This morning I was at Jaguar-Land Rover in Castle Bromwich. This afternoon I will be talking to employers in the Black Country. Large or small, businesses in the West Midlands and across the country are facing a desperately difficult time. Orders are down.
Sales have slumped. Import costs are rising. Credit has dried up. The prospect of mass unemployment now looms, with all the heartbreaking consequences for families and damage to our society we know that brings.
We have been arguing for many months now that this is a monetary crisis that requires monetary solutions. Getting the banks lending again to companies through a big, bold and simple National Loan Guarantee scheme is the urgent priority.
It distresses me that the credit scheme the government eventually promised to set up, and which was supposed to start this week, is still on the drawing board.
Like so many other promised government initiatives, from the housing repossession plan to the support for trade insurance, to the car rescue package announced two months ago, Ministers don't appear to know the difference between a newspaper headline and actually delivering real help on the ground. This dithering and paralysis in government is costing people their jobs and their businesses and their homes.
It is the scandal of inaction and it contributes to the widespread feeling best expressed by the CBI Director General a fortnight ago that 'there's little sense of a coherent strategy' in the government's approach to the recession.
It may seem, therefore, a distraction that the political world in Westminster is asking whether or not Gordon Brown should apologise for his role in the mistakes that led Britain into this economic mess.
The Chancellor thinks he should. So too does his closest ally Ed Balls. But the Prime Minister thinks he shouldn't. The rest of the Cabinet is divided.
Does it really matter, you may ask. What use is an apology to a struggling business or a family losing their home? In fact it does matter. This is not about some Westminster game - it is a disagreement about the future direction of our economy and the foundations for recovery.
For if, like Gordon Brown, you believe that Britain is simply the innocent victim of a banking crisis that came from America then you would agree with him that there is "nothing to apologise for".
And because the Prime Minister believes none of Britain's problems are home grown, his solution is simple too. Apply the sticking plaster to an otherwise healthy body; urge the Americans to improve their financial regulation; try to get some international early warning system so we spot future trans-Atlantic storms; and pump the bubble up again.
That, boiled down, is the Prime Minister's answer to the current economic crisis. He won't say sorry for his mistakes because he really doesn't think he made any.
I take a fundamentally different view - and so do an ever growing number of the British people.
Our banking system is not separate from our economy, it is a reflection of it.
Our banks hold a mirror up to the worst excesses of our society. And the unsustainable debts in our banks are a reflection of unsustainable debts in our households, our companies and our government.
That is what the man who was Chancellor for ten years has to apologise for. And it means that applying sticking plaster and lecturing the Americans won't work - because the model of economic growth pursued in Britain in recent years is fundamentally broken and needs fixing.
In short, where you stand on the question of the prime ministerial apology says a lot about where you stand on the future direction of economic policy in our country.
That is why, for Gordon Brown, 'sorry' really is the hardest word.
Let me explain why I think the banking crisis is a mirror of a deeper problem that infected the whole of our economy.
We can all now see that our banks lent more than was safe and made most of their profits from business models that turned out to be unsustainable when the bubble burst. British banks became amongst the most indebted, most leveraged in the world, with tangible assets thirty nine times tangible equity compared to seventeen times in US banks. But as an economy we weren't saving enough to fund this debt. So our banks and shadow banks sucked in hundreds of billions of pounds from abroad.
As a country, we lived beyond our means. Our banks borrowed money from China to lend to us, so we could buy the goods the Chinese produced. We could see it in the huge current account deficit that persisted for a decade.
But it was explained away with talk of a new paradigm of low inflation, stable growth and the end of 'boom and bust'.
For a while almost everyone was persuaded, and even amongst the sceptics almost nobody put the whole picture together.
As I said in my speech to the Conservative conference here in Birmingham last year, "we forgot that an economy built on debt is not an economy built to last." Or as Warren Buffet puts it more colourfully, it is only when the tide goes out that you see who has been swimming naked.
