Healey's Budget Unveils £1.5bn Devolution Boost for Growth 2026

Chancellor John Healey's first budget will include a major devolution package aimed at boosting regional economic growth, featuring a new £1.5bn borrowing facility for regional mayors and a £285m 'good growth' fund. The move, announced ahead of next week's budget, is designed to give local leaders more control over spending and investment decisions.

Andy Burnham, the mayor of Greater Manchester, has promised that local leaders in England will no longer have to come "cap in hand to Westminster" as part of the fresh drive to devolve spending power. The chancellor's plans mark a significant shift in how funding is allocated, moving away from centralized approvals toward greater regional autonomy.

What the Devolution Package Includes

The centerpiece is a £1.5bn borrowing facility, to be drawn up in collaboration with mayors over the next two years. Regional mayors have long complained that they are constrained by their limited borrowing power – in contrast to local authorities in the US and some European countries, which commonly issue their own bonds.

In addition to the borrowing facility, the package includes an initial £285m "good growth" funding next year, to be spent on local leaders' priorities. These priorities could include housing, transport links, or high street regeneration, giving local areas the flexibility to address their most pressing needs.

Amid fears in the Treasury about whether some local authorities have the capacity to administer increasingly large budgets, Healey will also announce £150m of support to help them scale up and build expertise. This funding is intended to ensure that local authorities can effectively manage the new responsibilities and resources.

Key Elements of the Devolution Plan

• £1.5bn borrowing facility for regional mayors, developed collaboratively over two years.
• £285m "good growth" funding for local priorities such as housing and transport.
• £150m support to build capacity and expertise in local authorities.
• Shift away from project-by-project Treasury approvals toward greater local autonomy.

Why It Matters: Ending "Cap in Hand" Culture

Andy Burnham hailed the plans, saying they would mean local leaders would no longer need to come to the Treasury for approval for each individual project. "I'm calling time on local leaders going cap in hand to Westminster. That is no way to run a country," he said.

Burnham, who became mayor of Greater Manchester in 2017, has been a vocal advocate for greater devolution. He added: "When I became prime minister, I said that if a..." The statement underscores the growing momentum behind giving regions more fiscal freedom.

The current system requires local leaders to seek Treasury approval for individual projects, which can be slow and bureaucratic. The new borrowing facility and growth fund are intended to streamline this process, allowing mayors to plan longer-term investments and respond more quickly to local needs.

Impact on Local Authorities and Regional Growth

The devolution package is expected to have a significant impact on local authorities, particularly those in regions with elected mayors. By giving mayors more borrowing power, the government hopes to stimulate investment in infrastructure, housing, and other growth-enhancing projects.

However, the Treasury's concerns about capacity are notable. The £150m support package is designed to address these worries by helping local authorities build the necessary expertise to manage larger budgets. This includes training, recruitment, and possibly new financial management systems.

The success of the devolution plan will depend on how effectively local leaders use the new powers and resources. If mayors can demonstrate tangible results – such as new housing, improved transport, or revitalized high streets – it could build support for further devolution in the future.

What to Watch Next

The full details of the devolution package will be unveiled in the budget next week. Key questions include how the £1.5bn borrowing facility will be allocated among regions, what conditions will be attached, and how the "good growth" fund will be distributed. The background to this story is set out in Andy Burnham's Devolution Plan: Unbundling England's Centralised. A related thread runs through UK Borrowing Hits £24.5bn as Healey Faces Budget Pressure. Earlier coverage in Andy Burnham's Devolution Pledge: Challenges Ahead shows how the argument developed.

Another critical issue is the timeline. The borrowing facility will be drawn up over the next two years, meaning its impact may not be felt immediately. The £285m funding for next year, however, could provide a quicker boost to local projects. A closer look at the same subject appears in UK Devolution Spending Powers and Mayoral Accountability. Anyone following the wider picture can start with English Devolution Plans Need Strong Scrutiny. The same theme surfaces in England's North-South Divide: Burnham's Devolution Challenge, which takes a different angle.

Additionally, the reaction from local leaders and opposition parties will be closely watched. While Burnham has praised the plans, other mayors and council leaders may have different views on whether the funding is sufficient and whether the accompanying conditions are acceptable. Context on how this played out before sits in Andy Burnham's Devolution Plan: Centralizing Power to. A companion piece, Welsh Devolution Demands: Give Wales What Scotland, approaches the same subject from another angle.

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