Nick Clegg to unveil localism pledges

Deputy Prime Minister Nick Clegg will today promise to make communities "masters of their own economic destinies" by handing them more power over spending.

Speaking at a local government conference, Mr Clegg will signal legislation giving councils more control over the taxes they raise.

They will also be able to borrow against income from business rates to fund investment in their areas.

The Liberal Democrat leader is to say: "Every Government preaches localism. This Government will practise it.

"In terms of real decentralisation, money talks.

"We need to reverse decades of centralisation to make our communities masters of their own economic destinies.

"We have to create the conditions for communities to invest in their own success.

"That means putting our money where our mouth is to give you proper power over spending as well as more control over the tax you raise and keep so, for example, you can fight for businesses to come to your town.

"You know we'll shortly be publishing detailed proposals for consultation.

"I can also confirm we will follow that consultation with a Local Government Finance Bill, so that this power shift is set in statute."

Mr Clegg will say that allowing business rates to be retained locally could mean councils have direct control of more than 80% of their budgets, rather than the 50% currently.

He will also offer a guarantee that deprived areas will not lose out from the shift, insisting: "From the start, no authority will receive less funding when the new arrangements are introduced than they would have done previously."

A system of Tax Increment Financing will permit councils to obtain finance against business rates, "helping to unlock the development potential of their areas".

The deputy prime minister will say: "You asked for new borrowing powers and to be given back business rates - we're delivering it. You've told us you want change but any reform must be fair - we've heard you. But now it's up to you to help us make this work. We have an unmissable opportunity here. If we get this right we can win the argument for localism once and for all."

Mr Clegg will also announce the nationwide introduction of Community Budgets, where cash for local services is pooled to help deal with problems more efficiently.

In the case of one family in Salford, 250 interventions were required in one year - including 58 police call-outs and five arrests; five emergency hospital visits; two injunctions; and a Council Tax arrears summons.

The council's Community Budget approach saw the creation of a joint prevention and early intervention team, and is said to have cut the £200,000 cost by two thirds.

"There are families that have been let down by the system," Mr Clegg will say.

"Their complex problems mean they can end up seeing dozens of professionals across public services - but those professionals aren't always joined up, making it near impossible for anyone to get an overall picture of what that family needs.

"Community budgets are budgeting for real life, breaking down the barriers between different parts of the machine, and treating people with troubles like human beings, not figures on a spreadsheet."