Manchester 'should lead devolution', ResPublica report argues
Manchester should be given income-tax raising powers and complete control of spending within five years, a centre-right think tank has said.
The proposals, published ahead of the Scottish independence referendum, could form a blueprint for full devolution to English cities, ResPublica said.
Its report proposes devolving power to a Greater Manchester assembly.
Ministers said they wanted to devolve more powers but that creating another tier of government was not the answer.
Phillip Blond, director of ResPublica, said: "For decades we've watched England's cities sliding into decline.
"This is why England needs devolution."
Scotland's independence referendum - and the extensive new powers promised even in the event of a No vote - has refocused attention on local powers in the rest of the UK.
ResPublica said a Greater Manchester Combined Authority (GMCA) with an elected mayor and assembly as in London, should first be given power over property taxes and then income taxes and the right to reinvest savings to increase revenue.
Arif Ansari, Political Editor, North West
After decades of centralisation, there's a growing consensus that England cities should be granted greater autonomy. The three major Westminster parties have plans which move in similar directions.
Manchester, Liverpool and Preston have all negotiated "city deals" which the government hopes will give them economic rocket boosters, benefiting the UK as a whole. Greater Manchester's combined authority is seen by Whitehall as a great example of what can be achieved. Greater powers for Scotland would only amplify those calls.
But there are challenges. There were public rows as the Liverpool combined authority, six councils across Merseyside and part of Cheshire, got underway earlier this year. Some authorities fear being dominated by the big city. And while local authority leaders want more power, some worry there's a lack of democratic accountability for the new bodies.
Most voters don't want more politicians. Even so, directly-elected mayors for the big city regions remain on the agenda.
The new authority would also be expected to commit to devolving further to localities within its area, according to the "Devo Max - Devo Manc" report.
Mr Blond said: "Financial freedom must come to Greater Manchester. Its population is bigger than Northern Ireland's. Its economy is bigger than Wales'. And it has a higher growth rate than Scotland.
"This is why it should be able to set its own taxes. It should have an elected mayor.
"These plans outlined in today's report will allow it to turn its fortunes around, lifting the population out of the doldrums. This is a blueprint for independence for cities in England."
Lord Peter Smith, chairman of the GMCA - which brings together the area's 10 existing authorities - welcomed the report, and said devolution for city regions could reduce public spending and boost growth.
"This full devolution model echoes our ambition, and we welcome ResPublica's view that Greater Manchester would be uniquely placed to pioneer it," he said.
Local Government Secretary Eric Pickles said the coalition government had already delivered "significant" devolution of power and finance to local communities.
"However, localism in England should be about devolving power to the lowest appropriate level - down to councils, to neighbourhoods and to individuals," he said.
"There may be some role for combined authorities on a strategic level to promote economic development and transport, but there is a real risk they will suck power upwards away from local councils and local taxpayers.
"Creating new taxes, more politicians and new tiers of local administration is not the answer - the starting point should be increasing local democracy and local accountability."