The main mental block is the fear of public speaking from what I understand. When you make students come out and present their arguments in front of the class, the mind goes blank and they cannot speak out even if they know what to speak. Looking at the paper and reading out, stems from the fear of looking at the audience in their eyes.

I personally feel you should make each student come out and speak. Initially they can do a self introduction and you can leave the field wide open in terms of what they should be speaking on while talking about themselves.

You can have a particular group delivering a speech on any topic of their choice. The other group can be split into teams and asked to do a role play taking any situation of their choice. Ensure that the whole class gets exposed to both public speaking and role plays.

Your role is very critical in terms of making them feel that they can do it and getting nervous is very essential to deliver a good performance. When I do this exercise, I tell students that nervousness is an excellent sign because the hormone adrenalin is pumped into the system which sends fresh blood to the brain and helps the speaker think clearly. I also keep on reiterating that the first 40 seconds to a minute is the most critical period wherein they need to keep control over themselves and mentally strengthen themselves. I never allow the students to come back and sit, until they finish their topic. You can also educate them about auto suggestion, wherein you feed your mind with powerful thoughts, as in imagining that the room is full of people who are begging and crawling before you just because they want to listen to your speech, or the room is full of criminals who are begging for your mercy. This technique has really worked wonders for me and gradually students gain so much of confidence, that there is literally a verbal duel as to who wants to come and speak out first.

All the best.