03/08
15 January 2008
Speech by the Chancellor of the Exchequer, the Rt Hon Alistair Darling MP, to the RSA (Royal Society for the Encouragement of Arts, Manufactures and Commerce), London
1. Let me start by thanking you for joining me today and let me thank also Matthew Taylor for organising this event and Peter Riddell for joining us on the platform.
2. It's an exciting time to be Chancellor of the Exchequer, as I'm sure you've noticed. And you won't be surprised to learn that some of that excitement is something I could have done without.
3. But it demonstrates how you have to deal with the unexpected like missing computer discs and also the consequences of something that started far from home.
4. The difficulties facing Northern Rock began on the other side of the Atlantic and are now being felt across the world. As a result we operate in far more turbulent and uncertain times than we've felt for many years.
5. You asked me to talk about the role of the Treasury in today's world. How we can build a fairer and more open society. And how we respond to challenges facing us now and over the next 20 to 30 years.
6. I want to set out what underpins my approach. How a fair society, a Britain in which people can get as far as they have the talent to go, to be judged on what they do - and have the chance to exploit their potential to the full - is a moral as well as economic imperative.
7. The Treasury has to be at the heart of making changes both in society and in the economy.
8. The core purpose of the Treasury must be to ensure the stability of the economy; to promote growth; and to effectively manage our public finances.
9. And I believe the Treasury must be more than a ministry of finance. I want it to be at the heart of government decision-making and for it, with No 10 and other departments, to set the strategic direction for the government.
10. Chancellors and Treasuries don't operate in a moral vacuum. For example, we spend billions of pounds supporting families. We want to prevent children growing up in poverty.
11. We want pensioners to have the dignity of living comfortably, not having to choose between turning on the heating or eating.
12. We want a first-class health service and first-rate education system. We want to tackle climate change.
13. We are doing these things because we believe it is right, morally and economically.
14. And because I believe this approach contributes towards a fairer Britain.
15. I first stood for election as an MP over 20 years ago because I wanted to make a difference to people's lives. And I believed then - and continue to believe - that politics is the most effective way to do that.
16. In these sceptical, sometimes cynical times, that can sound trite. But it is as true now as when I was first elected to parliament.
17. Some people say the phrase 'it's not fair' is the total of the British moral compass. Perhaps that's a bit harsh. But people understand that the notion of fairness is behind disputes in every family, workplace and community in the land.
18. Life's not fair, you might well reply: maybe not. But 20 years ago, it seemed to me that it was a lot fairer for some than it was for many.
19. I came into politics then, because I believed then - and still do - that it's the only real way to affect change. Politics matters. To strive for fairness, and a fair society. And I think people expect fairness to be the central plank of any Labour government.
20. It seemed to me then unfair that people, through no fault of their own, were held back, had poor health, poor education, poor housing - and had no expectation that things would get better.
21. It is morally wrong as well as economic madness that people should be held back, refused chances to improve themselves and their lives, through being dependent rather than contributing.
22. We are not talking here about equality of outcome. We can't all be brilliant footballers. It's not unfair that I can't play football like David Beckham. But it is unfair if some people don't even have the chance of a kick at the ball.
23. Over the past decade, I have seen the good that government can do.
24. For example, ten years ago, the-then Department of Social Security was essentially there to pay out benefits. That was its core purpose.
25. Was it fair to write off the life chances of hundreds of thousands of people languishing on long-term sickness benefit because that benefit was used to disguise unemployment figures?
26. From the day I walked through the doors of the Department, I became ever more convinced of the importance of work as a pathway out of poverty.
27. Today the Department of Work and Pensions and Jobcentre Plus have a core purpose of getting people into work, that's their number one priority. Welfare to work has transformed the life chances of millions of people. And it has also transformed the nation's finances.
28. Whatever the difficulties of the tax credit system, and we are working on that, it has meant that work has paid off and children have been lifted out of poverty.
29. And in dealing with this issue, I became convinced that we were dealing with a lack of aspiration too. And that improving the environment of people's lives can improve their aspirations. I'm convinced absolutely of the importance of education in overcoming that lack of aspiration.
30. Education and skills available for all are essential, especially in a world where the demand for unskilled labour will continue to fall.
