Full control of £6bn a year of health spending is to be handed to Greater Manchester councils as part of a significant extension of devolved powers, it was reported.

A proposed deal with the Treasury – which the Manchester Evening News said was due to be formally unveiled this week by the chancellor, George Osborne – would transfer the spending of NHS cash to 10 local councils from April 2016.

The region has already accepted the creation of a powerful “metro mayor” in return for taking over responsibility for transport, skills and housebuilding and the right to recoup some cash generated by growth.

The Greater Manchester Combined Authority (GMCA) eventually hopes for full devolution of all £22bn of public spending in the conurbation.

But any move to combine health budgets – at present controlled by NHS England – with councils’ existing social care duties had been thought to be some way down the line.

The newspaper said it had seen a draft memorandum of understanding that included the creation of a board to distribute funding and take decisions in areas such as personnel, regulation, information-sharing and NHS buildings.

It would work closely with existing clinical commissioning groups (CCGs) of GPs.

Osborne has hailed extended powers for cities as a key part of efforts to create a “northern powerhouse” to rival London economically.

The post of police and crime commissioner for Greater Manchester police – established by the coalition government – will also be scrapped in favour of the new mayor.

Richard Humphries, assistant director of the King’s Fund thinktank, said that a full transfer of responsibility would be a reform “on a breathtaking scale” but could pose serious risks.

“If … the plan is to take the money away from CCGs and NHS England and to give it to local government, that, on the range of options to achieve integration, is on the nuclear end of the spectrum and raises all sorts of questions and risks,” he told BBC Radio 4’s Today programme.

“Depending on the detail – and the detail is really crucial and we don’t have that yet – you could either see this as a triumph for local democracy or creating real risks of yet another reorganisation of the NHS when it’s barely recovered from the last one.”

With the NHS “heading for the financial rocks”, there were also concerns about accountability and financial risk with the NHS, he said.

“If the plan is to give the money to local government, the words ‘chalice’ and ‘poisoned’ perhaps spring to mind.”