UPDATE: You can now watch the speech in full

 

This weekend is just the second time we've been together as a party again since those momentous events last May.

I've really enjoyed fielding questions, queries – yes, some criticisms, too – from many of you over the last couple of days.

But it was a passing remark from one delegate that took me most by surprise.

'It's so nice to see you back' she said. 'I thought we'd lost you when you walked through that door of Number 10'.

Let me reassure you.

David Cameron hasn't kidnapped me. Although I gather some people were planning to this weekend.

My life may have changed a fair bit since the last election. But I haven't changed one bit.

We all know that we did not take the easy path last May. But we did take the right path.

Yes, being in government with the problems we inherited is hard.

Explaining why we're having to make cuts is hard.

And being in coalition with another party isn't always easy either.

Making compromises, settling differences, and going out to explain decisions which aren't exactly the ones we'd make on our own.

But every single day I work flat out to make sure that what we're doing is true to our values.

Because that's what I owe to the country. To the millions of people we represent.

And I owe it to you.

I never forget that it is because of you, your tireless work, that Liberal Democrats are now in government. I never forget that we are a party of fairness, freedom, progress and reform.

We cherished those values in opposition. Now we're living by them in government.

So yes, we've had to toughen up. But we will never lose our soul.

The slogan at this conference says: In government, on your side.

Some people have asked me: whose side, exactly?

My answer is simple.

We're on the side of the people I call Alarm Clock Britain. On the side of everyone who wants to get up and get on.

People who, unlike the wealthy, have no choice but to work hard to make ends meet.

People who are proud to support themselves but are only ever one pay cheque from their overdraft.

People who believe in self-reliance but who don't want to live in a dog-eat-dog world.

Who want everyone who can to work hard but they want children, the elderly and the vulnerable to be looked after too.

People who believe it is as wrong to opt out of tax as it is to opt out of work.

People who want the best for their children and need good local schools.

Who rely on our NHS.

Who want great public services but can't stand seeing government waste.

People who don't want politicians lecturing them on how to live.

And who are fed up with politicians taking their votes for granted.

These are the people liberals have always fought for.

Fought to get them votes, wages, jobs and welfare.

Lloyd George's People's Budget to make the wealthy pay their fair share and give a pension to all those who'd worked hard.

Keynes' plans to make our economy work for everyone and provide jobs for all.

Beveridge's radical blueprint for a welfare state to give security and dignity to every citizen

They may not have called it Alarm Clock Britain but they had the same people in mind.

The people liberals have always fought for. And we always will.

Those of you who were at the rally on Friday will remember that Ros Scott passed on to our new President, Tim Farron a copy of a book:

On Liberty by John Stuart Mill.

A reminder that we are the inheritors of a century and a half of radical liberal tradition.

We're not the heirs to Thatcher.

We're not the heirs to Blair.

We are the heirs to Mill, Lloyd George, Keynes, Beveridge, Grimond.

We are the true radicals of British politics.

That was true a hundred and fifty years ago and it is still true today.

In government, especially in difficult times, it is more important than ever to know whose side you are on.

When money is tight you have to make choices. And the only way to get them right is to know who you are making those choices for.

We are on the side of Alarm Clock Britain.

They have been failed for generations.

Failed by the tired tribalism of left and right.

Failed because both of those political traditions forget about people and place their faith in institutions.

For the left, an obsession with the state.

For the right, a worship of the market.

But as liberals, we place our faith in people.

People with power and opportunity in their hands.

Our opponents try to divide us with their outdated labels of left and right.

But we are not on the left and we are not on the right.

We have our own label: Liberal.

We are liberals and we own the freehold to the centre ground of British politics.

Our politics is the politics of the radical centre.

We are governing from the middle, for the middle.

In government. On your side.

The first order of business for this government has of course been to tackle the budget deficit Labour left behind.

There is no hiding place.

There can be no ducking out.

But let's be honest, this is not what we're in politics for.

I didn't get into politics to balance the books.

It is what we have to do – so we can do what we want to do.

When we came into office, we were borrowing an extra £400m every single day.

£400m we were asking our children to pay back.

Everything I want for Britain –

Great schools.

World class hospitals.

A balanced economy.

Can only be built on strong foundations, and on sound public finances.

Now, some people say to me: I understand we have to stop spending so much.

I understand we have to sort out the deficit. But aren't we doing it too quickly?

In other words, why now?

Here's why:

By cutting the deficit decisively we have restored confidence in Britain.

Essential – because without confidence there can be no growth.

We have helped keep interest rates lower for longer, helping families, helping businesses.

It has meant making difficult choices.

But at least they have been our choices...

Not forced on us by the bond markets as they have been in Greece and Ireland.

And the risks of delay far outweigh the risks of swift action.

Labour's delay would certainly be costly and could be deadly.

And do you know what really annoys me about them?

