Tony Benn once spoke about wanting a fundamental shift of power and wealth to working people. I too want that fundamental shift - to local people and local institutions. Over the last century Britain has become one of the most centralised countries in the developed world as power has been sucked to Westminster. Some might wonder why this matters. After all, isn't politics just about what works? But there is a deep connection between where decisions are made and what works.

When one-size-fits-all solutions are dispensed from the centre, it's not surprising they so often fail local communities. When people experience a yawning gap between the changes they want to see and those they can directly affect, it is inevitable that demoralisation and democratic disengagement follow.

The Conservative party wants nothing less than radical decentralisation, to reach every corner of the country. The policies we launch today are a decisive step towards that goal. They fall into three broad groups. There are plans to give people a much greater say over the issues that affect their daily lives; plans to give local councils much more responsibility and power; and plans to actually reshape the way political power is structured in this country. Let me give you some examples of how we're going to push power out to the people.

First, giving local people more power. Right now most people feel totally insignificant in the political process. Frankly, that's because - in the current over-centralised system - they are insignificant. If you're unhappy about decisions made by your council there's very little you can do about it outside election day.

We're going to change that by giving people the power to instigate referendums on local issues - including council tax rises. If there's a local consensus that a tax increase is unnecessary, people will be able to club together and vote it down. This isn't the sham "power to the people" of a one-day consultation or a citizens' jury; it's real power in the hands of local people.

Second, we're going to give local councils much more power and responsibility. We've got to recognise that the central state can't have the imagination and flexibility to tailor all of its services to local needs. I am convinced that if we have more local discretion - more decisions made and money spent at the local level - we'll get better outcomes.

It is both patronising and absurd that councils can only act on a local issue if they have a specific mandate to do so. We're going to change that by trusting local authorities with a "general power of competence" that will free them to carry out any lawful activity on behalf of their community. That way, instead of endlessly looking up to Whitehall for permission, our councils will be looking to local people for direction.

Our third front is a restructuring of political power in cities. The case of London shows how having a single accountable mayor is a huge boost to democratic engagement, and we want other cities to benefit too. We're not going to enforce a mayoral system anywhere; instead we will legislate to hold a referendum on the change in 12 of our largest cities. Unless they reject the new structure, cities from Bristol and Birmingham to Nottingham and Newcastle will have a mayor. Strong local leadership is just one of the ways we can start re-balancing power and responsibility in Britain.

Many worry that decentralisation is a step backwards. But localism isn't some romantic attachment to the past. It is absolutely essential to our economic, social and political future. If our local economies are vibrant and strong we are far less vulnerable to global shocks or the failures of a few dominant industries. If people know that their actions can make a real difference to their local communities, they're far more motivated to get involved - and civic pride is revived. If local government is both more powerful and more accountable, we can start to restore the trust that's been lost in our political system. It's for these practical reasons that I am a confirmed localist, committed to turning Britain's pyramid of power on its head.

• David Cameron is the leader of the Conservative party

camerond@parliament.uk