31. Raising the leaving age to 18, making sure young people don't walk out of the school gate without life and work skills, getting more students into university, finding more modern apprenticeships - all are essential for people's life chances and for the country.
32. Is it fair that good quality education is available to some but not others? I don't think so.
33. But that view is not universal. It has to be argued for. Even today.
34. Nor is there a political consensus on fixing a target to eradicate child poverty. Is it fair that someone's life chances can be blighted by growing up in poverty? I argue strongly that it's not. It's not fair. It's not right. And it makes no economic sense.
35. Fairness is the essential underpinning of our approach.
36. That brings me to the second point I want to make which is what government can do and what it cannot.
37. I believe strongly that we as individuals have to make our own decisions. We are responsible for what we do. We have obligations to our families and to each other. The individual must be at the heart of all we do. People rightly ask how does this affect me, my family?
38. But I also believe that government can make a big difference to the choices open to us in making those decisions as individuals.
39. Through successive Budgets we have made considerable progress towards providing fairness for families with children, tackling child poverty and increasing employment.
40. And we continue to make progress: we have lifted 600,000 children out of relative poverty.
41. Despite the considerable progress that has been made, a child in a relative low-income family still remains more likely to have poorer health and education outcomes than their more advantage peers.
42. Work is the best route out of poverty. The National Minimum Wage and Child and Working Tax Credits help ensure that work pays more than welfare.
43. Poverty is not just about money. It is also about jobs, ambition, aspiration, and access to public services. And our strategy for addressing child poverty is an all encompassing one. The Comprehensive Spending Review announced that compared to 2007-8, by 2010, the Government will be investing an additional £2 billion a year on public services to alleviate child poverty.
44. Educational attainment can transform the life chances and quality of life of young people, their families and their communities.
45. I've seen this first hand. In my constituency once failing schools have been transformed by extra investment, strong leadership, the commitment of dedicated teachers and, above all, the hard work and determination of pupils.
46. And more and more of them are now going on to further education and jobs which means that they are better able to support themselves and their families.
47. We are also taking action to put affordable houses within reach of the many young couples who are struggling to get on the housing ladder and the many families still making do in cramped or unsuitable conditions while they wait for a decent home.
48. There are those on the Right who argue against what they call 'Big Government'. I am against the concept of 'Big Government' if by that you mean that the state should take decisions that ought to be left to us as individuals.
49. But what these people are usually arguing against is the amount of spending on education, or on health for example: or to what extent governments should be involved at all in the provision of these services.
50. In my view, governments shouldn't make choices which should be left to the individual. Nor should the state be the provider of everything. But good government does provide good schools for our children and a health service that is there when we need it. Not when we can afford it. Not just for some. But for all. That seems fair to me.
51. And good government should help people make improvements in their lives. There is also a clear role for others: we have evolved from a time where the public, private and voluntary sector operated in separate spheres.
52. Now businesses, voluntary organisations and individuals have the resources and commitment to lead transformation. And we need this concentration of efforts to help us achieve a fair and equal society, with opportunity for all.
53. I'm not going to give you an exhaustive list of the challenges ahead, but I do want to illustrate my belief, my approach. Before I do that let me reiterate our commitment to a strong and stable economy. It is essential to delivering everything we do.
54. In the past decade, the strength and stability of the economy has been the foundation of our success.
55. Although we are currently experiencing some uncertainty for the global economy - and every country is affected - Britain is well placed, indeed better placed than almost any other, to see through this uncertainty.
56. Our economy growing the fastest in the G7 - in the last quarter, 3.3 per cent on the year. Growth has continued for a record period. More people are in work than ever before - 29.3 million. Claimant count unemployment is at it's lowest since 1975.
57. Inflation here is amongst the lowest in the G7. Indeed over the past decade inflation overall has been lower than any of the previous five decades and half of what it was in the 1990s.
58. This gives us a position of strength to face current international uncertainty.
59. So what are the big challenges we face? Firstly, we live in a rapidly changing world. Globalisation is a reality. So we've got to make sure that we do everything we can to remain competitive, to ensure that Britain is a good place to do business and that innovation and invention is encouraged.
60. We have an excellent reputation. British science is respected across the world. Our financial services industry remains robust. London is the world's premier financial centre. We may manufacture less than 30 years ago but what we do is in many cases world-class.
