Healey’s first budget to include big devolution package to boost growth

John Healey’s devolution package is a plan to give English mayors and local leaders more money, borrowing power and responsibility. It is intended to support regional economic growth while reducing the need for Whitehall approval. The package is part of the chancellor’s budget statement and reflects the government’s aim to move decisions closer to communities.

Its main measures are a new £1.5bn borrowing facility, £285m of initial “good growth” funding and £150m to help councils build administrative expertise. The growth money could support housing, transport links or high-street regeneration. The borrowing facility will be designed with mayors over the next two years.

The £285m funding is a temporary bridge until 2028, when some income tax revenue is expected to go directly to local areas. Leaders may also be allowed to keep some extra revenue created by stronger local economies. A white paper will provide further details after the budget.

In this context, devolution means transferring powers, funding and responsibility from central government to English regions and their local leaders. Instead of Westminster deciding or approving many details, mayors and councils would have greater freedom to choose projects for their communities. The policy is presented as a way to make government more responsive to local needs.

For example, local leaders could use “good growth” funding for housing, transport links or high-street regeneration. A new borrowing facility would also give them more scope to finance investment. The government plans to design that facility with mayors over the next two years, rather than imposing it without local involvement.

The change is not an immediate transfer of every power. The £285m funding is intended to last until a system begins in 2028, when some income tax revenue may go directly to local areas. A future white paper will explain how the civil service will be reshaped as powers move down from Whitehall.

The package has three main financial elements. The largest is a new £1.5bn borrowing facility for local areas. It will be drawn up in collaboration with mayors over the next two years. This addresses complaints that regional leaders have too little borrowing power compared with local authorities in some other countries.

The second element is £285m of initial “good growth” funding, available next year. Local leaders could direct it towards priorities such as housing, transport connections and high-street regeneration. The third is £150m for councils to scale up their administration and build the expertise needed to manage larger budgets.

Together, those announced figures represent £1.935bn, although they serve different purposes and are not described as one single pot. The £285m is temporary support until 2028. The borrowing facility is to be developed over two years, while the capacity funding responds to concerns about councils’ readiness.

More borrowing power would give mayors greater scope to finance major projects without seeking central approval for every individual decision. Flexible funding would let them match investment to local conditions. The article identifies housing, transport links and high-street regeneration as possible priorities for the £285m “good growth” fund.

A concrete example is a housing scheme linked to a transport project. Under new “green book” guidance, projects that can be combined to boost growth may be considered together. That could help leaders plan connected investments rather than treating homes and transport as unrelated proposals. The borrowing facility would add another possible source of finance, although its detailed design is still to come.

The intended result is quicker, more coordinated regional development and stronger local ownership. However, the article does not guarantee that every project will proceed or that borrowing will automatically produce growth. Councils will also need to develop the administrative capacity to manage larger budgets, supported by the planned £150m.

Local leaders currently operate within a strongly centralised UK tax and spending system. Regional mayors have also complained that their borrowing powers are limited. As a result, they can be required to seek Treasury approval for individual projects rather than deciding freely how to invest in their areas. Andy Burnham described this as going “cap in hand to Westminster.”

The new approach would provide a £1.5bn borrowing facility and flexible “good growth” funding. Mayors and local leaders would be able to set priorities such as homes, transport links and high-street regeneration. Updated “green book” guidance would allow connected projects, such as housing and transport schemes, to be considered together.

The proposed change is intended to give local leaders more autonomy and reduce case-by-case central control. It will not remove all oversight, and the borrowing facility still has to be designed with mayors. A future white paper will explain how Whitehall and the civil service will change as powers are passed down.

The £150m is intended to prepare local authorities for greater financial responsibility. The Treasury is concerned that some councils may not yet have the capacity to administer increasingly large budgets. More powers without suitable systems, staff and expertise could make spending harder to manage. The support therefore forms a practical foundation for the wider devolution plans.

The money will help councils scale up and build expertise. That matters because local leaders may soon control more investment funding and gain access to a new borrowing facility. They could also receive some income tax revenue directly from their areas from 2028. Managing those resources would require stronger administrative arrangements.

This support is part of the package rather than a separate local-government programme. It is designed to make the transfer of money and authority more workable. The article does not specify how councils will receive the funding or what particular skills will be developed. It does state that the government wants local capacity to grow alongside local power.

Local government investment can draw on borrowing, direct funding and tax revenue. Borrowing helps finance projects such as homes or transport links, while grants provide money for specific priorities. The proposed package would expand both borrowing capacity and flexible funding. From 2028, some income tax revenue is also expected to go directly to local areas, giving them greater long-term security.

The proposed incentive is to let local leaders keep some additional revenue created by a stronger local economy. For example, if policies support new housing, better transport or high-street regeneration, the resulting economic improvement could increase local income. Retaining part of that extra revenue would give leaders a direct financial reason to support pro-growth decisions.

This would connect investment with future local resources rather than relying only on central allocations. The article says more details will be announced at the budget, so the precise tax arrangements are not yet settled. It also notes that councils need stronger administrative capacity before managing larger budgets and responsibilities.