"In recent months I've been speaking about a simple but vitally important idea. Rather than just straightforward economic growth, I believe we as a country need also to concentrate on social growth.
Not just on GDP - gross domestic product - but on GWB - general wellbeing.
I've talked about wellbeing at work - meaning flexibility and trust, when the employer knows that the business will prosper if its employees are happy and feel respected.
At home, wellbeing means having time for family, having the space and the leisure for beauty and for growth.
Today I want to talk about the space in between work and family - between business life and domestic life, between the market and the home.
This space is the community.
I believe that we are experiencing a crisis of community. Social networks are shrinking. Neighbourhoods are suffering for the simple reason that people don't know each other.
But I also believe that we could be, potentially, on the threshold of a new era of community life - a time when people feel a reinforced value of neighbourhood, and of "social life" in its meaningful sense.
I will argue that we've lost two vital elements of social wellbeing: real local democracy, and widespread voluntary action.
However, I am optimistic that having lost them, with the right leadership, values and action, we can find them again.
I cannot think of a more appropriate place and occasion for what I have to say than here, in Birmingham, in honour of Joseph Chamberlain.
In his time as Mayor of Birmingham Chamberlain was guided by two basic beliefs - which I think should guide us today.
The first was the importance of local democracy and the potential of local government.
Chamberlain preached what he called the "municipal gospel" - the good news of reform, improvement and rebuilding.
His greatest legacy is the city centre itself. Using legislation passed by Disraeli's government he cleared slums and built Corporation Street in their place.
That legislation - the Artisans Dwelling Act - was what Disraeli called "permissive" legislation.
It didn't tell local councils what to do - it allowed them to do the right thing by themselves.
So Birmingham council under Chamberlain's leadership transformed the city centre.
It became an economic powerhouse, and a place of beautiful urban design.
Today there are great things which local government can do. And once again Birmingham is showing the way.
Great projects in the city centre - Brindleyplace, the Bull Ring, the Mailbox - show what ambitious leadership from the council, plus private enterprise, can do.
But Chamberlain knew that urban improvement - or "regeneration" as we call it - takes more than prestigious building projects.
And that brings us to his second guiding principle - voluntary action.
For the transformation of Birmingham did not begin as a political initiative.
It began in society - to be exact, in the noncomformist churches, like that Methodist church out there in Moseley Road.
The people of Birmingham decided that they could not rely on politicians to make their city better. They did it themselves, with that indomitable Victorian spirit which combined compassion with hard-headed practicality.
The same belief - that the future of the city lies with the citizens not the government - exists today here in Balsall Heath.
As I said, Birmingham city centre is enjoying a fantastic revival. But to me almost the best thing that is happening in Birmingham is happening here.
I know you've had a problem with tornadoes here… I visited the area in January and was impressed with the resilience of local people in the face of such difficulty.
But the good news is that Balsall Heath has had a social tornado too. A mighty wind is sweeping through this neighbourhood.
This story is familiar to you, of course. But I want to say it for the journalists present, in the hope that your story will become more widely known - as it deserves to be.
Ten years ago Balsall Heath was one of those neighbourhoods known depressingly as "sink" areas. Crime. Truancy. All the ugliness of urban decay.
Today, no one would say that Balsall Heath is sinking. And the reason for the turnaround is nothing other than the people of this neighbourhood themselves.
Local people decided enough was enough.
You got together and simply intimidated the criminals away - not by violence, but by taking a stand.
You formed committees to keep a eye on curb crawlers.
You lobbied the council to get the drug dealers evicted.
You manned the police station itself, so it could stay open longer.
And it worked.
Crime in Balsall Heath has fallen by a half. It was a grey wasteland ten years ago - now it wins Britain in Bloom contests.
House prices are up - houses which changed hands ten years ago for £5,000, are worth £125,000 today. I know we've seen house price inflation but that is ridiculous!
It's down to you, to the success of Balsall Heath as a place where people want to live.
In the rest of Birmingham some 6 per cent of people say that life is getting better - here, 66 per cent say so.
Central to the achievement of this neighbourhood is voluntary activity. Half the people here volunteer some of their time to helping their neighbourhood - many of them through the Balsall Heath Forum.
I congratulate every one of you, and especially the Forum's leadership - Dick Atkinson and Danny Bailey - for your achievement.
I also want to give special congratulations to my near-namesake - a young man called Kamran who I met last time I was here, and who will be known to many of you.
Kamran returned this week from a 500 mile bike ride from Inverness, with 15 young people from Balsall Heath. Together they've raised £30,000 to build an orphanage in Pakistan for children who lost their parents in the earthquake there.
