Clegg to call for smaller state in first major speech

Plans to liberate schools from excessive state interference and guarantee hospital treatment to patients within a set time will be set out today by Nick Clegg.

In his first major speech since becoming the Liberal Democrat leader, he will challenge his party to stake out distinctive new ground by "thinking daringly" over the next year.

Mr Clegg is trying to shake off the Liberal Democrats' reputation for representing the people who run public services rather than those that use them.

He will warn that the party risks being squeezed to the political margins if it fails to set out a clear vision for handing more power to parents of schoolchildren and patients. He will say: "We should never advocate change for the sake of it. But neither should we just be defenders of the status quo – and under my leadership we will never be."

Speaking at a conference of party activists in London, he will argue that central government's task is to allocate funding for public services fairly, to guarantee equal treatment and to ensure good minimum standards. "Once those building blocks are in place, the state must back off and allow the genius of grassroots innovation, diversity and experimentation to take off in providing an array of top-class schools and hospitals," he will say.

Mr Clegg is proposing setting up a new generation of non-selective schools, which he suggests could be called "free schools". They would be "under local government strategic oversight, but not run by the council, and free to innovate to drive up standards for all our children".

Such schools could be established by any suitable sponsor, including groups of parents, educational charities and community and private organisations.

Mr Clegg will protest that it is unacceptable for more than half of teenagers to leave school without five good examination grades. "We have such low standards for GCSE pass scores that the Government reports as 'passes' some grades which we know are, in reality, of no value in today's labour market. You can get a G, in some cases, for a mark of about 20 per cent. It's time to call a fail a fail, and raise expectations by abolishing the two lowest pass grades for GCSEs."

He will reiterate his commitment to the National Health Service, but argue that ordinary people need to "take more control, both of its management and their own health care". He will propose all patients are given a guarantee of treatment within a specific period. If the NHS fails to hit the target, then patients should have the automatic right to care in a private hospital.

Mr Clegg will also say that patients should get more control over their treatment, suggesting that separate budgets are allocated to those with long-term and chronic conditions. The Liberal Democrat leader will argue that such proposals will transform public services to make them "human in scale and personal in nature".

He will contrast this position with Gordon Brown's "command and control from the centre" and the Tories' focus on "escape routes for the lucky few".

Mr Clegg has announced a flurry of initiatives since his narrow victory over Chris Huhne last month. He has set up a "root and branch review" of the party to look at ways of meeting his commitment to more than double the party's Westminster representation – currently 63 MPs – within a decade.

He has established a commission on social mobility, which will be chaired by Martin Narey, chief executive of Barnardo's. Its remit is to come up with policies to help children from disadvantaged backgrounds to fulfil their potential.