In his Budget speech George Osborne said:

We are working with our great cities to devolve decision-making powers and we are striking a ground-breaking deal this week with Manchester to support £1.2 billion in growth-enhancing infrastructure in that city. We will support £150 million of tax increment financing to help local authorities to promote development, and we will provide an extra £270 million to the Growing Places fund. In all this we are working with local areas to support their ideas for growing the private sector in parts of the country where the state has taken a larger and larger share of the economy.

The Financial Times reports that Greater Manchester, which has 2.6m people, could "earn back" up to £30m a year of tax for the growth it creates through a £1.2bn infrastructure investment fund.

The idea is that the 10 authorities in Greater Manchester be rewarded from the extra tax paid by businesses moving in as a result of measures "to upgrade its tram, road and bus network." What if they attracted more business by cutting Business Rates? Would that be rewarded to the same extent? Or are the rewards skewed to rewards spending money rather than spending less? Some businesses might be more interested in the level of Business Rates than the level of bus subsidy.

One general message coming out from the Government is that those that adopt directly elected mayors will be better placed to make such deals.