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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.

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.

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.

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.

Below is the text of the speech made by Alistair Darling on 2nd July 2002 at the Railway Forum.

Introduction

‘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.

Conclusion

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.