When Mo Farah approached the final stretch of the 10,000m final, who wasn't up on their feet, screaming at the TV?

When Nicola Adams beamed at the crowd after winning the first ever women's Olympic boxing, who didn't smile back? I was lucky enough to be there, and that's one I'll never forget.

Was there anything more British than that drenched choir in the Jubilee River Pageant, singing Rule Britannia! in the pouring rain?

Incredible images. Spectacular shows. Jaw-dropping personal triumphs.
And, above all, a year defined by shared experiences and national spirit too.

As for 2013, there will be more great moments, I'm sure.
And some big challenges as well.
Many families are still feeling the squeeze.
Look at the world around us and you see continuing economic uncertainty - particularly in our European backyard.
We are living through fluid, difficult times.

What I can tell you is that, whatever 2013 throws at us...
The Liberal Democrats will continue to anchor this Coalition in the centre ground...
And we will hold firm to our key purpose in this government:
The Liberal Democrats are building a stronger economy, in a fairer society, enabling every person to get on in life.

Over the holidays people want a break from politics as much as from work - I know that.
But as you look to the year ahead, you also deserve the reassurance that your government has a plan to steer the country onto better times - and that we're going to stick to it.

So I want you to hear it from me, on behalf of the Liberal Democrats, that this Coalition Government is not going to lurch one way or the next.
We will stay the course on the deficit.
We will cut income tax bills and help with childcare bills.
We will invest in boosting jobs and we'll reform welfare to get people into work.
A stronger economy.
A fairer society.
Where everyone can get on.
That's what we're about.
That's what I want 2013 to be about.
And, however you usher it in, I hope you have a fantastic time...
Happy New Year.

Dear Editors,

Every January readers are treated to articles reminding them that they have overindulged during the end-of-year festivities and must resolve to lose their holiday weight.

I am sure that you want to promote a healthy lifestyle for your readers but at this time of year in particular far too much magazine coverage tends to focus on irresponsible, short term solutions and encourages readers to jump on fad diet bandwagons.

As editors you owe more to your readers than the reckless promotion of unhealthy solutions to losing weight. If your aim is to give practical, sensible advice about losing weight - and not how to drop a stone in five days - you should encourage reasonable expectations, instead of dangerous ones, along with exercise and healthy eating.

So may I suggest a New Year's resolution for 2013? Shed the fad diets and fitness myths on your pages and instead celebrate the beauty of diversity in body shape, skin colour, size and age. I think your readers will appreciate it.

Sincerely,

Jo Swinson

Find out how much your local school has been given by searching the table below.

The cash targets extra money to schools depending on the number of children from disadvantaged backgrounds they have. The Pupil Premium is a major Liberal Democrat priority that is being delivered by the Coalition Government.

The Pupil Premium will be worth a total of £1.65bn, or £900 per child, in 2013/14. It covers any primary or secondary school pupil that has been registered for Free School Meals in the past six years.

Commenting, Liberal Democrat Schools Minister, David Laws said:

"Liberal Democrats are building a strong economy and a fair society where everyone can get ahead. Education is absolutely at the heart of that. "The Pupil Premium is extra support for the children who need it the most, whether it is catch-up classes, one-to-one tuition, extra IT support - whatever the school thinks best. "Helping the most disadvantaged children helps every child. Fewer children falling behind means less disruption in class and a better education for everyone."

By 2015, The Pupil Premium will be worth a total of £2.5bn a year to schools in England.

The Pupil Premium was one of four policy priorities that the Liberal Democrats put on the front page of their 2010 General Election manifesto. The others were raising the point at which you start paying Income Tax to £10,000 to give people on low and middle incomes a £700 tax cut; creating jobs by making Britain greener; and measures to clean up politics. The Pupil Premium was one of the key measures argued for by Liberal Democrats during the Coalition negotiations.

"I very much welcome the FSA levying its biggest ever fine; a fitting tribute to appalling acts of misconduct and deception. Hitting banks where it hurts most, their profits, sends a clear signal that they must change their ways if they want to operate in the UK. We need a banking system which serves society, not itself.

"Because of Coalition action the £160m will go into the public pot rather than back to the banks which do not deserve it. It is hard to understand why the previous Government tolerated recycling fines for the benefit of the offenders, but I am glad that the Coalition has restored common sense and made sure that since April this year all fines will go back into the public purse.

"I now want to see those individuals found guilty of misconduct dealt with by the regulators and those bankers who broke the law to be served justice. I will be working with my Liberal Democrat colleagues to make sure the Serious Fraud Office has the resources it needs to bring further prosecutions."

"In a fair society it is simply not right that innocent people can have their DNA stored by the state.

"That is why Liberal Democrats are restoring basic rights to millions of people.

"Under Labour, the Government collected the DNA of millions of people who had done absolutely nothing wrong. From children to witnesses, British citizens DNA was collected and stored.

"Astonishingly, the Labour Party still think it's right that the Government should hold such personal information, even if you've done nothing wrong.

"DNA is critical for police investigations, but only suspects and those convicted should be profiled. That's why this month, following the Liberal Democrat-led Protection of Freedoms Act, the Coalition Government will begin destroying six million unnecessary DNA records."

"The largest recorded fall in unemployment for over a decade is very welcome news. It shows that the Coalition Government is on the right track to get more people into work so that we can leave these difficult times behind us.

"The fall in unemployment was driven by the biggest drop in youth unemployment on record. Liberal Democrats have always been clear that getting young people into work is crucial to build a stronger economy.

"Youth unemployment can be devastating to the long-term career prospects of young people and that is why Liberal Democrats have put in place a £1bn Youth Contract to give young unemployed people a chance to earn or learn."

"Following a discussion of the parliamentary party, there was agreement to have a free vote at the second reading stage of the bill to deliver equal marriage. There was agreement that the overwhelming majority of the parliamentary party wanted to vote in favour of the legislation because it is the right thing to do and not just because they were whipped to do so. Therefore it was agreed a free vote was the best way to highlight this."

"There were significant concerns about the draft bill, which is why I insisted that it be put before the Joint Committee.

"This is a very difficult issue and I welcome the Committee's thoroughness.

"Their report makes a number of serious criticisms - not least on scope; proportionality; cost; checks and balances; and the need for much wider consultation.

"It is for those reasons that I believe the Coalition Government needs to have a fundamental rethink about this legislation.

"We cannot proceed with this bill and we have to go back to the drawing board.

"We need to reflect properly on the criticisms that the Committee have made, while also consulting much more widely with business and other interested groups.

"The Committee did not, however, suggest that nothing needs to be done. They were very clear that there is a problem that must be addressed to give law enforcement agencies the powers they need to fight crime. I agree.

"But that must be done in a proportionate way that gets the balance between security and liberty right. Any modernisation of the powers, including possible new legislation, must meet the concerns of the Joint Committee by having the best possible safeguards and keeping costs under control."

'The Commission President's comments are not surprising. We have said for some time that if Scotland were to leave the UK the most likely is that it would need to seek EU membership on newly negotiated terms while the rest of the UK would continue as a member state.

'That would mean Scotland needing to negotiate from a position of weakness, with all the implications that would have for agriculture, fisheries, and the economy. These are risks we do not face as part of the UK, a current, large and influential member.

'And there is a bigger lesson here: the Scottish Government's assertions on this issue have been exposed. This debate must be based on robust evidence and fact. Our view has been based on legal and academic evidence while their position has been based on nothing. That is why we are where we are.'

"I'm a supporter and always have been of same sex marriage, because I think marriage is a wonderful thing, a wonderful institution.

"It's a demonstration of a couple's commitment to each other, of their loving relationship.

"Every couple, gay or straight, who wants to celebrate that in the eyes of society should be able to.

"It's very important to remember that under our plans we're not going to force any church or any religious denomination to hold same sex marriage ceremonies if they don't want to.

"But I do think it's time that we allow any couple that want to, no matter who they are, to enjoy civil marriage."

Commenting further, long standing campaigner for equal marriage and Liberal Democrat MP for St Austell and Newquay, Stephen Gilbert said:

"It's very welcome news that churches which would like to conduct ceremonies for same-sex couples will be allowed to under the Coalition's proposals.
"The important point is that it will be for churches to decide and no church will have to do anything they don't want to.
"Liberal Democrats have long fought for equal marriage and now we're in government we're committed to making it happen.
"Love is the same, straight or gay, so the civil institution should be the same too. Widening equal marriage to allow churches to opt-in is a very positive step forward."

"I am glad that Starbucks has finally given in to public outrage and agreed to pay a fairer share tax in the UK. Other companies should follow suit. Over 12,000 people have joined my campaign for fairer taxes which called on a boycott until Starbucks took responsibility for its tax affairs.

"I look forward to seeing the detail of the proposal but welcome this first step. Reports of £10m are better than the zero pounds they paid for the last three years, but let's be clear - companies must pay their fair share of tax, not however much they feel like.

"The Coalition Government is taking a tough approach, investing heavily in clamping down on tax avoidance. For every £1 we spend on tackling avoidance we will get £7 back.

"Our message is clear: everyone, no matter how wealthy the company or individual, must play by the rules and pay their fair share. Those who don't will not get away with."

"It's fantastic the Coalition has recognised the importance of manufacturing to the British economy and is supporting businesses by introducing a 100% allowance on capital purchases up to £250,000.

"This will particularly benefit small and medium-sized businesses and investment in new machinery will in turn help to boost the economy.

"Increasing productivity in the manufacturing sector is hugely beneficial to the economy and will provide more jobs. Giving companies an incentive to invest is immensely important and I am pleased the Coalition Government is getting behind industry.

"Liberal Democrats are committed to closing the skills gap, increasing apprenticeships and delivering key initiatives to help businesses of all size across the country grow and succeed.

"As a party, Liberal Democrats have always supported manufacturing and engineering in the UK. In the Coalition Government, Liberal Democrats have made it a priority to increase manufacturing as a percentage of GDP and address the issues which have slowed manufacturing down in recent years."

"Liberal Democrats are working for a stronger economy and a fairer society, so that everyone can get on in life. That's why we are cutting taxes for working people.

"Today's announcement means that by April, Liberal Democrats will have cut your income tax bill by £600 a year.

"Liberal Democrats want fairer taxes, which is why we made raising the tax-free allowance our number one priority at the General Election - so important that we put it on the front page of our manifesto.

"When times are tough, with rising bills and wages not keeping pace with inflation, we want to give people real, practical help.

"Cutting Income Tax will not deal with all of those problems, but it will help. And I hope it will make a big difference to every family in this country."

"This is a historic moment for our country and our Monarchy. People across the realms of the Commonwealth will be celebrating the news that the Duke and Duchess of Cambridge are expecting their first child.

"We can also all celebrate that whether the baby is a boy or a girl, they will have an equal claim to the throne. It's a wonderful coincidence that the final confirmation from the other realms arrived on the very day that the Duke and Duchess of Cambridge made their announcement.

"The Government will soon introduce the Succession to the Crown Bill which will make our old fashioned rules fit for the 21st Century. It will write down in law what we agreed back in 2011 - that if the Duke and Duchess Cambridge have a baby girl, she can one day be our Queen."

East of England

1. Andrew Duff

2. Josephine Hayes

3. Belinda Brooks-Gordon

4. Stephen Robinson

5. Michael Green

6. Linda Jack

7. Hugh Annand

East Midlands

1. Bill Newton Dunn

2. Issan Ghazni

3. Phil Knowles

4. George Smid

5. Deborah Newton-Cook

London

1. Sarah Ludford

2. Jonathan Fryer

3. Richard Davis

4. Anuja Prashar

5. Rosina Robson

6. Turhan Ozen

7. Simon James

8. Matt McLaren

North East

1. Angelika Schneider

2. Owen Temple

3. Christian Vassie

North West

1. Chris Davies

2. Helen Foster-Grime

3. Jo Crotty

4. Qassim Afzal

5. Jane Brophy

6. Sue McGuire

7. Gordon Lishman

8. Neil Christian

South East

1. Catherine Bearder

2. Anthony Hook

3. Dinti Batstone

4. Giles Goodall

5. Ian Bearder

6. Allis Moss

7. Steve Sollitt

8. Bruce Tennent

9. John Vincent

10. Alan Bullion

South West

1. Sir Graham Watson

2. Kay Barnard

3. Brian Mathew

4. Andrew Wigley

5. Jay Risbridger

The sixth place on the Regional list is to be nominated by the Liberal Party of Gibraltar.

West Midlands

1. Phil Bennion

2. Jonathan Webber

3. Christine Tinker

4. Ayoub Khan

5. Tim Bearder

6. Joanna Corbin

7. Neville Farmer

Yorkshire and the Humber

1. Edward McMillan-Scott

2. James Monaghan

3. Joe Otten

4. Chris Foote-Wood

5. Jacqueline Bell

6. vacant

"Labour only introduced the 50p rate as the last, desperate act of a discredited government. They hit low-income workers by scrapping the 10p tax rate. And Labour cut Capital Gains Tax for millionaires every year while the Coalition has increased it.

"Liberal Democrats have cut taxes for working people by more than £500 a year compared to Labour so far and already lifted more than 2m people of the poorest workers out of paying Income Tax all together.

"Ed Milband needs to explain to his constituents in Doncaster why it took the Coalition Government to take more than 10,000 of them out of paying tax all together.

"Liberal Democrats are cutting taxes for the lowest-paid people so we will take no lessons from the Labour Party."

"I am determined that we continue to give you, the Lib Dem News readers, the sort of content you enjoy, while taking advantage of the opportunities the magazine format gives us, especially the extra pages.

"So let me know what you want to make sure we keep from Lib Dem News and what else you would like to read.

"One feature that is definitely continuing is the letters page, so please keep the letters coming in."

"This is another encouraging sign. Together with the recent GDP figures, these are signs that the economy is healing.

"The UK suffered a huge economic shock during the financial crisis. Liberal Democrats were clear when we joined the Coalition Government that it would be a choppy road to recovery but that we needed to create the right conditions to support growth and deal with the deficit.

