Chancellor Healey to Give Mayors Direct Control Over 1.5bn Pounds

Chancellor John Healey will announce a 1.5 billion pound borrowing facility in Wednesday's budget that grants regional mayors in England direct access to funds. The measure is designed to end the requirement for local leaders to seek individual Treasury approval for specific projects. Prime Minister Andy Burnham said the package removes the need for local authorities to go cap in hand to Westminster for permission.

Regional mayors have long argued that limited borrowing powers hinder local development. In the United States and parts of Europe, local authorities commonly issue their own bonds. Under the new plan, mayors will negotiate the terms of the facility with the government over the next two years. This shift aims to provide local areas with greater financial independence from Whitehall.

The budget also includes an initial 285 million pounds in growth funding for next year. Local leaders will control how this money is spent, with options including housing, transport links, or high street regeneration. The funds are intended to bridge the gap until 2028, when a new system will pass some income tax revenue directly to local areas.

This revenue-sharing model was first proposed by Rachel Reeves, Healey's predecessor, earlier this year. Local leaders will retain a portion of the extra revenue generated by a stronger local economy. This structure is intended to give local authorities a direct financial incentive to support pro-growth policies. Further details on how the revenue split will work will be included in Wednesday's statement.

Concerns exist within the Treasury regarding the ability of some local authorities to manage larger budgets. To address this, Healey will announce 150 million pounds to help local governments build expertise and scale up their capacity. Burnham stated that decisions that can be made closer to home should be, a view he formed while serving as mayor of Greater Manchester.

Healey said the government is providing local leaders with more money, more power, and more capacity to build homes and make area-specific decisions. The package was developed with No 10 North, which has held weekly meetings with local leaders to identify barriers to economic growth. This collaboration led to a change in the Treasury's green book, which guides public spending decisions.

Under the updated green book rules, projects that can be combined to boost growth, such as housing and transport schemes, can now be assessed together. A white paper on reshaping the civil service, titled rewiring the state, is due after the budget. This document will outline how powers move from Whitehall to local authorities. The budget will also include support for households facing rising energy costs and modest tax rises on banks.

Healey will explain how the government plans to fully fund the four-year defence investment plan announced during the final days of Keir Starmer's premiership. He is not expected to announce when the UK will commit to spending 3 percent of GDP on defence. That decision is likely to wait for a spending review due next year.