It is understood powers would be devolved from the Government to West Yorkshire with neighbouring North Yorkshire districts given the chance to be involved through ‘associate status’.
That would mean neighbours such as Craven and Harrogate could partner West Yorkshire on cross-border issues, such as transport, without being a permanent part of the new structure.
Ministers have insisted that areas which agree to take on significant powers from the Government must create an elected mayor.
It was not clear last night whether agreement has been reached on the creation of an elected mayor for West Yorkshire.
A source close to the discussions said: “We are very close to a deal which would see devolution to West Yorkshire with associate arrangements for North Yorkshire districts which want such arrangements.”
If confirmed, the development would scupper the ambitions of those hoping a single devolution deal could be struck that included the whole of West, North and East Yorkshire, known as the Greater Yorkshire or ‘White Rose’ plan.
West Yorkshire council leaders have consistently rejected that approach, initially proposing a Leeds City Region deal including their authorities and Harrogate, Selby, Craven and York.
Greater Yorkshire backers warned that partnering those four authorities with West Yorkshire would raise complex questions in areas such as policing.
The Government has suggested elected mayors should take on the role of police and crime commissioners. The Leeds City Region plan could have seen North Yorkshire police officers effectively serving under two crime commissioners.
But West Yorkshire leaders had made clear that if the Leeds City Region plan was not accepted they would pursue a West Yorkshire-only deal rather than embracing the Greater Yorkshire idea.
They hope the idea of ‘associate status’ will remove any objections from other Yorkshire councils that could stop Ministers giving the deal the go-ahead.
An agreement on the boundaries covered by a devolution deal would allow detailed discussions to progress over the powers and money which might be transferred.
The initial list of ‘asks’ submitted by West Yorkshire leaders included the power to raise money from business rates to invest in infrastructure in the same way as the Mayor of London has to help fund the Crossrail project.
Ministers have also been asked to give West Yorkshire the power to introduce a London-style franchised bus system.
South Yorkshire councils are pursuing their own devolution discussions in partnership with neighbours in Nottinghamshire and Derbyshire.