58 per cent.

As a result waiting lists are down; school standards are up. Transport spending is now 90 per cent higher. More people are using public transport than ever before.

Aid for the world’s poorest countries has doubled in real terms.

The Defence Budget has seen the longest period of increased spending in a generation.

This year we again expect to spend over £2 billion more supporting our troops on the front line. Including around £900 million on military equipment.

Mr Deputy Speaker, I want to take this opportunity to pay tribute to our service men and women in Iraq and Afghanistan, and their families.

We are deeply proud of the bravery, professionalism, and courage they display in serving our country.

Mr Deputy Speaker, this has been an exceptional commitment to improving public services. By 2010-11 we will have seen the longest sustained expansion of investment in public services in recent history.

In 1997 the annual cost of servicing our national debt was 9 per cent of public spending.

But today it is 5 per cent of total public spending. Freeing up an extra £23 billion each year to invest in public services – around half the entire budget for schools.

In the early 1990s as much as three quarters of all new public spending went on debt and social security costs. The figure is now just a third of that – allowing us to target spending where it is needed.

We have turned welfare into work and borrowing into wealth creation.

And it is essential that we continue to help everyone who can work to do so.

So Mr Deputy Speaker, we will bring forward further proposals to reform housing benefit to ensure that work pays.

From April 2010 all long-term recipients of incapacity benefit will attend work capability assessments.

These reforms will continue to free up resources for investment.

And it is right that like any other organisation, the public sector is as efficient as possible and that it delivers value for money.

Over the last year public sector employment has fallen. At the same time, private sector employment has grown strongly leading to record levels of employment, underlining the resilience of the British economy.

All departments have now published plans which will deliver another £30 billion in savings each year from 2010/11.

All of these savings will be reinvested in services.

And we will examine all major spending areas to identify where further reform could be made to deliver better value for money and maintain the improvement of public services.

Mr Deputy Speaker the Prime Minister has made clear, spending must be matched by reform. Reform remains vital. It’s not optional – it’s essential. It’s common sense.

Since 1997 we have responded to peoples’ expectations for better public services after decades of underinvestment and neglect.

We have driven up standards, developed a greater diversity of providers, tackled failing services, thereby ensuring that maximum benefit was gained from investment.

10 years ago there were 600 schools in which less than a quarter of pupils gained at least five good GCSEs. Today there are fewer than 50.

Compared to 1997, around 10percent fewer people under 75 now die from cancer thanks to faster and better treatment and more specialist doctors.

But the test for public services in the future is not whether they are better than before or simply good enough. It is whether they are as good as they can be.

So, if the focus of the past decade was on repairing the old; the focus of the next will be on developing genuinely world-class services.

After a decade of hugely increased investment, we will continue our spending at a sustainable rate alongside our wider objectives for the economy and public services.

This Budget therefore confirms the spending plans set out in last year’s Comprehensive Spending Review, and makes an assumption for continuing real growth in public spending after 2011 at a rate of 1.9 per cent a year.

That will allow departmental resources to continue to grow at broadly the same rate as in the next three years.

Now, Mr Deputy Speaker, I want to turn to the steps that we need to equip Britain for the future.

There is no greater moral imperative than to make sure that every child has the highest aspiration and ambition.

And the best possible opportunity to go as far as they have to the talent to go. Not some children, but every child.

If we are to build a fairer future for our children then we must eradicate child poverty in Britain.

Between 1979 and 1997 the number of children living in poverty has doubled.

Since then Mr Deputy Speaker, I can report that there are 600,000 fewer children in relative poverty, and we have halved the number of children in absolute poverty.

We have set ourselves an ambitious target to eradicate child poverty by 2020 and to halve it by 2010. And today I want to do more to deliver that ambition.

I will help their families to escape permanently the cycle of deprivation that blights too many lives.

Central to this is helping more parents into work.

We want to demonstrate our commitment to supporting parents, through a contract in which Government undertakes to provide the support that families need to move into work and the other side of this contract we look to families to make a commitment to improve their situations where they can.

From October 2009, we will change the rules for Housing and Council tax benefit so that parents are better off in work than on benefits.

As a result, a working family with one child on the lowest income will gain up to £17 a week. Mr Deputy Speaker this measure will lift 150,000 more children out of poverty.

And I can do more to help all children and hard working families.

In 1997 Child Benefit for the first child was £11 a week. I can tell the House that from April 2009, I will increase Child benefit for the first child to £20 a week – a year earlier than planned.

I will increase by £50 a year above inflation the child element of the Child Tax Credit for families on low and middle income from April next year.

This means that a family with two children, earning up to £28,000 a year, will be over £130 a year better off.

To make further progress we will spend a further £125m over the next three years targeting help to those who need it most and where the challenges are the hardest, developing new approaches that help families for the long-term.

Taken together these measures mean that, even at a time when we need to take difficult decisions, are investing a further £765 million next year and then a further £950 million the following year to take 250,000 more children out of poverty.

Today I am publishing analysis on what further steps we intend to take to eradicate child poverty.

And I believe further action is now needed to help vulnerable groups deal with rising energy prices.

We want to see the 5 million customers on prepayment meters given a fairer deal and energy companies to increase their support to vulnerable customers.

We will work with the companies to take further action on a voluntary and statutory basis – to underpin this as necessary we will legislate.

Energy companies currently spend around £50 million a year on social tariffs. I want to see this rising to at least £150 million a year over the period ahead.

Mr Deputy Speaker, the Government is committed to encouraging more people to save.

There are now over 17 million people with individual savings accounts and, from this April, we are increasing the annual Individual Savings Accounts investment limit to £7,200 with the amount that can be held in cash rising to £3,600.

And parents have now opened over 2.4 million Child Trust Fund accounts saving more for their children’s future.

We must go further.

So I can also announce that the Government will launch the Saving Gateway nationally with the first accounts available to savers from 2010. By contributing to these accounts we will offer incentives to save to up to 8 million people on lower incomes.

Ending child poverty, encouraging saving, raising ambition and providing greater opportunity.

Mr Deputy Speaker, for business, my Budget provides continuing stability and certainty and introduces new opportunities for entrepreneurs – the three critical factors contributing to the strength of the UK’s business environment.

Ensuring that the UK remains one of the best places in the world to do business, we will continue to promote open and competitive markets – including by removing barriers to trade across the world through bilateral and multilateral trade negotiations including the conclusion of the Doha development agenda.

