The Chancellor arrives for his speech

"Long-term investment is the key"

"Clear rules for economic discipline"

Brown Aims for Long-term Success

In his first Mansion House speech to the City, Mr Brown said making the Bank of England publicly accountable for hitting the Government's inflation target, was the "final building block" in his reform of monetary policy.

The Chancellor disregarded a hundred years of history by turning up at the Lord Mayor's Dinner, traditionally a black tie event, in a suit.

It follows a similar gesture at the usually black tie CBI annual dinner in May, where he wore a business suit.

Mr Brown told his audience of bankers and city merchants that the introduction of "more rigorous, precise and open procedures" would help the Bank of England's new monetary policy committee, responsible for setting interest rates, to meet its target.

A captive audience

"We need to lock into our economic policy a commitment to consistently low inflation over the long term," he said.

"Real stability is achieved not when we meet a target one or two months in a row, but when we can confidently expect inflation to be consistently low for a long period of time. We need a long-term monetary policy framework," he insisted.

"Instead of the old procedures that were ad hoc, personalised and could not last credibly for the long term, this Government has set in place clear rules, command greater confidence," stressed Mr Brown.

The Chancellor also emphasised his determination to keep a tight rein on public spending and warned the public sector unions that there would be no big pay rises.

The former Chancellor, Kenneth Clarke, looks on

"Just as we will resist any other irresponsible demand on public spending, we will resist irresponsible public sector pay demands," he said.

He pledged to improve the competitiveness of the marketplace to enable investment levels to rise and to modernise the tax and benefits system "to ensure that people have jobs, are able to keep the jobs they have and are able to move into better jobs".

In Europe the Government would push ahead with its competitiveness agenda to promote flexible labour markets, break down barriers to competition and secure the completion of the single market.

"In our monetary and fiscal policy we are determined to chart a consistent course, not for a few months or even a year or two, but for the long term," continued Mr Brown.

"By being better equipped for the future, Britain and the British people can and will be better off," he concluded.