Page last updated at 16:45 GMT, Monday, 22 September 2008 17:45 UK

Darling pledges action on economy

Darling: 'Times are hard but we must keep things in perspective'

Chancellor Alistair Darling has pledged action to deal with the "extraordinary turbulence" in the financial system in his speech to the Labour conference.

He said the UK economy was going through "difficult times" but said he was "confident" it would emerge from the current downturn stronger.

He promised to avoid "knee-jerk" actions, saying his main priority was to stabilise the banking system.

Mr Darling also said Gordon Brown was the best man to deal with the crisis.

Uncertain times

Mr Darling sought to reassure Labour delegates that although the UK was facing "unprecedented economic challenges", the government had the right policies to deal with them.

One thing I am certain about is that we have the right prime minister, the right team and the right policies
Alistair Darling

BBC political editor Nick Robinson said that in his speech Mr Darling had sought to put the fact he was a "low key" speaker to his advantage, delivering a reassuring message about the economic situation.

"These are very uncertain times," he said.

"But one thing I am certain about is that we have the right prime minister, the right team and the right policies to help the country through them."

Alhough the economy was facing a "bumpy" period ahead, Mr Darling said its fundamental strength "means we can be confident about the future".

Mr Darling said the action the government had taken to support the troubled banking system in recent days contrasted with the attitude of the Conservatives who had "walked away" from tough decisions over Northern Rock and other key issues.

"They may well claim to be committed to financial stability but people should be judged on what they do not what they say," he said.

Mr Darling said he was committed to taking whatever steps were necessary to tackle market turmoil, including introducing new legislation on bank deposits and regulation within weeks.

He said regulators would look at the issue of excessive City bonuses with the Financial Services Authority (FSA) saying it could punish firms for encouraging too much risk-taking.

How extraordinary that a Chancellor could give a speech in the middle of an economic crisis and provide no plan about how the government is going to handle it
George Osborne, Shadow Chancellor

But he warned that solutions to the problems of globalisation will not be found by one government alone.

The Conservatives said it was "extraordinary" that Mr Darling ad "no plan" to deal with the current financial crisis while the Lib Dems said the chancellor was "complacent" about the worsening state of the economy.

Tax question

Mr Darling said the government would be "disciplined" in its attitude to the public finances and would have "to live within its means".

Many experts have said taxes will have to rise to cope with the shortfall in revenue as the economy slows.

When asked earlier by the BBC if income tax would go up Mr Darling declined to answer "yes" or "no", instead saying "it is not the time to take money out of the economy".

When asked again, Mr Darling told the BBC that the time to pay back debt was when the economy was doing better.

He also said that at the moment, rather than increasing taxes, basic rate tax payers were paying less tax this month.

He rejected calls from union leaders and MPs on the left of the party for tax rises for the wealthy and also for a "Robin Hood" energy tax.

Darling is saying he will tackle faults in the economic system, what is the purpose of a chancellor?
Confusus, Wales

His speech followed a debate during which unions and some Labour MPs demanded a windfall tax on energy firms to help impoverished households pay their gas and electricity bills.

The demands for a levy, which was rejected by Mr Brown earlier this month, were spearheaded by Unite's joint general secretary, Tony Woodley.

Addressing the same issue, Business Secretary John Hutton said a tax would deter potential investors.

The windfall tax and other fuel poverty calls were backed by delegates at the party conference.

However the result is largely symbolic - it means the party's National Policy Forum will have to discuss the issue, rather than actually making the issue official party policy.

'City excess'

Under pressure to curb the culture of excessive City bonuses, Mr Darling said banks should not behave "recklessly" or do anything that could hurt the wider economy.

Speaking on the same issue, Mr Hutton said "curbing excesses" in the City may be necessary to ensure the integrity of the financial system was not "undermined".

The chancellor and Mr Brown will fly from the conference to New York to seek international agreement on tighter regulation of the financial sector.

Other ministers who spoke on the third day of the conference included Foreign Secretary David Miliband, Defence Secretary Des Browne and Business Secretary John Hutton.

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