Speaking in Manchester as he launched the latest phase of his Northern Powerhouse initiative, Chancellor George Osborne said that O’Neill would be given special responsibility for driving forward devolution to cities outside London.

The 58-year-old was yesterday awarded a life peerage by the Queen and given the title of commercial secretary to the Treasury.

His brief includes public sector infrastructure projects and attracting private sector investment into UK infrastructure.

Competition policy and regulation will be other areas of interest.

He will be a central figure in the Chancellor’s plan to close the North-South divide through the Northern Powerhouse and the new City Devolution Bill launched yesterday, which will be at the heart of the Government’s Queen’s Speech.

O’Neill, the son of a Manchester postman, spent 16 years at Goldman Sachs, where he worked as chief economist and is credited with coining the phrase BRICs to describe the emerging market powerhouse economies of Brazil, Russia, India and China.

He has also introduced the phrase ‘Manpool’ for Manchester and Liverpool’s economies acting as a powerful bloc while recommending prioritising faster transport connections between the great northern cities.

Previously, the new minister has expressed scepticism about HS2, warning that it would allow people to get to London quicker.

The Chancellor’s northern powerhouse plan drew heavily from recommendations last year from the City Growth Commission, chaired by O’Neill.

Osborne’s Cities Devolution Bill sets out a vision that would see city regions given more power over local transport, housing and planning.

It has been welcomed by industry as a step towards bringing greater infrastructure investment outside of London.

Institution of Civil Engineers Director General Nick Baveystock, said: “The devolution of transport powers is an opportunity to be seized and this renewed commitment from government is encouraging.

“Scotland and London have shown that locating transport powers closer to those it affects can lead to greater investment and better decision making – and this Bill should pave the way for others to also benefit from greater autonomy.

“There is however no “one-size fits all” devolution model. Government must therefore resist the desire for standardisation and instead be guided by the needs, ambition and capacity of each area. Local areas also need to rise to the challenge – demonstrating how they will make the best use of powers and contribute to UK wide goals.”