"Liberal Democrats know that what matters to people is not abstract numbers and for everyone who is unemployed, it is a personal tragedy. That is why Liberal Democrats are working hard to help people into work. Young people especially need an extra hand as unemployment for them often leaves scars for decades to come. That is why Nick Clegg has invested £1bn in the Youth Contract, which will give every young person the chance to earn or learn."

"Liberal Democrats believe that our current system of maternity leave is out-of-date and out-of-step with the wishes of modern parents who want much greater flexibility in how they look after their children.

"I believe reform is long overdue and the changes we are making will shatter the perception that women have to be the primary care-givers. In the future, both mothers and fathers will be able to take control of how they balance those precious first months with their child and their careers.

This is good news not only for parents and parents-to-be, but employers too who will benefit from a much more flexible and motivated workforce."

"Liberal Democrats believe that if we are to deliver sustainable, strong growth we need to get the best out of both men and women in the workforce.

"Current arrangements are old-fashioned, inflexible and gender-biased. People should have the right to choose how they balance their work and family commitments.

"These proposals bring good news for business - not least a more motivated and productive workforce. Employers will be able to recruit and retain staff from a wider pool of talent in turn helping to diversify our economy and drive growth."

"If big names like Starbucks, Google and Amazon want to make money in the UK then they must be made to pay their fair share of tax here too.

"It's outrageous that Starbucks had sales of nearly £400m in the UK last year and paid nothing in corporation tax.

"People are already speaking with their feet by buying elsewhere and the Coalition Government is taking a tough approach, investing heavily in clamping down on tax avoidance.

"For every £1 we spend on tackling avoidance we will get £7 back.

"Our message is clear; everyone, no matter how wealthy, must play by the rules and pay their fair share. Those who don't will not get away with."

It is a pleasure to be here in Dublin. I want to begin by paying tribute to the tireless work of Graham Watson as ELDR President and to the whole ELDR team for making this Congress possible. And I hope to be able to welcome to you to the 2013 ELDR Congress in London. I also want to say a big thank you to Micheál Martin and Fianna Fail for their excellent hospitality and for making sure that that this Congress will, I have no doubt, be a real success. And I would like to congratulate Mark Rutte and the VVD on their recent election results. I know Mark couldn't make it today but he and I have been good friends for some time and it's great to see him and his VVD colleagues back where they deserve to be - in government.

Congress, I am particularly pleased to be here today, because it is my strong conviction that it is at times of great turmoil that Europe needs liberals the most. In the middle of the 20th Century those who came before us took a continent scarred by war, a place of great uncertainty, fear and hardship, and set about building a continent whose citizens would live together in peace, work together in mutual respect, and grow together in shared prosperity. Whatever the challenges that face the European Union, our nation states and our shared institutions, it is liberals who will make sure we always rise to those challenges.

Europe needs liberals now more than ever. The shared challenges we face are ones that can only be tackled when like-minded people across Europe work together: how to create jobs, particularly for our young people, and bring back prosperity; how to tackle climate change and build the new, green economies we need for our future; and how to keep our citizens safe in an uncertain and fast changing world. Those at home and abroad who want us to pull up our drawbridges and remove ourselves from the outside world, to cut us off and go it alone, cannot rise to those challenges. We must remain open, outward-looking and optimistic. Pulling together, not falling apart.

I haven't come here to rehash the arguments we all know too well about the future of the Eurozone, about the budget or the bailouts. At a time of great division in Europe I want to talk about the things that unite us: as people; as nations; and as liberals. Europe needs liberals now more than ever because it is only with agreement, co-operation and shared priorities that we will rise to these challenges.

YOUTH UNEMPLOYMENT

Liberals have always played a key role in challenging consensus, pushing for change and coming up with new, radical thinking. One of the gravest threats to the long-term future of our economies and societies is youth unemployment. Millions of young people across Europe are leaving education and finding either that there are no jobs, or that employers who are hiring are not prepared to take a chance on them. True, the rates of youth unemployment vary across Europe, but the underlying problem is one that is facing every single country in the Western world. Here in Ireland, almost one in three young people is unemployed. In the UK, we have a million young people not in work, education or training.

Youth unemployment is not only an economic tragedy, it is a slow burning social disaster. Research shows that the more time you spend unemployed when you are young the worse you will do over your working life. It crushes the hope of young people who send out application after application but rarely ever receive a reply let alone an interview. And it means businesses miss out on the enthusiasm, innovation and productivity of a generation.

Liberals believe fundamentally in spreading freedom and opportunity. But there is no quick fix or silver bullet. And no one country can claim to have all the answers. So we need to learn from each other. That's why next week I am travelling to France to discuss youth unemployment with the Prime Minister, Jean-Marc Ayrault. And it's why much of what we are doing in the United Kingdom is influenced by colleagues overseas.

In the UK, Liberal Democrats are leading the way in tackling youth unemployment. Because we understand the importance of equipping our young people with the skills they need to thrive we are overseeing a massive expansion of apprenticeships. But it would be wrong for us to pretend that we are taking on these problems without benefiting from the experiences and ideas of our fellow liberals and neighbours.

For example, in the UK, and despite the pressures on budgets, we have developed a £1bn Youth Contract, which will provide nearly half-a-million new opportunities for 18-24 year olds. Targeted job subsidies for employers who will give young people a chance, much like those that operate in Belgium and Netherlands. New work experience placements to break the cycle of joblessness, like those we see across Sweden, Finland and Denmark. And a new programme to help the most disengaged 16 and 17 year olds - getting them back to school or college, onto an apprenticeship or into a job with training. In fact, our apprenticeship scheme unashamedly seeks to emulate the phenomenal success of Germany's long-standing apprenticeship schemes. The pool of radical ideas and new thinking is vast when we choose to look beyond our national borders. And I am delighted to see much of this radical thinking being done here in Ireland by our hosts Fianna Fail. Encouraging entrepreneurship. Expanding the national internship service. And giving new support to train young Irish people in the skills they need to succeed.

Europe needs liberals because we believe fundamentally in spreading freedom and opportunity, and too many of our young people have too little of both. As we rebuild our economies we must make sure the skills and livelihoods of our young people are put at the top of our priorities.

GROWTH

Europe needs liberals because we understand the way the world is changing. Globalisation and the information revolution have transformed the way we communicate and do business. They have spread democracy and empowered parts of the world to grow at remarkable rates. And they have helped fuel the great rise of the emerging powers whose economic and political might grows daily. Liberals know that we in Europe must adapt to this modern world with openness as our watchword. We are open minded internationalists.

Where other politicians see risk, we liberals see potential. Where other parties see threats, we liberals see opportunity. The opportunity to spread prosperity by completing the single market in services and digital, unlocking over €4,000 in extra income for every European household; the huge growth potential for Europe to lead the world in research and development and high tech industries, by unlocking investment and venture capital for our innovators and through agreeing a new EU-wide patent; and the chance for us to use our collective weight to drive forward free trade agreements for the benefit of European businesses and consumers. Deals like the recent EU-South Korea Free Trade Agreement that, in just one year, has increased European exports by €1.7bn; or game-changing deals with some of the biggest markets in the world, such as Japan and the United States.

In fact, if the EU can complete all of its current free trade agreements with third countries, it would permanently add more than 2% to the EU's GDP or some €275 billion annually, and create more than 2m new jobs. I would like to pay particular tribute to our friends in the European Commission for keeping the single market and free trade agenda moving forward, and urge them to keep it up, to go further and to go faster.

GREEN AGENDA

When it comes to understanding how the world is changing, there can be no clearer example than climate change. Some people say that at times of hardship and economic uncertainty we cannot afford to care about the environment. It is a foolish and dangerous argument. Climate change is no less a threat to us when times are tough. If we shrink from the task of cutting our emissions then our legacy to our children and grandchildren will be disaster. If we want our children and grandchildren to live in peace and prosperity then we must act now and act decisively before it is too late. So we must tackle climate change now with the same urgency, if not more, than we have in the past.

Europe needs liberals because we understand that the only way we can tackle a problem of this scale is by working together, leading by example and pooling our resources. But Europe needs liberals not just because we understand the urgency of the challenge but because we see the opportunity it presents. We are all looking for ways to get our economies growing and ways to create jobs that last. The green goods and services market is a key part of the answer. It is one of the fastest growing sectors in the world, worth over €4trillion today, and all the projections are that it will grow and grow at an increasing rate.

I'm proud that companies in Britain, including in South Yorkshire where I am an MP, are at the cutting edge of green innovation. In the UK, the Liberal Democrats in Government are expanding our renewables sector. Rolling out a massive programme of energy efficiency in our homes and businesses. And creating a revolutionary Green Investment Bank. An idea developed by Liberal Democrats, put in our manifesto, argued for in our coalition negotiations and being delivered by a Liberal Democrat Secretary of State.

At the European level, we liberals must come together to ensure that Europe taps into the huge potential of green jobs in this area. Through driving forward new ambitious emissions targets. Through implementing in full the Commission's Low Carbon Roadmap. And through investing in low carbon energy infrastructure to develop a European supergrid, linking up our countries to enjoy efficient, clean and secure energy, just like the exciting ideas for interconnecting Britain and Ireland, so that excess wind energy in Ireland can be transported and used in the UK.

There is so much to do to deliver a full low carbon energy transformation, to unlock millions of green jobs and to establish thousands of world leading clean tech businesses, and it is Europe's liberals who must be bold, ambitious and radical to make sure this become a reality.

SECURITY AND JUSTICE

As liberals we also understand the importance of working together to keep our citizens safe in a dangerous and uncertain world. The UK and Ireland, two nations with a shared land border, are painfully aware of the value of cross-border co-operation on policing and security. We all know that cross border crime and terrorism is a major threat to us as individuals, as nations and as a European community. And we know that when crime crosses borders, justice should too.

So together we have built the world's most advanced system for cross-border police and justice co-operation. Co-operation that in 2010 cracked open a pan-European human trafficking network, rescuing over 180 children; that last year broke up the world's largest online paedophile ring, freeing over 200 children who were being systematically abused; that, as we speak, is investigating hundreds of serious and organised international crimes, like the recent and tragic murder of a British family in Annecy, in France.

There is a live debate in the UK on the level of UK involvement in European police and justice measures. The Government has said our current thinking is to opt out of these measures en masse, before seeking to rejoin those measures which are important to our safety and security. It's true that some of the measures may be old, out of date or defunct. And yes, some need improvement. But I want to be absolutely clear: a final decision has not been taken, and the Liberal Democrats will only agree to doing that if I am satisfied we can opt back in to the measures needed to protect British citizens. Liberal Democrats in the UK's Coalition Government, like liberals across Europe, understand that we are all safer when we work together.

CONCLUSION

So as we face this array of economic, environmental and security challenges, it is fitting that the ELDR Congress should be held here in Dublin. As Ireland prepares to take on the presidency of the European Union, there can be no doubt its economy is coming back. All the indications point to this: growth in exports and in agriculture; a well-educated young population; continued investment from the technological industry; a country gaining increasing confidence from the financial markets due to its strong implementation of EU and IMF-supported programmes.

But there is a long way to go for all of us. European countries can't deal with these major challenges - growth, jobs and youth unemployment, climate change and security - by themselves. Europe needs liberals because we understand that the challenges that face us all right now require a collective, liberal response. Europe needs liberals because we understand that it is only by spreading freedom and opportunity that we will thrive as individuals, as nations and as a continent. Europe needs liberals because we understand that all of us are richer, greener and safer when we stand together, and that we are all weaker when we stand apart.

Pulling out all the stops

The party is pulling out all the stops in the last few days of campaigning before next Thursday's big polling day, and candidates need your help to deliver some good results.

On 15th November there will be three Parliamentary by-elections, a City Mayoral Poll in Bristol and voting will also take place for the new Police and Crime Commissioners.

Deputy Prime Minister Nick Clegg and Lib Dem Ministers have been out campaigning in all the Parliamentary by-elections. Nick has made a point of visiting several times the constituencies of: Cardiff South and Penarth, where the candidate is Dr Bablin Molik; Corby, where Jill Hope is standing for the Lib Dems following Louise Mensch's resignation (see photo above) and Manchester Central, where Marc Ramsbottom is fighting the seat vacated by Labour MP Tony Lloyd.

The Party Leader has also been campaigning in Bristol to support Dr Jon Rogers, the well-known Liberal Democrat candidate and local doctor, who is campaigning hard for the new Mayoralty in the City.

The Party Leader told Lib Dem News: "Campaigners from across the UK have been working tirelessly to promote Liberal Democrats in the upcoming elections. And our candidates have been doing an incredible job to reach out to voters, in often very difficult circumstances. I applaud their effort, tenacity and dedication.

"I wish everyone facing by-elections and PCC elections the best of luck. And with just a few days to go before polling day, I would encourage anyone not already involved, wherever they live, to do whatever they can to help."

And you can help now - either in the constituencies or, if you cannot get to one, by telephone. Here are some contact details:

Cardiff South & Penarth Tel: 029 2066 5742 Email: Virtual Phonebank No: 0172AO-7160

Corby Tel: 07725 483445 Email: Virtual Phonebank No: 585F9N-1363

Bristol Tel: 07775 705 216 Email: Virtual Phone Bank No: B6BCAO-9555

Manchester Tel: 07940 083218 Email: Virtual Phone Bank No: 7559AI-2937

"Liberal Democrats support the living wage and we commend those employers who have introduced it.

"Instead of asking employers to take on this burden, Liberal Democrats are focusing on making sure people keep as much of the money they earn as possible. That's why in the Coalition Government, we have cut income tax for people on low and middle incomes. By 2015 tens of millions of people will have had a £700 Income Tax cut and millions more will be taken out of paying tax altogether.

"Those changes mean that someone working full time on the minimum wage will see their income tax bill cut in half, but the Liberal Democrats want to go further. Our policy is for nobody to pay any income tax until they earn more than the minimum wage.

