In 1997 the new Labour government faced big economic challenges: A volatile, boom and bust economy; chronic under-investment in our public services and infrastructure; and too many low paying jobs. We laid the foundations for an unprecedented decade of low inflation, high growth, high employment, and rising living standards. The achievements of that decade give us strong foundations for weathering the current storms in the world economy.

Today Britain’s economy faces fresh new challenges from the double hit of a global credit crunch and a global commodity price hike. Over the last decade, the world economy has become increasingly interdependent. So a housing market crisis in the United States creates a credit crunch that ripples round the world. Rising incomes for millions of people in China and India lead to a sharp increase in demand for commodities and trigger a spiralling up in prices. As a result, whereas the economic challenges we once faced were primarily domestic, today they are primarily global. The globalisation of finance, while bringing more prosperity and jobs, also increases the risk that instability in one country will spread to others. And we must adapt.

The first job of government in this new world is to be on the side of hard working families, especially the most vulnerable. This does not mean a bigger state. But it does mean a government that works to help people support themselves and promotes fairness. We want an open, enterprising economy because we know that is the way to create more wealth for our people, but we also understand government needs to stand by people helping them cope with the more difficult times that economic turbulence brings.

That is why we are helping people cut their energy bills with a ground breaking programme of investment in energy saving, raising the Winter Fuel Payment this year for 12 million people, and providing long-term help for families. And it is why we are postponing increases in petrol duty for the full year. In addition, 22 million people, who will get this month’s tax cut, will be able to use the £120 extra to help meet their bills over the next few months.

But, in this new more integrated global economy, Labour believes government must take the measures needed to secure our prosperity for the future. We will take steps to reduce our overdependence on imported oil by taking tough decisions on energy to invest in nuclear power, a massive expansion of renewables, and carbon capture and storage. We will invest in the critical transport infrastructure our country needs to ensure that we remain competitive in the global economy, to the benefit of all nations and regions of Britain. We will maintain our world-class leadership in science through sustained investment in scientific research, innovation, and the development of new technologies. And we will continue to raise the skill levels of the British workforce, through expanding apprenticeships, widening participation in Higher Education, offering new rights to training to lower skilled workers, and new opportunities for all to learn at home or in the workplace. Only in this way can we be sure that all our people have the chance to get well-paid and fulfilling jobs.

Housing

A critical component of prosperity is that everyone should be able to afford a home of their own to buy or rent. In the short-term, that means ensuring greater support for homeowners and taking targeted steps to boost the housing market. That is why earlier this month we announced a comprehensive £1 billion housing package. A new first-time buyers initiative will mean 10,000 more young families having the chance to get onto the property ladder and a one-year Stamp Duty holiday for all homes costing under £175,000.

For vulnerable homeowners in difficulty, a new mortgage rescue scheme and a more generous safety net will help prevent repossessions, with all the implications these can have for families. And because new social housing will be vital in the next few years, we are bringing forward £400 million to build up to 5,500 new social rented homes in the next two
years.

Since new Labour came to power, the demand for housing has been steadily increasing, driven by longterm demographic and social changes. So we need to respond to these longterm changes in the housing market by ensuring that more houses are built to satisfy the demand. This is the only response that will produce the affordable housing that is needed.

The environment

For the generations to come, we must tackle climate change which threatens not just sustainable prosperity in this country but the well-being of our planet. The key strategic challenge we face is how to guarantee prosperity while at the same time making the transition to a lowcarbon economy.

The years of cheap energy and careless pollution are behind us. We must set ourselves on a new path - a path that delivers a transition to a low carbon energy economy, that is less dependent on oil. Our commitment to 60 per cent - and maybe to even greater - reductions in carbon emissions by 2050 will have profound implications for the British economy. It means supporting new technologies, such as electric cars and innovative ways of increasing energy efficiency in homes and businesses.

As higher global energy prices hit families in Britain hard, we will do what we can to help families reduce their energy bills – not just this winter but permanently. To achieve this, we have acted responsibly to ensure that energy companies help hardpressed customers on middle and modest incomes save money and save energy. This will lead a national programme for household energy efficiency, providing loft insulation and cavity wall insulation free of charge to elderly and low-income households and at a 50 percent discount to others. We will also target extra help for the most vulnerable consumers.

