Alistair Darling used his inaugural Labour Party conference speech as Chancellor to promise that the Government would not allow another banking crisis to develop and hinted that senior managers at Northern Rock should lose their jobs over the recent turmoil at Britain's fifth largest mortgage lender.
In the opening address of the conference in Bournemouth, the Chancellor warned that Northern Rock's problems were a further reminder of the impact of globalisation on the British economy.
He admitted that recent events, which saw the Bank of England bail out the troubled lender and queues of worried savers formoutside Northern Rock branches across the country, had been challenging for the Government.
But Mr Darling insisted that "we will come through this" because of the economy's underlying strength and pledged that ministers would act to prevent a repeat of the crisis.
"Last week was difficult," he said. "There are lessons to be learnt. I will make sure we make the changes we need to ensure stability.
"Let's be clear: no government can ever be in the business of protecting executives who make the wrong calls or bad decisions," he told delegates.
"My job is to protect ordinary savers. So we need to strengthen protection for ordinary savers, to give them confidence, ensuring their savings in a bank or building society are guaranteed. We need to be able to separate out ordinary savers' money, paying it out quickly."
The Chancellor called for far greater openness in banks both at home and abroad, to prevent risky investments being hidden, and he called for them to be better regulated.
"It's in all our interests to learn from what's happened and we are ready to take the lead and take whatever action is needed," he said.
Gordon Brown increased the pressure on Northern Rock by warning it would need to review its policies. But he said it was for the bank to decide whether heads should roll.
"This is a matter for the company, for the directors and the shareholders, to deal with," he told BBC1's The Andrew Marr Show.
He insisted the system of regulation in the banking sector had "worked well" but refused to be drawn on when he first knew of the looming problems at Northern Rock.
In his speech Mr Darling echoed his predecessor by warning that Labour's policy priorities, such as tackling poverty, depended on maintaining discipline in the economy even if it meant taking unpopular decisions. "It is only possible to keep on improving people's lives because of the strong economic foundations that we have created," he said.
Mr Darling accused the Conservatives of "opportunism, inconsistency and incoherence" in their approach to the economy which would lead to instability and high interest rates if put into practice.
He received a short standing ovation after he told the conference: "Once they said we would never win again. Then they said no Labour government could win two terms, but the people returned us for a third. And if we stick to our sense of purpose, prepare our country for change, then together, with Gordon Brown, we will deliver for all the people".
The Conservatives accused the Prime Minister last night of not being honest with the voters over the Northern Rock crisis.
George Osborne, the shadow Chancellor, said: "Gordon Brown cannot give straight answers to the simplest of questions.
"The Prime Minister can't go on refusing to tell us what he knew and when he knew it, and why the Government was unable to stop the first bank run in living memory that threatened the stability of our financial system.
"What is he trying to hide? Why can't Gordon Brown be straight with people?"
AM: Question and answer session on stronger and united communities, with the Culture Secretary, James Purnell, and the Communities Secretary, Hazel Blears
PM: Gordon Brown's keynote speech
AM: Health debate led by the Health Secretary, Alan Johnson.
The Foreign Secretary, David Miliband, opens the foreign affairs debate
PM: The Defence Secretary, Des Browne, and the International Development Secretary, Douglas Alexander, close the defence debate.
Peter Hain, Work and Pensions Secretary, and John Hutton, Business Secretary, speak on prosperity at work.
AM: Schools Secretary Ed Balls and Universities and Skills Secretary John Denham lead education debate
PM: Gordon Brown's question and answer session
AM: Debate on sustainable green communities with Environment Secretary Hilary Benn, Transport Secretary Ruth Kelly and Housing Minister Yvette Cooper.
Debate on crime with Justice Secretary Jack Straw and Home Secretary Jacqui Smith.
Closing speech by Harriet Harman, Labour's deputy leader.Reuse content