"That's real help delivered by Liberal Democrats compared to a Labour Party that raised taxes on working people by abolishing the 10p tax rate and left the economy in a mess for others to clear up."

More cities free for growth


The Deputy Prime Minister announced this week that 20 more cities and their wider areas will be given the opportunity to bid for radical new powers to boost local growth under the 'City Deals' programme.

Cities from the successful first wave of deals, with England's

eight largest cities, secured groundbreaking powers including the ability to 'earn back' tax from the Treasury, devolved transport budgets and control of the skills budget for their city.

The second group includes: the Black Country; Bournemouth; Brighton and Hove; Hull and Humber; Ipswich; Leicester and Leicestershire; Greater Norwich; Oxford; Reading; Plymouth; Southampton and Portsmouth; Stoke and Staffordshire; Sunderland and the North East; Swindon and Wiltshire and the Tees Valley.

"In the best English tradition we have witnessed a quiet revolution across the nation's eight largest cities," said Nick. "From control over buses and trains and the freedom to plug skills gaps, to powers to 'earn back' tax and

set up local investment funds to spend on local projects - the deals are unlocking the huge potential of our cities so they can go for growth.

"Now it's time to free even more places from Whitehall control. I want these 20 cities and their wider areas to come up with ambitious and innovative proposals to help them make changes that will be felt by everyone across their region."

City Deals are a key part of the government's objectives of rebalancing the economy and boosting private sector growth. The Deals will accelerate the pace of decentralisation and unlock new and innovative ways to drive growth.

MP Julian Huppert has welcomed the chance for Cambridge - was one of the cities announced this week - to bid for more government funding. "This is an excellent opportunity for Cambridge to demonstrate what it is capable of - freeing us to do what we want with less interference from Whitehall," he said.

"Cambridge has always struggled because of the lack of government funding for major infrastructure. Despite this, the City has proved it is one of the strongest economic centres in the UK; but it could do so much more with the right financial support. If our bid is successful, it will open up a whole range of new opportunities for our City; the possibilities are endless," added Julian.

This autumn, the great debate on Britain's role in Europe has, as ever, generated a lot of heat yet little light.

We want to be in, we want to be out;
We want to repatriate powers, use our veto, keep our pint, save our pound, protect our strongest export market...
Be critical of Germany, not end up like Greece, feel proud of our role in creating peace in Europe, yet cynical about an acronym winning the Nobel Prize.
And just last night, in a House of Commons debate on the European Budget, we saw Europe turned into a political football as political opportunists sought to score a political point.

But when it comes down to it, there is a serious debate to be had...
And we do have some serious decisions to make.

In Europe today, there are effectively three places you can be.
They fit together like rings around a circle.

There's the core:
Where the Eurozone countries are now pulling together more closely;
Integrating further to shore up the single currency.

Then there is the ring around that - the inner circle:
The states who aren't in the euro, but are members of the EU.

And the outer circle:
Where you find the accession countries, EEA countries, Norway, Switzerland, and so on.

The UK is in the inner circle - but the terrain is shifting.
The core is tightening - to what degree we don't yet know.
Some states on the outside are seeking, over time, to head further in.
And, as a different Europe emerges, over the coming years...
We have to decide where the UK fits within it.
What role will we play in our new neighbourhood?

Very few people are now suggesting we move into the centre.
Joining the Euro will not be in our interests anytime soon - certainly not in my political lifetime.

But there are forces who want to pull us towards the edge;
Towards the outer circle.
Reducing the extent to which we cooperate on the continent;
Happy for the Channel to widen.
Hoping, even, that it becomes a gulf.

Today I want to explain why that is a very dangerous position...
Leaving the UK isolated and marginalised.
And I want to offer a more compelling alternative:
A strong UK, influential in Europe and so more influential in the world;
Working with our allies on the issues that matter to our prosperity and security;
Driven by pragmatism, as opposed to dogma, in these debates.
Unambiguously in the inner circle.

That will require an approach that is engaged and balanced.
So not accepting every request or regulation sent from Brussels.
But, equally, cooperating constructively where it is in our national interest to do so.

Iin our immediate future, that means three things:
One: a tough EU Budget settlement.
Two: defending and deepening the Single Market - and our place in it - for the sake of growth and jobs.
Three: taking the decisions on law and order cooperation that will keep British citizens safe.

The Europe debate will continue to run and run, as the Eurozone integrates further - that is certain.
And in the UK we will find ourselves talking about it, thinking about it, arguing about it frequently over the coming years.
But right here, right now the UK's priorities can be easily summed up:
Tough on the money; more jobs; more criminals behind bars.


Before I turn to those, I want to focus on the proposal doing the rounds that...
The best way to improve the UK's position in Europe...
Is to renegotiate the terms of our relationship with the rest of the EU.
We should opt out of the bad bits;
Stay opted in to the good bits;
And the way to do that is a repatriation of British powers.

That seems very reasonable; in fact, it's a pretty seductive offer - who would disagree with that?

But, look a little closer:
Because a grand, unilateral repatriation of powers might sound appealing...
But, in reality, it is a false promise, wrapped in a Union Jack.

Let me explain why.

I am all for reducing frivolous and expensive European rules.
At the weekend we heard stories about proposals to regulate the shoes and jewellery British hairdressers wear.
That kind of thing is clearly too much.
Having worked at the heart of the EU, I can certainly give you some more examples.

And, more profoundly, we need to refocus the EU...
So it does more where it adds value, and less where it doesn't.
I'm very proud of this Government's track record in working with our European partners to do that.
Whether that's reducing EU red tape for small business;
Or securing agreement on a European Patent after 23 years of negotiation;
Or getting long overdue agreement to devolve powers over fisheries policies.
But there is a lot more we need to do to get the Europe focused on the policies that create economic growth and make it more competitive.
And I want the UK leading that.

So I do not think the EU is perfect by any stretch and I'm a big advocate of EU reform.
But this idea that we should - or could - extract ourselves from the bulk of EU obligations is nonsensical.
It is wishful thinking to suggest we could - effectively - give ourselves a free pass to undercut the Single Market...
Only to then renegotiate our way back in to the laws that suit us.
The rest of Europe simply wouldn't have it.

What kind of club gives you a full pass, with all the perks...
But doesn't expect you to pay the full membership fee or abide by all the rules?
If anyone else tried to do it...
If the French tried to duck out of the rules on the environment or consumer protection...
If the Germans tried to opt out of their obligations on competition and the single market...
We would stop them - and rightly so.

And let's be honest:
Many of the people who advocate repatriation are the same people who want us out of Europe - full stop.
For them, no rebalancing of powers will ever be enough.
And so there is no hard border between repatriation and exit...
Because, for these people, repatriation is pulling at a thread - and they want to unravel the whole thing.
Just look at the last few weeks:
As soon as we start talking about repatriation, we descend into the in-versus-out debate.


And heading to the exit would be the surest way to diminish the UK.
Because what then?
Become the next Norway or Switzerland?
Advocates of repatriation point to these nations and say they have the best of both worlds:
Access to Europe's markets...
Without an assault on their sovereignty.

But these countries sit and wait for bills and directives from Brussels...
Duly paying their bit, changing their laws...
But with absolutely no say over Europe's rules:
No political representation; no national voting rights; no voice at all.
They work by fax democracy:
You find your instructions on the machine in the morning, and you follow them.
They have no meaningful sovereignty in the EU.

Norway has had to implement three quarters of all EU legislation...
Including the Working Time Directive.
They pay into the EU Budget: for the specific programmes they participate in and for development grants to new member states.

Switzerland has no guaranteed access to the Single Market.
They have to negotiate on a case-by-case basis.
And right now they are having to match - even surpass - rigorous EU banking regulations...
Just to protect business between Swiss and European banks.

To go down that route would be a catastrophic loss of sovereignty for this nation.
I want better for the UK.


And our other allies want better for us too.

It's long been the case that the UK stands tall in Washington...
Because we stand tall in Brussels, Paris and Berlin.
There is a great deal to our enduring special relationship.
But, for the Americans, the UK's leverage on the continent has always been part of our appeal.
That will remain the case - no matter who's in the White House after next week.

And while it is, of course, important that we form new alliances in the world...
In Asia, India, Latin America...
The idea that we can float off into the mid-Atlantic...
Bobbing around in a new network of relationships...
Without a strong anchor in Europe...
While countries around the world - incidentally - are working more and more in regional blocks...
Is clearly not a sound strategy in a fast-moving, fluid and insecure world.

Those who advocate turning our back on our neighbours…
Seem to think we have a ready-made web of alternative alliances…
A set of international agreements with other countries that could readily sustain us.
But that isn't how it works.

The Commission has just confirmed, for example, that if the UK suddenly left the EU…
We would instantly lose access to every EU trade agreement with a third party.
Agreements with 46 countries are in place, and agreements with a further 78 are under negotiation.
Our membership of the EU gives us access to all of them.
And that includes almost every Commonwealth country.
The EU is looking at opening negotiations with nine more countries, two of which, Japan and the USA, would be very significant.
Do we really want to leave the EU, lose these free trade arrangements for UK exporters, which go above and beyond WTO rules...
And potentially have to negotiate that all from scratch?
The UK government would spend a decade doing that and nothing else.
And can anyone seriously suggest that Japan, or South Korea, or Brazil would cut us a better deal as an island of 60m people than as a continent of 500 million?

Ironically, the people who do understand this strength-in-numbers argument are the Scottish Nationalists.
They may be trying to pull away from the UK...
But they're going around saying an independent Scotland would have automatic entry into the EU - an assertion that has no basis in fact...
Precisely because they see how important it is to Scottish prosperity.
And they know a separate Scotland, seeking re-entry into the EU, would lose the extra benefits it gains from being part of a big member state.
They don't want to face what might happen to Scotland's influence on fishing quotas, or agricultural policy, or the regulation of the banks.
They don't want reality to bite.
So they've gone into denial, preferring political assertion to legal advice.

The best - and most realistic - choice for the United Kingdom is to stand tall in our European hinterland;
For the sake of our security, our prosperity and our place in the world.

Standing tall means asserting ourselves when we need to protect the nation's interests.
But also cooperating with our neighbours when it is for the good of the British people.
In the coming weeks and months, that will mean three things.


First, taking a tough line on the EU Budget...
Ahead of a special European Council meeting at the end of the month.

The Coalition Government's position remains the same:
We will not accept an increase, above inflation, to the EU Budget.
That is a real terms freeze.
And we will protect the British rebate in full.
That is the toughest position of any European country.
At a time of deep fiscal tightening in the UK...
With British taxpayers seriously feeling the pinch...
We cannot support a real increase in EU spend.

Labour has now taken a different position - as we saw last night - having had a change of heart.
Ed Balls knows only too well, from bitter experience...
That there is absolutely no prospect of securing a real terms cut to the EU budget.
But at the eleventh hour, and having stayed silent on this issue for months...
Labour now proclaims that, actually, this is what they've wanted all along...
And they can wave a magic wand over the Council negotiations and convince 26 other countries to agree.

Yet it was Labour who agreed to the last long-term EU budget settlement...
Which saw a major jump in EU spending and lost part of the UK's rebate...
In exchange for virtually no real EU spending reforms.
And British taxpayers have suffered the consequences ever since...
With our net contributions going from less than €3bn in 2008 to more than €7bn in 2011.

Who were two of the Labour MPs to vote for it?
Ed Balls and Ed Miliband.
Who was the Europe Minister?
Douglas Alexander.

Their change of heart is dishonest, it's hypocritical...
And worst of all, Labour's plan would cost the taxpayer more, not less.
Because in pushing a completely unrealistic position on the EU budget...
One that is miles away from any other country's position...
Labour would have absolutely no hope of getting a budget deal agreed - driving the annual EU bill up instead, over which we would have no veto power at all.

We've been waiting for years for the Labour party to announce how they would cut spending.
Now they have finally come out in favour of cuts...
But in a way they know is undeliverable; and in a way that would hurt British taxpayers.
And it turns out even their cuts cost money.
I've heard people describe it as clever opposition politics - and I suppose it is.
But it's not the behaviour of a party serious about government.

Yes, the British Government's position is tough.
Yes, it is going to be difficult to negotiate.
But we are working for a deal because that is the best way to protect British interests.
The Prime Minister and I may have our differences on Europe...
But, on this, we are absolutely united.
To one side we have opponents of the Government pretending we can give less...
On the other side, there are some in Europe demanding we give more.
But it's our job to make realistic, responsible and hard-headed decisions on behalf of the British people.

This is a deal that can be done - that's the message I'm pushing with my European counterparts.
With governments across Europe having to get the most out of every pound, Euro or zloty they spend...
A real terms freeze is a good offer.
It's in the EU's own interests to be seen to be showing real restraint.


Second, we need to be actively protecting and advancing the single market - and our place in it - for the sake of British jobs.

Around one in every ten jobs in Britain relies on British trade within the Single Market.
Around half of all our trade goes to other European states - exports from around 100,000 firms.

But as Europe evolves, we cannot take the integrity of the Single Market for granted.
That's already been made clear during negotiations on the new Eurozone banking union...
Which we're having to ensure doesn't undermine the single market in financial services - prejudicing the City.
And we can expect more of this kind of thing, as the Eurozone integrates further.

And not only will we need to defend the Single Market - we also need to deepen it.
Removing trade barriers in services and digital industries would be worth around £3,400 a year to the average household.
Money we need as we return our economy to health.
But it won't happen without leadership from the UK.
We were among the Single Market's architects:
Lord Cockfield - a British Commissioner - helped design it;
Margaret Thatcher played a critical role in pushing it through
And today - as the most open, liberal economy in the EU - we will need to help finish what was started twenty years ago.

And that's how we send the right signal to foreign investors too.
One of the reasons big multinationals come here is because we offer a launching pad to the world's largest borderless marketplace.
Think of the big employers who've set up operations here: Samsung, Tata, Siemens.
The automotive giants helping drive the renaissance in the UK's car industry:
Nissan, Honda, BMW, Toyota.
Firms who currently pay no import tariffs on the vehicles they send from here to the continent.
But who would be faced with levies of up to 22% if the UK suddenly left the EU.