61. But if we are going to remain that way then we've got to make the changes we need so that we can compete successfully, not just today but over the next 10 to 20 years.
62. Take housing; it is essential for economic development. We know that we need three million new homes by 2020 including 70,000 affordable homes a year by 2011.
63. That doesn't just mean spending over £8 billion a year but it means increasing the supply of land and crucially reforming the planning system.
64. All of us are worried that there simply aren't enough homes. We can do something about it but we have to be prepared to make the changes so that we can ensure that our children, first-time buyers, can make home owning a reality.
65. And reforming the planning system is essential if we are to meet the two big challenges of obtaining secure and greener energy supplies.
66. Last week's decision on nuclear power was difficult. But if we're serious about tackling climate change then we need to take action at every level.
67. And climate change demonstrates the need to take action both at home and together with other governments across the world. It makes a powerful case for co-operation in the European Union. Together we can do a lot more.
68. Today few problems rival the need to tackle the challenge posed by climate change. We cannot prosper as a nation if we do not deal with the issue of climate change head-on.
69. This is not a rhetorical platitude any more. It is a factual statement about the profound change to the world we inhabit and the one we want to safeguard for our children and future generations.
70. There are difficult choices to be made as we seek to secure our prosperity and environment. But ultimately there cannot be any long-term trade off between strong and sustainable growth. Sustainability is not an optional extra. It is essential for all our futures.
71. And if tackling climate change demands global action so too does making poverty history here and across the world. And that is why sustainability will be at the heart of the Budget.
72. I'm pleased that the UK has played a leading role in international efforts to tackle global poverty and achieve internationally agreed Millennium Development Goals. Over the past decade we have doubled the Department for International Development's budget. It estimates that each year it helps to reduce permanently the number of people living in poverty by three million.
73. For me, these two issues will be central to everything I do. These are causes worth fighting for because the future of our country and the wider world depends on us being able to reverse the harmful effects of climate change and eradicating child poverty.
74. Let me make two final observations.
75. First the case for maintaining spending where it is needed over the long term. Departments now have three year spending settlements.
76. But in the two crucial areas - transport and science - we are increasing spending over a ten-year period because that is essential to the long-term prosperity of the country. I know firsthand what failing to spend what is needed can do to the railways. That's now being put right with a record number of passengers being carried.
77. And our ability to maintain scientific innovation and to convert that into goods and services is essential to the future. Spending is to top £6 billion a year by 2010 and we're seeing the results.
78. We are focussed on the long term in everything we do. But we will have to deal with the unexpected. The present uncertainty has caused turbulence in the international financial markets and led to Northern Rock being unable to raise the funds it needed last autumn. Unbelievably it had no 'Plan B.' Because of the risks to the financial system we had to intervene to support it.
79. And we need to see it through. Conditions are difficult. I would like to find a private sector solution but all options, including nationalisation, have to be considered.
80. The action the Government has taken has maintained financial stability and prevented the problems at Northern Rock from spreading more widely.
81. With respect to the future of Northern Rock we have consistently made clear that our preferred option is a private sector solution.
82. But as both the Prime Minister and I have made clear all options are being considered as it would be irresponsible to do otherwise.
83. Our objectives are to protect the interests of tax payers and depositors. To maintain financial stability. To champion growth and enterprise. And I'll take whatever action is necessary, however difficult, to take the right decisions for the long-term interests of the country.
84. Governments have to deal with the unexpected and the unwelcome but they also have to remain focussed on the long-term. And that is why I'm taking forward wide-ranging reform to banking regulation in this country, ensuring we have all the necessary tools to deal with any future events.
85. As I said earlier a sound economy has to be Treasury's first and foremost priority. So in the Budget I will continue to take the decisions necessary to ensure the stability of the economy; to raise growth and to effectively manage our public finances.
86. Let me finish by repeating my unshakeable belief that we must build a fair society where everyone has the best possible chance to get on.
87. This is what we will be judged on. I came into politics because I was determined to help change the way things were. In the last ten years we have made substantial progress but it is unfinished business. And I'm determined that the Treasury will remain at the centre of our drive to build a safer, fairer country.