Mr Deputy Speaker, our goal is, and will continue to be, to maintain the most competitive corporation tax rate of any major economy. We have the lowest corporation tax rate in the G7.

A competitive and simplified tax regime is essential.

That is why we cut the main rate of corporation tax in 1997 and again in 1999.

And from next month the main corporation tax rate falls again from 30 per cent to 28 per cent.

Mr Deputy Speaker, the UK is one of the best places in the world to do business. We are committed to consultation with business to maintain a stable business tax system that remains responsive to business’ needs and internationally competitive.

Underlining our commitment to maximising the economic recovery of the UK’s oil and gas reserves, I can also confirm reforms to the North Sea fiscal regime to help incentivise investment and support production.

But today I also want to do more to support Small and Medium Enterprises now and in the longer term.

13 million people work in Small and Medium Enterprises. And there are over 750,000 more firms than in 1997.

The new Capital Gains Tax rate will come in next month including the entrepreneurs’ relief I announced in January.

And that will benefit over 80,000 businesses and investors in the next year alone – 90 per cent will continue to pay Capital Gains Tax at 10 per cent – one of the lowest rates in the world.

This Budget continues a programme of tax simplification. I am today announcing further steps to help small companies simplify their tax calculations.

Mr Deputy Speaker, especially at this time we need to do more to help Small and Medium Enterprises get access to the finance they need.

To help them in current conditions, I can therefore announce that funds available through the Small Firms Loan Guarantee scheme will be increased by £60 million for the coming year.

And I am from next month extending the scheme to small and medium firms.

I am also increasing the amount of investment on which tax relief is available under the Enterprise Investment Scheme from £400,000 to £500,000, and the employee share limit for tax relief under the Enterprise Management Incentive Scheme will increase from £100,000 to £120,000.

The Secretary of State for Business and Enterprise will consult on radical new proposals to impose a limit on the amount of regulation that can be imposed by Whitehall departments.

I will also provide a capital fund of initially £12.5 million to specifically encourage more women entrepreneurs.

There is more I can do to ensure that small and medium firms win more business from the public sector.

So we will take immediate steps to give firms better access to Government contracts, and to help them with their cashflow.

And I am asking Anne Glover, Chief Executive of Amadeus Capital Partners, to look into what other barriers we can remove and the practicality of setting a goal for Small and Medium Enterprises to win 30 per cent of all public sector business in the next five years.

I believe that this could help promote enterprise in one of our most innovative and dynamic areas of the economy.

I believe we can help support them grow their businesses, creating new jobs and opportunities.

Mr Deputy Speaker, we welcome the contribution made by people born outside the UK who choose to come and work here. They are an important and central contributor to our economy’s growth and prosperity.

They pay taxes on their earnings here and also pay tax on money they bring into the country from abroad.

But for those non-domiciled individuals or families who have chosen to make Britain their home, I believe that it is right and fair that they should, after 7 years, pay a reasonable charge to maintain the right to be taxed differently from other UK residents.

Beyond that, as I have said before, we will not seek to charge UK tax on offshore income or capital gains that is not brought into the UK.

This new charge will be implemented from April. There will be no further changes to this regime for the rest of this Parliament or the next.

Last October I said that I would consider a scheme to which claimed to raise an additional £2.8 billion. On closer examination it was clear that the sums that did not add up. Not for the first time given the source. And I have rejected it.

We will continue to be vigilant against tax avoidance and we are publishing today further measures to ensure fairness for all taxpayers.

If we are to compete in the future it is essential to do even more to drive up standards in education and to improve skills. Increased spending on education has benefited children across the UK.

We have cut the number of underperforming schools dramatically in the last decade.

And building on last year’s Spending Review, we will raise standards even further. To create greater opportunity for all children.

And so the Secretary of State for Children, Schools and Families will be investing £200m to bring forward by a year to 2011 the Government’s aim for no schools to have fewer than 30 per cent of its pupils achieving 5 A*-C GCSEs, including English and Maths.

We will extend the successful London Challenge model, enable the best head teachers to turn round low performing schools, create new trusts and federations around successful schools, and in areas of greatest need drive forward a faster expansion of our Academies programme.

And as a result, by 2011, we will ensure that every school is an improving school meeting the standards we have set.

And I can announce today that we will commit £10 million over the next five years – which alongside contributions from the Wellcome Trust and private sector will create a £30 million Enthuse Science fund.

This will give every science teacher in secondary and further education access to high quality professional development helping improve the science offer to today’s children.

And to improve skills, the Comprehensive Spending Review increased resources for adult training. Extra funding will enable nearly 3 million adults to gain new, higher-level skills by 2011.

And today I can announce an extra £60 million over the next three years to provide new opportunities for people to gain the skills needed to enter the labour market, to remain in work, and progress in work.

This includes additional apprenticeships with leading employers to help tackle skills gaps and shortages.

Mr Deputy Speaker, by 2010 we will be spending over £6 billion a year supporting British science and innovation.

And tomorrow also the Secretary of State for Innovation, Universities and Skills will publish the Science and Innovation White paper.

Including proposals for a Further Education Innovation Fund to help them support businesses to develop their innovative potential.

If we are to compete in the future, not only do we need to have the best business environment and higher skills levels, we also need good transport links to make up for decades of underinvestment.

In the last ten years we have doubled the amount we spend on transport. £7 billion on the West Coast Mainline to Glasgow cut journey times. Public transport usage is at a 25 year high.

Mr Deputy Speaker, last November, following the Government’s investment of £6 billion, saw the completion of the Channel Tunnel rail link, with the opening of the St Pancras international station.

This week the new Terminal 5 opens at Heathrow.

Today I can announce new measures at Heathrow and other airports to ensure that a greater use of biometric technology speeds up the time it takes passengers to get through immigration control.

Good for business. Good for Britain.

Government funding for Crossrail is now secure; this will support economic growth not just in London but in the whole of the United Kingdom by adding an estimated £20 billion to national income.

This will help ensure that London retains its position as the world’s pre-eminent international financial centre.

We are spending more on public transport. But we also need to reduce congestion and improve transport links.

If we are to remain competitive over the next 20 to 30 years, we have to take more radical steps to reduce congestion on our roads.

We need more capacity on our roads but we cannot build our way out of all the problems we face.

Last week the Secretary of State for Transport announced further measures to ease congestion. In addition she has made available funding to develop local schemes to tackle congestion in the short-term.