These companies need to be reassured that we will continue to be the best bridgehead into the European market.
We cannot afford to give the impression that we are going to disengage.
We need to stay focused on driving trade between us and our neighbours.
That is the only way to protect British jobs.
It's a position that is pro-business and pro-Britain too.


Third, cooperation on law and order.

Before signing up to the Lisbon Treaty in 2009…
The previous Government negotiated an opt out on a package of 130 crime and policing measures, which pre-dated the Treaty.
The Coalition now has to decide whether to stay opted in to all of those measures...
Or else pull out of the lot, before seeking to opt back in to individual instruments - depending on negotiations with the Commission and the Council.
A decision needs to be taken by 2014 and we will give Parliament a say.
But, clearly, we need to agree our starting position now.

So we're looking across the 130 measures.
The Government has said our current thinking is to opt out of them en masse, before seeking to rejoin some.
But I want to be absolutely clear:
A final decision has not been taken.
And I will only agree to doing that if I am 100% satisfied we can opt back in to the measures needed to protect British citizens.
And if I am convinced we are not creating waste and duplication, incurring unnecessary costs.
We will be led by the evidence and the experts at all times.
What matters is preventing crime and terrorism - this must not turn into an ideological scrap.

We are likely to find that some of the measures are defunct.
Like old measures to improve data collection in drug trafficking, or things like outdated skills directories for crime fighting professionals - old instruments that have now been superseded.

But there are others which have transformed the way our police operate...
Delivered justice for victims of crime where once there was none...
And put thousands of criminals behind bars.

It is my strong personal view, that there is a great deal of value in Europol, for example, which pools intelligence to combat serious organized crime.
Joint Investigation Teams and Eurojust, which enable cross-border operations...
Like the ongoing investigation into the recent murder of a British family in Annecy in France.
Today, if a rapist, or paedophile or violent offender living in Britain has a foreign criminal record - we can receive it at virtually the click of a button.
When a forged British passport or driving licence turns up in Europe - we can find out about it straight away.
When a fugitive runs from the UK, we can use the European Arrest Warrant to bring them back - as we saw again recently in the case of teacher Jeremy Forrester.
Yes, the Arrest Warrant needs reform so that it is used proportionately, but it is an important crime fighting tool.
We've managed to set high standards for combatting children pornography across the whole of Europe - something the UK pushed for.
Our police can call on the resources and intelligence of the entire European crime-fighting community....
To hunt down and arrest murderers, escaped convicts;
To stop billions from being laundered out of the UK every year.

In the words of Hugh Orde, the President of the Association of Chief Police Officers:
'In the 21st Century, policing is international.'
And to anyone who says we don't need these EU measures to fight crime and terrorism effectively, I say prove it.
Prove it to the police, the intelligence agencies, the lawyers, the victims of crime charities.
Prove it to the people who deal day in day out with the worst criminals imaginable.
Because my position is clear: I will not ask them to protect the British people with one hand tied behind their back.

The UK is part of the most advanced system for combating cross-border crime on the planet.
And we have been at the forefront of building it.
Over the last fifteen years we've led the way on crime and policing cooperation in Europe.
The Head of Europol is British.
The last head of Eurojust was British.
The EU's police training centre is at Bramshill in Hampshire.
This package of 130 law and order measures has British fingerprints all over it.
And I want UK citizens continue to benefit - fully - from the system we built.


So, tough on the money; more jobs; more criminals behind bars.
That's the deal we are going to deliver for the British people.

You cannot do any of those things from the edge.
You cannot deliver for British citizens when you're halfway out the door.
Europe is changing - yes.
But rather than go into retreat, now is the time to confront those changes head on.
We need to make a decision about who we will be in the new Europe.
And I say we need to be strong, loud, present…
That's the strategy that will leave the UK more prosperous, safer, strong.
Standing up for the people of Britain by standing tall in our own backyard.

Thank you.

Paul Burstow MP has also been elected as chair of the Parliamentary Party.

The new appointments in the House of Commons are:

Gordon Birtwistle, Business, Innovation and Skills

Mike Crockart, Energy and Climate Change

Julian Huppert, Home Affairs, Justice and Equalities

John Leech, Culture, Media and Sport

Greg Mulholland, Work and Pensions

Alan Reid, Transport

Mark Williams, Wales

Roger Williams, Food and Rural Affairs

John Thurso becomes the co-chair to the Parliamentary Party Committee on Constitutional and Political Reform in addition to the role he holds for the Scotland committee.

The new appointments in the House of Lords are:

Lord (Jonathan) Marks of Henley on Thames, Justice

Lord (Monroe) Palmer of Childs Hill, Defence

Lord (Mike) Storey, Education (starts January)

Lord (Martin) Thomas of Gresford, Wales

A full list of the Liberal Democrat Parliamentary Party Committee Co-Chairs is copied below:

Work & Pensions
Commons Co-Chair: Greg Mulholland
Lords Co-Chair(s): Lord German


Education, Families & Young People
Commons Co-Chair: Dan Rogerson
Lords Co-Chair: Baroness Walmsley until January 2013, followed by Lord (Mike) Storey


Constitutional & Political Reform (including Cabinet & House Business)
Commons Co-Chair: John Thurso
Lords Co-Chair: Lord Tyler CBE DL

Culture, Media & Sport
Commons Co-Chair: John Leech
Lords Co-Chair: Baroness Bonham-Carter of Yarnbury


Energy & Climate Change

Commons Co-Chair: Mike Crockart
Lords Co-Chair: Lord Teverson

Environment, Food and Rural Affairs
Commons Co-Chair: Roger Williams
Lords Co-Chair: Baroness Parminter


Transport
Commons Co-Chair: Alan Reid
Lords Co-Chair: Lord Bradshaw


Communities & Local Government
Commons Co-Chair: Annette Brooke
Lords Co-Chair: Lord Tope CBE


International Affairs (FCO, Defence & DfID)
Commons Co-Chair: Martin Horwood
Lords Co-Chair: Baroness Falkner of Margravine (FCO)
Lords Co-Chair: Lord Palmer of Childs Hill (MoD)
Lords Co-Chair: Lord Chidgey (DFID)

Health & Social Care
Commons Co-Chair: John Pugh
Lords Co-Chair: Baroness Jolly

Home Affairs, Justice & Equalities
Commons Co-Chair: Julian Huppert
Lords Co-Chair: Baroness Hamwee (Home Office)
Lords Co-Chair: Lord Marks (MoJ)

Business, Innovation & Science
Commons Co-Chair: Gordon Birtwistle
Lords Co-Chair: Lord Razzall CBE

Treasury
Commons Co-Chair: Stephen Williams
Lords Co-Chair: Baroness Kramer

Wales
Commons Co-Chair: Mark Williams

Lords Co-Chair: Lord (Martin) Thomas

Scotland
Commons Co-Chair: John Thurso
Lords Co-Chair: Lord (Nicol) Stephen

Northern Ireland
Commons Co-Chair: Stephen Lloyd
Lords Co-Chair: Lord Alderdice

New £1bn boost for regional growth

The £1bn third round of the Coalition Government's Regional Growth Fund was announced by Deputy Prime Minister Nick Clegg last week. This is another massive investment in new jobs across England. It will create or safeguard thousands of jobs over the long term, benefitting around 130 projects and leveraging £6bn of private sector investment.

For too long, the economy has been lopsided and over-reliant on financial speculators in only one Square Mile. As we build a new economy from the rubble of the old, Liberal Democrats in the Coalition Government want to rebalance the economy so that it benefits the whole country, not just London and the South East.

The Business Secretary, Vince Cable went to Liverpool to visit Redx Pharma, a UK-based pharmaceutical company, which has been allocated £4.7m in round three, for research into drugs against microbial infection, influenza, hepatitis C and HIV. The project is expected to create 119 jobs over five years.

The government investment will help manufacturing firms, small businesses and local partnerships across England to expand their operations, create new jobs and stimulate growth - the Coalition's top priority.

Bidders will be putting in £6bn of their own cash for these projects and programmes which are expected to create and safeguard more than 240,000 jobs over the long term. This comes in addition to the 300,000 jobs that are being created or safeguarded from rounds one and two of the fund - the majority of which are being added over the next five years.

"This £1bn boost for growth in towns and cities across England is creating jobs that will last in the parts of the country that need it most," said Nick
"In tough economic times the Regional Growth Fund is good value for taxpayers' money - this £1bn round of the fund is pulling in £6bn of private sector investment.

"I have seen for myself the real difference this makes on the ground - from iconic businesses like Eddie Stobart expanding in Widnes and creating 3,450 jobs in the local area, to the Sunderland car parts factory, Unipres who have used their funding to buy a new 3,000 tonne press, letting them accelerate production and take on an extra 316 people.

"The Regional Growth Fund is working, on track and supporting businesses to create jobs and grow the economy."

"Today's positive GDP figures are another encouraging sign. Together with falling unemployment and inflation, these are signs that the economy is healing.

"The UK suffered a huge economic shock during the financial crisis. Liberal Democrats were clear when we joined the Coalition Government that it would be a choppy road to recovery but that we needed to create the right conditions to support growth and deal with the deficit.

"Today's news is positive but we are working hard to build a sustained and sustainable economic recovery. Only last week, Nick Clegg announced another £1bn worth of investment through the Regional Growth Fund, helping to create jobs across the country.

"Liberal Democrats know that what matters to people is not abstract numbers but the money they have in their pocket. That is why we have done the right thing to support people on low and middle incomes in these difficult times by lifting more than a million people out of paying Income Tax all together and giving nearly 25m people a £550 Income Tax cut since 2010."

Many in the corporate world do not - automatically - see the Liberal Democrats as natural allies. Perhaps that's because, most recently, we've rightly earned ourselves a reputation as loud critics of corporate irresponsibility.

Not least in financial services following the crash in 2008. Yet, historically, the Liberal Democrats are a party of industrialists and small business; staunch advocates of free trade between open economies; long believers in the power of enterprise to help individuals fulfill their own potential, while serving society at large. And, since coming into government, we've been taking decisions, day in, day out, to promote British business.

Whether that's ensuring a sensible approach to Europe: where we're determined to defend and deepen the Single Market - protecting our place in it - while the Eurozone members integrate more tightly.

Whether it's a sensible approach to immigration: where we're tightening the system, but must do so without turning away the talented individuals who want to come here and make a contribution to your firms.

Whether it's pushing for more investment in green industry: where there's such high potential for growth.

But perhaps I haven't said enough about these things. From now on, I intend to be much more open about our efforts to support British business. I want you to be confident that my party is on business' side. That we are determined to put the private sector at the heart of a strong, rebalanced economy. That we will be sensible and centrist; pragmatic - not dogmatic - at all times.

Bluntly, with the economy still fragile, this is not the time for dogma. There's a lot of speculation about what tomorrow's GDP figures will bring. Whatever they look like, we know that, overall, we've set the economy on the right path. But recovery is slow and fitful. Repairing the damage following the shock in 2008 is a gradual healing process. And the Government must remain absolutely focused on the reforms that will drive growth.

Indeed, it's dogma - at least in part - that got the economy into this mess. It was blind faith in the unrestrained operation of financial markets that helped take the banking system to the edge of a precipice. Political, regulatory and financial elites were so intoxicated with an unfettered and over-leveraged banking system that they refused to hear the alarm bells as the financial crisis loomed; they refused to see the deep, structural weaknesses that had emerged in our economy.

So we're turning a page on the economic ideology of our recent past. And, as we navigate these extreme times and uncharted waters, we should be vigilant against kneejerk or dogmatic responses to our economic challenges. And tonight I'd like to single out three areas where pragmatism is especially needed from both Government and business, as we work together.

First, we need a balanced, engaged approach to Europe - essential to the interests of the City. Second, we must prioritise lending to sound business - critical for our economic recovery. Third, we need to lead the shift to a more responsible, more sustainable corporate culture - crucial to our long term success.

First, defending the City in Europe.

The Coalition's starting point is simple: we support difficult regulatory surgery - at home and abroad - where that is needed to stabilise the financial sector. But we will not accept steps that are anticompetitive or protectionist. The playing field must be level.

That's why, for example, I don't support a Europe-wide Financial Transaction Tax. Though I would support a global one. Limiting the FTT in this way would skew the playing field. It would be bad for Europe in the world, and bad for the UK in Europe. And, what's more, at a time of high unemployment in Europe. The Commission has itself said that it would cost more jobs than it creates.

On the other hand, I welcome the Liikanen Report: a set of reforms for Europe's banking system. It's largely consistent with our domestic intentions, as set out in the Vickers Report. And I'm keen that we support implementation of the Liikanen proposals across Europe. Alongside implementing Vickers here in the UK.

Where our situation is less straightforward is the Eurozone banking union - at the top of the agenda at last week's European Council. And it's here that we need a sophisticated approach.

Clearly it's not a good idea for the UK to be part of a full Eurozone banking union designed to break the vicious circle between sovereign debt and bank debt in the single currency area. But let's not forget that we're already part of a banking union-lite: the single market in financial services. And so, while we have an obvious interest in the full, Eurozone banking union succeeding. At the same time, we need to make sure it doesn't prejudice the UK. The worst outcome would be the creation of an over-powerful banking bloc. Able to undermine the single market. Able to undermine what remains - by far - Europe's largest financial centre: the City of London.

So the question is: how do we get the best outcome? As someone who worked in Europe for years, my view is the best approach is to engage fully and properly in the debate. Making our case and winning the argument over and over again, while decisions are being made.

That's why the Coalition Government will now do two things: One: after last week's summit, we'll work flat out to make sure that the rules governing the relationship between the European Central Bank, in it's new supervisory role, and the Bank of England - and the role of the European Banking Authority - are settled in a sensible manner.