The truth was that Britain's economic growth of the last decade was a boom founded on an unsustainable current account deficit which itself was largely driven by unsustainable growth in consumer spending across the board.
Many consumers funded this spending boom not from earnings or savings, but borrowing - often borrowing secured against the value of house prices which themselves were booming on the back of cheap credit.
The result is that by the time the boom turned to bust, our households were the most indebted of any major economy, more even than America's, with debt to income standing at 175% for the average British family compared to 140% for the average American family.
The huge losses suffered by our banks from UK mortgages and consumer loans that are now turning bad are a reflection of that unsustainable consumption. A stark illustration of just how much the economy was reliant on unsustainable consumption growth is that if consumer spending had merely grown in line with incomes over the decade between 1998 and 2007, average growth would have been 0.7% lower. Every year.
That may not sound much at first, but it means that our GDP would have been about 7% lower - £100bn lower - in 2007. That's more than £4,000 for every household in the country. And now those debts are being called in.
Of course it wasn't just consumers.
Too often, companies, like banks, just increased leverage to increase returns on equity, without increasing returns on assets - the sound returns that drive sustainable growth. And, of course, far from trying to rein in this unsustainable household and corporate borrowing, the Government was leading by example.
Year after year Whitehall itself lived beyond its means with persistent budget deficits and increasing off balance sheet liabilities, pumping up demand yet further and building up debts that will take a generation to pay off.
Amazingly, if PFI spending and outsourced contracts are included, two thirds of job growth between 1998 and 2006 was down to the public sector. That's not sustainable either economically or fiscally. That's not how you build a sound and stable economy.
As David Cameron said back in September 2007, just days after the run on Northern Rock, "the increases in debt in the UK economy - personal, corporate, and Governmental - have added a new risk to economic stability." Given that the diagnosis of what went wrong touches almost every sector of our economy, the treatment must be equally far-reaching. Of course we must improve financial regulation and reform the short term bonus culture in our banks, and Conservatives have been leading that debate.
We were amongst the first to call early last year for tougher regulation of bank lending in a way that dampens the credit cycle instead of amplifying it.
We have called for reforms to the failed tripartite system of financial supervision, returning more powers to the Bank of England to call time on excessive debt. But we cannot hope that better financial regulation will allow us to continue where we left off.
We need a fundamentally different model of economic growth that is sustainable and responsible.
First, British businesses must become less dependent on debt. This is already painfully clear in our banking industry. As well as the difficult process of recapitalisation we have already seen, it's clear that in the long term banks will have to hold more capital and leverage will have to be lower. But we don't just need to recapitalise our banks. We need to recapitalise the whole of British business.
Debt has to give way to greater ownership.
I believe in the coming year we will see that happen, and a number of rights issues are already in the offing.
As the Director General of the CBI said earlier this week, "equity capital is likely to play a much more prominent part in corporate capital structures in the future than it has in the recent past".
Given the scale of the debt problems, I believe there is role for government in encouraging this recapitalisation of British business to take place more quickly than it otherwise would.
That is certainly the case with new business start-ups.
One of the most damaging impacts of the credit boom was that real venture capital in exciting new businesses was squeezed out by highly leveraged private equity. Figures from the British Venture Capital Association show that early-stage investments have slumped from 11 per cent of total equity value invested in 2000 to less than 4 per cent in 2007.
You might think that the middle of a recession is not the time to be investing in the businesses and entrepreneurs of the future, but you couldn't be more wrong. It's actually exactly the right time.
Half of the top 50 US companies in the Fortune 500 were incorporated during a recession, including seven out of the top ten. Even in this savage downturn, new markets and business opportunities are emerging all the time, and if we don't seize them someone else will.
It is start-ups and new technology, not bail outs, that will drive our recovery
Government could play an important role, either through co-investment along the lines of the Prudential's new UK Companies Financing Fund, or a new Industrial and Commercial Finance Corporation - which became today's 3i.
Unfortunately Labour moved in the opposite direction in the last Budget, increasing the tax levied on venture capital investments at the very beginning of the recession. But it is not just new start ups that need our help.