They refuse to set out how they would make their own cuts.

Ed Miliband even boasted that their plans are: and I quote

"A blank sheet of paper."

They call for us to produce a Plan B.

But they haven't even got a Plan A.

Labour won't take responsibility.

They say they would cut but they won't tell us where.

They say their plan would be easier but they don't admit their plan would mean three extra years of cuts.

They want to be saying to the people in 2015: 'more cuts are needed'.

We want to say: we've done what needed to be done.

This is a question of fairness.

Above all, fairness to our children.

Racking up £400m of debt in their name every day is not right:

Our generation has a responsibility to the next.

When it comes to the deficit, the real question is not when, or if.

The real question is how.

We have protected spending on schools, on science and on health.

Found extra money for the pupil premium and apprenticeships

Given councils more financial freedom than they've ever had before

And we are increasing the amount we spend on overseas aid.

We won't turn away from the task of fixing the deficit.

But nor will we ever turn our backs on the world's poorest people.

We are not just fixing the deficit

We are laying the foundations of a stronger Britain and a fairer world.

In local government, I know the cuts are difficult.

But our councillors are showing what imagination, compassion and a bit of liberalism can do.

I cannot tell you how proud I am that not a single Liberal Democrat-led council is closing a single Sure Start children's centre.

Sheffield has had a budget cut of more than 8%

Every lost job is a loss we all feel keenly:

But the Liberal Democrat council here has kept compulsory redundancies down to 270.

And they have kept open every children's centre, library and swimming pool.

But cross the Pennines into Manchester, a council having to make almost identical savings.

You'll find a Labour council letting nearly 2,000 people go.

So don't let Labour take the moral high ground:

In councils up and down the country they're the ones making the decisions to cut services that could be protected.

Some people say Labour are making cuts for political reasons...

So they've got something to blame the coalition for in their local election campaigns.

Let me say this:

Anyone who sacks a member of staff or shuts down a public service for political purposes is a disgrace to politics and a disgrace to Britain.

So yes, we have to tackle the deficit. But we are not a cuts government.

If we get to 2015 and all we've done is pay off Labour's deficit, we will have failed.

Deficit reduction is just a fraction of the work we are undertaking.

Bit by bit, step by step

We are putting in place the cornerstones of a fairer, more liberal Britain...

The four cornerstones we put on the front of our manifesto:

a fair politics
a fair, sound economy
fair taxes
and fair chances for all our children

Maybe those changes don't make the news every night like the cuts do.

But they will be the liberal legacy of this government.

The legacy each and every one of us will be proud to share.

Part of that legacy is proving that a new politics is not just possible –

It's better.

The old political establishment, on the left and on the right, hate what's happening to our politics.

The old left screaming betrayal every time politicians work across party lines or make a compromise.

The old right simply horrified to see Liberal Democrats in government at all.

We are showing that new politics, plural politics, coalition politics, can work for this country.

And it terrifies them.

There are enemies of reason across the political spectrum.

But there are friends of progress too – and the future of politics belongs to them.

It belongs to us.

People used to say coalition governments weren't British.

I am sure our coalition partners will forgive me for reminding them of their attempts, in the last days of the election campaign, to portray the horror show of a hung parliament.

Remember what they said? A hung parliament and coalition government would mean.

"Indecision"

"Weak government."

"A paralysed economy"

Well, it hasn't turned out like that, has it?

The coalition government is strong and it is radical.

The main criticism now made of the government is that we are doing too much.

That we are too ambitious.

Perhaps the new complaint about coalition governments is that coalitions are too strong.

But two parties sharing power in Westminster is just the start.

We need to share power with the people.

Let me quote you some words that inspired me many years ago:

'The old politics is dying.

The battle to decide what the new politics will be like is just beginning.

It is possible, just possible, that it will be a politics for people."

Shirley Williams wrote that three decades ago, as she and others set out to change the shape of British politics.

Shirley was an inspiration then, and is an inspiration today.

Shirley, perhaps it has taken longer than you thought, but here we are.

A new politics is beginning at last.

We must make it what you dreamt of: a politics for people.

The coalition government is shifting power from state to people:

Restoring civil liberties

Protecting personal freedom and privacy

Crushing the ID database

We're ending the house arrest of Labour's Control Orders

Guaranteeing freedom of the press

Undertaking the biggest devolution of financial power to Scotland since the formation of the United Kingdom

Tearing up the Whitehall rules that dictate to Town Halls how to spend local people's money

Running a successful referendum to give more power to Wales

Putting public health in the hands of local authorities.

Reforming party funding

Giving voters the right to sack corrupt MPs

Creating an elected House of Lords, finishing the job this party started a century ago

We passed the policies, conference after conference...

Now, finally, we're passing the laws.

And, of course, a referendum to change our voting system...

For the first time ever, the people of Britain choosing how to choose their MPs.