Kamran's in the audience - let's give him a round of applause…
There's a very important point in that story.
I know that Dick believes, as I do, that we in the West have an enormous amount to learn about community - and about family solidarity - from Eastern cultures.
As a result Balsall Heath has benefited from the example set by recent immigrants here.
Kamran's effort to raise money for Pakistan is a small token of gratitude from Balsall Heath - and it reminds us that our neighbours are not always the people living next to us.
So Chamberlain's two principles - the transformative potential of local government, and the vital importance of voluntary action - are alive and well in Birmingham today.
Indeed I am delighted that Birmingham council is considering ways to introduce "neighbourhood management", so that local people are directly responsible for services in their areas.
Balsall Heath is being treated as the "guide neighbourhood" in this process, bringing its experience to help other areas.
I know you are pressing the council to devolve control over parks, leisure and housing to the neighbourhoods - and I agree.
I would urge our councillors to be radical.
This is happening in other parts of the country - and it's an exciting agenda.
In South Tyneside, the council has devolved power, including to 71 self selecting neighbourhoods. They are "self selecting" because the specific area making up the neighbourhood is chosen by people, as how they identify the area in which they live.
This can work in rural areas as well as urban ones.
In West Wiltshire an alliance of parish councils has formed to share approaches to their common problems.
I heard presentations from both at an excellent seminar set up by the Young Foundation in the east end of London.
The success of both is partly based on the same concept - a revival of pride in place. And a belief that this concept should be part of a new "municipal gospel" today.
You see I think the problem can be described in a single word: dislocation.
Too many of us are strangers in our own streets.
People don't feel at home in their own communities - they don't feel that the public space is their space.
Indeed the public space itself is shrinking. Public buildings are being turned into housing. Parks and playing fields are being lost too, at a terrifying rate.
Streets, these days, are just for travelling on - all too often the community is what you pass as you go to-and-from home and work.
To take a unique but important example, in 2002, many neighbourhoods wanted to hold a street party to celebrate the Queen's golden jubilee, like they celebrated the coronation in 1953 and the sliver jubilee in 1977.
But they found they couldn't get permission to block off their own street from traffic - or if they did, they found they needed public liability insurance before they could set up the trestle tables.
Old Left and Old Right
Few of us genuinely want to turn the clock back to the 1950s or the 1970s. But we must all miss the days when a neighbourhood meant something.
We all still get a warm glow when we visit a baker or greengrocer surviving on the high street - or when the local pub actually is local, rather than a link in a national chain.
We all want to feel not just that we are free - but that we belong.
That we live in a town where the advertising and the shopfronts look as if they were designed for here, not for anywhere.
We want our children to develop a sense of situation - so that they inhabit a place, not a playstation.
So how do we get there?
On this everyone agrees: we need more community. The problem is that we conduct this debate in largely sterile terms about the size of the state.
On one side you have people, like Polly Toynbee on the Guardian, who think that the restoration of community lies in expanding the size and scope of government.
And then there are those on the other side, like Simon Heffer on the Telegraph, who think that only a small state can deliver healthy communities. They argue that we must cut taxes and cut spending before we can hope to see a revival of community.
Where Polly thinks we Tories go too far, Simon thinks we don't go far enough.
The fact is, they're both wrong. Indeed, it's odd how similar their views are, both in analysis and in effect.
The mistake both the Old Left and the Old Right make is that they look at the problem from the wrong end. They concentrate on government, not the people.
The fact that they say opposite things - one that we should expand the state, the other that we should shrink it - is irrelevant. They're both talking about the state.
Rather than concentrating on the state, I believe we should concentrate on people. This may seem obvious, or yet another politicians' sound-bite - but in fact it has important implications for policy.
We can put it in the economic terms of supply and demand.
Instead of expanding the supply of state services, as the Old Left wants, I believe we should strive to expand the supply of social services - services provided by society itself.
And rather than cutting the supply of state services, as the Old Right wants, I believe we should strive to cut the demand for them - reduce the numbers of people who rely on the state, rather than simple reducing the services they receive.
The fact is, we cannot arbitrarily withdraw welfare benefits for the most needy of our fellow citizens.
Yes, if we did that, no doubt in 20 years' time people would have become more self-reliant - but think of the misery of those 20 years.
Some people will always need help and support - and we should not imagine that government simply withdrawing from the social field will automatically and instantly cause new, independent bodies to spring up in their place.
What we need to do is reduce people's reliance on the state by actively promoting alternatives.
That is the way to reduce the size of government - from below, as people progress from dependence to independence - not from above, by a brutal and instant reduction in spending.
