Page last updated at 11:21 GMT, Sunday, 28 September 2008 12:21 UK

Cameron seeks new financial rules

David Cameron on his party's financial plans

The Conservatives want to scrap the existing rules on government borrowing and set up an independent organisation to monitor public spending and debt.

Leader David Cameron told the BBC he would give power to the Bank of England to "call time" on debt in the economy.

In the wake of Bradford and Bingley's nationalisation, Mr Cameron also said he preferred allowing the Bank of England to take over failing banks.

Mr Cameron was speaking as his party's conference begins in Birmingham.

He told BBC One's Andrew Marr show the Conservatives would act as a "responsible opposition" and said: "What you won't hear from me this week is the sort of easy cheap lines beating up on the market system, bashing financiers.

"It might get you some easy headlines, but it is not going to pay a single mortgage, it's not going to save a single job."

Shadow chancellor George Osborne will announce on Monday that as part of an economic package, the Conservatives would scrap existing fiscal rules, which they say have been discredited by Labour.

In the short term we should legislate to show we are going to protect deposits and savings
David Cameron

The Tories would set up an independent organisation, the Office of Budget Responsibility, that would act as a watchdog on all public spending and borrowing.

It would produce the country's economic forecasts, instead of the chancellor on Budget Day, and a full audit of all of the nation's borrowing, Mr Cameron said.

The body - which would not have powers to force a government to act in a particular way but would have the power to embarrass - would set a target date for Britain's budget to be balanced and publish public reports on progress.

The Conservative Party's aim is to prevent a repeat of the problems that have affected Northern Rock and the Bradford & Bingley banks.

Mr Cameron said: "In the short term we should legislate to show we are going to protect deposits and savings.

"We also need to give the Bank of England more powers to step in and save failing institutions."

He added: "At a time of economic difficulty, it's particularly important that we are here setting out that there is an alternative."

Egypt, Pakistan, Hungary

Mr Cameron said there had been "failure of regulation" in the financial sector, adding: "We have had a debt boom that went on for far too long and it reached into parts of the economy it shouldn't have done."

He said the government had had a year since the Northern Rock collapsed.

Whatever they say now they will only renegade on it if elected into office just as labour has done
Tony Jarrett, Norwich, UK

He said: "Why have they wasted a year - what have they been doing?"

But he said that nationalising institutions such as Bradford & Bingley and Northern Rock left the taxpayer with the "whole risk".

Instead, the Bank of England should be able to help struggling banks without leaving the Treasury liable for huge debts, he said, adding: "I'm not signing any blank cheques."

He said: "We have had 14 years of economic growth and yet we have got the biggest budget deficit in the industrialised world, apart from Egypt, Pakistan and Hungary.

"That is a disgrace and that must never, ever be allowed to happen again. We have had a chancellor and prime minister for 11 years who boasted about his fiscal rules. The fact is they have failed."

As the party conference got under way in Birmingham, meanwhile, a Sunday Telegraph poll suggested the Tory lead over Labour had been halved over the past month.

The Sunday Telegraph survey of 2,020 people put the Tories on 43%, with Labour on 31% and the Liberal Democrats on 17%. The Conservatives had a 23% lead over Labour in August.

The Tory conference opens later with a discussion on the economy involving Mr Osborne and shadow foreign secretary William Hague. Mr Cameron's speech closes the conference on Wednesday.

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