Healey to Give Mayors Direct Control of 1.5 Billion Pounds

Chancellor John Healey will announce a devolution package on Wednesday that transfers financial authority to local leaders in England. The plan includes a new borrowing facility and direct spending powers that remove the requirement for central government approval on individual projects.

The core of the proposal is a 1.5 billion pound borrowing facility. Mayors will help structure this fund over the next two years. This change responds to long-standing complaints that limited borrowing powers hinder regional growth. In the United States and parts of Europe, local governments frequently issue their own bonds, a practice that has been rare in the UK.

The budget will also allocate 285 million pounds in initial growth funding for next year. Local leaders will decide how to spend this money, with potential uses including housing, transport links, and high street regeneration. These funds are designed to bridge the gap until 2028. That is when a new system will pass a portion of income tax revenue directly to local areas to provide longer-term financial security.

Prime Minister Andy Burnham framed the changes as an end to local leaders seeking permission from Westminster. He stated that the practice of going cap in hand is no way to run a country. Burnham noted that tax and spending in the UK are more centralised than in many other leading economies. He cited his experience as mayor of Greater Manchester as a reason for pushing decisions closer to home.

Healey said the government is providing local leaders with more money, power, and capacity to build homes and make area-specific decisions. He noted that local officials understand their communities' needs better than central departments. The package was developed with No 10 North, which has held weekly meetings with local leaders to identify barriers to economic growth.

Treasury officials have raised concerns about the ability of some local authorities to manage larger budgets. To address this, Healey will announce 150 million pounds to help these bodies scale up and build internal expertise. The government also changed its green book guidance this week. The new rules allow combined assessments for projects that boost growth together, such as housing and transport schemes.

The budget will also include support for households facing rising energy costs and modest tax increases on banks. Healey aims to give businesses and families breathing space after the Middle East war pushed up bills. He will explain how to fund the four-year defence investment plan announced at the end of Keir Starmer's premiership. A decision on spending 3% of GDP on defence is expected to wait for a spending review next year.