system in greeting the house of lords were the members are elected. this portion is 30 minutes. >> >>two and a half years ago, i stood in this very hall to make my first speech as leader of our party. i said that the chance for change was within our reach, and we had to seize it. that chance came. perhaps not quite in the way many of us could have expected. but the chance came and you - we - responded with real courage and conviction. cynics expected us to back away. instead, we confounded those who said that coalition government was impossible. we created a government which will govern and govern well for the next five years. thate will govern and govern well for the next five years.

of course, there are those who condemn us. we are challenging years of tradition, but i am so, so proud of the quiet courage and determination which you have shown through these momentous times in british political history. hold a warners and we will have changed -- holding ourerve, we will have changed british politics for good. hold our nerve, and we will change britain for dead. -- for good. [applause] just think of what we have done already. we have changed the injustice of

the rich paying less on their investments and then the poor do on their wages. we have rolled back a generation of liberal and intrusive legislation. , the banksar's day will pay a new levy that will help fill the black hole of they helped create. [applause] on the first of april, 900 belsen the low earners will stop paying income tax -- 900,000 low earners will stop paying income tax altogether. in may, the people of britain will get to choose their own a voting system, and this time next year the children who needed the most help will be getting the most help.

we havelways seen the face of change. we are now the agent of change, and every single person in this hall today is part of that change. actually, there is one contribution that you all made to the success of the coalition negotiations that you are probably not aware of. our formidable negotiating team got all of the training they needed battling for policy right here on this floor. [laughter] [applause] some things, of course, are different in government. some are the same. i still think the war in iraq is illegal. [applause] the the difference is lawyers

now get anxious when i mention it. [laughter] i still believe in our commitment to the developing world, the difference is i now get to meet those commitments. i still campaign for political form. -- for political reform. the difference is now get to legislate f it as well. i still have to try to explain to my children that going from leader to deputy prime minisr is not a demotion. [laughter] [applause] we will take risks in government, but we will never lose our cohold. we have not changed our liberal values. our status is different, but our position is the same. remember the promises we made in the fall during the election

campaign? for the first time in my lifetime, liberal democrats are able to deliver on those promises. we promised no taxes on the first 10,000 pounds you earn. we have already raised that amount. in the coming years, we will go further to but more money back in the pockets of low earners. we promised to improv the education for our children. it will happen at the start of the next school year. we promised a robust, green economy, a new kind of growth. we have set up a regional growth fund. there will be green investment to channel money into new energy. these are the first steps to require our economy, new jobs, new investment, new hope. we promised clean politics. giving people a chance to change our voting system,

cleaning up funding, and finally, a century after it should have happened, we are going to establish an elected house of lords. [applause] these pledges we made togetr in the election of 2010 will be promises kept in the election of 2015. the coalition program which commits the government to making these changes -- it is not a liberal democrat manifesto, but it is not the conservative manifesto either. it is our shared agenda and i stand by it. i believe in it. i believe it will change britain for good. [applause] we should not have

gone into government. we should have led the conservatives take the blame, waited on the sidelines ready to reap political rewards. maybe that is what people expected from a party that had been in opposition for 65 years. people had gotten used to us being outsiders, against every government that has come along. maybe we got used to it ourselves. but the tools for the change we want -- the duel for the change we wt is over. imagine if we had turned away. how could we ever again have asked the voters to take us seriously? [applause] labour left the country's

coffers empty, so the years ahd will be lean. but you do not get to choose the moment when the opportunity to shape your country comes your way. what you get to choose is what you will do wn it does. we chose a partnership of government. he truth is, i never expected the conservatives to embrace a negotiation and compromise, but ey did. david cameron showed that he could think beyond his party and helped build a new kind of politics. the election results did not give a single party a mandate for government. it gave all parties the mandate to govern differently. we answered the call. one of those remarkable surprises of this coalition government is that we are not

simply selling for the lowest common denominators between us. instead, we have become more than the sum of our parts. for those who believe in plural politics, that is not a surprise. in life, two heads are usually better than one. in politics too. when the country faces grave challenges -- the deficit, the threat of climate change, the war in afghanistan, millions of children trapped in a disadvantage, two parties acting together can be braver, fairer and bolder than one party acting alone. the new politics. [applause] the new pitics, plural politics, partnership politics, coalition politics is the politics the nation needs today. the liberals and conservatives will always be separate branches with distinct histories and

different futures, but for this parliament we work together to fix the problems we face and put the country on a better path. this is the right government for right now. [applause] our first job, however, is a difficult one. balancing the budget. i did not come into politics to make spending cuts. but it is the only choice if we want to steer ourselves out of the economic mess labour made. it is the only choice if we want to bring back hope and optimism to our nation. you cannot see the debts mounting upp.

