The lines of savers queuing to withdraw their deposits from Northern Rock serve to remind us just how fragile the stability of the economy can be. The credit crunch, previously restricted to the City, has burst onto our high streets.
We support wholeheartedly the action that the Bank of England and the Financial Services Authority are taking to provide liquidity to Northern Rock. The Bank is confident that Northern Rock is solvent and open for business, and on that basis is supporting it through its liquidity crisis.
Of course, we need to know more about the chain of events. In a period of financial turbulence, it is vital that we establish the facts and avoid speculation. But we must not avoid discussion of the issues at stake: they affect every single one of us. And this crisis has put into sharp relief the risks to the economic stability that matters so much to every family in the country
In the short term, we need answers to important questions about financial regulation and transparency. In the medium term, we need real changes to the framework for monetary and fiscal policy in order to ensure stability. And I believe that we need now to learn a fundamental, long-term lesson: an economy built on debt puts economic stability at risk.
The Government should move quickly to answer the short term questions. Since the taxpayer, through the Bank, acts as lender of last resort when a bank is in crisis, the taxpayer can rightly expect safeguards in return. This crisis raises the question of whether those safeguards were strong enough.
Should the Government have required more transparency from banks using new financial vehicles to finance their borrowing? For instance, should we request the same capital reserves that are required for on-balance sheet lending? The rating agencies play a key role in assessing risk - yet there are pressing questions rightly being asked about their objectivity. Has oversight of these agencies been too lax?
Over the months ahead we need answers to these questions, and action to ensure that our regulatory structure keeps step with modern financial markets. As I said last week, the same spirit of innovation that makes the City of London a global financial centre can create the type of problems we are witnessing now. That doesn't mean we should fight shy of innovation: but as the Financial Services Authority recognises, innovative markets need innovative regulators.
Beyond these short-term questions, we need reform of our economy's monetary and fiscal framework to ensure stability. I have put stability at the heart of Conservative economic policy: the security of people's jobs and mortgages must be our number one priority.
In terms of monetary policy, we will not just continue with Bank of England independence, but strengthen it by reforming the way experts are appointed to the Monetary Policy Committee. No longer should appointments be made by the Chancellor or his coterie, without any check or confirmation.
But there is little point in strengthening monetary stability if it can be undermined by poor management of the public finances. So when it comes to fiscal policy - tax and spending - the Conservative position is strong and clear. We support the Government's conversion to tight spending plans. But this is not enough to entrench stability. We will introduce independent judgment of the fiscal rules, so they have real bite. With a Conservative government, no longer will the Chancellor be both judge and jury.
In the long-term, we need not just strong monetary policy and strong public finances, but a third dimension too: action on debt. It is not enough for the Chancellor simply to talk about the need for common sense in banking. We have called for greater transparency, and for lenders to be allowed to talk to each other about a borrowers' credit history.
For instance, instead of just notifying each other once a loan has gone wrong, they should be able to share informationon how much someone has borrowed in total. Banks should be more transparent with their customers too, explaining more clearly the costs of any borrowing. We should also consider preventing banks from raising credit limits without consent.
The credit crisis, however, raises deeper questions about the way our economy has been run over the past 10 years. Alistair Darling's remarks last week that banks need to think carefully about their lending decisions came after a decade of virtual silence about debt from both him and Gordon Brown. This Government has presided over a huge expansion of public and private debt without showing awareness of the risks involved.
Though the current crisis may have had its trigger in the US, over the past decade the gun has been loaded at home. Under Labour our economic growth has been built on a mountain of debt. And as any family with debts knows, higher debt makes us more vulnerable to the unexpected. In short, the increases in debt in the UK have added a new risk to economic stability.
Over the past decade, the level of personal debt has trebled, to £1.3 trillion. We owe more than our entire national income. So now when interest rates go up, the impact on homeowners escalates. Mortgage payments are at their highest for 15 years. Add in Gordon Brown's stealth tax rises, and real take-home pay for the average family is falling. No wonder insolvencies have quadrupled in the past 10 years, and are now at record levels. Someone goes bust in the UK every seven minutes.
Meanwhile, for all its past talk of prudence, the Government has been on a spree of gigantic proportions. Despite the world economic boom, Gordon Brown is borrowing £35 billion a year - more than the entire schools budget. No wonder the IMF has said that this cannot continue: our Government is borrowing more than any other in Europe. It takes quite something to make Italy's borrowing look prudent.
There are no quick fixes to these problems. Let us hope that the Bank of England's measures can contain this crisis, so that savers and homeowners are safe. But if we achieve that, let us not notch this up as another victory for stability, but let us take the action needed to ensure that we are better prepared should it ever happen again.