Some central government departments could cease to exist if devolution is done properly, Lord Jim O’Neill said in a speech on the Northern Powerhouse at Sheffield University.
The Commercial Secretary to the Treasury said there were no limits to the project, but it depended on the “persuasiveness” of local leaders and their willingness to accept accountability for managing cities’ debt.
He said: “If we do devolution properly some central government departments will cease to exist - I’m not saying which ones.
“It’s a pretty exciting path that we’ve just opened the door to, which could go a lot longer and deeper than we realise.”
Lord O’Neill spoke to an audience of 200 at Firth Court, including university and civic leaders from across South Yorkshire.
His comments, in the 11th Roberts Lecture, come just three weeks before the Budget - and the deadline for Sheffield City Region to sign its second devolution deal.
It will bring £900m of funding over 30 years and an elected ‘metro-mayor’ in May 2017.
Crucially, it hands power over skills, transport and planning to local leaders, who believe they can do a better job than Whitehall.
Lord O’Neill, who studied economics at Sheffield University in the 1970s, has ministerial responsibility for the Northern Powerhouse project which aims to unite northern cities as one economy.
He added: “With the right focus attention and support from us and all elected policy makers in the region it will be a success.”
The growth of cities to act as a counterbalance to London, better connectivity, improved education, halting the brain drain and attracting exciting companies were key to the Northern Powerhouse, he added.
A cashless Northern Oyster card for use on buses, trains and trams was planned after it was introduced in London and passenger numbers increased 20 per cent. And the best bits of the successful ‘London Challenge’ - a scheme to boost attainment - could be applied to the Northern Powerhouse as a region.