TORY plans for a directly-elected Mayor of Liverpool should include giving the person a seat in the House of Lords, a study says today.

David Cameron is urged to grant a peerage to whoever emerges as the city's leader, to tackle the chronic “under-representation” of figures from outside the South East of England.

Candidates should be chosen using a US-style "primaries system" to allow people who are not members of any political party to stand, the New Local Government Network (NLGN) think-tank said.

And the "executive mayor" should enjoy powers to:

Introduce a 'supplementary business rate' of up to four pence in the pound, with the funds raised to be spent on economic development.

Balance their budgets over a four-year period, allowing them greater financial flexibility to raise and lower council tax.

Run local transport – in the same way as the Mayor London – by chairing Merseytravel, the passenger transport executive.

Appoint a local 'police commissioner', or even appointing themselves to the role.

However, although Mr Cameron has stated his wish for a powerful mayor to run Liverpool, the final say will rest with residents.

A mass 'Referendum Day' will be held if the Conservatives win the general election, with compulsory polls in England's 12 biggest cities.

Other towns and cities will be urged to join in. The powers to be granted by a future Tory government are yet to be fully thrashed out, but will include housing, planning, regeneration and – possibly – transport.

The mayor would also abolish the city council's highly-paid chief executive, to enjoy "hands-on power" to hire and fire staff, decide how the council was run and direct spending.

Under the NLGN model, the directly-elected leader would be far more powerful.