Chancellor George Osborne hailed the “historic” deal for a combined authority for the Tees Valley which was set to be announced today.
The measures will mean the area will vote in a directly elected mayor in 2017 and will transfer several powers from Whitehall to the region.
It enables the authority to create an investment fund with an initial allocation of funding for capital financing of at least £15m a year.
The Chancellor said: “The old model of trying to run everything in our country from the centre of London is broken.
“It has led to an unbalanced economy and made people feel remote from the decisions that affect their lives.”
Today’s announcement, alongside a similar deal for the North East, brings the number of city regions across the north signing up to mayoral devolution deals to four.
Devolution deals underline the government’s commitment to building a Northern Powerhouse to help rebalance the economy and ending the old model of running everything out of London.
Northern Powerhouse Minister James Wharton said: “Our long-term economic plan seeks to rebalance growth and build a Northern Powerhouse. By ending the ‘one size fits all’ approach of the past, we are giving local people the powers they need to boost jobs and skills.”