Our corporate sector's excessive dependence on debt is deep rooted in the structure of our economy. In particular, economists have long pointed out that our corporate tax system favours debt financing over equity.
Interest costs are fully deductible with very limited restrictions, while the returns on equity receive little or no tax relief.
Gordon Brown's decision in 1997 to abolish the dividend tax credit for pension funds made an existing imbalance worse. The result is that the UK is widely regarded as having the most generous tax treatment of debt interest of any major economy. That's economically inefficient at the best of times, but it makes even less sense now that we understand more about the dangers of excessive leverage. There are several ways that we could begin to undo this imbalance by reducing the costs of equity financing relative to debt.
I have long argued that there is a powerful case for looking at stamp duty on shares, which raises the costs of capital and reduces investment. But I believe the time has come to look again at the generosity of interest deductibility in our corporate tax system.
Clearly this would require careful consideration of the treatment of banks and the UK-based treasury operations of global companies. And we would need to consult very widely and give businesses plenty of time to adjust. But by reducing the tax breaks for debt we could potentially fund a significant reduction in the headline rate of corporation tax - a key determinant of our international competitiveness.
I have already committed to reduce the headline rate from 28p to 25p by reducing complex reliefs and allowances, but we will need to go further if we are to keep pace with an increasingly competitive global economy. The prize could be considerable - a simpler and more competitive tax system, more jobs and investment, and British business that are less dependent on debt.
If reducing the dependence of our corporate sector on debt is the first priority, the second is doing the same for the public sector. The next government will inherit the worst public finances since the Second World War. Independent forecasters predict that Government borrowing will be more than 10% of GDP, and official debt will be soaring towards £1 trillion. And yet the long term demands on our public services from an ageing population and existing commitments will continue to rise.
By 2050, we will have gone from having four people of working age for every elderly citizen to a ratio of just two to one, with knock-on consequences for our tax base and pensions system.
On current policies these pressures will increase total spending by 3% of GDP over the next 30 years. That's about £40bn in today's terms, or 8p on the basic rate of income tax.
So Britain has got no option. We have got to bring the public finances under control. If the government has lost the appetite to confront this truth, then the opposition has not.
We will come off Labour's unrealistic spending plans. We will bring about major reforms to the culture of Whitehall, putting the emphasis on value for money. And we will overhaul the way government spending is controlled by creating an Office of Budget Responsibility to act as a rod for the back of all future Chancellors.
But government will never be able to both live within its means and provide quality public services unless we embrace reform. Now is the worst possible time to take our foot off the pedal on public sector reform. Yet this is exactly what the Government is doing.
From complaints from academy schools that their hard won freedoms are being reduced, to growing concerns that the welfare reform agenda is stalling, all the signs are pointing in the wrong direction.
In contrast, whether it is Michael Gove's radical plans for Swedish-style school reforms, or the plans for real welfare reform that Theresa May and David Freud are developing, it is the Conservatives who are now driving the reform agenda.
Reform is vital for its own sake - to deliver real improvements in services. But the fiscal crisis has created a new imperative.
Ultimately, as the Chief Executive of the Audit Commission has warned so starkly, unless we press ahead with reform and get the increased productivity that brings, then the quality of services will suffer.
Conservative reform is the only way to avoid Labour cuts. By turning their backs on reform that is the course that Labour are now pursuing.
But with reform we can not only live within our means, we can start to tackle Britain's long standing social problems of welfare dependency, educational under-achievement, crime and persistent poverty. And we can begin to bring the national debt under control.
So we must tackle the addiction of our corporate and public sectors to debt. But this will not be enough to create a sustainable economy unless we can do the same for the whole country.
We need a structural increase in the amount we save and invest as a country. The persistent current account deficits that have dogged the British economy for so long are a simple arithmetic reflection of the fact that we have been saving less than we need to fund investment.
Our national savings rate is one of the lowest in the developed world. For too long we have been investing too little to support continued growth at the rates we have become used to.