talk to your friends. you will not see the signs of our debt odeficit. the numbers sod alarming, but in the end they are just numbers. it does not feel like we cannot afford it. so how did this debt crisis happened? put simply, over the course of the recession, 6% of our economy disappeared. the shock was so profound that even though the economy is growing today, we are poorer today than we thought we would be. predictions and spending plans on those predictions have turned out to be wrong. we cannot keep spending money as if nothing had changed. the problems are there. there are real. we have to solve them. it is the same as a family with

earnings of 26,000 pounds per year who are spending as if they have 32 pounds a year even though they already have 42,000 pounds of debt. imagine if that were you. you would be crippled by the payments. that is what this government is doing. is is not you. speak t counselors across the country. did they know what it is like to pick up the community after labour lead a country d -- bled the country dry. our council leaders know that the poorest are the ones who suffer when finances get out of control and money has to be spent on debt.

they know there is nothing fair about denying you have a problem and leaving it for the next generation to clean up. [applause] would you ask your children to pay your credit card bill? i have heard some people saying -- no, i think, is the answer. [laughter] that should be the answer. i should not be giving new ideas. [laughter] i have heard some people say that the cuts are taking britain back to the 1980's, or even the 1930's, dismantling the state. it is not true. even when the cuts are done, we

will still be spending 41% of our national income, the same amount we were spending in 2006. of course i wish there was a pain free alternative. who would not? delay will not solve the problem. it could have made it worse. every d we ignore the deficit, gets harder to fix. the debt mounts up and you have to pay interest on it. already, we spend 44 billion pounds per year on interest alone. it is a criminal waste of money

that should not be lining the pockets of a bond traders. it should be paying for police and schools. [applause] that is why this government's aim is that by the time of the next election, our debts will be falling as a proportion of natural income. we will wipe the slate clean for the next generation in making these changes we will learn from the mistakes of previous recessions. we will not make the mistakes of the 1980's in which whole communities or hollowed out. i know how worried people are

that cuts will be like the industrial changes of the 1980's. let me say to everyone in those communities, scotland and wales too, yes it will be difficult, but it will not be like the 1980's. we will not let that happen. we will make these cuts as fairly as possible. finding money for the pupil premium to help children get the best start in life. reforming welfare to help people get back to work. we will not let capital spending - investment in new buildings, infrastructure and repairs - be swept away as it has in the past. we have a billion pound regional growth fund targeted specifically at creating gwth in those areas of the country that have been dependent on public sector jobs. we've offered a national insurance tax break to

employers who set up new companies outside london and the wider south east. and we are determined to wean the economy off labour's lop sided obsession with financial services in the city of london. rebalancing our economy - so opportunity is never again concentrated only in the south east corner of our island. so no matter what your background or where you live, you have the opportunities you crave. the destination is the right one but getting there is going to be hard. to those thousands of people who work in the public sector, who do such an outstanding job in our schools, hospitals, police forces and local councils, i say this: i know these are very unsettling times for you. i will not disguise the fact that we need to take difficult

decisions today to ensure there are good, affordable public services tomorrow. we have protected the funding for the nhs, the bgest public service of all. we will provide more, not less, money for the children in our schools who need the most help. but i know you will be thinking: why should you have to make any sacrifices to deal with a recession you didn't cause? why are the bankers who helped create the mess not taking more of the blame? why should you have to accept a pay freeze, or changes to your pension, when the richest still get away with paying little or no tax at all? i agree. that's why we imposed a levy on the banks in our first budget. it's why we're working hard with our friends in europe and beyond on the idea oa financial activities tax on profits, pay and bonuses. it's why we're going to be forcing the banks to own up

about the ludicrous pay and bonuses they give out. it's why our banking commission is looking at whether to split the banks up completely to keep our economy safe. and it's why we're working ft out to get the banks lending again to small businesses, the lifeblood of our economy. we have do more in five months than labour ever did to sort out the gre and the recklessness of the banks. our approach is simple: they helped bring down our economy. it must never happen again. people who avoid and evade paying their taxes will no longer get away with it either.

we all read the headlines about benefit fraud. we all agree it's wrong when people help themselves to benefits they ouldn't get. but when the richest people in the country dodge their tax bills that is just as bad. both come down to stealing money been from your neighbours. we will be tough on welfare cheats. but unlike labour, we'll be tough on tax cheats too. we will crack down on the super rich who hide away money overseas. we will take on organised crime gangs set up to avoid tax. and we will prosecute five times as many tax cases as labour ever did. so the message is loud and clear: just as the public sector must be made affordable, the banks must be held to account. and tax avoiders and evaders must have nowhere to hide.

