Last autumn, our financial system suffered its most destructive crash since the 1930s, taking an economy already in recession and plunging it further into the mire.
Ten months on, the banking system remains broken, held together by billions of pounds worth of taxpayer loans and government guarantees.
The public finances are awash with red ink, burdening every child born today with £22,500 worth of debt.
And businesses are still going bust, houses are still getting repossessed and unemployment queues are still rising at an unprecedented rate.
The decisions that led to this crisis represent a policy failure of historic proportions.
We now need deep, wide-ranging reform that matches both the magnitude of the crisis and the scale of the hardship inflicted on the British public.
That reform must be based on a clear understanding of what went wrong in the first place - and a clear determination to put it right.
I believe three things led to this crisis.
First, this Government's imprudent attitude to debt as it failed to fix the roof when the sun was shining.
Second, no one took responsibility while debt across the whole economy spiralled out of control.
Third, irresponsible behaviour in some of our banks was allowed to go unchecked and the financial system become unstable.
And it will be the economic priority of a Conservative Government to address each of these in turn.
GOVERNMENT DEBT
First, government debt.
According to some estimates, this Government will borrow almost fourteen per cent of our national income next year.
That's twice as much as when Denis Healey went to the IMF in 1976.
But it's easy to forget that we actually entered this recession with one of the highest budget deficits in the developed world too.
That is Labour's record.
Borrowing in the boom - so when the tough times did come, they had run out of money with which to help people.
And excessive borrowing in the bust - which has undermined consumer and public confidence and is threatening to make the recession last longer.
And their plan for the future?
To refuse to admit to the problem and refuse to act.
George Osborne and I have been straight about the need to sort out our public finances.
From abandoning Labour's spending plans to opposing the VAT cut.
From saying that spending plans need to be reduced, both last year and this to stating clearly that future reductions will have to be made too.
From outlining where cuts can be made like scrapping ID cards and the ContactPoint database, to establishing an independent Office of Budget Responsibility that will stop any future Chancellor living beyond their means.
And to those who say this will tie the hands of future governments.
I say: Yes it will. Good.
DEBT ACROSS THE ECONOMY
Second, debt across the whole economy.
Under Gordon Brown, Britain built up more consumer debt than any other major economy - in history.
Our households racked up over a trillion pounds of personal debt.
This mountain of debt was mirrored by British banks, which became amongst the most leveraged in the world.
At their peak, our banks had tangible assets thirty nine times tangible equity - twice that of those in America.
So when the boom did turn to bust and the value of assets fell, we were hit harder than most.
This build up of debt was at best ignored and at worst encouraged.
For this, the finger of blame points directly at the system of financial regulation that Gordon Brown set up in 1997.
At its heart was the tripartite system in which no one was looking at the big picture, no one had the responsibility and authority to act, and no one was in charge.
So those bad debts, risky loans and soaring house prices...
...the systemic risk and the asset price bubble...
...they all fell between the cracks.
And I'm afraid the Government's proposals...
...that all we need are a few more tweaks and a little more bureaucratic tinkering...
...are totally inadequate and risks preventing a recovery.
Their tripartite Council for Financial Stability is just the same three organisations...
...with nobody in charge and nobody taking responsibility.
Moreover, it's only due to meet every three months.
Lehman Brothers filed for bankruptcy, AIG was rescued, Lloyds TSB took over HBOS, Bradford and Bingley was nationalised, the US pumped $700 billion into their financial sector and our banks were recapitalised in the space of three weeks.
This crisis has shown we need one body to be unambiguously in charge - always on top of things.
That body must have the expertise and authority to regulate the overall amount of debt in our economy.
That body must use its discretion and judgement, not follow rules and tick boxes.
That body must have the respect and the influence to keep our banks in check.
In the United States, they've called on the Federal Reserve.
In Britain, it's time to call on the Bank of England.
So we will abolish the tripartite system and give the Bank of England an explicit role in macro-prudential, system-wide regulation.
They will be the ones who take a big picture view and have the power to act.
They will be the ones who will call time on debt.
IRRESPONSIBLE BEHAVIOUR
Third, checks on irresponsible behaviour.
People might not understand the minutiae of over-leveraging or short-selling, but they know that the roots of our current crisis lie in irresponsibility.
Bankers at HBOS giving risky mortgages and loans to commercial property, while taking big equity stakes in the companies they lent to.
RBS forcing through one of the most questionable deals in history as they bought a large chunk of ABN AMRO at the top of the market.
Why did this happen?
This crisis has revealed that for too long bankers have enjoyed a free option.
If they made short-term profits - they could expect a fortune.
If they made long-term errors - they could expect no penalty.
Profits were privatised.
Losses could be socialised.
This asymmetry at the heart of the banking system explains why there was such excessive risk taking and requires far-reaching reform.
We need to make sure the financial sector serves the long-term interests of the economy, not just its own short-term interests.
So we will abolish the Financial Services Authority, and will give the Bank of England the power to regulate pay structures, riskiness and complexity and size of all our banks, building societies and other significant financial institutions.
That which puts financial stability at risk will be penalised.
So if bonus structures are irresponsible, banks will be made to hold more capital against them - akin to a tax.
And we should encourage claw back, where bonuses paid out for short-term gains are paid back in the event of long-term losses.
The financial sector must understand that it cannot behave like this crisis never happened.
CONCLUSION
Government debt controlled.
Debt across the economy restrained.
Irresponsible behaviour checked.
These three things will be the economic priorities of an incoming Conservative Government.
They represent real change from what went before.
And they will underpin our financial stability and economic progress for the decades ahead."