Two: we want to work with you to show that the City is not just a British asset, but a European asset too. It's responsible for over a third of the European wholesale market. 80% of the EU hedge fund industry is based here.
Our financial and professional services employ more people than Paris and Frankfurt put together. We've got more foreign banks than any other city. The largest insurance industry in Europe. AIM - Europe's biggest equity market for small business. The City is the biggest exporter of financial services in the world. And you know better than anyone that if London-based firms decided to leave they wouldn't all head straight to Frankfurt or Paris. Many would go to New York, Hong Kong, Dubai.

That's the reality I'm pressing with my European counterparts. And I implore the industry to do more to push this message yourselves - not least City UK. The rest of Europe needs to be crystal clear: If they integrate in a way that hurts the City, they potentially hurt Europe as a whole.

Second: lending. The thing our economy needs most, right now, is money flowing through it. Especially for SMEs. That is urgent. And it's essential if we're going to build a private sector that is vibrant, entrepreneurial, diverse.

So Government is doing everything we can to help finance business: working with the Bank of England to deliver the £80bn funding for lending scheme; creating a new Business Bank to support up to £10bn worth of loans; setting up a Green Investment Bank for low carbon companies specifically; investing directly - and leveraging private money - through schemes like the Regional Growth Fund; as well as seeking to boost non-bank forms of financing like peer-to-peer-lending, supply-chain finance; and so on. But with such tight constraints on the public finances, we can only do so much; the bulk of the money has to come from you.

I know that there are issues with demand - I don't discount those. But perception is as big a problem as any: many small firms simply don't think they'll get the loans. I know that the banks feel restricted by their capital and liquidity requirements. But the FSA has recently announced more flexibility in those requirements - a move I very much welcome. Precisely because it increases the banks' capacity to lend.

Third: responsible enterprise - the theme of my last speech here, in January. It's an issue David Cameron and Ed Miliband have also spoken about. And, while it is encouraging to see the parties converge for once. This must not be mistaken for a political bandwagon that will, eventually, roll on.

It won't. Responsible capitalism is not a fad, it's hard-headed economics. It's about empowering shareholders, investors and ordinary workers to create a check on reckless decisions. It's about rewarding people who drive short-term profit but who think about long-term stability too. It's about fair and healthy competition so the best companies flourish and the most talented individuals rise.

That's a corporate world more sustainable, ultimately more profitable, and which commands public support. Business doesn't operate in a social vacuum. Especially at a time when banks have come to rely - for their very survival - on an explicit or implicit taxpayer guarantee. The public backlash against the banks hasn't just been uncomfortable for the sector, it has threatened the basic consent in society. Without which the modern commercial banking sector would be unable to operate. So it's in businesses' own interests to be sensitive towards their social context.

In government, we're delivering a range of reforms that will strengthen our corporate culture, many led by Vince Cable:

• New powers for shareholders, for example, to hold directors to account.
• Greater corporate transparency for investors;
• I'm pushing employee ownership to give more ordinary workers a stake;
• We're intervening to curb excessive supermarket dominance, providing extra protections for smaller retailers.
• Taking action to open up more boardrooms to more women.

The list goes on. But there is no silver bullet, and government can't do this alone. So, where companies are moving in this direction themselves, that is extremely encouraging. Because this has to be the direction of travel. If we want a prosperous future, enlightened enterprise is the only way. And I ask this audience - the powerful commercial enterprises represented here tonight - to lead the way. I want us to work together as we rescue, repair and reform the British economy after the damage sustained in 2008. A partnership based on hard-headed pragmatism, not dogma, and an unshakeable belief in the dynamism and innovation of British business and the British people.

He also called on all Liberals around the world to focus on fighting corruption in the corporate world as well as the public sector to build sustainable growth.

Speaking at the closing ceremony of the Liberal International Congress Simon Hughes said:

"Remember as liberals what our core values are:

A passionate commitment to the rule of law, equally applied to all, the powerful and the weak, the rich and poor;

A passionate commitment to the rights of all human beings to freedom of expression;

And a passionate commitment to economic and social justice.

The majority of people on the planet live in places where inequality is greater than a generation ago.

From the beginning, Liberals knew that we could not fight injustice, corruption, violence and ignorance without working together across countries, and in today's world of global financial markets and global communications this is truer than ever.

We will not be able to end poverty in Africa as long as banks in Europe allow corrupt politicians in Africa to launder money through them.

We will not end conflict worldwide if we do not have strong controls worldwide on the arms trade and conflict financing.

In this city of Abidjan one of the worst environmental and economic crimes was committed when toxic waste from a European company was dumped here and 100,000 people had to seek medical attention.

And it was in my city, London, where these crimes were exposed and justice sought and obtained.

At the start of the 21st century, a liberal economy in both developed countries and developing countries must take on corruption in the public sector and the corporate sector, and must take on inequality and vested interests if we are allow everybody to benefit from our shared resources.

So all Liberals must go home to our own countries and work harder for greater equality for all people, particularly minorities who are discriminated against on the grounds of their faith, ethnicity, race or sexuality; work harder for a reduction in inequality of income and wealth, and work harder to end corruption of governments and social irresponsibility by private companies."

Delight at McKinnon decision

Theresa May's announcement that Gary McKinnon will not be extradited to the United States has delighted Liberal Democrat campaigners across the country. The Home Secretary said the case had been decided on the human rights issue alone - not something that must have been easy for a Conservative Minister to disclose.

Immediately after the announcement, Nick Clegg emailed Liberal Democrat members: "In opposition, we were unequivocal: Gary McKinnon should not be extradited. I said at the time that he was too vulnerable to be uprooted from his friends and family and sent across the Atlantic, and if there was a case to answer it should be here in the UK. So today I am absolutely delighted by the Home Secretary's decision to withdraw his extradition order.

"I want to congratulate Gary and his mother Janis on their deserved victory. They have campaigned tirelessly and I pay tribute to their strength and determination.

"But there was another significant moment as well: the Coalition Government has announced that we will seek to amend the US-UK extradition process to make it fairer in future.

"We're adding a so-called 'forum bar' which will mean that British courts can decide to block a request for extradition if it is in the interests of justice to try the case here. This will increase the overall transparency of our extradition arrangements and will better balance the safeguards for defendants.

"We will let you know more detail in due course on this announcement because today is about Gary. Today is a day for celebrating."
Cambridge MP Julian Huppert also welcomed the Home Secretary's decision.

"Mr McKinnon's case is not clear cut," he said. "He is clearly unwell and needs to be treated with compassion. He has suffered 10 years of torment and I hope now he can start to get the help he so clearly needs."

Julian has been fighting the extradition warrant against Gary McKinnon, and has been in regular contact with his mother, Janis Sharp and joined her at 10 Downing Street in February to mark 10 years since his arrest in 2002.

He has also been fighting McKinnon's case through the Parliamentary Home Affairs Select Committee and it featured prominently in the recent inquiry into UK-US Extradition Treaty. Julian congratulated Home Secretary Theresa May in the House of Commons for taking the correct decision at long last. He said later: "This is an historic decision which I hope will lead the way for change."

The warning comes as the Coalition Government released new figures showing that human trafficking to the UK is rising and as three of Britain's leading Anti-Human Trafficking charities, writing in The Times, called on the UK to remain part of all European measures to combat human trafficking.

Commenting, Julian Huppert said:

"Human trafficking is one of the worst crimes imaginable. Having been sold a dream of a better life, many victims end up as modern day slaves for Britain's criminal underworld.

"To combat this cross-border crime effectively, we need to work across national borders. But if Tory Eurosceptics deny our police and prosecutors the tools they say they need to fight this international crime, it will only make life easier for Britain's human traffickers.

"Theresa May must listen to the police, law societies and anti-human trafficking organisations, not the ideological anti-European dogma of some in her party that would damage the fight against organised criminal gangs.

"The UK has a proud record of leading Europe in fighting human trafficking, bringing the traffickers to justice and releasing those held as slaves. We must not put that in jeopardy."

Commenting, Lynne Featherstone said:

"I am absolutely delighted to receive this award for Politician of the Year. The Government have committed to legislate on equal marriage by 2015, and I look forward to seeing it happen.

"I want to thank Attitude so much for the award, and wish them all the best with their great work in the future!"

Accepting the award on her behalf last night, Liberal Democrat MP for St Austell and Newquay, Stephen Gilbert said:

"One of the leading women in Government, Lynne pushed passionately for the cause of equal marriage against a backdrop of religious condemnation and right-wing revulsion.

"She argued succinctly and with a good deal of common sense that marriage was owned by the people, not by the Church, and that equal marriage was the right and fair thing to do no matter what the naysayers might say.

"She has stood her ground time and again on the side of equality. She was clear that the Government's consultation was not about whether to bring it in - but how to bring it in.

"In a time of austerity, when some have argued that the focus should solely be on the economy, she was one of the sane voices pointing out that a government can multi-task."

After the awards, Attitude posted on their website:

"Lynne Featherstone has been the face of the coalition's pledge to introduce equal marriage reforms.

"The MP for Hornsey and Wood Green has been vociferous in her support for the LGBT community, and the government's promise to deliver same-sex civil marriage rights.

"Congratulations Lynne, you're our politician of the year!"

Baker keeps down rail fares

The rise in rail fares for the next two years will be lower than expected, thanks to the Liberal Democrats commitment to fair pricing for passengers.

The reduction, which will be funded from the Department for Transport's budget, will benefit millions of commuters and passengers who use the rail network. Transport Minister Norman Baker said:

"The Lib Dems have been making the case for a fair deal for passengers for years, and bringing fares down is the main thing I've been fighting for. But until the public finances are in a state that lets us do that, my priority is to keep increases as low as possible."

Rail fares increases are set annually by reference to inflation, measured by the Retail Prices Index (RPI). From the New Year, rail fares were due to increase, on average, by RPI plus three per cent but this rise will now be RPI plus one per cent. The announcement will benefit more than a quarter of a million annual season ticket holders and thousands of monthly and weekly ticket holders. For some season tickets holders, the news will result in a saving of up to £200 over the next two years.

The reduction in the planned increase for 2013 and 2014 is good news for rail users. Norman added:

"I know that passengers are feeling the pinch at the moment. This announcement will make life that little bit easier for hundreds of thousands of rail users and I am pleased that Lib Dems in government are driving these changes."

Keeping fare increases low whilst boosting investment in a sustainable railway is a balancing act on which Liberal Democrats have a growing track record in government. The biggest rail modernisation programme since the Victorian era is now underway and will benefit millions of rail passengers.

Recent commitments to High Speed 2, electrifying huge swathes of the rail network, completion of the Northern Hub and some 1,200 new rolling stock for the Thameslink line are some examples of the improvements which Liberal Democrats in government have been pushing for. This investment will stimulate growth and create a cleaner, low carbon transport system for years to come.

Liberal Democrats are committed to ensuring that the billions of pounds worth of improvements badly needed are paid for fairly.

"As Liberal Democrats, we need to spread the word that we are absolutely committed to ensuring the travelling public are not unfairly saddled with the cost of backfilling for years of underinvestment in the rail network,"

added Norman.

"The burden has to be shared fairly between passengers and the railway companies."

"The Coalition Government is committed to fair rail fare pricing and the announcement today is good news for both commuters and people who use the train less regularly.

"My Liberal Democrat colleagues and I have been making the case for a fair deal for passengers and I'm delighted that the two parties have come together on this.

"We have been very clear that as soon as the public finances allow, we should try to bring rail fares down and that we should keep the price rises to a minimum in the meantime.

"Liberal Democrats have also been clear on the need to put our railways on a sustainable footing. They need investment and they need it for the long-term.

"We will be working with the rail industry to achieve this so that the burden is shared fairly between passengers and the railway companies"

The pension revolution begins

The biggest change in pensions for over 100 years - automatic enrolment - began on Monday. Starting with the largest firms (those with more than 120,000 employees), employers will now be required by law to pay into a workplace pension for staff that do not opt out.
At least 0.8 per cent of their salary is paid into the pension and this is topped up by one per cent from their employer and 0.2 per cent in tax relief. For someone on an average salary of £20,000, it works out at around £309 per person per year.
By the end of the year, around 600,000 more people in the UK will be saving into a workplace pension and by May 2014 about 4.3 million people will be saving for their old age.

"We are proud to be introducing this truly historic change, which will radically alter the way we save for our old age, and see millions more people putting something aside for the future," said Minister for Pensions, Steve Webb.
"From last Monday, we will start seeing large firms, such as banks and big supermarkets, automatically enrolling their staff into a workplace pension. Between now and 2018, more and more employers will come on stream - right down to the smallest ones.
"If we can get between six and nine million more people saving in a pension by the time all employers are in, that's a genuine savings revolution."

Key facts about automatic enrolment:

• Around 11 million people are not saving enough to achieve the pension income they are likely to want or expect in retirement, and less than one in three adults are contributing to a pension, while people are on average living longer - in the past 25 years, life expectancy at age 65 has increased by five years for men and three years for women
• Evidence from the Department for Work and Pensions suggests that, once automatically enrolled, less than one-third will take the active decision to opt-out
• In the United States, case studies show automatic enrolment dramatically increased membership of similar schemes among new employees

Commenting, Co-chair of the Liberal Democrat Parliamentary Party Committee on Communities and Local Government, Annette Brooke said:

"Decades of failure by Labour and Conservative governments have left us with a housing crisis that forced rents higher and higher and left thousands of people with no hope of getting a foot on the property ladder.

"The Liberal Democrats want to see a massive house building programme which will help kick-start the economy, create jobs and give thousands of people a decent place to live.

"We also want to crack down on rogue landlords by forcing all landlords to be licensed. We want a fairer deal for tenants, giving them more power and security."

Check against delivery

This summer, as we cheered our athletes to gold after gold after gold, Britain remembered how it feels to win again. But more importantly, we remembered what it takes to win again. Whether from Jess Ennis or Mo Farah, Sarah Storey or David Weir, the message was the same: we may be the ones on the podium, but behind each of us stands a coach. And behind the coach, a team. And behind the team, the organisers, the volunteers, the supporters. And behind them, a whole city, an entire country, the UK nations united behind one goal.

