Chancellor George Osborne said the Government was working towards a deal on ‘far reaching’ devolution of powers to Sheffield in his budget speech.
However he said deals – also being discussed with Liverpool and West Yorkshire leaders – would be in return for creation of directly elected mayors as has been agreed with Manchester.
He handed extra powers to Manchester and said the ‘historic devolution’ was available to other cities which would go down that path.
Mr Osborne faced pressure to deliver over the north after the controversial announcement that there would be a pause on electrifying the Midland Mainline.
Sheffield was one of three cities to get devolution deals under the last Government - including powers over skills, housing and transport.
Leaders want wider controls from Whitehall, but say only a ‘significant devolution deal’ would trigger any changes in Government.
Sheffield residents voted no in a referendum on elected city mayors – although that was a different model to the one now proposed.
Coun Sir Stephen Houghton, chairman of the Sheffield City Region Combined Authority, said: “Local leaders have started the conversation with Government on a devolution deal and the possibility for a city region metro mayor.”
He said leaders supported plans to devolve powers and funding as decisions were made more effectively locally and they wanted the economy ‘rebalanced’ and productivity to rise.
He added: “However, a deal is not inevitable and any deal for significant changes in governance in Sheffield city region will only be made if a significant devolution deal is on offer.”
Specific details of a deal were not announced and are likely to come with a spending review in autumn but regional leaders said if one could be agreed it would focus on accelerating the region’s growth plan to stimulate the economy and create 70,000 jobs in the next decade.
Sheffield Council leader Julie Dore said the city now needed investment in infrastructure and growth.
She added: “It is clear the Government is determined to impose mayors, and throughout negotiations we have kept all options on the table. “But the Government needs to demonstrate they are willing to put greater investment, and local control over the programmes we need to deliver results, in return.”
Mr Osborne said the budget was for ‘working people’ with a new ‘national living wage’ and a rise in the personal tax allowance.
However Harriet Harman, acting Labour leader, said it was making them ‘worse off’ with tax credit cuts. She also called for the plan to electrify rail routes to be reinstated.
Dr Alan Billings, South Yorkshire Police and Crime Commissioner, said the budget could have ‘grave consequences’ for policing as NHS and defence spending is to rise. Last night, Sheffield People’s Assembly campaigners also protested at Sheffield Town Hall.
Sam Morecroft, branch officer for union UCU at The University of Sheffield, said: “What is most shameful is how this affects young people.”
He said they would suffer from housing benefit cuts and miss out on the new living wage. But reader Rob Gilmore’s verdict was: “No budget is perfect but it appears to encourage people to work and live within their means, so surely a good thing.”