Healey Grants Mayors Direct Authority Over 1.5 Billion Pound Fund

Chancellor John Healey will grant regional mayors in England direct control over a new 1.5 billion pound borrowing facility in next week's budget.

The funds, to be structured over the next two years, allow local leaders to issue debt without seeking approval from the Treasury for each individual project. This shift responds to long-standing complaints from mayors that limited borrowing powers restrict their ability to invest in infrastructure. In contrast, local authorities in the United States and parts of Europe frequently issue their own bonds to finance local development.

Prime Minister Andy Burnham described the package as an end to local leaders having to go "cap in hand to Westminster." He stated that this process is no way to run a country. Burnham noted that he experienced these constraints first-hand as mayor of Greater Manchester, where decisions often required central sign-off.

The budget also includes an initial 285 million pound allocation for "good growth" projects next year. Mayors will have discretion to spend this money on priorities such as housing, transport links, or high street regeneration. This funding serves as a bridge until 2028, when a new system will transfer some income tax revenue directly to local areas. This revenue-sharing model was first proposed by former Chancellor Rachel Reeves earlier this year. Healey will provide further details on how local leaders can retain a portion of the extra revenue generated by a stronger local economy, incentivizing pro-growth policies.

To address concerns within the Treasury regarding the capacity of local authorities to manage larger budgets, the government will allocate 150 million pounds to build expertise and scale up local administrative capabilities. Healey said the government is providing "more money, more power and more capacity" to help communities build homes and make local decisions.

The devolution package was developed in consultation with No 10 North, which has held weekly meetings with local leaders to identify barriers to economic growth. This process led to a change in the Treasury's "green book" guidance. Under the new rules, projects that combine different elements, such as housing and transport schemes, can now be assessed together for funding. A white paper on "rewiring the state" is expected after the budget, outlining how the civil service will be reshaped as powers move from Whitehall to local levels.

Healey's first budget statement is scheduled for Wednesday. Alongside the devolution measures, the plan is expected to include support for households facing rising energy costs and modest tax increases, including on banks. The Chancellor aims to provide "breathing space" for consumers and businesses after the Middle East conflict pushed up bills and increased interest rates on government borrowing. Healey will also explain how he will fully fund the four-year defence investment plan announced under previous leadership, though a decision on spending 3% of GDP on defence is likely to wait for a spending review next year.