In the longer-term, road pricing could reduce congestion as well as helping to meet our wider environmental obligations.

So I am setting aside new funding to develop the technology that could underpin national road pricing, inviting tenders to test this with the results expected next year.

Just as we need good transport links, we also need to make sure that we have more housing to meet the rising demand for new homes as well as to support our growing economy.

Since 1997, as a result of historically low mortgage rates we have seen one and a half million more home owners.

Already we have helped 95,000 families into new homes through shared ownership and shared equity schemes. And we will spend £8 billion on new, affordable and social housing over the next three years.

This will enable the Housing Corporation to deliver 70,000 new affordable homes each year by 2010/11.

But I want to go further.

From this April, key workers – such as teachers and nurses – and first time buyers will be able to borrow money from new-shared equity schemes.

Until now these were only available to those who could afford three quarters of the price of their new home. I am now extending the scheme to help those able to afford half of the price of their new home.

And I can also announce that from today, stamp duty on shared ownership homes will not be required until buyers own 80 per cent of the equity in their home.

Mr Deputy Speaker, it is precisely at this time that we need to do more to promote longer-term stability for home owners and mortgage holders.

Already the reforms we have introduced have created much greater stability with consistently low mortgage rates for home owners.

However, the uncertainty in the financial markets is having an impact on mortgage lenders here in the UK.

So I want to take measures that will keep mortgage rates low and stable.

In 2006, 30 per cent of mortgages agreed in the UK – £100 billion of lending – were funded through secondary funding markets.

Current conditions in these mortgage funding markets are extremely difficult because of financial turbulence in global markets.

In some countries these markets are closed.

It is, however, imperative that lenders have access to stable and low cost funding so that mortgage rates can come down as soon as possible.

We will to bring together, investors and lenders with the Treasury, the Bank and the Financial Services Authority to find market-led solutions to strengthen these funding markets further.

Mr Deputy Speaker, I also want more people to have the choice of long term fixed rate mortgages. These protect borrowers from risks and still allow them flexibility to move, or get a new mortgage if rates go down.

Today, however, most people in the UK have short-term fixed rate mortgages for two or three years, leaving them exposed to interest rate rises when their mortgage deal ends.

This is not the case in other countries, such as Denmark where the majority of homeowners take out long-term fixed rate mortgages.

I want to see more flexible and affordable long-term fixed rate mortgages for 10, 20 or even 25 years.

And I am today publishing the findings of the review of housing finance in the UK.

The conclusions show that long term fixed rate mortgages can reduce some of the risks of taking out a mortgage, especially for first time buyers and lower income families.

And it will help more people get on – and stay on – the housing ladder.

So, I will seek views on how we can deliver – drawing on international experience – the right framework for the UK to achieve affordable, long term fixed rate mortgages. I will report back at the Pre-Budget Report.

Mr Deputy Speaker, the best way to improve long term affordability and stability is to build more homes. That is why we are committed to 3 million more homes by 2020.

So I can announce that in addition to the 40,000 already under construction, we have through the review of public sector land identified sites for 70,000 more homes.

Mr Deputy Speaker, we are determined to take decisions now for the long-term future of our country.

Helping to improve affordability, supporting long-term stability for homeowners, and meeting the needs of future generations.

And our greatest obligation to future generations must be to tackle climate change.

Britain has been at the forefront of international action. We are one of the few countries meeting our Kyoto target.

We are working with other countries following agreement in Bali last year to agree tougher global goals after 2012.

And the UK will use our £800 million environment fund to work with the United States, Japan and other countries as well as the World Bank to fund clean technologies in developing countries, and adaptation to climate change.

Britain is already the leading financial centre for carbon markets and we are also working with California and other American states to build these markets and strengthen international partnerships.

We need to do more and we need to do it now. Few doubt the science. The need to take action is urgent.

There will be catastrophic economic and social consequences if we fail to act.

Recognising this threat, we are the first Government anywhere in the world to introduce legal targets compelling us to take action to cut carbon emissions.

We have an established target to reduce carbon emissions by at least 60 per cent by 2050.

I believe that we should go further.

That is why we have asked the Climate Change Committee to advise us – whether as part of an international agreement – we should raise our target to 80 per cent.

And if we are serious about reaching demanding targets then every department in Government, every public sector body, every business, every one of us needs to play its part.

And to ensure carbon reduction is a central part of our economic objectives, I can tell the House that the first carbon budgets to 2022 will be announced alongside the Budget next year.

Long-term growth must be sustainable.

There are huge opportunities here too for business, and there could be over a million jobs in our environmental industries within the next two decades.

Meeting these long term challenges will require us to make substantial reductions in emissions across the economy – in energy supply, transport, in our business and in our homes.

But I believe that there are three key steps we can take now.

Firstly, working in Europe we have helped build the Emissions Trading Scheme to curb the amount of carbon produced by generators and large industrial users.

The scheme imposes a cap on the amount of carbon companies can generate. Companies get allocations for credits to help them adapt.

If we want to encourage investment in low carbon technology in energy renewables and in nuclear, for example, and to make industry more carbon efficient we need to go further.

So in the next phase, instead of auctioning 7 per cent, I want to see auctioning of 100 per cent of these allowances for energy generators.

Last year’s Energy White paper committed us to increasing the supply of renewable energy and the Energy Bill will allow the tripling of renewable electricity by 2015.

We will consult on how to meet our share of the European Union target in the summer.

Secondly, we need to do more to reduce the amount of carbon generated at home and at work.

Given the damage that single-use carrier bags inflict on the environment, we want to be able to take action. We will introduce legislation to impose a charge on them if we have not seen sufficient progress on a voluntary basis.

Legislation would come into force in 2009 and based on other countries’ experience, it could lead to a 90 percent reduction, with around 12 billion fewer plastic bags in circulation.

The money raised should go to environmental charities.

And next month we will launch the most ambitious household emissions reduction programme.

Energy companies are obliged through the Carbon Emissions Reduction Target to give their customers better deals for energy efficiency and therefore cut bills.

Cavity wall insulation for nearly three million homes. Loft insulation, more energy efficient appliances and light bulbs.

I can announce £26 million funding next year for a Green Homes Service to help people cut their carbon emissions and their fuel bills.

We will roll out smart meters to medium and large companies over the next five years, providing greater incentives to reduce the amount of energy they consume.

We already have a target to make new homes zero carbon from 2016. I believe that we can go further.

And I can announce today that new non-domestic buildings will become zero-carbon from 2019.

