The work could give councils the power to spend income tax locally as part of a “big rebalancing” of decentralization, Lisa Nandy said.
Ms Nandy confirmed her party would consider proposals that could give metro mayors and other local leaders an additional £6billion a year.
She is exploring an idea first suggested by Onward, a center-right think tank, that would allow mayors to keep 1% of basic income tax revenue to fund the decentralization of more local services.
Gordon Brown will review the plans
Ms Nandy, shadow upgrade secretary, is said to have asked former Labor Prime Minister Gordon Brown to review the plans as part of his committee on the future of the UK.
Speaking at a Labor fringe event hosted by Onward on Monday, she called for a “great rebalancing of wealth and power in this country” and vowed to end the “Hunger Games system” of devolution which sees the mayors fight over funding.
“We are seriously considering proposals from organizations [such as] Ahead, [which was] the first to say that we should delegate some income tax to local areas so that people can make financial decisions themselves,” she said.
“[Councils must] doesn’t work on the priorities set by people hundreds of miles away, who have never set foot in the places we call home, who have no stake in the outcome and no skin in the game.
Almost three-quarters (74%) of capital spending in the North West is still controlled by Whitehall, the Give Back Control report revealed when it was released in June.
The newspaper received all-party support from Andy Burnham, Labor Mayor of Greater Manchester, and former Conservative Chancellor George Osborne.
Could free up another £250m
It showed that giving mayors a penny in the pound could free up an additional £250million for regional authorities in the West Midlands and Greater Manchester, while promising additional scrutiny, responsibility and accountability for mayors in exchange for their increased powers.
Ms Nandy also appeared to criticize Sir Tony Blair’s push for half of all children to go to university while in government.
She said while Labor had done an ‘incredible’ job of opening up university education, people felt there was ‘too little to return’ on returning home.
“It’s the equivalent of trying to fly a jet using just one engine,” she said. “We believe that all places and all people have something to offer and have a stake in the future of this country.”