You can tell the 'No' campaign are desperate.

Making up ludicrous stories

Basically making it up as they go along.

What are they so scared of?

AV is a small change that makes a big difference.

It keeps what people like about the current system, like constituency MPs.

It simply puts people, rather than politicians, in charge.

Makes MPs work harder for your vote.

And helps end the scandal of safe seats for life.

On the Yes campaign we have the Liberal Democrats, Labour party supporters, the Green Party, UKIP, Plaid Cymru, the SNP, Friends of the Earth, Colin Firth, Eddie Izzard and Helena Bonham Carter.

On the No side of the argument are the BNP, the Communists, the Conservative Party.

John Prescott, Norman Tebbit and David Owen.

Tricky one.

It's simple.

If you want more duck houses: vote no.

If you want more democracy: vote yes.

In seven weeks, the British people can sound the last post for first past the post.

So we have seven weeks to get our message across:

If you want MPs to work harder for your vote, vote yes.

If you want politicians to listen to whole country, not just swing voters in marginal seats: vote yes.

If you want an end to jobs for life in safe seats, vote yes.

If you want a new politics, vote yes.

But it's not just a new politics we need.

We need a new economy.

The deficit is the most obvious symptom of an unbalanced, unsound, unfair economy.

An economy based on speculation and debt, rather than growth and investment.

We need an economy that works for Alarm Clock Britain, not just for the financial elite

We need an economy that works for us all.

Dealing with the deficit is just the first step to making that possible.

We have to get growth going again.

A new kind of growth.

The budget ten days from now will be a budget for growth:

For green growth.

For balanced growth.

Building the homes our children will need.

Getting young people into work.

Investing in the low carbon economy of the future.

No more dependency on the City of London and its coffers:

A flourishing future for the great cities of the North and the Midlands...

Cities which will be the engines of growth in our economy.

As they were in the past and as they will be again.

As for the banks, I agree with Mervyn King.

The Governor of the Bank of England says that it simply isn't sensible or right to have banks which are so big that if they fail we have to bail them out.

It's not good for the economy.

It's not good for taxpayers.

And it's not good for Britain.

Under the old model, a handful of financial institutions were able effectively to hold the country to ransom.

And who paid the biggest price for Labour's failure to regulate the banks properly?

Ordinary, hard-working taxpayers, that's who.

We will not let that happen again.

So we are fixing the banks.

We are going to take £10bn more than Labour planned in taxes off them this parliament.

We're making sure they lend £10bn to ordinary businesses this year alone.

Making them come clean about how much they pay their top people with the toughest disclosure regime in the world.

And – most importantly of all – we set up an independent Banking Commission to advise us on a sustainable future for the whole banking industry.

And we will act on what it recommends.

The banks must go back to being the servants of the economy, not the masters.

And people are fed up with a system where those on ordinary incomes have to pay taxes they can't afford.

While people at the top accumulate vast wealth no questions asked.

Forget the tired arguments of the left and right focusing solely on top-rate tax.

We need proper tax reform. Liberal tax reform.

My philosophy on tax is simple:

Less tax on aspiration, enterprise and hard work.

More tax on pollution and unearned wealth.

These are the principles which are already shaping government tax policy and will continue to do so in the years to come.

From next month, 900,000 people will stop paying income tax altogether.

Every basic rate taxpayer will pay £200 less a year in tax.

We will take real steps every year, including in the Budget in ten days time, towards our goal that nobody earning less than £10,000 pays any income tax at all.

From the front of our manifesto to the pay-packets of 23 million people.

Do you know who did that?

You did that – everyone of you in this hall.

You did it.

You designed the policy.

You voted for it at a conference like this one.

You campaigned for it.

And now it's happening.

So get out there and tell people about it.

On every doorstep and in every town.

An extra £200 in your pay packet starting next month.

By 2015, no tax on the first £10,000 you earn.

Labour think fairness means taking money off people and then making them fill out forms to get it back again.

We say no.

We say that you shouldn't pay tax until you've got enough to get by.

Work has got to pay.

So we're fixing welfare to make sure it always does – to break open the poverty trap Labour created.

As Beveridge himself said: "The State should not stifle incentive, opportunity or responsibility"

So our universal credit will send a simple, clear message:

Work pays.

Even an hour of work pays.

Do what you can, and we will help you.

There are of course some difficult welfare cuts coming.

We are building a system of welfare that is fair to recipients, and fair to the taxpayers.

A system Beveridge would be proud of.

And for pensioners, from next month our 'triple guarantee' will mean that everyone will be protected in retirement.

Never again the indignity of Labour's 75p pension rise.

Under our plans, pensioners will get £15,000 more in state pension over their retirement than under Labour.

And who did that?

You did that.

So tell every pensioner in your community, on your street, about it.

About the difference you made.

