Chancellor John Healey will use his upcoming budget to hand English regions greater control over spending, announcing a new borrowing facility and a short-term fund intended to bridge to a long-term income tax sharing arrangement.
What the package contains
The interventions announced by the Treasury include a proposed £1.5bn borrowing facility, to be developed in partnership with metro mayors over the next two years, alongside an initial allocation of £285m in so-called “good growth” funding for next year. The package also includes £150m to help local authorities scale up the capacity needed to manage larger budgets.
“I’m calling time on local leaders going cap in hand to Westminster. That is no way to run a country. When I became prime minister, I said that if a decision can be made closer to home, it should be. Today we’re putting that into practice, shifting power out of Westminster and into the hands of the people who know their communities best.”
Regional mayors have long argued their scope to borrow is too narrow compared with peers in the United States and parts of Europe, where local authorities commonly issue bonds. The borrowing plan is framed by ministers as a means to unlock projects on housing, transport links and high street regeneration.
Short-term support and the move to tax-sharing
Officials say the £285m is intended as a stopgap until a new system is introduced in 2028, under which some income tax revenue would be devolved directly to local areas. That longer-term approach was previously suggested by Rachel Reeves and is designed to give localities steadier revenue streams and more predictable planning horizons.
The Treasury flagged concerns that not all councils currently have the administrative capacity to handle larger, more complex funding settlements. The £150m pot is directed at building that capability so local bodies can meet new responsibilities without jeopardising delivery.
Implications for local government
If enacted largely as sketched, ministers say the measures will reduce the need for individual project approvals from Whitehall and allow decisions to be taken nearer to affected communities. The government intends further operational details to be revealed at the budget.
- £1.5bn proposed regional borrowing facility, developed with mayors
- £285m initial “good growth” funding for 2027/28 to back local priorities
- £150m to build capacity in local authorities
Ministers have signalled the shift forms part of a broader push to stimulate regional economic growth by devolving fiscal tools. Further specifics on eligibility, governance and which projects will be prioritised are expected in the budget statement.
| Measure | Amount | Purpose |
|---|---|---|
| Regional borrowing facility | £1.5bn | Enable mayors to access borrowing aligned to local projects |
| Good growth fund (initial) | £285m | Bridge funding for local priorities until 2028 tax-sharing |
| Capacity support for councils | £150m | Develop administrative and delivery capability |
The chancellor’s team frames the package as a practical step to give local leaders the tools to decide on investments that reflect local needs rather than seeking central permission for each initiative. Detailed rules and conditions will determine how far the proposals change the balance of power in practice.
