If events in the financial markets seem to be taking place at warp speed, British politics this week have accelerated to catch up. Four days ago, at the UN General Assembly, Gordon Brown announced an end to the “Age of Irresponsibility” that he presided over. Yesterday, as US markets reeled at the congressional deadlock over a financial bailout, George Osborne effectively declared to the Conservatives that we are living in a new Age of Austerity - one that he and David Cameron will probably end up having to manage. The Shadow Chancellor was grim-faced as he described banks being blown over like trees in the path of the financial hurricane, and the belt-tightening that will be needed. His message was timely and welcome.

Everyone in the country now knows that Britain has been living on a mountain of debt that made us feel big when it should have given us vertigo. That the economy is on the slide, and that the Government's cupboard is bare. But these things needed to be spelt out.

Mr Osborne did not describe detailed policies. But he did lay out the parameters of a future Conservative government. He rightly defended the principles of “responsible” free-market capitalism, while warning bankers that they should pay to help to clear up the mess they created. The Conservative Party would be even-handed, he implied. Having told the poorest people in society that there is no help without conditions, he said, it was only right to apply the same principle to the richest. Crucially, he also told his party that tax cuts are unaffordable. He and Mr Cameron have endured much criticism for their refusal to promise the tax cuts that have been so totemic for many on the Right. They feared that such a promise could prove a hostage to fortune, and they have been proved right.

The strains on the public purse are such that the details of the Bradford & Bingley bailout are all the more critical. Taxpayers must know where the money is coming from. In contrast to its dithering over Northern Rock, the Treasury moved decisively to protect Bradford & Bingley savers, after what looked like the beginnings of a run on the bank at the weekend. But this means that the Treasury is spending £4 billion to protect depositors with more than £35,000 in savings. Another £14 billion will theoretically be funded by other banks, through the Financial Services Compensation Scheme, but in practice this will depend on the outcome of the liquidity crisis.

The problem is compounded by the gradual decline in confidence with the way the Government has handled public debt. The past year has exposed the Government's sleight of hand about its financial position. Ministers who lambast companies for off-balance-sheet accounting cannot continue to hide hundreds of billions of Private Finance Initiative debt out of sight and out of mind. Their habit of overestimating tax revenues to support expenditure plans is indefensible now that tax receipts are collapsing.

The Conservative proposals to create an office of budgetary responsibility - the mouthful of a name is presumably meant to add weight to the concept - are therefore timely. When Government bets the house, it is playing with the people's money. It must be as responsible and transparent about its dealings and its debt as it demands that bankers be.