We will consult on achieving that targets with the potential to save 75 million tonnes of carbon dioxide over the next thirty years.

The Climate Change levy, which is the main reason why we have met our Kyoto targets and which is still opposed by some, will increase in line with inflation from April.

The third key area we need to take action now is in relation to transport.

It accounts for nearly a third of our carbon emissions.

We recognise the contribution of aviation to the UK economy. That is why we support the expansion of Stansted and Heathrow.

I have always been clear that aviation must meet its environmental costs, and that is why we want aviation in the European Union Emissions Trading Scheme.

Because emissions from aircraft are forecast to continue to grow, I am also announcing that revenue from plane duty will be increased by 10 per cent in the second year of operation.

But Britain’s 30 million cars, vans and lorries together account for 22 per cent of total carbon emissions.

Over the last 20 years new cars have become 50 per cent more efficient. And new technology will bring further improvement.

Today, I am publishing Professor Julia King’s review of low carbon cars in which she examined new technologies which could help cut carbon emission.

Professor King found that by simply switching to the cleanest cars on offer, motorists could save 25 per cent of their fuel costs.

She also found that manufacturers needed to be encouraged to bring new technology to the market.

And I am asking the European Commission today to set a tighter target which reduces the cap on emissions from cars from 130 grams per kilometre of carbon dioxide to 100 grams per kilometre of carbon dioxide by 2020.

The road tax system should do more to support the use of more carbon-efficient, and therefore less costly cars.

This will help reduce average carbon dioxide levels in new cars.

Firstly, from April 2009, I am proposing a major reform to Vehicle Excise Duty to encourage manufacturers to produce cleaner cars and by introducing new bands, there will be an incentive to encourage drivers to choose the least polluting car.

And as a second stage for new cars, from April 2010 there will be a new first-year rate based on carbon dioxide emissions of the car.

Cars that emit less than the proposed 130 grams per kilometre European standard of carbon dioxide emissions will pay no car tax at all in the first year.

But a higher first year rate will be introduced on the most polluting cars.

Cutting taxes for those who cut carbon emissions.

But it is right that if people choose to buy a more polluting car that they should pay more in the first year to reflect the environmental cost.

The changes will provide a real incentive to manufacturers and motorists.

We must encourage sustainable biofuels. Therefore the biofuel duty differential will be replaced by the Renewable Transport Fuel Obligation.

I am also reforming capital allowances for business cars to increase the incentive to move to lower emitting cars.

Mr Deputy Speaker, today is no smoking day. From 6pm today the duty on tobacco will rise, adding 11 pence to the price of a packet of 20 cigarettes and 4 pence to the price of five cigars.

And to help people to stop smoking, we are continuing the 5 per cent reduced rate of Value Added Tax on smoking cessation products beyond 30 June this year.

Mr Deputy Speaker, as incomes have risen, alcohol has become more affordable.

In 1997, the average bottle of wine bought in a supermarket was £4.45 in today’s prices. If you go into a supermarket today, the average bottle of wine will cost about £4.

From midnight on Sunday, alcohol duty rates will increase by 6 per cent above the rate of inflation. Beer will rise by 4p a pint, cider by 3p a litre, wine by 14p a bottle and spirits by 55p a bottle.

Alcohol duties will increase by 2 per cent above the rate of inflation in each of the next four years.

Mr Deputy Speaker, it is only because I have taken these decisions on alcohol and on closing tax loopholes that I am able to provide additional support for families and lift more children out of poverty.

And it also why I am now able to make two further announcements whilst still meeting our fiscal rules.

As the House will know, the basic rate of income tax will fall by 2 pence in April.

Charities play a vital role. We will therefore implement a transitional rate of 22 per cent, to allow them to continue to claim gift aid at the current rate, delivering £300 million worth of relief and will give charities the certainty they need for the next years.

I said that one of the key features of this Budget is fairness. I also want to do more to help older people especially this year.

Mr Deputy Speaker, we are spending £11 billion more in real terms per year on pensions with over half this extra money going to pensioners on the lowest incomes.

From this April, as a result of changes made last year, a further 600,000 pensioners will be taken out of paying income tax.

The pension Credit now guarantees a minimum income of £124 per week from April.

Before 1997 there was no Winter Fuel Allowance.

For this year I have decided to help pensioners who are facing pressures such as higher energy bills. I will raise the winter fuel payment for over 60s from £200 to £250 and for the over 80s from £300 to £400. 9 million pensioner households will be better off. Conclusion

Mr Deputy Speaker, this is a responsible Budget to secure Britain’s stability in the face of global uncertainty.

I have made my choice.

Responsible decisions not irresponsible, unfunded promises.

Fairness and opportunity for everyone in Britain.

To secure a strong, sustainable future.

And I commend it to the House.

Alistair Darling – 2007 Speech to the CBI Annual Conference


Below is the text of a speech made by the then Chancellor of the Exchequer, Alistair Darling, to the CBI Annual Conference on the 27th November 2007.

It is a pleasure to address the CBI Conference.

And first of all I would like to acknowledge the advice and support given by Richard Lambert and his colleagues. Both at the DTI and now at the Treasury I have worked closely with the CBI. From the working time directive to reducing burdens on business your views matter. And your staff speak up for your interests. Believe me they don’t pull their punches. They serve you well.

This year’s conference is taking place at a time when the reality of the global economy is clearer than it has ever been.

The problems that started in the American housing market have quickly affected countries across the world. There are reasons to be cautious. We don’t yet know the full effects of this uncertainty.

But there are good reasons too to be optimistic.

This year world growth will again be around five per cent – above its thirty year average for the third year in a row.

Britain has a strong economy.

We have highly successful competitive businesses, many here today. We have seen over ten years of uninterrupted growth.

And as I said in the Pre Budget Report whilst that growth will slow next year, the economy will continue to grow next year and the year after.

It is the Government’s job to work with you as we deal with the present uncertainties. But there are also huge opportunities ahead as many of your members will testify. You are winning orders here and across the world in every sector competing with the best.

Supporting and sustaining businesses remains central to everything we do and I know that we have worked well together over the past decade and we will continue to do so.

Our shared priorities must be

  • to maintain stability and flexibility in the face of financial uncertainty,
  • to break down barriers to trade in the face of increasing calls for protectionism,
  • to respond to the global challenges of competition and climate change.

And that means taking decisions that may be difficult – just as you do every day. And having made those decisions we see them through.