And let me also be clear.

Responsibility goes all the way up the income scale.

So we're going to make the top bankers come clean about their own pay and bonuses.

And we're going to make sure they pay their taxes.

We will always be just as tough on tax evasion at the top as on benefit fraud at the bottom.

Because ordinary workers in alarm clock Britain don't set up offshore trusts to avoid paying tax:

They pay their way – and that's a standard everyone should live by.

They also deserve world-class public services,

That will mean change, some of which may feel uncomfortable.

But we have to open up our public services if we want them to improve.

I know that many of you have concerns about the government's plans for the health service.

What I need you to know is that all of us in government are listening, and that we take those concerns seriously.

We have campaigned for years for an NHS that gives more power to professionals and to patients.

Do not believe for a moment Labour's scare-mongering about privatising the NHS.

No government of which I am part will tamper with the essential contract at the heart of the NHS: to care collectively for each other as fellow citizens.

World-class health care for all.

Publicly funded. Free.

Centred on patients, not profit. So yes to health reforms.

But no – always no – to the privatisation of health.

We want a great NHS.

And we want great schools, too.

A fair start for every child.

Under Labour, the opportunity gap widened – even as billions of pounds were invested in our public services.

That's their legacy of shame; the wasted money that could have made a difference.

We must do more, even though they left us with less.

Life chances should not be determined by background.

Prospects should never be narrowed by the postcode of the home you are born into.

Birth should never be destiny.

As liberals, we believe in an open society

Where the power to shape your own future is in your hands

Where all roads are open, to all of our children.

That is why Sarah Teather is providing free pre-school education to every two year-old from a poor backgrounds.

That is why we have introduced a pupil premium putting £2.5bn extra into schools that take on the children most likely to fall behind.

That is why we are creating 350,000 new apprenticeships, helping people get a trade and get ahead.

And that is why we are opening up our universities to poorer students.

We are introducing a national scholarship scheme.

So that young people from any background can go to university.

It is no secret that we could not deliver our policy to abolish tuition fees.

And I know how deeply people regret that.

But though we have been divided, we can now unite, together, behind one clear mission:

To make university access fair, fair for all.

Right now, our best universities are almost monopolised by the better-off.

A pupil at a private school is fifty-five times more likely to get into Oxford or Cambridge than a pupil who qualifies for free school meals.

But what's even more scandalous is that there are still some people in these institutions who shrug their shoulders and say:

That's just the way things are.

They are wrong and they will have to change.

We are insisting that universities wanting to charge more for courses have to open their doors more, more than ever.

And let me be clear to the universities...

Open your doors or we will cut your fees back down to size.

No more blaming the system.

Fair access: fair access now. It isn't just the universities.

Many of our liberal ambitions will be opposed by powerful interests.

But we are used to it.

We have faced them throughout our party's history.

Let's face them again.

The reform-blockers in the House of Lords, clinging to their unaccountable powers

The MPs in Westminster opposing voting reform that threatens their safe seats

The political party machines, afraid to wean themselves off big money

The unions standing in the way of reforms to give patients and parents more power

The financiers in the City of London, resisting fairer regulation and transparency

All looking out for themselves, protecting their turf, trying to close the doors against change.

Well, we're not having it.

Who stands up for the interests of the people without a lobbying group?

I'll tell you who does.

We do.

And we are not going to let them down.

I do not underestimate the scale of the tasks we face.

These are testing times for the country.

Testing times for the government.

Testing times for us as a party.

Let's be honest, after seven decades in opposition, 2010 was not the easiest time to return to government.

But we have shown ourselves to be up to the task.

We will not shrink from our responsibilities as a party of government.

We will not flinch from taking the difficult decisions to put this country back on track.

We will not miss this opportunity to build a more liberal Britain.

I know that being in the coalition government means us having to take some difficult, even painful, decisions.

But clinging to the comfort blanket of opposition would not have made life more comfortable for our fellow citizens.

It would have been an abdication of responsibility.

Never, ever, doubt the value of being in government.

Would a government without Liberal Democrats have ended child detention?

Got an extra ten billion out of the banks?

Would it have held a referendum on the voting system?

Or put up capital gains tax?

Ordered an inquiry into torture?

Brought in a pupil premium?

Or replaced control orders?

Would a government without Liberal Democrats have cut taxes for the poorest?

I don't think so.

In just a few weeks time, we'll be taking the liberal message to Scotland and Wales, and in council seats up and down the land.

When you go into this election campaign – and people are asking what difference we have made to government –

You go ahead and tell them.

Tell them that this government is getting our economy moving.

Tell them that this government is getting the banks lending.

Tell them that we are cutting income tax.

And raising the state pension.

Investing in our children.

Renewing our political system.

And restoring civil liberties.

Tell them how we are working to build a liberal Britain:

Tell them:

We are in government.

And we are on your side.