Let all towns and cities borrow to pay for new trams and shopping centres, Nick Clegg says8 December 2011
The Government is hoping that the new powers which trigger a swathe of new infrastructure projects to help fuel economic growth in towns and cities across the country.
The plans are expected to be published in a new Local Government Finance Bill in the next two weeks, with the powers in place by April 2013.
They will allow councils to borrow for the first time against future tax receipts from business rates through a new Tax Increment Financing scheme.
Eight "core" cities will also be helped through new "city deals" in which they will get greater control over the money they receive from central Government.
They will be allocated a single pot of cash to spend locally and end a current situation in which they go on "bended knee" for money from Whitehall for individual schemes such a new retail park or roundabout.
The "core" cities are Birmingham, Bristol, Leeds, Liverpool, Newcastle, Nottingham, Manchester and Sheffield, which collectively account for 58 per cent of England's population and 61 per cent of its jobs.
The plans have been developed by Mr Clegg and Greg Clark, the Cities minister.
Officials said cities would not be allowed to get into unsustainable debt because the cash they could borrow would be matched to historic business rates receipts
The Deputy Prime Minister will say in a speech in Leeds that the Government wants "to recast the relationship between central Government and cities".
He wanted to end the historic "parent and child" relationship between towns and central Government which had developed under the Labour Government, he will say.
Mr Clegg will say he wants to unleash "an unprecedented transfer of power, to unleash city power, to boost entire regions, to get our national economy growing".
He will say: "There will be no more going on bended knee to Whitehall department after Whitehall department to bid for different capital pots for individual schemes.
"Instead cities will get one consolidated capital pot to direct as they see fit. Whether that is on a new roundabout or a new retail park - whatever their area needs to boost economic activity."
Councils will only "have to show that a specific scheme is feasible, achieves value for money, is transparent and accountable and contributes to growth" to qualify.
He will raise the prospect of Oyster card transport schemes cropping up in cities around the country. He will say: "We want to look at ways cities can shape public transport, being ambitious about what they can deliver for their area.
"When we talk about TFL, instead of Transport for London why can't it be Transport for Leeds? Or Birmingham? Or Bristol? Where, if there is a good economic case for trams, or Oyster cards or bicycle hire - those areas can have modern, innovative systems too?"
Mr Clegg will also use the speech to reach out to disaffected public sector workers who he says fear they are being "cut adrift" by the Coalition because of the rhetoric over cuts to public sector jobs and pensions.
He will say: "That is not the case - many of our public sector workers are making huge sacrifices and I am hugely grateful for it. I am grateful to the people making sacrifices in the private sector too. What will hurt both groups is if we now allow this debate to become polarised."
He will say that public sector workers - teachers, nurses, policemen and women - "make up a big chunk of our northern workforce".
The debate about boosting the economy should not be allowed "to become polarised, as if our dilemma is helping the public sector versus the private sector, the North versus the South", he will say.