Over the past ten years Britain has been the only major economy to enjoy continuous growth.

Indeed in that time Britain is the only major economy to have grown continuously.

Our determination to take the difficult decisions means that even in today’s uncertain times – with turbulence in international financial markets and record oil prices – we can be confident of the resilience of the UK economy.

Now, economic stability depends on financial stability.

In the financial markets, it is clear that both here and internationally we need to strengthen surveillance and supervision to head off problems before they arise.

We are working with the IMF and the Financial Stability Forum to provide far greater transparency so that institutions understand the risk to which they might be exposed.

And here at home there are lessons to be learned. I have made it clear our response has to be proportionate and appropriate, but that we will strengthen the regulatory system where it is needed.

And let me tackle head on those who now say that we should not have provided financial support for Northern Rock.

This was a bank that depended on being able to raise billions of pounds on the money market. When that was no longer possible, we had a choice.

We could have let it go down. But I believe that the consequences for the banking system, including the likely knock-on consequences for other financial institutions in which confidence would inevitably have been shaken, and for Britain would have been extremely damaging.

That is why I authorised the Bank of England to provide support. At the time that intervention was widely supported, even by some who now imply that it was the wrong thing to do and who are not prepared to accept the consequences of that support.

I believe it was right to intervene; that it was right to put in place guarantees arrangements to savers. And it is right to see it through.

It was never going to be an easy decision. There were always going to be critics when the going got tough.

But that is not the point. Far worse would have been to have done nothing, to have allowed that bank to have gone under. I believe this would have had very serious consequences for the banking system and for the British economy.

On Monday, Northern Rock announced that it had decided to take forward discussions on an accelerated basis with a consortium led by Virgin.

I am very clear that any proposal for the future of Northern Rock must be consistent with the principles I have set out, namely protecting the vital interests of the taxpayer, depositors and wider financial stability.

I welcome Northern Rock’s decision to work with Virgin to turn its proposal into a hard agreement with Northern Rock and the authorities. Discussions are now proceeding urgently.

Governments will never succeed in avoiding the unexpected and the unwelcome and this episode certainly answers to both descriptions.

But Government should also be judged by how it responds to these difficulties when they arise. That response must be open and measured; perhaps not always the stuff of headlines but certainly the best basis of solutions.

Take the loss of the child benefit data. It is a huge problem, but one that has to be dealt with. That is what Government has to do in the face of problems like this. It is difficult but we have to get on with it and sort it out.

But it is also the job of Government to set out its long term vision for the country.

A vision of a strong and successful nation with its businesses competing with the best in a fast changing global economy.

And maintaining Britain’s stability is my priority because it is the precondition for the long term prosperity of this country. And I have set out more details on this today.

So too is the need for Government and business to work together.

It is for business to win orders for goods and services.

But business rightly looks to Government to create the conditions for this success.

If we are to compete we must ensure that Britain remains a good place to business:

  • flexible enough to adapt to change, with the right tax and regulatory approach,
  • and able, because of the strength of our economy, to make long term investment from education and skills to science and transport, supporting business at every stage.

And we must also maintain our commitment to free and fair trade, resisting calls for protectionism, wherever they come from.

In each, we need to make the right long term decisions and see them through.

First, maintaining Britain as a good place to do business means ensuring we have a tax regime that is competitive, fair and simple.

That is why in the Budget earlier this year we announced we are cutting the corporation tax main rate to 28p and simplifying the allowances for investment. The basic rate of income tax will be reduced to 20p, helping not just the self-employed but small businesses too.

Simplification of the tax system is important. Because complexity brings increased costs.

I know that my proposals to introduce a single rate of capital gains tax have been controversial. That was inevitable.

We are working with the CBI and other business organisations to listen to what you have to say. I expect to publish final proposals in the next three weeks.

But many have long called for a simplified tax system and have long complained about the complexity of the tax system.

And we have to recognise that one person’s tax exemption is another’s complexity – simplification is not the easy option. But it is the right one wherever it is possible.

Let me say this on the principle: capital gains like any other profits ultimately come from the strength of the economy.

So I believe it is right and fair that they pay their share in tax as a contribution to the economy’s future strength.

But because we want to reward investment, we are right to now tax gains at a lower rate than income – and the new single rate is among the most competitive in the world, is less than half the top rate for income, and is also less than half what it was ten years ago.
It is also right to make the system more straightforward and sustainable, with a tax that is easier comply with.

I am listening to what you say and will report to Parliament very shortly.

Britain has 800,000 more businesses set up in the last ten years and OECD says UK has lowest barriers to entrepreneurship of all its countries.

I am determined to do everything I can to keep it that way and keep Britain as a good place to do business.

So in the run up to the Budget, I want to continue to work with the CBI and other business organisations to ensure that encouraging enterprise remains at the heart of this approach.

That is also why we need to continue to improve the way we regulate so our approach is proportionate, competitive, and principled.

What is needed is genuine cultural change. If you don’t need to regulate, then don’t. And if we do, do what’s necessary – no gold plating.

All of us know that effective regulation can help business.

All of us appreciate that it is right to help new mothers and fathers by giving them some time off at the birth of their children. Many of us would have liked that ourselves.

And proper regulation to protect employees against exploitation from the unscrupulous.

But that regulation has to be proportionate. Take health and safety, we have cut the number of forms by 50 per cent, my colleague John Hutton is reviewing what more we can do for small business, and the Health and Safety Executive is publishing practical suggestions that will reduce the paperwork burden firms face while protecting their staff.

Or take the risks and procedure relating to industrial tribunals, where I set out proposals for reform when I was at the DTI, which have now been agreed and will save businesses over £100 million a year.

Britain is a good place to start up and maintain a business. And creating the right conditions for success depends on sustained investment.

For decades Britain’s problem was because of its inherent weakness it was never able to sustain investment in science or transport. It would start and then stop.

As a result of ten years of sustained growth, of only making promises on tax and spend that were costed and based on what we could afford, we have been able to maintain investment year on year. We will continue to do that.

Investing in skills and making the reforms necessary to raise our educational standards and levels of innovation, as the Prime Minister said yesterday.

Britain is now investing as much in the intangible assets that are essential for our future – in innovation and intellectual property, in software and skills – as we are in more traditional physical assets – and as much as the United States. We will continue to support R and D through tax credits.

