Whitehall will have to hand over major finance powers to town halls across England and Wales as part of George Osborne's "devolution revolution". The chancellor said the plan will allow local authorities to keep the local business rates they collect, instead of handing the tax revenue to central government.

The top Tory, speaking at the Conservative Party conference in Manchester on 5 October, claimed the moved would give councils a staggering £26bn ($39bn) boost between them and boost jobs. "It's time to face facts. The way this country is run is broken," Osborne said.

"People feel remote from the decisions that affect them. Initiative is suffocated. Our cities held back. There's no incentive to promote local enterprise. It's time we fixed it."

The batch of new powers will also allow the government to scrap the Uniform Business Rate, a national levy imposed local authorities. The chancellor said: "Any local area will be able to cut business rates as much as they like to win new jobs and generate wealth, it's up to them to judge whether they can afford it – it's called having power and taking responsibility."

An early audition?

Osborne, who is tipped to run in the Conservative leadership election before the 2020 general election, also gave a slice of his own motivations. He said: "I don't want to do this job just to occupy this office, I'm here to make changes that last – solve problems to make people's lives better, slay dragons that stand in people's way."

The chancellor said he was committed to his so-called "Northern Powerhouse" plan, which, among other things, will see powers devolved to a Greater Manchester authority in return for a directly elected mayor.

"In the end it all comes down to where the power lies, to who makes the decisions. There's a building not too far from here which reminds us of what local government used to mean," Osborne added.

"Look at Manchester Town Hall in all of its neo-gothic splendour – it was built as a place of power, a great civic cathedral where the decisions that affected this city would be taken, not remitted to a committee in London. But over the decades, the wings of local government were clipped over and over again by all parties, most especially ours."

The speech, trailed as Osborne's "building Britain" plan, came less than an hour after Sajid Javid addressed the conference. The business secretary painted a pro-enterprise image, but also issued a tough warning for companies.

He said: "I am shamelessly pro-business. But being pro-business does not mean that you turn a blind eye to bad practice. Whether you're a bank rigging interest rates, a car manufacturer cheating on emissions or a company not paying your fair share of tax, be warned – we will come after you. Because free enterprise is not a free-for-all."