i want to make something crystal clear about the coming spending review. it is not an ideological attack on the size of the state. there is one reason and one reason only for these cuts: as liam byrne said in that infamous letter: there isn't any money left. it's not smaller government i believe in. it's a different kind of government: a liberating government. this government will transform the state. reversing generations of centralisation. putting power into people's hands. because the job of government is not to run people's lives. it is to help people to run their own.

i want britain to have the best schools and hospitals in the world. but that doesn't mean we should be controlling them all from whitehall. governments that have the arrogance to imagine that 100 misters and 1,000 civil servants can fix the country all by themselves. governments like that fail. so we will restore power to people, families, communities, neighbourhoods and councils. turning the tide of centralisation and for the first time giving power away. councils, like all parts of governme, are going to have to make do with less money in the years ahead. but they will have more freedom than ever before. labour rattled on about decentralisation, but they held the purse strings tight. we are different; we are liberal. because we will put local government back in charge of the money it raises and spends.

budgetwhy in our first we unlocked more than a billion pounds of ring-fenced grts. that's why we will end central capping of council tax. that's why we will allow councils to keep some of the extra business rates and council tax they raise when they enable new developments to go ahead. and i can announce today that we will be giving local authorities the freedom to borrow against those extra business rates to help pay for additional new developments. this may not make the pulses race, even at a liberal democrat conference. but i assure you it is the first step to breathing life back into our greatest cities.

our leaders in sheffield say it could alw the redevelopment of derelict mines in the don valley; our leaders in newcastle believe this could help them create a new science park; in leeds they argue the aire valley could be transformed. but whether in newcastle, in sheffield, in leeds or indeed in every city in the uk. what matters most is that finally, they will be in the driving seat, instead of waiting for a handout from whitehall. local people, local power, local change. the same approach - financial freedom - is governing our relationship with scotland and wales, too. that's why we are taking forward the calman commission to give scotland real freedom and responsibility over its own money.

and why, if the referendum for more devolution in wales is successful, we will take forward a similar process for the senedd. giving the nations of the uk the freedom they deserve. putting power in local hands is one of the many things labour never really understood. the labour leadership candidates are trying to rewrite history. but we remember. civil liberties destroyed on an indurial scale. a widening gap between rich and poor. failure to act on the environment. locking up more children than anywhere else in western europe. kowtowing to the banks. a foreign policy forged in george bush's white house. the invasion of iraq. and then, on top of all that they brought the country to the brink ofankruptcy. writing cheques, even in the final days of their government that they knew would bounce. this country could not have

borne five more years of labour. has anyone else lost track of the books labour people keep publishing? never in the field of political memoirs, has so much been written by so few about so little. [laughter] [applause] they went from nationalisation to serialisation. from the third way to a third off at the book shop. and the next generation is still fighting the same backstabbing battles instead of talking about the future for britain. we held a public consultation about the spending review.

we had 100,000 ideas from members of the public about how to cut waste a do things more effectively. and not a single idea from the labour party. they have the economic strategy of an ostrich. i want to say something to whoever is elected as the next labour leader. you cannot duck difficult choices forever. alyou have done in the last four months is carp and complain. but a decent opposition has to provida decent alternative. your party let people down in government. until you face up to your responsibility for the state we're in you'll let people down in opposition too. labo did some od things, of course they did.

but just think what they could have done. with enormous majorities, 13 years and money to spare. the best opportunity for real fairness there has been in my lifetime. but imprisoned by timidity they squandered a golden age. we must now take up the challenge that labour ducked. we must do more, even though they left us with less. when faced with the daunting task of reducing our deficit, the temptation might have been to go slow elsewhere. one difficult task at a time - that would have been the cautious response. but it wasn't our response. because i believe at times of great difficulty, great things can still be done. at times of eat difficulty, great things must be done.

some say we've bitten off more than we can chew. i say there's no time to wait. we could wait to solve the welfare crisis, but every day people struggle to get back into work. we could wait to give our children a better start at school, but they only get the chance to grow up once. we could wait to reform our prisons, but every day offenders leave prison ango straight back to crime. we could wait to cut the deficit, but every day, we spend £120m servicing our debts, and that's £120m we can't spend on our children. we have four years and seven months before the next election. 1690 days. we're not going to waste a single second. there is no time for the old go-slow, timid governments of the past. we're keeping our eyes onhe horizon, n on the headlines. building, brick by brick, day