What a contrast from a year ago when England's cities burned in a week of riots. When the images beamed to the world were not of athletes running for the finishing line, but the mob, running at police lines. When the flames climbed, not from the Olympic torch in east London, but a furniture shop in south London. A 140 year-old family-run business, which had survived two world wars and countless recessions, razed to the ground. Of course, even then, amid the smoke and embers, we saw our country's true character when residents came out onto the streets to clear up the mess.

And we saw it again this summer when the Reeves furniture shop in Croydon re-opened in new premises, the walls decked with photos of young people holding up messages of hope. And who put those pictures up? Young volunteers from Croydon and an 81 year-old man called Maurice Reeves, who, like three generations before him, ran the shop before handing it over to his son. Maurice, your example should inspire a generation.

You see, what Maurice has shown - what our Olympians and Paralympians have reminded us of - is that, for most people, success doesn't come easy or quick. That's what our culture of instant celebrity obscures: that real achievement in the real world takes time, effort, perseverance, resilience. The war veteran: a victim of a roadside bomb in Afghanistan, competing at the Paralympics. The businessman: a victim of an arson attack in south London, serving his customers again. The millions of people up and down the country, who, no matter how heroic or mundane their battles, keep going, keep trying, keep working, whatever life throws at them.

These are the qualities that will see our country through these tough times. And these are the qualities that will guide our party through tough times too. So let us take our example from the British people as together we embark on the journey ahead. Our party: from the comforts of opposition to the hard realities of government. Our country: from the sacrifices of austerity to the rewards of shared prosperity. Two journeys linked; the success of each depending on the success of the other. Neither will be easy and neither will be quick, but it will be worth it. And be in no doubt. If we secure our country's future, we will secure our own.

We live at a time of profound change, almost revolutionary in its pace and scale. Here in Britain, we are faced with the gargantuan task of building a new economy from the rubble of the old. And of doing so at a time when our main export market - the Eurozone - is facing its biggest crisis since it was formed. And while the European economy has stalled, countries like Indonesia, Malaysia, India and China continue to grow, and at a phenomenal rate.

The potential consequences of this shift in power, should we in the West fail to respond, cannot be overstated. Our influence in the world, our standard of living, our ability to fund our public services and maintain our culture of openness and tolerance - all are in the balance. For power would move not only away from the liberal and democratic world, but within it too; from moderates to hard liners, from internationalists to isolationists, from those committed to the politics of cooperation to those hell-bent on confrontation. If history has taught us anything, it is that extremists thrive in tough times.

So yes, if we fail to deal with our debts and tackle the weaknesses in our economy, our country will pay a heavy political price. But the human cost would be higher still. Not only would we fall behind internationally, we would leave a trail of victims at home too.

So to those who ask, incredulously, what we - the Liberal Democrats - are doing cutting public spending, I simply say this: Who suffers most when governments go bust? When they can no longer pay salaries, benefits and pensions? Not the bankers and the hedge fund managers, that's for sure. No, it would be the poor, the old, the infirm; those with the least to fall back on.

Labour may have thought it was funny, after crashing the economy and racking up record debts, to leave a note on David Laws' desk saying: "there's no money left". But it's no joke for the most vulnerable in our society; the people Labour claim to represent but let down the most. So let's take no more lectures about betrayal. It was Labour who plunged us into austerity and it is we, the Liberal Democrats, who will get us out.

It's easy to forget sometimes that the debate we're having in this country is playing out across our continent. It's a debate between those who understand how much the world has changed, and those who do not. And between those who understand the need to adapt to those changes, and those who baulk at the size of the challenge. And the fate of every European country - ours included - will depend on the outcome.

In the coming years, some countries will get their own house in order. But some will not. Those that do will continue to write their own budgets, set their own priorities and shape their own futures. But those that do not will find their right to self-determination withdrawn by the markets, and new rules imposed by their creditors, without warning or clemency. That that will never happen to us is often just blithely assumed; the comparisons with Greece, breezily dismissed. Yet it is the decisions we take - as a government, as a party - that will determine whether we succeed or fail. For the first time, the future is ours to make.

Our journey from austerity to prosperity starts, of course, with economic rescue; dealing with our debts and delivering growth. If you listen to Labour, you could be forgiven for thinking that austerity is a choice; that the sacrifices it involves can be avoided; that if we only enacted Ed Balls' latest press release we'd be instantly transported to that fantasy world where there is no "boom and bust" and the money never runs out.

But the truth is this: there is no silver bullet that will instantly solve all our economic problems. Some of our problems are structural, others international. All will take time to overcome. We are dealing with an on-going surge in global energy, food and commodity prices. An existential crisis in the Eurozone. And a banking collapse which, more than four years on, is still blocking the arteries of our entire economic system.

Ranged against these forces, the idea that if government just deregulated a bit more as Liam Fox proposes, or borrowed and spent a bit more as Ed Balls proposes, we would, at a stroke, achieve strong and lasting growth, is just not credible. In my experience, if you're being attacked by Liam Fox from one side, and Ed Balls from the other, you're in the right place.

You see, what is needed - and what we're delivering - is a plan that is tough enough to keep the bond markets off our backs, yet flexible enough to support demand. A plan that allowed us, when the forecast worsened last year, to reject calls for further spending cuts or tax rises and balance the budget over a longer timescale. A plan that, even at the end of this parliament, will see public spending account for 42 per cent of GDP - higher than at any point between 1995 and 2008 when the banks collapsed. And a plan that, because it commands the confidence of the markets, has given us the room to create a Business Bank, provide billions of pounds of infrastructure and house building guarantees and an £80 billion Funding for Lending scheme - the biggest of its kind anywhere in the world.

Of course so much of this is about perception. People keep telling me we should be doing what Barack Obama did with his fiscal stimulus. What they don't tell you is that much of what the President had to legislate for, we are already doing automatically. So let's not allow the caricature of what we are doing go unchallenged. If Plan A really was as rigid and dogmatic as our critics claim, I'd be demanding a Plan B, and getting Danny and Vince to design it. But it isn't. Which is why you were right, earlier this week, to overwhelmingly reject the call for us to change our economic course. We have taken big and bold steps to support demand and boost growth. And we stand ready to do so again and again and again until self-sustaining growth returns.

Of course, arguments about economic theory are of no interest to the millions of people just struggling to get by right now. The home-help whose earnings barely cover the cost of childcare. The builder who knows the company will be laying people off, but doesn't yet know if he'll be one of them. The couple who want to buy their first home but can't raise the money for a deposit. To them and to all the other hard working families just trying to stay afloat, I say this: the Liberal Democrats are on your side. You are the ones we are in government to serve. Not with empty rhetoric but real practical help. That is why we promised to cut your income tax bills by raising the personal allowance to £10,000. So you can keep more of the money you have worked for. So your effort will be properly rewarded. So the task of making ends meet is made that little bit easier.

At the last budget, we made two big announcements: that we were spending three thousand million pounds increasing the tax-free allowance, and just fifty million pounds reducing the top rate of tax while recouping five times that amount in additional taxes on the wealthiest. I insisted on the first. I conceded the second. But I stand by the package as a whole. Why? Because as liberals, we want to see the tax on work reduced, the tax on unearned wealth increased, and the system as a whole tilted in favour of those on low and middle incomes. The budget delivered all three.

But let me make one thing clear: Now that we have brought the top rate of tax down to 45p - a level, let's not forget, that is still higher than throughout Labour's 13 years in office - there can be no question of reducing it further in this Parliament. All future cuts in personal taxation must pass one clear test: do they help people on low and middle incomes get by and get on? It's as simple as that.

At the next election, all parties will have to acknowledge the need for further belt tightening. That much is inescapable. But the key question we will all have to answer is who will have to tighten their belts the most? Our position is clear. If we have to ask people to take less out or pay more in, we'll start with the richest and work our way down, not the other way around. We won't waver in our determination to deal with our debts. But we will do it in our own way, according to our own plans, based on our own values. So we will not tether ourselves to detailed spending plans with the Conservatives through the next Parliament.

Colleagues, we should be proud of the fact we have delivered fairer taxes in tough times. We should be proud of the fact that we're taking 2m people out of income tax altogether and delivering a £700 tax cut for more than 20m others, and should never miss an opportunity to tell people about it. But as we do so, remember this: our tax cuts, like our extra support for childcare, for schools, for pensioners - these are not stand-alone consumer offers. They are part of a broader agenda of economic and social reform to reward work, enhance social mobility and secure Britain's position in a fast changing world. In short, national renewal. That is our mission. Our policies either serve that purpose, or they serve none at all.

One of the things about governing is it forces you to confront the inconvenient truths oppositions choose to ignore. Like the fact that, over the last 50 years, our economy has grown threefold, but our welfare spending is up sevenfold. Or the fact that, to sustain our spending, we are still borrowing a billion pounds every three days. Or that, as a result of that borrowing, we now spend more servicing the national debt than we do on our schools. In combination, these three facts present us with a fundamental challenge: to not only regain control of public spending, but to completely redirect it so that it promotes, rather than undermines, prosperity.

How we do that - how we reshape the British state for the economic challenges of the 21st century - is a debate I want our party to lead. For there are only two ways of doing politics: by following opinion, to get yourself on the populist side of each issue, or by leading opinion, and standing on the future side of each issue. The first brings short-term rewards, of course it does. But the big prizes are for those with the courage and vision to get out in front, set the agenda and point the way.

So let us take the lead in building a new economy for the new century. An open, outward looking economy in the world's biggest single market. A strong, balanced economy built on productive investment, not debt-fuelled consumption. An innovative, inventive economy driven by advances in science and research. And yes, a clean, green economy too, powered by the new low-carbon technologies. Britain leading the world.

But I have to tell you, we will not succeed in this last task unless we can see off that most short-sighted of arguments: that we have to choose between going green and going for growth. Decarbonising our economy isn't just the right thing to do; it's a fantastic economic opportunity. The green economy in Britain is growing strongly right now, bringing in billions of pounds and creating thousands of jobs - in wind, solar and tidal energy; the technologies that will power our economy in the decades to come. Going green means going for growth. But more than that, it means going for more energy that we produce ourselves and which never runs out; it means going for clear air and clean water and a planet we can proudly hand over to our children. Going green means going forward.

So let the Conservatives be in no doubt. We will hold them to their promises on the environment. Of course, there was a time when it looked like they got it. It seems a long time ago now. When the Tories were going through their naturalist phase. The windmills gently turning; the sun shining in. As a PR exercise, it was actually quite brilliant. Until, at last year's party conference, they went and ruined it all, admitting that you can't in fact "vote blue and go green". Well of course you can't. To make blue go green you have to add yellow, and that's exactly what we're doing.

As we plot our path from austerity to prosperity, we need to remember that nothing we do will make a decisive difference if we don't make the most important investment of all: in the education and training of our young people. For we will only fulfil our collective economic potential, if we fulfil our individual human potential. Yet the legacy of educational inequality in Britain is an economy operating at half power, with far too many young people never getting the qualifications they could get, never doing the jobs they could do, never earning the wages they could earn.

The true cost of this cannot be counted in pounds and pence. Yes it's a huge drag on our economy, but more than that, it is an affront to natural justice and to everything we Liberal Democrats stand for. Because if you strip away all the outer layers to expose this party's philosophical core, what do you find? An unshakeable belief in freedom. Not the tinny sound of the Libertarian's freedom - still less the dead thud of the Socialist's - but the rich sound of Liberal freedom, amplified and sustained by the thing that gives it real meaning: opportunity. The freedom to be who you are. The opportunity to be who you could be. That, in essence, is the Liberal promise.

And that is why this party has always been - and must always be - the party of education. Because just as there can be no real freedom without opportunity, so there can be no real opportunity without education.

Every parent knows how it feels when you leave your child on their first day at school. That last look they give you before the door closes behind them. The instinct to go with them, to protect them, to help them every step of the way. That's how we should feel about every child. That's the responsibility we have to every parent. To support them at every stage: from nursery to primary, from primary to secondary and from secondary to college, university or work.

That's why we're providing more money so the poorest two-year-olds, as well as every three and four-year-old, can now benefit from pre-school education. Delivering our Pupil Premium - £900 per child next year - so the most disadvantaged children get the more intensive, more personalised support they need. And why, when they leave school, we're providing scholarships, bursaries, grants, loans, apprenticeships and wage subsidies, to help them go on learning or start earning.

But extra resources won't make a difference unless matched by greater ambition. Which is why money must be accompanied by reform. Reform to ensure all children can read and write. To make schools focus on the performance of every child. To turn around failing schools, and put more pressure on coasting schools. And yes, reform to replace GCSEs, not with an O Level, but with a new more rigorous qualification that virtually every child will be able to take, and every well taught child will be able to pass.

And to ensure they do, I can announce that from this year, we will provide a new 'catch-up premium' - an additional £500 for every child who leaves primary school below the expected level in English or maths. If you're a parent whose child has fallen behind; who fears they might get lost in that daunting leap from primary to secondary school; and who is worried by talk about making exams tougher, let me reassure you. We will do whatever it takes to make sure your child is not left behind. A place in a summer school; catch-up classes; one-to-one tuition; we are providing the help they need. So yes, we're raising the bar. But we're ensuring every child can clear it too.

I am proud of the resolve we Liberal Democrats have shown over the last two and a half years. We've had some real disappointments: tough election results, a bruising referendum. But through it all, we have remained focused, determined, disciplined. It hasn't always been easy, and, when we've made mistakes, we've put our hands up. But we've stuck to our task - and to the Coalition Agreement - even as others have wavered. The received wisdom, prior to the election, was that we wouldn't be capable of making the transition from opposition to government. The choices would be too sharp, the decisions too hard.

The Liberal Democrats, it was said, are a party of protest, not power. Well two years on, the critics have been confounded. Our mettle has been tested in the toughest of circumstances, and we haven't been found wanting. We have taken the difficult decisions to reduce the deficit by a quarter and have laid the foundations for a stronger, more balanced economy capable of delivering real and lasting growth. But conference, our task is far from complete, our party's journey far from over.