Globally it is estimated that environmental industries, including renewable and nuclear energy, waste management, pollution control, and energy efficient products will be worth 0 billion by 2010 - equal to the size of the global aerospace industry. By 2050, the overall added value of the low carbon energy sector could be as high as trillion per year worldwide, and it could employ more than 25 million people. Britain can be a world leader in these industries.

In part the solution requires international leadership - we must secure an ambitious global agreement on climate change in Copenhagen next year. But we also need to empower local areas to take action.

Tackling climate change is also central to our ambitions for tackling global poverty, since the impact of rising temperatures will fall most heavily on the poorest and most vulnerable people in the world.

Through both moral imperative and our global self interest, Britain must continue to lead the fight against global poverty and injustice. In recent years we have seen the enduring power of global movements in securing change: through collective efforts of governments, businesses, ordinary citizens and others, there are 40 million more children in school; two million more lives are saved every year by immunization; and polio, leprosy and neonatal tetanus are on the verge of elimination. Britain must continue to be at the forefront of harnessing this collective power to accelerate action on justice and opportunity for all.

At the same time we must ensure that our natural environment flourishes and is open for all to enjoy. So we are legislating to protect our seas, open up our coastline to everyone, and will continue to improve the purity of the water we drink and the air we breathe. And we will continue to support a strong and thriving farming sector. And because we must adapt to the new challenges climate change will bring to Britain, we will invest in new flood defences to protect thousands more homes.

Technology

In 1997, only 10 per cent of British people had access to broadband internet. Last year, access reached 45 per cent, and today it is now nearly 60 per cent. This rapid growth in broadband access has made communication easier, driving a boom in global communication and business. It has connected us with the world and its opportunities. But while technological transformation is expanding our scope for new markets and enables us to exploit our potential to compete and sell British technologies and products to the world, these opportunities also bring risks to people not equipped to tap into these new networks being left behind. Therefore we will work to make digital inclusion a reality for all.

Enterprise

We must also continue to ensure that Britain remains one of the best places in the world to do business. There are four and a half million businesses in Britain today - more than ever before and the OECD says we have the lowest barriers to entrepreneurship of any OECD country. Britain remains a magnet for overseas investment and we have one of the most robust, independent competition regimes anywhere in the world. But we must meet the needs of business, particularly when it comes to our crucial infrastructure: from reform of planning laws to supporting sustainable aviation growth, we need to face up to difficult decisions squarely, and not back away from hard choices.

Only Labour can meet these new economic challenges because only Labour has the determination to take tough decisions for the future.

Our changing world

Over the last eleven years Labour has been at the forefront of progressive change. In July we ensured the passage of the Lisbon Treaty through Parliament, ensuring that the EU can accommodate its historic enlargement to 27 member countries. We continue to work in close partnership with our European colleagues to respond collectively to our common economic challenges - the global credit crunch, the rising price of oil, and the escalating cost of food. In Iraq we are making marked progress towards our goal of handing security and policing back to the Iraqi people. We are playing a crucial role in Afghanistan in the frontline against terrorism. We will continue to combine military support with development assistance, helping to put the Afghan economy and people on the path to a stable and prosperous future.

We have led the world on cancelling third world debt; fighting poverty; introducing the first ever climate change bill; banning landmines and now cluster bombs; and combating injustice in Burma, Darfur, and Zimbabwe. We have stood up to aggression and fought for fairness and justice across the globe. We should be proud of our record.

This is a unique era - globalisation and growing interdependence are bringing change of unprecedented scale, speed and diversity. Seismic shifts in economy, culture and communications mean that the world now faces interwoven strategic challenges - from security, and the environment, to development and global economic change. We are witnessing the rise of new economic powers in Asia, increasing migration, the rise of fragile states and terrorism, the growing global development emergency, and the relentless competition for natural resources - all of which are transnational in nature and impact.

These global challenges require global solutions; facing these challenges and promoting fairness for Britain and the world will need more cooperation, not less. It means working with international partners to build a new global society with effective rules and institutions fit for the 21st century. It means building a new framework for global security to deal with new international terrorism, regional conflict, energy competition, and failed and failing states, as well as supporting armed forces capable of playing their full part in protecting the UK and countering global instability. It means we must continue to lead the campaign to eradicate diseases, combat poverty, and ensure a global climate deal. And it means working for a Europe better equipped to counter shared challenges such as climate change, migration, and economic uncertainty, standing solidly alongside those who build
democracy and human rights, and playing a leading role in wider progressive alliances
for change.