And we will continue to match public sector with private sector investment. We will continue to expand the role of the private sector providing a greater diversity of supply, creating new opportunities for committed, innovative business and third sector organisations, as my colleague Peter Hain is announcing today in the jobs market.

In transport, where public and private sectors work together, committing to investment over the long term also plays a critical part.

Which is why in the spending review I extended the long term funding guideline for transport of annual growth of 2¼ per cent above inflation for the next ten years.

Putting right decades of underinvestment, providing the roads and railways we need.

I introduced the Bill to build Crossrail in 2005. I have now approved the financing package – essential for the competitiveness of not just the City of London but for the whole country.

In 2003 I published a White Paper setting out the need for an expansion to our airport capacity.

Last week the Government launched the consultation on the expansion of Heathrow.

Provided the environmental and access conditions can be met, the right thing for the growth of the economy and prosperity of our country is to build a third runway. And proposals for a second runway at Stansted are already underway.

And this is one of the tests that any Government has to meet. Has it the strength of purpose to see through difficult decisions, often ducked in the past, but which are essential for our economic success.

There is a simple choice. Other countries are making plans for the future. So must we.

So too in energy supply. Today’s record oil prices simply underline the challenge we face, but also that in addressing it our economic and environmental objectives are increasing at one.

We need increased stability and security of supply from a greater diversity and cleaner sources of energy.

And as I made clear when I published the Energy White Paper in the summer nuclear power potentially has a role to play in tackling climate change and improving energy security.
So our preliminary view is that, subject to the outcome of our consultation, it should be part of the mix of future energy options. We will announce our final decision early in the New Year.

And if it is to be part of the mix, it can’t be the last resort – if that was to be the case, because of the time it takes to build new power stations, by the time you have decided you need them, it would be too late.

And, as the Prime Minister said last week, there are huge business opportunities in new markets, products and jobs here as well. Sir Nicholas Stern recognised this.

Your report published yesterday and debated this morning did too. The value added of the low carbon energy sector could be as much as $3 trillion worldwide by 2050.

I want to see our British Energy Technology at the cutting edge of environmental innovation and London as the centre of the global carbon market.

There are difficult choices to be made as we seek to secure our prosperity and the environment. But ultimately there cannot be any long term trade off between strong and sustainable growth.

Modernising our infrastructure will require difficult decisions too, as we balance our environmental and economic priorities, and national and local needs.

The Planning Bill before Parliament is a critical part of this.

It is a test for all political parties. Seven years to get planning permission to build terminal 5. Six and a half years for the North Yorkshire power line application. The present system doesn’t work and it needs to be reformed.

Our proposals will mean greater debate on energy or aviation policy, the opportunities for individuals to be heard in a process that isn’t drawn out month after month year after year, and greater certainty in decision making.

The Bill deserves support.

It is by making these decisions we can be confident of our success in a more open global economy. And I am committed to making our economy open to trade and investment. Our future depends on it.

The fact that over the past ten years world trade has grown nearly twice as fast as world growth is a demonstration that that those economies which are open to trade are most likely to succeed.

And the fact that Britain is a world leader in capital markets, already the most open part of the world economy, is a demonstration that Britain is well placed to succeed.

Our financial services trade surplus is the largest in the world, twice that of our nearest rival.

Indeed our openness has defined our history and our past successes.

And I am determined it defines our future and our continued success.

It is essential that Europe too becomes far more competitive. Last week the Commission published proposals for reform of the Single Market, which we called for earlier this year.

We must continue to argue against restrictions and unnecessary regulation which damage our competitiveness and which are holding back growth in the European economy.

Reducing agricultural tariffs, opening up completely the energy and communications and utilities markets, and properly completing the creation of the single market for services.

We will push for closer EU-US trade ties, including in financial markets.

We will do all we can to help secure a global trade deal.

We believe in breaking down trade barriers, securing free and fair trade across the world. We will continue to lead by example. But to secure the full benefits of openness for the global economy, others must follow.

We welcome inward investment. Indeed our country depends on it. Britain wins more inward investment as a share of its economy than any other major country.

But I also believe that all investors not only have to behave commercially but also be seen to behave commercially.

For sovereign wealth funds, I welcome the IMF and OECD proposals to establish the international guidelines including high standards of governance and appropriate transparency.

Just as we welcome investment here, there needs to be a level playing field for investment across the world: it benefits everyone if we all are open.

So when I met the Competition Commissioner Neelie Kroes yesterday, I agree that where a Member State fails to open the markets it has agreed to, there must be strong enforcement action by the Commission.

It must be made easier for individual businesses to overcome artificial and illegal barriers are erected that prevent them doing their legitimate business.

When I attend the G7 Finance Ministers meeting in Japan next year, business priorities will be the top of my agenda, I will argue that the G7 can no longer just be open amongst ourselves, but I want the G7 to become an advocate for openness between all countries.

And when I visit China next year, I will invite British business leaders to join me, in promoting greater trade between our two countries, and working with the Chinese Government to encourage more investment, including through tackling infringement and promoting adequate enforcement of intellectual property rights.

I will continue to do everything I can to break down barriers to trade and promote British trade.

There are difficult issues that need to be confronted if we are to maintain our competitiveness and secure our prosperity.

  • Whether it is maintaining our stability in response to financial uncertainty,
  • promoting free trade and open markets in response to protectionism,
  • adapting in response to climate change,
  • making the difficult choices – planning reform, aviation capacity, energy generation – in response to competitive challenges,
  • these are issues that have to be tackled. If we are to seize the opportunities available to us in the new global economy

People rightly expect governments to confront these issues and have the commitment and determination to take the right long term decisions.

We will continue to respond and deal with the unexpected and difficult decisions that confront any government from time to time.

We have the strength of purpose to see through the current international uncertainty, backed by one of the strongest economies in the developed world.

And we have a vision of a successful Britain underpinned by successful British businesses competing with the best across the world.

I am determined that we keep it that way.

Alistair Darling – 2002 Speech on the Railways


Below is the text of the speech made by Alistair Darling on 2nd July 2002 at the Railway Forum.


‘Getting on with it’ is the title of this conference and that is exactly what I want to talk about today. It’s what your customers expect from you. And bluntly it’s what the public tell us too.

I’ve been impressed at how much enthusiasm there is to work together. And importantly an enthusiasm to get on with it. That’s in all our interests. Industry. Government. And most crucially the passengers.

Today is not for analysing how we got where we are. Rather we need to focus on how progress is made from now on. Towards a better and safer railway.

