NICK Clegg vowed to "breath new life" into the North's town and cities yesterday, with a pledge to finally give them the same economic muscle as their rivals abroad.

In his conference speech - in which he urged the Liberal Democrats to "hold our nerve", as its poll ratings plunge - Mr Clegg promised to allow cash-strapped councils to borrow funds for badly-needed transport and regeneration projects.

The Lib Dem leader suggested the Tax Increment Financing (Tif) powers would allow every area to enjoy economic growth, even in the years of harsh spending cuts to come.

Vowing to "turn the tide of centralisation", he said: "Councils, like all parts of government, are going to have to make do with less money in the years ahead. But they will have more freedom than ever before.

"What matters most is that finally, they will be in the driving seat, instead of waiting for a handout from Whitehall. Local people, local power, local change."

The new powers would allow town halls to borrow against future business rates and delighted the North East Chamber of Commerce, which said: "We have been calling for this initiative for the last two years."

However, details were sketchy. Mr Clegg's aides were unable to suggest how much town halls might be able to raise - or when the new powers will come in. They will require legislation.

Many saw it as a low-key announcement for a party leader - and deputy prime minister - fighting to convince his followers that he has real influence. Even Mr Clegg agreed it would "not make pulses race".