Andy Burnham plans to end the “begging bowl” culture for local government by giving English mayors and regional leaders are set to receive increased funding and expanded powers in the Budget.
Mr Burnham’s chancellor John Healey said that the strategy aims to harness the “untapped and wasted” potential within regions and cities.
The prime minister, who has long advocated decentralisation from Whitehall, said that the move would prevent local leaders from having to go “cap in hand” to Westminster for investment funding.
Due to be formally unveiled in Wednesday’s Budget, the plans grant local authorities enhanced flexibility when making investment decisions.
Ministers have allocated an initial £285 million for next year, moving away from reliance on separate bidding pots managed directly from Whitehall.
In an effort to address criticism from areas which do not yet have strategic authority status, the Treasury said that they will still be able to access a share of the money to support them in the “transitional period”.
The government will also work with mayors to design a new £1.5 billion borrowing facility from 2028, giving them greater access to capital to invest in projects.
The chancellor said: “Every community in Britain has potential – for too many it has gone untapped and wasted while money and power has been held in Westminster.
“Mayors and local leaders know what their communities need to grow, which is why we are giving them more money, more power and more capacity to get projects moving, build homes and make the right decisions for their areas.”
Strategic authorities will also get £150 million of funding next year to build their capability to take on the new powers and manage complex projects and investment programmes.
Mr Burnham said: “I’m calling time on local leaders going cap in hand to Westminster. That is no way to run a country.
“When I became prime minister, I said that if a decision can be made closer to home, it should be.”
Claire Ward, the chair of the UK Mayors Network and Labour’s East Midlands mayor said: “Having the right powers and resources through increased devolution will help us to turn our ambitious plans into reality and deliver real, lasting change for our communities.
“I welcome this commitment from Government and will continue to push for the tools we need to help our regions to thrive.”
Labour’s London Mayor Lord Sadiq Khan said the greater ability to invest could “help unlock transformational infrastructure projects” including the West London Orbital route, the extension of the Bakerloo underground line and Docklands Light Railway and the development of Stratford International station.
However, there was criticism from the Lib Dems.
Zöe Franklin MP, Liberal Democrat Spokesperson for Local Government, said: "The Liberal Democrats have always championed a simple principle - decisions affecting local communities should be made by the people who live in them. It is high time Labour caught up.
"Yet this announcement creates far more confusion than clarity. What does this 'transitional' funding actually mean for the Prime Minister’s pledge that no area will be forced into a mayoralty? And will council leaders be able to access this money directly, or will it remain trapped at the mayoral level?
"This is not a serious plan to empower communities. Local leaders need long-term certainty, not another Whitehall beauty contest pitting cash-strapped councils against one another. After weeks of rumour, Wednesday’s Budget must deliver real substance, otherwise this mountain of briefings isn't worth the paper it’s leaked on."