And we will do this with the two principles of Joseph Chamberlain - local democracy and voluntary action.
Now it is true to say that the last Conservative government was not always kind to local democracy.
There was a reason for that: hard-left councils which spent more time fighting the government than serving their communities.
But this government has gone so much further in binding and controlling local government.
There have been positive developments.
Scottish and Welsh devolution have not been without controversy, including genuine anger about the scale of central costs.
But I believe the Scottish Parliament and the Welsh assembly should be accepted as part of the new constitutional architecture.
And I welcome the growth of elected mayors in some cities.
But in general there has been a pronounced move away from local democracy.
Two weeks ago the government admitted that 80 per cent of the performance measurement that councils carry out is to comply with Whitehall requirements.
No wonder local turnout is so low: what's the point in voting when your council is just the local outpost of the central state?
And it's getting worse.
The government's regionalisation programme is presented as an act of decentralisation.
In fact, in almost every area the regional bodies take their powers up from local councils, not down from Whitehall and Westminster.
Transport, planning, housing, the ambulance service, the fire service, all are or will be controlled further away from the citizen.
The government has plans to re-organise local government itself, scrapping the shire system by removing the power of district and borough councils.
Until this week the government seemed intent on abolishing county police forces in favour of large regional forces.
I'm not sure if that plan is still on the table - if it is, it means that here in Birmingham, the West Midlands force would be united with three other forces, creating a new force stretching from the borders of the Thames Valley to the borders of North Wales.
Regionalisation of local government, policing and all the other areas I mention is wrong not only because it is taking powers up, rather than devolving them down.
It also flies in the face of another truth about local democracy and its role in restoring the pride of place that people want to feel.
This truth is demonstrated time and again, from the success of Balsall Heath to resilience of English parish councils.
The truth is that small is beautiful.
So much for Labour's approach to local democracy.
What of their record on voluntary action?
Again, there have been some positive developments. One is the Chancellor's extension of Gift Aid, which means that more charities benefit from tax breaks on donations.
Another is the Community Interest Company, the new corporate model for social enterprises. CICs have been up and running for a year now, and I congratulate the government for this innovation.
But so much more could be done.
In general, volunteers provide services - and this is where their trouble really starts.
Whitehall service contracts with voluntary bodies are notoriously short. Government departments now receive three-year funding from the Treasury - yet the majority of their contracts with the voluntary sector are for a year or less.
For a small community organisation this means constant uncertainty. This uncertainty is made even worse when - as so often happens - the money which is promised fails to arrive on time.
Or when it fails to cover the full costs of the project - even though, unlike voluntary bodies, commercial suppliers are able to claim for their overheads.
Commercial companies also suffer less inspection and monitoring than voluntary ones - even though there is no evidence of greater fraud or abuse in the voluntary sector.
And as for volunteers themselves… if you've jumped through the hoops of the Charity Commission and Companies House ….if you've cleared the hurdle of the Criminal Records Bureau …and if you've complied with all the obligations on trustees and volunteers …then you'll know what a headache simply starting a charity can be, let alone running one.
The fact is that system is institutionally hostile to voluntary bodies and community groups.
All in all, guess what proportion of government spending goes on voluntary organisations?
Less than half a per cent.
And guess what the government's target was to raise this by last year?
Five per cent.
So they planned to raise spending on the voluntary sector from 0.5 per cent to 0.525 per cent. That's not exactly ambitious.
Worst of all, the Government doesn't even know where this money goes - though they do confess that the poorest communities benefit least.
After his speech on the voluntary sector last month the Prime Minister was asked a question by a member of the audience, the director of a small homelessness charity in Ipswich.
She said this:
"I guess we feel a bit like the small organic farmer who is now being told we have got to contract with the supermarket. And there are a couple of things we know about supermarkets:
first of all we know they don't do ugly, they want their vegetables in nice neat rows, they don't want any blemishes, they don't want any bubbles on their carrots;
the second thing we know is they don't want to deal with the whole variety of growers.
So my question is how can the government ensure that the supermarkets, i.e [.in our case] the local authorities, embrace and welcome our diversity, our independence and our ugliness?"
She was spot on. I am not sure she got much of an answer from the Prime Minister.
But I want to try to give an answer myself, and outline how the Conservative Party would deal with the voluntary sector.
Conservatives' approach: voluntary action
As that lady realized, the problem is not with the organic farms but with the supermarkets they deal with.
We can take her analogy from the environment.
We need greater biodiversity in our social landscape. We need a greater number, and a greater variety, of suppliers.