To allow plenty of time for questions, I shall be brief. In following weeks and months I’ll set out in more detail how I believe we should take things forward from here. And at the same time, I’ll address important wider issues such as the critical balance between road and rail and how we get that right.

You asked me to set out my first thoughts in relation to the railway. Today I’ve got three things I want to say:

First, we must to build from where we are

Second, you need to work together, and we with you.

And third, the industry must look at things through the eyes of its customers, the travelling public.

Focus on delivering existing strategy

I’m clear the first priority must be to deliver existing objectives. So let’s concentrate on making improvements where they are needed most. We need to convert the very substantial funding going into transport through the 10 Year Plan into visible results and improvements year on year.

The day I got this job I said I would take a good look at all the Department’s work. That’s what you would expect. But I also said that I had no intention of tearing up the 10-Year Plan and starting from scratch again.

Just as economic stability is essential for businesses to plan investment with confidence. So we need stable transport policies.

Of course we’ll improve on the plan. It will undoubtedly need further development. And we’ll do it. But the immediate need is to get on and see visible progress as quickly as possible.

The railways have been through a difficult time. The legacy of years of under investment are very apparent.

And all this alongside the public rightly demanding better standards means there is a lot to be done. And the public is rightly impatient for change.

Now there are successes. In my first few weeks I have been struck by what is being achieved:

4000 new carriages on order or delivered

A substantial increase in freight and passenger numbers over the last 5 years

And construction of the first new major railway for over 100 years ( the Channel Tunnel Rail Link) now on time and on budget

We need to build on these. A clear programme delivering improvements across the whole network.

Last week’s announcement which will lead to the setting up of Network Rail was crucial to get the network on to a sound footing. And I’m grateful for the welcome most of you gave it. It marks a new spirit of co-operation, working together.

Work together

Which brings me to my second point. ‘Getting on with it’ means working together. The fragmentation and lack of common purpose that characterised the railway system in the past few years has been damaging and destructive to the interests of both the industry and the travelling public.

As many of you recognise, the industry needs to work together. In the same direction with a shared objective. Sorting out the small problems as well as the bigger ones. And you’ll have our support.

And the Department will always be open to new ideas and approaches. Not just from industry but user groups and the wider public. If there’s a case for change or a new approach, let’s discuss it. But always remembering the key thing is to get on with the job in hand.

Progress is being made. I am encouraged the industry is now working together far more closely than in the past. In particular, I welcome the good relations between the Rail Regulator and the Strategic Rail Authority, Railtrack and the operating companies.

With the setting up of Network Rail, there’s been some comment about what this means for the relationship between Government and the industry. Of course it’s Government’s job to put the right structures in place and secure the funding we need. But let’s be clear about this: it’s your job to manage and to deliver.

The Strategic Rail Authority has already brought coherence to long-term planning. As well as a clear commitment to getting results. The new management is making a real difference

Network Rail will operate in the public interest. But it needs to driven by sound commercial decision-making. It must have a firm control over its costs, its assets and its contractors.

Through the 10 Year Plan, we are providing the funding to put right decades of under-investment. But we will not write blank cheques. You’ve got to show results.

The Train Operating Companies need to bring in the flair and efficiency they promised. And they can point to some successes – new rolling stock for example. But there are still problems to be overcome. Operating Companies account for half the network’s delays.

For the railways to work, everyone has to work together. I want to say a word about contractors and subcontrators in that context. This is a big issue. A problem we know needs to be sorted out.

Now there always have been subcontractors in the industry. That’s not the problem. Rather the problem is that in too many cases not enough attention is being paid to making sure subcontractors do what they are supposed to do.

And what is imperative for safety also makes good sense commercially.

So what’s needed urgently is end to end accountability. And it isn’t enough to put in place processes – ticking boxes to show the process has been followed. Checks are needed to see they’ve actually done what they are supposed to do. Safety is of paramount importance.

We’ll play our part. I am going to publish proposals for a new independent Rail Accident Investigation Branch later this month. Setting up for the first time in the railway’s history, an independent railway investigator whose sole focus is to establish the causes of accidents and to learn lessons.

Look outwards and improve

This brings me to my third and final point. The industry needs to look out at the railways through the eyes of its customers – both passengers and freight.

Customers are concerned about results. They want to see trains running on time. They are concerned about safety. And they want to travel in comfort. This is not rocket science. And it’s within our grasp. We just need to do it.

But there’s more to it than that. People should use the railway because they want to. Not because they have to. As an industry you should set high standards for yourselves. We need more innovation. We need to give the customer proper choice. Reflecting the way they want to travel. Easy to book tickets which are easily changed.

The railways have been about for a long time. But the industry needs the vigour and imagination of a new industry.

We can learn from the way newer industries have responded to the demands of their customers. You face different problems. So your solutions will be different. But be creative. Show some flair.

Stand in your customers’ shoes. Ask yourselves what matters to them. Services should centre around the customer. Not shoe-horn customers into operational convenience. Or because it’s always been done that way.

We must set our sights on a railway network that is consistently reliable and accessible to its passengers. It will take time. We’re making up for years of under investment. The approach is changing. There is the beginning of a new culture of co-operation which should deliver year by year improvement. Putting it bluntly, there’s a lot more to be done.


That’s all I want to say today. There will be more in months to come. But I said I would give you my first thoughts. We build on what’s been achieved. And work together. And we put ourselves in the passengers’ shoes . If we do that I believe we can make a real difference to the railways in this country.

Alistair Darling – 1987 Maiden Speech in the House of Commons


Below is the text of the maiden speech made by Alistair Darling in the House of Commons on 6th July 1987.

I am obliged to you, Mr. Speaker, for giving me the opportunity to make my maiden speech. Before I address the subject matter of the debate, I wish to pay tribute to my immediate predecessor, Sir Alex Fletcher, who represented the constituency for four years after the redrawing of the boundaries in 1983. Before that he had represented Edinburgh, North for some years. When I had dealings with him he was entirely courteous and during the election campaign there was no rancour. I am happy to tell the House that the campaign was conducted entirely on the issues, which is perhaps why I have the pleasure of being able to address the House this evening.

Before I address myself to the Bill I take the opportunity of paying tribute to George Willis, who represented Edinburgh, North and who sadly died during the general election campaign.

