CORNWALL has been handed a dramatic devolution package without having to agree to an elected mayor, triggering a fresh row in the North-East.

Ministers announced “historic new powers” for the county, including control of privately-run bus services, regional investment and integration of health and social services.

Only days ago, the Treasury briefed that Cornwall would fail to land a wide-ranging deal after it refused to have a mayor imposed without a referendum.

But, announcing the agreement, David Cameron said it would ensure that “opportunity and prosperity reaches every corner of our country”.

And he added: “This devolution deal marks a major shift for the people who live and work in Cornwall – putting power in their hands and giving them the tools to take charge and make the most of the fantastic potential that Cornwall holds.”

Ed Cox, the director of the IPPR North think-tank, said the announcement was a “milestone in decentralisation” and showed the impetus was growing.

But he pointed out: “Cornwall has struck a devolution deal without a directly-elected mayor - showing that government is prepared to flex in order to push through its plans.”

Last week, North-East political leaders clashed with George Osborne, accusing the Chancellor of double-dealing over the “mayor for devolution” rule.

Simon Henig, Durham’s Labour leader and the chairman of the North-East Combined Authority (NECA) criticised the prospect of a devolution deal for Cornwall “with no mention of an elected mayor.”

Meanwhile, Treasury talks with NECA have reached an impasse over the mayor issue, prompting fears that the region is falling behind in the devolution race.

A ‘North-East metro mayor’ would rule Durham, Newcastle, Sunderland, North Tyneside, South Tyneside and Northumberland councils - a vast area of more than a million people.

This week, Labour leadership favourite Andy Burnham weighed in behind North-East leaders, agreeing he area was too big for a single leader.

The Cornwall deal will also hand responsibility over skills training and for the selection of inward investment projects.

The Treasury said Cornwall had escaped the mayoral diktat because it is already a unitary authority, with a decisive leadership.

In contrast, Mr Osborne has refused to hand over significant powers to areas with multiple council leaders, with the potential for disputes and uncertainty.