Prime minister David Cameron has endorsed a guide to community budgets written to help other local authority areas develop area-based pooled budget schemes.

Issued jointly by the Local Government Association (LGA) and DCLG, the guide describes how the four community budget pilot areas – Essex, Greater Manchester, West Cheshire and the west London tri-borough – assembled other key parts of the public sector to tackle wide-ranging issues.

NHS Trusts, police forces, the Jobcentre Plus network, schools, the voluntary and private sector firms worked with councils across a wide variety of public policy areas including early intervention, unemployment, domestic abuse, re-offending.

Work begins next month on implementing the pilot schemes, which if successfully rolled out nationally could deliver potential savings of up to £4bn annually, a study from consultants Ernst & Young last year calculated.

The lion's share of the savings would accrue to central government departments and agencies, a fact which informed sources claim is guiding the Treasury's approach to the forthcoming spending round.

Mr Cameron said:  ‘When I became prime minister, I made clear I was going to lead a different sort of government.  Rather than hoarding power in Whitehall, I wanted us to be the Government that gave it back to the people.

‘Decentralising power isn't just right, it works,' Mr Cameron said.  ‘People on the ground know what's needed to improve there area, and how to get value for money in achieving it.  The Whitehall blueprint just can't match local knowledge.'

Chairman of the LGA, Sir Merrick Cockell said anticipated further council cutbacks meant there was ‘no other option' than to transform how local services are funded and delivered.

‘There is a real appetite among local government to seize the mantle and lead the way in radically transforming the way the public sector works,' Sir Merrick said.

‘For this potential to be unlocked government will need drive this plan forward throughout Whitehall and ensure that all parts of the country can adopt a Community Budget approach.'