We’re at the press conference now, it’s about to start. In the meantime click here to read the full speech.
2.45pm: Highlights from the speech:
Questions of regulation and transparency: "This crisis raises the question of whether those safeguards were strong enough. Should the Government have required more transparency from banks using new financial vehicles to finance their borrowing? For instance, should we request the same capital reserves that are required for on balance sheet lending?"
Britain plc is in poor shape: "First, our public finances are in poor condition. Our deficit, at £35 billion, is the highest in Western Europe, leaving fiscal policy with little room for manoeuvre if the financial crisis leads to wider consequences in the real economy. What’s more, as the Institute for Fiscal Studies have warned, UK tax revenues are unusually dependent on financial services and the City, through corporation tax, stamp duty and taxes on City bonuses. Together these account for more than 10 per cent of total tax revenues. Second, the average Brit is more than twice as indebted as the average European. Personal debt in the UK as a proportion of income has risen from 105% in 1997 to 164% in 2006 – the highest ever recorded and the highest in the developed world. Third, house prices have trebled over the last decade in the UK – an increase faster than for any other European country apart from Ireland. These facts underpin my decision to put stability at the heart of Conservative economic policy – because the security of people’s jobs and mortgages must be our number one economic priority."
The need to improve oversight of monetary and fiscal policy: "In terms of monetary policy, giving independence to the Bank of England was an idea whose time had come. We will not just maintain this independence, but enhance it. We will reform the way experts are appointment to the Monetary Policy Committee. No longer should appointments be made by the Chancellor or his coterie, without any check or confirmation. But there is little point in strengthening monetary stability if it can be undermined by poor management of the public finances. So when it comes to fiscal policy – tax and spending – the Conservative position is strong and clear. We support the Government’s spending plans, because they have adopted our approach of sharing the proceeds of growth, at least over the next few years. But this is not enough to entrench stability. We will introduce independent scrutiny and judgement of the fiscal rules, so they have real bite."
The scale of the debt problem: "This Government has presided over a huge expansion of public and private debt without showing awareness of the risks involved. Under Labour our economic growth has been built on a mountain of debt. And as any family with debts knows, higher debt makes us more vulnerable to the unexpected. Alan Greenspan himself, recently appointed by Gordon Brown as his economic adviser, made exactly this point this morning when he said that “Britain is more exposed” than the United States. In short, the increases in debt in the UK economy – personal, corporate, and Governmental – have added a new risk to economic stability."
What Conservatives propose on debt: "We have called for greater transparency, and for lenders to be allowed to talk to each other about a borrowers’ credit history. For instance, instead of just notifying each other once a loan has gone wrong, they should be able to share information on how much someone has borrowed in total. This wouldn’t require new regulation – in fact it is regulation that stops banks sharing this information now. Banks should be more transparent with their customers too, explaining more clearly the costs of any borrowing. We should also consider preventing banks from raising credit limits without consent. Finally, I believe that we need to strengthen the sense of responsibility that banks and other lenders have towards their customers. Believing in a liberal credit market is not enough. Banks have a responsibility to lend responsibly, and the Government has a responsibility to remind them of that duty when their lending gets out of hand."
Editor’s comment: "Contrary to what some comment-ers have already said on this thread I think David Cameron got the speech right today. ITV News asked the first question and suggested that Mr Cameron might be scaremongering. That Labour suggestion – taken up by The Mirror earlier – won’t get legs but could have done if the Conservative leader had been stronger. There may be a time for stronger words but not today when the retail bank customers are quite so jittery. The Tory leadership cannot be accused of opportunism here, either. As George Osborne pointed out in the Q&A, Lord Griffiths was commissioned to write a report on debt by the Conservatives three years ago. George Osborne has held a debt summit and one of the six themes of Iain Duncan Smith’s social justice report was Britain’s one trillion pound debt mountain."
We’ll post later on the party’s scheduled announcement of the day: ‘Fair play For Women’s Pay’.