It is appropriate that in my first speech in this place I should talk about a local government Bill that affects Scotland and other parts of the United Kingdom. I shall allude briefly to the position of Scotland and of those of my right hon. and hon. Friends who are not separatists, who form the majority of Scottish Opposition Members. If we are to be part of the United Kingdom, the position of those of us in Scotland must be considered and recognised. I consider that it is bad practice to attempt to legislate by what are essentially English provisions and to foist those on Scotland without giving them separate consideration, which they so richly deserve, from a Scottish point of view.

There is a feeling abroad in Scotland that the Government do not care. That feeling will be exacerbated or will be fired if we are to see more legislation that applies to Scotland tacked onto the back of English legislation. The powers of the Secretary of State for Scotland are perhaps greater than those of any other Secretary of State and that makes the case all the more for giving Scotland and Scottish legislation separate consideration. If the Government are so proud of their record, let us hear those who speak for it. Let them proclaim the advantages that they say have come to Scotland. There is a junior Scottish Minister on the Treasury Front Bench and perhaps we shall have the opportunity during the debate of hearing what he has to say about the Bill.

This is an unusual local government Bill, because it deals with Scotland and other parts of the United Kingdom. Scotland normally has separate legislation and Scottish legislation usually follows in about a year after the legislation has been introduced for the rest of the United Kingdom. That was the position until the introduction of the community charge legislation, or the legislation that imposes a poll tax on Scotland. In that instance Scotland was treated, for once, as an experiment. The poll tax has been tried out in Scotland as an experiment to see whether it will work and to see what the response is before it is tried in the rest of the United Kingdom.

In a perverse sort of way it is possible that some good may come from Scotland being used in this way. Conservative Members know how greatly their forces were diminished north of the border and I believe that the poll tax contributed possibly more than anything else to their rejection at the ballot box just one month ago. The much criticised and much talked about yuppies, if there be such creatures, turned out overwhelmingly to support Labour Members.

In Edinburgh, Central, as in the rest of the country, we have a sense of fairness and decency and of what is right and what is wrong. We believe that if a local authority is elected it should be left to get on with the job without interference from central Government. The hallmark of this Government is that they have interfered more than any other Administration in the way in which local authorities conduct their business. More than that, we value local services and we are willing to pay for a job well done. We do not want cheap and shoddy services. Instead, we want repairs that last and services that people take a pride in delivering and that others appreciate when they receive them. Cost cutting does not make for greater efficiency, and privatisation leads to cost cutting, which means in the long term that local authorities and the public sector must pick up the pieces.

Part I of the Bill is clearly designed to squeeze direct labour organisations, although in many parts of the country they are extremely efficient and win a large share of the work that has to be put out to tender. Local authority services can be efficient, because the people who provide those services take pride in doing so. They know that they are providing a service on which local people rely.

The Transport Act 1985 did more than anything else to undermine the provision of one local authority service-buses—by putting transport affairs into private hands. In the Lothian region, we had one of the best bus services in the country; now the ratepayers are paying £2 million more to subsidise a less efficient bus service. The hon. Member for Edinburgh, West (Lord James Douglas-Hamilton) will no doubt have some sympathy with that. When I was chairman of Lothian region transportation committee, he wrote to me again and again, more than any other Member of Parliament, asking whether I could do anything to restore services in his constituency.

We must maintain and enhance DLOs, because they have to deal with emergencies and pick up the pieces when the private sector cannot meet the need. If the legislation is passed, DLOs will be weakened, jobs will be lost and it will cost us, the ratepayers and those who live locally more in the long term.

Part II of the Bill is what I might term the morality part. It seeks to strike at those local authorities that choose not to do business with certain firms. I cannot see what is wrong with deciding that we do not want to do business with a firm that conducts itself in a way that we find reprehensible. I cannot see what is wrong in deciding that I do not wish to trade with a firm that mistreats its work force by not paying them properly, or by discriminating against certain sections on grounds of race, creed or colour. I should have thought that such an attitude would be lauded by all hon. Members. However, it appears that the Government intend to strike against it.

I consider this a matter of decency. Where is the local authorities’ right to choose? Coming from a Government who support the right to choose and freedom of choice, this part of the Bill is ill founded. It strikes at the very right of local authorities to make choices, not just on cost but on matters of straightforward decency.

I find part III of the Bill particularly difficult to understand. The hon. Member for Isle of Wight (Mr. Field) paid tribute to the magnificent vistas that can apparently be seen in his constituency by anyone who visits it. I invite any Conservative Member who wishes to come to Edinburgh. Indeed, I will invite the Scottish Front Bench, and will gladly pay for the two taxis that will be required to take them round the city. The Georgian facades and the historic and beautiful royal mile belie the fact that 20 per cent. of the constituents are unemployed, many of them young people. We have young bands of nomads with nowhere to live and nowhere to go. Instead of paying money to private landlords to build accommodation, we need controls over the sort of accommodation that is provided, proper supervision and proper funding. When we consider that the public purse pays private landlords some £9 million a year in Edinburgh, we realise that the money would be better spent by local authorities to provide properly supervised accommodation to suit the needs of young people—to give them a sense of pride in their accommodation, and a chance to make something of their unfortunate lives.

Much has been said about the part of the Bill that strikes at publicity. I will say only that it seems very bad practice that the Government intend to suppress dissent to the extent of saying that communications from local authorities, perhaps to Members of Parliament, are to be struck at if they are critical of the Government. Part IV demonstrates that no one can attack the Government without fear of retribution through the courts. This Government have spent a large amount of money, both directly and indirectly, on privatisation and advertisements. We were told that businesses that had been created by the state were shackled by the state, but when they were to be privatised they became, suddenly, a model of efficiency, and we were told that they ought to be purchased when the opportunity arose. Who paid for that? The taxpayers paid for it. If the Government can spend public money on advancing what they believe to be right, democratically elected local authorities ought to have the freedom to do exactly the same.

The Bill is one of the worst examples of local authority repression. Scotland will oppose it, just as it will be opposed throughout the country. Scotland will not be pushed beyond the pale. The legislation is bad for Scotland, just as it is bad for all parts of the United Kingdom. Opposition Members who represent Scotland will not pull down the shutters. We shall advance our arguments for fairness, justice and decency.

The Government say that the economic recovery is taking a long time to come north. Similarly, Labour’s argument for fairness, justice and decency is taking longer than I should like, but in the end I believe that our view will prevail. One can trample on decency and scorn consensus only for so long. This Bill illustrates what a heavy-handed, centralist approach this Government have adopted. That is why the Opposition will oppose it root and branch.