There is a growing recognition in Government that faith is a vital resource for building social capital. When I was growing up, the general assumption was that faith was on the way out. Spokespeople for faith in the media were either elderly or lightweight or both. They were presented as harmless eccentrics who could be humoured as relics of the long gone era. But they were certainly not regarded as having anything worthwhile to say to secular modern Britain.

How different it all looks today. Church attendance figures have continued their inexorable decline but you don't have to look far to see they don't tell the whole story. Over three quarters of the population expressed adherence to one or other of the major faiths in the 2001 census.

There is a growing number of large churches, mosques and temples and financial giving from the faith communities is undoubtedly rising. The Make Poverty History movement - 80% of whose support came from the faith communities - proved to be a remarkably influential lobby. At a time when community gatherings are in decline, the remarkable thing about public worship is not how few people attend these days, but actually that so many people do.

In communities where most other institutions pulled out long ago, the faith institutions are still there. And - remarkably though it appears to people like me who grew up in the 1960's - much of the most original, most creative, most dynamic third sector contributions to social and economic regeneration are coming today from people of faith - people who draw their inspiration from the practise of worship. Not everybody welcomes that. There is a powerful school of thought which was very happy with the decline of faith and is very uncomfortable at the prospect of its renewal. They think it means airwaves will be filled by crackpot right wing fanatics, or worse still that it will lead to violent conflict like Northern Ireland.

There was a lot of debate over the summer about the role of Muslims in Britain, and several times I heard the criticism expressed that the problem with Muslims was that they are Muslim first, and British only second. The people that make that complaint don't have a problem with Islam. They have a problem with faith. There is a growing proportion of people in modern Britain who do define their identity primarily in terms of faith. I don't think we should complain about that - we should celebrate it. Because faith is a vital source of cohesion, of compassion, and of exactly the values whose scarcity is the greatest source of unhappiness in our society today. We need more of it not less.

But, recognising as Government increasingly does, that faith is a great resource for the kind of regeneration we want in our communities, there is a problem. That problem is that Government finds faith very difficult to deal with. It just doesn't fit with the categories government is comfortable handling. It raises very awkward problems:

• If government provides funding for one faith group, how do you handle the fury of others? Better to leave well alone.
• What if it turns out that Govt funding helps pay for proselytising, or religious services?
• How do you deal with people who are so old that they still believe in God?

On the first of these, by the way - the worry that faith groups will all be in opposition to each other - I have never found that to be the case. In fact people of faith are often much better able to get on the same wave length as people of another faith - than are people of no faith. In practise, people of distinctive faiths find they have a very good basis for cooperating on a range of shared concerns.

Believing different things is not in practise a barrier to collaboration. Faithworks has shown that - and so once again in the diversity of the attendance today. So government has a dilemma. We recognise the huge potential of services being delivered by faith based organisations - because the quantity and quality of the volunteering which those organisations can enlist is unmatched anywhere else - and we can see that potential being realised in a growing number of instances.

But we don't know how to support that potential in ways that respect the distinctiveness of the organisations and avoid the pitfalls which might be expected to be encountered. And that challenge is at the heart of this consultation.

A week ago today I took time out from the Labour Party conference to attend a breakfast meeting in the Moss side area of Manchester. A young black boy had been shot dead there a few weeks previously, and the taxi driver was very reluctant to go there. The meeting was in a disused pub which had been bought for community use by the local church, and there were nearly twenty local people there, black and white, young and old, well-off and hard-up - and we talked about how government could support more effectively what they are all doing to make that community better.

The ability of faith institutions to pull together groups like that in any community in the country is unique. We are trying to do a better job of listening and helping:

• We have set up the new Faith Communities Consultative Council as a streamlined structure for us to talk to rational faith representatives, chaired by my colleague Phil Woolas, of DCLG.
• We are initiating regular contact between faith community leaders and representatives with ministers and senior officials.
• We have set up a network of officials in the local authorities which have the most diverse faith communities, to support and spread good practice in working with faith communities.
• We sponsor the inter-faith network.
• We have appointed in the Department for Communities and Local Government dedicated relationship managers to work proactively with the Christian, Muslim, Jewish, Hindu and Sikh communities.
• And we are going to pay very close attention to what you've told us today about how we can support you better in the future. And if something else occurs to you after this meeting, please drop us a line.

My main job in the Cabinet is to lead on the preparation of the Comprehensive Spending Review, which we will publish next summer with government spending plans for the following three years. We want to do it with a longer term perspective - so we are looking at the next ten years ahead, and considering what the big challenges over that period are likely to be - and how we should address them.

We see faith communities having a very important role, and we recognise that we need your help to work out how we can make the most of their contribution.

So thank you for being willing to help us today. My request will be that we should continue to work together in the months ahead.

Thank you.