Mayors should be given a 5% share of income tax revenues to shift £3.8bn a year from Whitehall and double the funding under their control, think-tanks have urged.
IPPR and IPPR North argued the proposal would allow strategic authority leaders to invest more in transport, housing and regeneration by transferring budgets currently held by Whitehall departments to mayors.
The report welcomed Prime Minister Andy Burnham's plans to extend fiscal devolution to all mayors by 2028, but warned success depended on strong safeguards.
Other recommendations included regional audit offices, borrowing powers for experienced authorities and a tariff-and-top-up system to redistribute funding from richer to poorer regions.
Report author Aditi Sriram said mayors have long been ‘expected to drive growth with one hand tied behind their backs' and that fiscal devolution would allow them to plan for the long term and share in the growth they generated.
Former Treasury minister Baron O'Neill of Gatley, an informal economic adviser to Burnham, said: ‘Without fiscal devolution, mayors and local leaders won't have the freedom to make real change happen.'
