John Healey budget to unveil devolution package with £1.5bn mayor borrowing
Chancellor John Healey's first budget on Wednesday will include a devolution package for England, featuring a new £1.5bn borrowing facility for mayors and an initial £285m 'good growth' funding allocation next year.
John Healey budget to unveil devolution package with £1.5bn mayor borrowing
Borrowing powers for mayors
The most eye-catching measure in the john healey budget devolution package is a new £1.5bn borrowing facility for mayors, to be drawn up in collaboration with them over the next two years. Regional mayors have long complained that their limited borrowing power constrains them, in contrast to local authorities in the US and some European countries that issue their own bonds. The chancellor will set out the plans in his statement on Wednesday.
'Good growth' funding and capacity support
Alongside the borrowing powers, the package includes an initial £285m allocation of 'good growth' funding next year for local leaders' priorities. The money could be spent on housing, transport links or high street regeneration.
Its purpose is to bridge local authorities to 2028, when some income tax revenue will begin flowing directly to their areas under a new system. More detail on that system will be announced at the budget, and local leaders are expected to be allowed to keep some of the additional revenues from a stronger local economy. The income tax idea was first mooted earlier this year by Healey's predecessor, Rachel Reeves.
The Treasury is also worried about councils' capacity to run larger budgets, so the package contains:
- £150m of support to help local authorities scale up and build expertise
End of project-by-project approval
Andy Burnham said local leaders would no longer need to come to the Treasury for approval for each individual project. He said the plans shift power out of Westminster and into the hands of the people who know their communities best.
"I'm calling time on local leaders going cap in hand to Westminster. That is no way to run a country."
Burnham had promised ahead of the budget that local leaders in England would no longer have to come 'cap in hand to Westminster'. The UK's tax and spending is more centralised than in many other leading economies, and he experienced those constraints first-hand as mayor of Greater Manchester. Healey said: 'Mayors and local leaders know what their communities need to grow, which is why we are giving them more money, more power and more capacity'.
How the package was built and what comes next
The package was drawn up with No 10 North, which held a weekly 'situation room' meeting with local leaders on the barriers to growth. This week the Treasury announced new 'green book' rules so that projects that can be combined to boost growth - a housing and a transport scheme, for example - can be considered together.
The next step comes after the budget itself: a government white paper on 'rewiring the state', due to be published then, will set out how the civil service will be reshaped as powers pass down from Whitehall.
