New Chancellor says Northern Rock lessons 'have been learned'

In his first major speech as Chancellor, he sought to draw a line under the financial turmoil of recent weeks, which he conceded had been "difficult" for savers.

He promised changes to ensure greater stability in the economy and customers' confidence that their savings in a bank or building society are guaranteed.

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Government sources say a wholesale review of the financial regulations will be conducted in the wake of the Northern Rock crisis, which saw thousands queueing to take their cash out of the bank after it was rocked by the credit crunch hitting global markets.

Mr Darling promised action to ensure more transparency - telling financial institutions "far greater openness would be expected" from them.

He also warned they would no longer be able to hide "risky investments off the balance sheet".

The Government is preparing to increase the guarantee on savings held in any bank or building society account up to £100,000.

The existing protection scheme offers a 100 per cent guarantee on only the first £2,000 and 90 per cent on the next £31,000 in the event of a bank collapse - with nothing above that sum.

"There are lessons to be learnt - and I will make the changes we need to ensure stability," said Mr Darling.

"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."

Mr Darling praised the "great achievement" of his predecessor, Mr Brown, in securing ten years of economic growth, a record not achieved by any other modern economy.

He added: "The country knows his strength better than ever after just three months as Prime Minister."

The Chancellor also attacked the Tories' "incoherent" approach to tax and spending, which he said would lead to higher interest and mortgage rates.

Earlier, interviewed by the BBC's Andrew Marr, the Prime Minister insisted the crisis in U.S. mortgage lending which led to Northern Rock's difficulties was "bound to have an effect on every advanced industrial economy".

Of claims that the Government knew about the looming problems at the bank earlier than it had admitted, Mr Brown insisted: "I don't accept that at all.

"What we have got is a continuous group of people meeting on a regular basis to look at financial issues.

"There will always be financial events around the world.

"The question is: do you have the right system in place to guarantee and ensure the stability of the economy?"

Shadow Chancellor George Osborne said it was increasingly clear that Mr Brown "cannot give straight answers to the simplest of questions".

"He was repeatedly asked when he first knew about the problems at Northern Rock, and he refused to answer," Mr Osborne said.

"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?"