George Osborne will be challenged to prove his commitment to relaxing Whitehall’s grip on West Yorkshire by handing over control of the purse strings.
The Chancellor will be told offering greater local control over tax revenues would need to be part of any deal that involved changing the way the area is run, The Yorkshire Post understands.
In the wake of the Conservatives’ election victory, Mr Osborne has promised to devolve powers and money from Whitehall but made it conditional on areas agreeing to have elected mayors.
West Yorkshire leaders will argue that to win support locally for any major change in the way decisions are taken they would need a significant prize.
There is also concern among some senior figures in West Yorkshire that without handing over financial powers, the Government will merely be using devolution as a cover to wash its hands of unpopular decisions as it imposes a further squeeze on public spending over the next five years.
Handing over powers over tax revenues, known as fiscal devolution, could see money from taxes such as stamp duty and business rates retained locally rather than going to the Treasury and more freedoms to borrow.
More radical options would allow areas to alter rates and bands in existing taxes or even give them the power to raise levies of their own.
Senior local government figures in West Yorkshire have admitted Greater Manchester secured a public relations coup when it agreed a deal – including the creation of an elected mayor – with the Government last year that allowed the city to claim to be in the vanguard of devolution.
But they will argue it is more important to secure the right deal for the region than reach a quick agreement to satisfy those worried that West Yorkshire is being left behind.
The West Yorkshire Combined Authority has already announced it will begin consulting the public and business on options for changing the way the region is run in the light of Mr Osborne’s commitment to elected mayors.
David Cameron’s appointment of Greg Clark, who has played a key role in earlier negotiations with Yorkshire authorities over taking powers over their own affairs, to the post of Local Government Secretary has been well received in the region.
The decision to offer economist Jim O’Neill, who led an influential commission on regional economic growth, a peerage and Treasury job has also been welcomed as a positive sign.
The Local Government Association, which represents councils, has today published its own proposals for future devolution, including a call for “fiscal autonomy” with areas allowed complete freedom to set council tax and a relaxation of the rules on fees and charges.
LGA chairman Coun David Sparks said: “Now is the time for bold solutions to help revive local democracy, strengthen our nation and deliver better and more efficient services over the course of this next parliament and for the parliaments to come.
“If we are to rebalance our economy ultimately all places, from our great cities to the powerful engines of our economy in non-metropolitan areas, need greater freedom from Whitehall.”
The LGA claimed that more local decision-making could save taxpayers up to £20 billion and add £80 billion in growth to the economy.