I know that there are some in the party - some in this hall even - who, faced with several more years of spending restraint, would rather turn back than press on. Break our deal with the Conservatives, give up on the Coalition, and present ourselves to the electorate in 2015 as a party unchanged. It's an alluring prospect in some ways. Gone would be the difficult choices, the hard decisions, the necessary compromises. And gone too would be the vitriol and abuse, from Right and Left, as we work every day to keep this Government anchored in the centre ground.

But conference, I tell you this. The choice between the party we were, and the party we are becoming, is a false one. The past is gone and it isn't coming back. If voters want a party of opposition - a "stop the world I want to get off" party - they've got plenty of options, but we are not one of them. There's a better, more meaningful future waiting for us. Not as the third party, but as one of three parties of government.

There's been a lot of discussion on the fringe of this conference about our party's next steps; about our relationship with the other parties; and about what we should do in the event of another hung parliament. It's the sort of discussion politicians love - full of speculation and rumour. But I have to tell you, it is all based on a false, and deeply illiberal, assumption: that it is we, rather than the people, who get to decide. In a democracy, politicians take their orders from the voters.

So let's forget all the Westminster gossip and focus on what really matters: not our relationship with the other parties, but our relationship with the British people. Imagine yourself standing on the doorstep in 2015 talking to someone who hasn't decided who to vote for. This is what you'll be able to say: we cut taxes for ordinary families and made sure the wealthiest paid their fair share. We put more money into schools to give every child a chance. We did everything possible to get people into work - millions of new jobs and more apprenticeships than ever before. And we did the right thing by our older people too - the biggest ever cash rise in the state pension. But most importantly, we brought our country back from the brink and put it on the right path.

Then ask them: are you ready to trust Labour with your money again? And do you really think the Tories will make Britain fairer? Because the truth is, only the Liberal Democrats can be trusted on the economy and relied upon to deliver a fairer society too. And to help get that message out there, I can announce today that Paddy Ashdown has agreed to front up our campaign as chair of the 2015 General Election team. I must admit, I'm not quite sure I'm ready for all those urgent e-mails and 5am phone calls. But I can't think of anyone I'd rather have by my side. Paddy, it's great to have you back.

Fifty, sixty years ago, before I was born, small groups of Liberal activists would meet up to talk politics and plan their campaigns. Stubborn and principled, they ignored the cynics who mocked them. They simply refused to give up on their dreams. They refused to accept that Liberals would never again be in government. And they refused to accept that Liberalism, that most decent, enlightened and British of creeds, which did so much to shape our past, would not shape our future. We think we've got it tough now. But it was much, much tougher in their day. It was only their resolve, their resilience and their unwavering determination that kept the flickering flame of Liberalism alive through our party's darkest days.

At our last conference in Gateshead, I urged you to stop looking in the rear view mirror as we journey from the party of opposition that we were, to the party of government we are becoming. But before we head off on the next stage of our journey, I want you to take one last look in that mirror to see how far we've come. I tell you what I see.

I see generations of Liberals marching towards the sound of gunfire. And yes, I see them going back to their constituencies to prepare for government. It took us a while but we got there in the end. These are the people on whose shoulders we stand. They never flinched, and nor should we. We owe it to them to seize the opportunity they gave us, but which they never had. Taking on the vested interests. Refusing to be bullied. Refusing to give up. Always overturning the odds. Fighting for what we believe in, because we know that nothing worthwhile can be won without a battle. A fair, free and open society. That's the prize. It's within our grasp. So let's go for it.

Commenting, Liberal Democrat Communities Minister, Don Foster said:

"Liberal Democrats have long campaigned to make planning more responsive to local demands and concerns. That is why we have reversed Labour's unworkable top-down, centralised planning system and appalling lack of house building to tackle the chronic housing shortage.

"The planning regulations proposals are accompanied by an extra £300m to ensure a significant increase in social housing. The increase in building will be a significant boost to the local economy.

"We are now consulting on how the planning regulations will work in practice and we will be listening to the views expressed today by Conference, which will form an important part of this process."

Commenting, Co-chair of the Liberal Democrat Parliamentary Party Committee on Health, John Pugh MP said:

"Mental illness affects a large number of people of all ages, from all walks of life, yet only one in four who suffers, seeks help. Without the right treatment it can ruin lives.

"Since coming into government, Liberal Democrats have made funding for mental health a priority, but we still have a long way to go to improve awareness and the provision of mental health services so more people seek help.

"The human costs of untreated mental illness can't be quantified but any additional costs to the public purse would be more than recouped in savings to the NHS and the overall economy.

"The Coalition Government has made real progress in addressing underprovision in mental health but more needs to be done and Liberal Democrats today promised we will ensure it remains a priority."

Commenting, Liberal Democrat Advocate General for Scotland, Lord (Jim) Wallace said:

"Liberal Democrats have made their unease about the Justice and Security Bill clear in the past and have confirmed this today. They have welcomed the significant changes that Nick Clegg has already secured, for example removing inquests from scope and restricting it to national security cases only, but they have made clear that they still have deep concerns.

"It has always been the Government's intention that closed courts should only ever be used as a last resort and in a very small minority of cases where the alternative is no justice at all. We will continue to work with parliamentarians from all sides, to ensure that the principles of open justice are protected."

Commenting, Liberal Democrat Treasury spokesperson, Stephen Williams said:

"The Libor manipulation scandal was just another example of what has gone wrong in our nation's banking industry. Public trust has been damaged and we now need to punish those guilty of wrongdoing in the Libor scandal.

"We need to see a fundamental culture shift in our banking sector to improve standards and boost lending for businesses. Vince Cable has led the way on restoring trust and vitality in the banking industry with the British Business Bank, which along with the Funding for Lending scheme will stimulate lending, drive growth and get our economy moving."

Commenting, Liberal Democrat Treasury spokesperson, Stephen Williams said:

"Liberal Democrats value the dedication and hard work of public sector workers across the country.

"I am pleased that Nick Clegg, Vince Cable and others have spoken out against regional pay. The Liberal Democrats have now made it absolutely clear that we want the Government to rule it out altogether."

Check against delivery

Conference, it's great to be here today and share with you some vital issues of my work.

Some time in the past, if I had been asked about naked short selling and large exposures. I might have thought it all a bit risqué: Closer magazine maybe; Soho rather than City.

But times change.

Now I'm immersed in financial regulation and crisis control, and as in Lord of the Rings it's a burden that gets heavier.

But I won't be captured, or turn into Gollom - unable to tell right from wrong.

As part of the Liberal Democrat team, MEPs follow the same principles of economic responsibility, fairness and sustainability that Nick Clegg and Liberal Democrat minsters do.

In London they've wrestled with the economic mess left by the financial crisis, cut taxes on low and middle incomes, provided the pupil premium and the Green Investment Bank.

In Brussels we've also tackled economic mess, protected savers, pensioners and small businesses, stood up for civil and human rights and shaped opportunities for low carbon goods and services.

On what I do there is much to tell: the battle to save the Euro, how the UK should face up to the all-powerful role of Europe in financial regulation, what on earth is a Banking Union and how will the single market in financial services - so important to the City and the UK tax base - survive alongside Euro area integration.

That is a long list - so I'll touch lightly on detail - but embedded in these topics is a ticking time bomb which may see us on our way out of Europe. It won't come from a referendum, it will come from acquiescence.

And it's a short fuse. Remember the veto - who asked you? That little surprise is still a cancer souring both relations and structures in Europe.

Back here, ever since the financial crisis morphed into the Eurozone crisis it has been a field day for Eurosceptics saying "I told you so".

What a waste of space!

Yes, the financial crisis laid bare flaws in the operation of the Euro - notably feeble ineptitude of the finance ministers who were meant to police it.

But raking over old arguments - like old superstitions with entrails and incantation - does nothing to help us move forward and fix the future; nothing to keep the UK up with the pace of change; and nothing to deliver the jobs and growth in the UK and Europe that are so badly needed.

UKIP and tea-party Tories live in some 1930s fantasy of imperial power, even though we are a lot closer to 2030!

They suggest that the open, mixed trading economy of the UK can function like the niche economy of Norway.

But they omit to mention that Norway and Switzerland contribute to parts of the EU budget,and end up obeying Europe's rules anyway, all without having influenced them.

I know the reality - Norwegian and Swiss representatives beat a path to my door asking for help!

Last year Norway adopted 75% of EU legislation.

The Swiss are implementing the vast majority of Europe's financial services legislation.

Why? Because the Swiss want their bankers and traders to continue to enjoy full access to the world's largest single market.

Europhobes talk of a UK freed from the 'shackles' of Europe, snuggling up to the US, and trading at liberty with the emerging markets.

They forget to mention that Europe already has, or is negotiating, free trade deals with almost every country in the world.

Other countries make time to talk to the world's largest trading bloc.

And what of the special relationship? The US wants a strong British voice at the EU table, but they will soon look elsewhere if we're not there.

An isolated Britain is no good to anyone.

Britain is heard in Washington, Beijing and Moscow when we exercise influence and leadership in Brussels, Paris and Berlin. Britain is stronger when it stands with our partners in Europe.

And as for those Europhobes who promote the idea of a Eurozone collapse. Are they mad?

That would make current economic challenges look like a walk in the park; it is wishing on the UK a recession like the great depression - but as I just said, UKIP and their fellow travellers like the 1930s.

From the US to China, nobody wants the Euro to fail.

They all know the world is interconnected - that their trade, their jobs, their economies are all affected.

And from US to China, they do not have a seat at the decision-making table. The UK does. And we must use it wisely.

Turning now to fixing the Euro - this needs discipline and more Eurozone integration to deliver the prize of growth and stability.

But if people in one country are to guarantee, or even help pay off, debt in another country, democracy does not allow that decision to be rushed.

So there is no quick fix.

And the path so far has not been pretty, more a game of nudge - each short term rescue being bought by agreement to long term reform.

Euro history does not read well: small countries obeyed the rules about not having too much debt - then France and Germany got the rules weakened, Italy still over-ran and Greece hid the truth.

But now, over a dozen pieces of legislation have already strengthened EU scrutiny over individual countries' budgets and their impact on one another, over statistical reporting and performance. Tougher penalties apply to those who ignore the rules or fudge the figures.

There's actually a lot of work done beyond the media scrum of summits!

However, on top of discipline, we must harness the collective strength of the Eurozone. European Central Bank interventions are one way, acting a bit more like the US Federal Reserve, which is what Mario Draghi's recent proposals do.

But this cannot stand alone without moves towards integration.

I also support some pooling of short term Eurozone Government debt, what I have dubbed a 'beginners Eurobond' or Eurobill. The idea here is to get a few years of breathing space to complete other reforms.

All this greater economic integration in the Eurozone presents serious challenges to the UK and we need mutual respect, not animosity, for it to work out well for us too.

Running parallel with the drama of the Euro, is all the legislation to clean up the financial system.

The European Parliament has equal power with the Chancellor and his European ministerial colleagues in amending and approving European legislation.

And amend we do!

I submit hundreds of amendments to major legislation, most of which influence the final outcome.

These aren't just "i" dottings: they have a major impact in areas like the security of banks, financial markets and people's pensions, on lending to businesses and bankers' bonuses.

Aha - you've heard about bonuses - but you may not know the rules came from the European Parliament.

Limiting cash pay-outs, claw-back arrangements, payment in contingent capital, restrictions on pension-pot pay-outs - yep that was us, quite a lot of it me - at the time having to battle against the FSA and against the Labour Government to push it further than they wanted.

Now we are proposing to limit bonuses to a maximum of once or twice an individual's annual salary with ways to claw back even if bankers have moved on to a new job.

I do know all the arguments and reservations, but like rip-off mobile roaming charges there comes a time when it just has to be done.

It is time for a revolutionary change in the way the financial sector thinks and this is part of it.

More generally, all European financial regulation is being tightened.

But this is not taking place in a vacuum. Far from it, the framework follows the G20 internationally agreed program, improving existing regulations and plugging the gaps.

And if UK procedures don't fit with new European versions, they have to be changed. So there is a bit of a frissance about this - and fuss in the press.

But, whether fairly or not - and it is probably a bit of both, the rest of Europe blames the City for the financial crisis and its consequences.

'Mea culpas' from UK supervisory authorities actually reinforce that view - apologies for 'light touch' supervision are not seen as giving the UK the right to suggest that it knows better than everyone else how not to mess up again!

The point is, just as everyone now wants to be tough on big banks that made epic mistakes, so too the rest of Europe wants to be tough on a big financial centre and its regulators - that could and did spread risk through the single market to them.

That's why December's attempt to get a veto on financial services was never a possibility.

Of course the rest of the Europe is far from blameless, but they take all the new rules too.

I'm in the middle of this. I also chair the face-to-face negotiations that reconcile the Parliament's and Ministers' amendments.

In fact, I am the only person always in the room and steeped in the detail of every dossier.

Sometimes I'm not sure if I'm on a roller coaster or dodgems, but it usually ends up well.

Now, the relationship between banking and regulation is a bit like warfare. Banks and complex financial products are missiles - and we have anti-missile systems of regulation, capital and all that - to try and keep us safe.

The thing is, when designing a missile no engineer would leave it without a fail-safe mechanism. But there is plenty of 'fail-unsafe' hanging around in our financial systems.

Fear of losing star traders and key asset managers - which we hear a lot about in the bonus debate - looks less to do with star quality and more to do with nobody else knowing how to steer or disengage the missile.

You know, any small or medium sized business seeking a sizeable loan from a bank would have to have contingency planning in place. A bit more thinking like that on the inside of the banks would have helped!

I'm aiming for more simplicity.

So every fund or manager should demonstrate they are fail-safe, that their positions can be properly understood and taken over by another.

Accounting rules must reflect reality, not what you hope something might still be worth if you wait long enough.

And regulation should not fight complexity with complexity - because instead of encouraging careful and considered investment decisions that leads to blind faith in complex financial products neither regulator nor investor understands.