And we need to ensure that the buyers - the people responsible for contracting with the suppliers - welcome the odd-shaped, the small, the intermittent - in a word, the ugly.
Because - no disrespect, Dick - it is often the ugly who find a way.
As you may know, we are conducting a policy review across the range of government activity. The various policy groups are reporting next year, so I don't want to pre-empt them with too much detail.
I'm also looking forward to the report next year of the English Volunteering Commission, led by Julia Neuberger.
There's a lot of work to be done. But there are already some great ideas out there.
One idea is to create Social Enterprise Zones in the areas of the country which suffer most from deprivation and crime.
For these are the areas which, by the government's own admission, lose out when it comes to funding community groups.
So I would like to see special zones which attract government funding for the voluntary sector - and where there are less bureaucratic obstacles for community groups.
I also want to see more of the kind of the initiatives which are taking place across Birmingham already - councils handing over control of community assets to community groups.
Castle Vale led the way by giving control of its housing stock to the people who live in it - a fantastic example of a council actually trusting the people they represent.
Then there's another idea I know Dick Atkinson and I agree on: helping school leavers contribute to their community through voluntary work.
I have established a new charity - the Young Adult Trust - which is bringing voluntary bodies with expertise in the youth sector together and will run pilot schemes for young people this year.
In the same way, we could encourage councils to experiment with community credits - by which you earn additional benefits through voluntary work.
As much as the specific policy changes I want to see - the level playing field for voluntary sector bodies and the longer contracts - there is a desperate need for a change in attitude.
We need a government that is prepared to trust the third sector more.
Sometimes that will mean letting go, taking risks, saying sometimes, we're doing a lousy job rehabilitating drug users or helping excluded kids back into school - you have a go.
And it will always mean - before taking any decision, before setting up any new bureaucracy - asking the question: what is the third sector, charities, voluntary bodies and social enterprises already doing and what more can they do?
And I also want to see greater levels of community engagement by the people who have done really well in the world.
We already have great philanthropists like Sir Peter Lampl - I want to see more, our own home-grown Bill Gateses and Warren Buffetts.
That's why you won't find me jumping on any bandwagon to criticise the Academy programme and other steps to link business and schools, together with those sponsors who have put money and expertise.
I applaud it.
I want to see more of it.
If we can harness James Dyson's passion for engineering, Philip Green's knowledge of retailing and Frank Lowe's expertise for media and creativity, while leveraging more money for inner city schools then we should press on further and faster.
All in all, we need a vast expansion of the resources - human and financial - available to community groups: a supply side reform to help meet the enormous demand which is out there.
Conservatives' approach: local democracy
I believe this will only come about if we also have real local democracy. That's the other side of Chamberlain's vision.
Empowering more local democracy is an idea whose time has come. Among large Western nations Britain is almost uniquely centralised.
I want to see a bigger role for local democracy - and more powers.
This can be done through local councils, directly elected mayors or direct democracy.
That is why we will abolish the regional assemblies and return their powers to local authorities.
That is why we will progressively abolish the ring fencing of local government money, freeing councillors to meet local needs.
That is why we will have a bonfire of targets, audit and control systems that waste time and money and sap local initiative.
And we will go further.
The residents of each police force area should elect the man or woman or the people who will call the police to account there.
Let me be clear that doesn't mean electing the chief constable - it means either directly electing the Police authority, or having a directly elected Police commissioner or mayor.
That way, the police will know who their masters are - not the Home Secretary in Whitehall, but the individuals, families and businesses they work for. That is the way to get real neighbourhood policing.
I said at the outset we should be optimistic about the opportunity for social growth in our communities …that we can build public spirit and pride of place through local democracy and voluntary action.
Elsewhere in Britain I have seen undeniable evidence that we are not, after all, going to the dogs.
I think of Greg Davis in Wythenshawe, Manchester who took over a collapsing church and has helped launch a whole range of local bodies and social enterprises, bring work for the unemployed and a focus for the community.
I think of local residents in Bassetlaw who rescued their sports centre from closure established a new community body - and now it thrives.
I think of what you have done here in Balsall heath, literally turning a community around through the enterprise and ingenuity of local people.
Then go from a handful of individuals to millions.
Those who argue, using low voter turn out and other indicators, that we have become an apathetic country are wrong.
People who care enough to march in their hundreds of thousands about issues as diverse as war and the countryside have not retreated into what is private and alone - and lost their passion for what is public and shared.
But we need a government, a society and a country that trusts people, invigorates local democracy and hands out power and responsibility to those ready to exercise it for the public good.
It is an exciting prize for us all to grasp."