Our infrastructure and our capital stock are simply wearing out. This is not a sustainable position to be in - we cannot continue borrowing to pay for growth.
As Mervyn King said recently: "As part of a longer-run rebalancing of the UK economy, an increase in our national saving rate, both private and public, is necessary."
We need a structural increase in the amount we save.
That's why, as a first step, we have called on the government to abolish tax on savings income at the basic rate in this spring's Budget. In the short-term, it helps those innocent victims of the recession - savers hit by close-to-zero interest rates.
In the long-term, it encourages saving and goes a long way towards eliminating the double taxation of savings as recommended by the Meade report 30 years ago.
Savings are the basis of sustainable private investment.And investment is the basis of a sustainable economic recovery.
So how can we generate an investment-led recovery?
Not through the kind of public works projects which the Government talk about, but haven't delivered.
As Samuel Palmisano, Chairman and Chief Executive of IBM puts it, "launching 'public works' projects - putting people to work with shovels and jackhammers to put money into their pockets - is not the way to jump-start a 21st century economy - or to build a competitive advantage in the different world that is taking shape."
The investment that we need is in the technologies and infrastructure that can underpin a smarter, greener and more competitive economy in the future.
Just look at California. More than $3 billion was invested by the private sector into Californian clean tech companies in 2008 alone. This private sector investment is also yielding tangible results. Green jobs are growing at twice the rate of non-green jobs. And one in five of these jobs is in manufacturing, helping to keep industrial centres afloat during the recession.
The same approach - investment leading to economic growth - can be achieved here in Britain and here in the West Midlands.
BT's announcement earlier this week that it has cleared the regulatory barriers that were preventing £1.5 billion of investment in fibre optic broadband is just the beginning of what can be achieved.
Over the next decade Britain will need massive investment to upgrade not just its broadband network but its energy and transport infrastructure - and we should be trying to front load as much of that investment as possible.
We have already set out proposals for billions of pounds of investment in home energy efficiency improvements, micro-generation, smart grids, undersea DC cables and other vital network infrastructure. And we are committed to building Britain's first national high speed rail link from London to Birmingham and onto Manchester and Leeds. In each of these examples we are talking about engaging private sector investment.
What government needs to do is remove the regulatory barriers that are holding that investment back. And in the current climate there is clearly a role for government guarantees and credit insurance to minimise the financing costs, but that could be done fairly simply within existing regulatory structures. And in return, utility companies could be required to commit to maintaining high levels of investment.
The result would be many thousands of new jobs and a solid foundation for a competitive low carbon economy in the future.
Our economy is broken and Gordon Brown's sticking plasters won't mend it.
We need a new model of growth.
We need to change from an economy built on debt to an economy powered by savings and real returns on effort.
A corporate sector less dependent on debt, with more equity investment in start-ups and the success stories of the future.
Public sector reform so that government lives within its means and delivers world class public services at the same time. And a country that pays its way in the world - saving and investing more to build a truly sustainable economy.
This is the compelling vision that I believe can restore confidence today and belief in a better tomorrow.
But we can only make it real if we are willing to confront some uncomfortable truths and tell people what they may not want to hear.
It means telling people that they can't rely on massive increases in house prices to fund their retirement, and that they will have to save for a deposit to buy their own home.
It means pointing out that increasing profits through ever higher debts is not a sustainable way to build a business.
It means explaining that government can't just spend money on every worthy cause that comes knocking on the door, and that difficult reform is a necessity when money is tight not just a luxury when budgets are rising.
The 'money for nothing' society has to end.
The age of irresponsibility is over.
We need to tell it like it is.
And the truth is that Britain is going to have to work hard and save hard to get out of this hole.
The Conservatives are ready to tell people these home truths, and the country is ready to hear them.
People have had enough of problems avoided and difficult decisions postponed - we can all see where that has got us.
It's time for an honest assessment of our problems, because that is the first step to solving them.
Only then can we start to build the economy and the society that our country deserves.