I've published a longer list on this - but you get the idea.

Finally, to a potential time bomb - the banking union - which is one of the steps on the way to fuller Eurozone integration.

The idea is to stabilise Eurozone banks by having pooled backstops. The first stage is common, strong, bank supervision by the European Central Bank, with options for non-euro countries to join.

Economically we need Eurozone stability.

But ECB-based banking union could unbalance the single market in financial services and marginalise the UK.

In the Parliament the mood is grim, with other countries' MEPs saying this is the moment other countries choose whether the UK is in or out.

Some countries' ministers say the same.

Thankfully the European Finance Ministers meeting I was at in Cyprus just over a week ago was friendly by comparison, with many countries having problems with the proposals.

And the outcome may be that the timer is set on a year rather than a few months. But it is still ticking.

Negotiations are extremely sensitive, and yes with moments to be tough, but the last thing that the UK needs is constant bellowing about repatriation of powers and wanton vetoes from the Tea Party Tories or silly part of the City.

Many City bosses agree with me, and I say to them it's no good crying to me, or behind closed doors, about UK exclusion while letting the Eurosceptic anti-regulation wide-boys portray London as anti EU.

It's no good lying low in case you don't get the deal you want on the Vickers plan for reforming banks - because you need single market access more than where a derivative sits in a ring fence.

You need EU clout to challenge US extra-territorial measures over who constitutes a swap dealer.

If you City bosses don't put your heads above the parapet now, and tell the Prime Minister, Chancellor, public and media about the concerns you share with me - then forget your UK lobbying, you'll need the time to find other ways to get full access to the Eurozone.

And the UK will be quietly on the way to EU side-lines, or exit, because nobody spoke up.

I won't be sitting with that on my conscience. Don't let it be on yours.

The City can't continue to be the leading financial centre in Europe if Britain leaves Europe.

There is no escaping international regulation of financial services in today's world. Either Brussels does it or Washington does it. What would the City prefer?

Regulation from Washington without the UK, or regulation from Brussels with the UK?

The poet John Donne, said that if a clod is washed away, Europe is the less. This quote is relevant today from Greece to Britain.

I doubt it would be much fun being 'clod Britain' either.

Washed away, would clod Britain's automotive industry boom continue when it's built on selling 50% of its cars to Europe;

Washed away, would clod Britain continue to enjoy formidable levels of inward foreign investment - over half of which comes from other European countries.

Would clod Britain be able to attract 128 free trade agreements?

Don't be fooled.

Don't allow the bell to toll for Britain.

Liberal Democrats rose to the uncomfortable challenge of coalition government. Our country needed it.

We must rise now to keep Britain in Europe.

Not tomorrow,

Not when it's convenient,

But now!

Check against delivery

I'd like to talk to you about our conference slogan: "Fairer taxes in tough times."

Thanks to the Liberal Democrats, taxes are getting fairer. Our tough budget negotiations mean that next year 24 million people will benefit from the largest ever increase in the tax free amount.

From April, working people will have seen their income tax bill fall by £550 and 2 million of the lowest earners will have ceased to pay any income tax. This is happening thanks to the Liberal Democrats in the Coalition Government.

It would not be happening without you.

Not everything about the Budget this year was perfect. But the Income Tax cut was by far the most important measure in the Budget - and the working people of this country will have over £3 billion more of their own money to spend next year as a result.

A cleaner working full time on the minimum wage will see their tax bill halved, thanks to Liberal Democrats. Very soon no one will pay Income Tax until they are earning more than £10,000, thanks to the Liberal Democrats.

We promised it in our manifesto, we campaigned for it, and we had the courage to go into coalition to deliver it. At the next election, we will promise to raise that figure yet further, to £12,500. So that you don't pay any Income Tax until you are earning more than a full-time salary on the minimum wage.

And in 2015 people will know that promise is credible, because we have delivered in Government. Thanks to the Liberal Democrats, truly a record of action - a promise of more.

Fairer taxes matter, because times are tough. The spending power of most people's pay packets has fallen over the last 5 years.

For too many, the spectre of unemployment has become a painful reality. For the country as a whole, the adjustment to a level of government spending and taxation that we can afford is painful and difficult.

When we came into office, we knew things were bad. But the truth is, we didn't know how bad. The damage that the crisis has done to our economy is even deeper than we first thought. The headwinds from high inflation and the eurozone are stronger than anyone imagined. The mess Labour left, worse than they would ever admit - let alone apologise for.

Now, having heard all of that, you might think I am pessimistic. You couldn't be more wrong. We have a government determined to do the right thing for the long term. Over the last two years we have laid strong foundations for a stronger economy.

I am fundamentally optimistic for the future. Because there are brilliant businesses, talented and hard-working people in every corner of this country who make this one of the best places to do business in the world.

Like the members of the Bristol Junior Chamber of Commerce I met with our brilliant Mayoral candidate Jon Rogers on Thursday, enthusing about the opportunities for young people to start their own businesses.

Like the small manufacturing company I visited in Cardiff South with Bablin Molik, our inspiring by-election candidate. A business that that has grown and is providing much needed jobs in the local area.

Like the massive chemicals plant I visited in Redcar with Ian Swales, growing with the help of a regional growth fund grant. These people are the growth makers, the job creators - our job is to help them.

Last year I announced the creation of the Growing Places Fund. £730m to help local areas fund local infrastructure to unlock new jobs. I can tell you today that the fund that Andrew Stunell and I established has already helped fund around 170 projects, supporting an estimated 178,000 jobs.

Conference, the economy has rightly been the central focus of this party conference.

Yesterday, we had an excellent debate on some of the further measures we would like to see to support growth. And Vince Cable gave a brilliant speech, setting out the work his department is doing to help clear up the mess that Labour left.

I daresay the congratulatory text message from Ed Miliband has been unavoidably delayed. Mr Miliband has come out with a new economic theory this month: 'Predistribution'

Apparently it means spending money you don't have, without knowing where that money is going to come from in the future. Conference, it's not a big new idea.

It's a bad old one. Labour spent 13 years trying it - and let the British people down spectacularly.

Labour don't like us talking about their record in office. But the country can never be allowed to forget their disastrous mistakes in banking, in regulation, in the public finances - falsely promising the British people that they could end boom and bust.

So I make no apology for reminding people that when it comes to the economy, Ed Balls and Ed Miliband have about as much credibility as Andrew Mitchell's etiquette coach.

The country won't let them forget their role in the economic crisis but it is also true that growth is much slower than we want. It will take us longer to deal with the deficit than we expected.

Here's why. The eurozone crisis. Higher than expected inflation. The weight of our broken banking system suffocating businesses with growth potential. All of these things have been tougher for Britain than was forecast when we started down this road.

In the short term, we are borrowing more as taxes and benefits respond automatically to help stabilise the economy. Critics should welcome that, not criticise it, because it shows that our plan is able to adjust as new pressures emerge. We have always been clear that flexibility is built in to our plan.

But every time an alternative is put forward, I ask myself a simple question. Will it strengthen the foundations of the better future economy that we are building?

Despite all of the difficulties and the challenges that lie ahead, in the last two years we have re-secured for this country a very precious commodity: credibility.

No one now doubts that Britain is a nation that can pay its way. As a result, the people from whom we borrowed £125 billion last year (more than the entire cost of the NHS by the way) were willing to lend us their money at some of the lowest interest rates we have ever paid.

Those low interest rates help keep wasteful spending on debt interest down. We have spent two years earning the confidence that secures those low rates. And we will not sacrifice it now.

Especially as we are able to use that credibility to create jobs, to help build homes, to get more money to business. Guaranteeing mortgages for first time buyers. Funding for lending to get more money to small firms. Guaranteeing funding to bring forward the major infrastructure projects our country needs and for housing associations to build more affordable homes.

Let me give you an example. One major project we are funding is London's Crossrail.

It is the biggest infrastructure project in Europe right now. But we need to ensure the rolling stock is delivered on time.

Right now, difficulties raising the necessary private funding in the market could delay their delivery. So I can announce to you today that the train contract for Crossrail will be the first project to qualify for a new government guarantee.

And it will be the first of many across Britain, I am sure. We have rebuilt the confidence in this nation's ability to pay its way in the world, we can now put that credibility to work for the British people.

There could not be a worse time to argue that we should abandon our plan. As we overwhelmingly agreed in our debate yesterday - we won't do it. It is the foundation for everything else. It is the foundation for jobs and prosperity in the future.

Last autumn, we were faced with a worsening forecast from the independent Office of Budget Responsibility. Rather than add more cuts now, we decided to take another two years to do the job.

That was the right, pragmatic response to things getting worse. Fellow Liberal Democrats, that decision has consequences too. It means we are now committed to further deficit reduction into the next Parliament.

Let me be absolutely clear: I will not sacrifice this party's independence by binding us to detailed spending plans deep into the next Parliament.

But there is one thing we must do. We have to set a detailed budget for government for the year 2015-16 because we will be in government for the first 5 weeks of it, at least.

That means setting out specific plans for the £16 billion of savings that are needed in that year. And it means setting out how we, as Liberal Democrats, would make the further tough choices needed beyond that.

Nick and I will negotiate hard to get this right, to make choices that are shaped by our Liberal values and driven by our Liberal Democrat priorities. We simply will not allow the books to be balanced in a way that hits the poorest hardest. At £220bn, welfare is one third of all public spending - and despite our painful reforms it is still rising.

We will have to look at it. But that cannot, must not, and will not be the only place we look. We insist that the difficult choices must be fairly shared: that those who can afford more must contribute more.

Which brings me back to where I started: fairer taxes, in tough times. We have done a great job cutting income taxes for working people. We have helped millions of people by stopping Labour's fuel duty increases. Helping struggling families and businesses deal with the burden of very high fuel costs.

And we have made a good start in raising taxes on the wealthiest. High earners get less tax relief on their pension contributions. You can't dodge stamp duty by putting your home in an offshore company.

Banks pay a special new tax - paying £10 billion over this Parliament. Capital Gains Tax is up - ending the scandal that a hedge fund manager could pay less tax than their cleaner.

At our conference 2 years ago, I announced an extra £900m to get tough on tax dodgers and told you that by the end of the Parliament it would deliver an additional £7bn a year in revenue.

Last year, I reported back that we were on track for an additional £2bn. And this year, I can announce we are on track to raise an additional £4bn. Fairer taxes in tough times, means everyone playing by the same rule book, and everyone paying their fair share.

To their credit, even most Conservatives now agree with that too. Last year we set up a new affluent unit within HMRC. I can report that it is already a success: it has raised £44m in less than a year.

And so I can announce that we will build on that success and expand its remit to the wealthiest 500,000 people in the country, those with net wealth over a million pounds.

The vast majority of taxpayers in this wealth bracket pay their fair share. We have this message to the small minority of wealthy people who don't play by the rules: we are coming to get you and you will pay your fair share.

But conference, tax dodging is not limited to our own shores.

So when I say we are coming to get you and you will pay your fair share, I mean those hiding their assets offshore too. Back in 2009, Labour made an agreement with Liechtenstein that set a time limited window that closes in 2016 for people to bring their UK tax affairs up to date.

They thought it would raise a billion pounds. Under this Government many more people are fessing up. So, we are doubling the size of the team focussed on Liechtenstein. With that extra effort we can recover much more from those who thought they could hide their money offshore. Up to three times more - £3bn.

That is good progress. We should all be proud of it. Getting tough on those who don't play by the rules. And as times get tougher, as belts get tighter, as austerity goes on for longer, it is morally necessary to do more.

In the summer, I shut down the scandalous situation where thousands of public sector workers were being paid in a way that potentially allowed them to pay too little tax.

Rules are now in place to stop that happening - based on the simple principle that if you're being paid public money, you should pay your taxes. But it cannot be right that similar rules don't apply to companies doing business with the government too.

There are thousands of large firms that receive taxpayers' money to deliver a service - they do a good job helping to deliver public services. But I have discovered that there is nothing that prevents the very small minority of firms that don't play by the rules from winning government contracts.

That is not right. That is not fair. And I am determined that it comes to an end.

If you want to work for us, you should play by our rules. Taxpayers' money should not be funding tax dodgers. So I have tasked HMRC and the Cabinet Office to come up with a workable solution to this problem and we will set out more details later this year.

And we need to get wealthy individuals to pay a fairer share too. In this country, we tax work, effort and income too highly, and unearned wealth far too little. Now you can move your money off shore but you can't move your mansion. That's why we want a Mansion Tax. It's simple, it's fair, it's unavoidable.

An extra levy on high value property would get more money from those who can afford it. It would ensure that the burden of the next round of deficit reduction is shared more fairly. We will continue to argue for it within government.

Now, some experiences in government have been quite strange. Nick may have hit the heady heights of 143 in the official charts. But strangest of all, some people seem to think it is impossible to be Chief Secretary to the Treasury and a Liberal Democrat at the same time.

Yes, I do have to work closely with George Osborne and Oliver Letwin. I do my best to make the Coalition work. And, actually, they do too. It is not impossible to be a Liberal Democrat in the Treasury. It is essential.

My liberal values are not left at the door on Whitehall. They are strengthened by being applied in practice, toughened by the experience of government.

And through my department we are delivering Liberal Democrat ideas:

• More investment in transport than ever before
• £2.5bn set aside for the pupil premium
• £1.3bn to invest in Post Offices
• A crackdown on tax avoidance and evasion
• Big tax cuts for ordinary working families

All of that in the toughest economic circumstances any modern government has faced. Do you really think Conservatives governing on their own would have done those things? That's the difference Liberal Democrats make in the Treasury.

We inherited an economy as damaged as any in modern peacetime history. We have taken the tough decisions that lay the foundations for a modern, strong, balanced economy with strong businesses and more jobs. Reforming welfare, taxing the wealthy, practical help for working families.

Thanks to you, we are on the road to recovery. Thanks to you, we are doing the job we set out to do. It is not easy, but we are doing the right thing and we are making a difference. That is worth the effort.