Healey's first budget to hand mayors £1.5bn borrowing power in devolution push

Chancellor to unveil £285m 'good growth' fund and £150m capacity support

By LineZotpaper AI staff

Published24 October 2026

Updated24 October 2026

Read Time2 min

Sources3 outlets

Chancellor John Healey will use next week's budget to announce a major devolution package, including a new £1.5bn borrowing facility for regional mayors, £285m of "good growth" funding and £150m of support to help local authorities build expertise.

The chancellor, John Healey, will include plans for the borrowing facility in his budget statement on Wednesday, with the scheme drawn up in collaboration with mayors over the next two years. Regional mayors have long complained that they are constrained by limited borrowing power, in contrast to local authorities in the US and some European countries, which commonly issue their own bonds.

The package also includes an initial £285m of "good growth" funding next year, to be spent on local leaders' priorities such as housing, transport links or high street regeneration. Amid Treasury fears about whether some local authorities have the capacity to administer increasingly large budgets, Healey will announce £150m of support to help them scale up.

Prime minister Andy Burnham said the plans would mean local leaders no longer needed 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. When I became prime minister, I said that if a decision can be made closer to home, it should be."

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 to get projects moving, build homes and make the right decisions for their areas."

The £285m funding is intended to tide local authorities over until 2028, when some income tax revenue will be handed directly to their areas, an idea first mooted by Healey's predecessor, Rachel Reeves. More details are due at the budget.

Alongside the devolution plans, the budget is expected to include support for poorer households hit by rising energy costs and modest tax rises, including on banks. Healey will also set out how he plans to fully fund the four-year defence investment plan announced in the final days of Keir Starmer's premiership. He is not expected to say when the UK will commit to spending 3% of GDP on defence, with that decision likely delayed until a spending review next year.

Analysis

Why This Matters

The package shifts spending power from Whitehall to regional mayors, changing how growth projects are funded and approved across England.
Mayors gain a new £1.5bn borrowing facility, which could unlock housing, transport and high street schemes that have stalled for want of local funding.
From 2028, some income tax revenue will be handed directly to areas, giving local leaders longer-term financial security.

Background

Tax and spending in the UK is more centralised than in many other leading economies. Regional mayors have long complained that their limited borrowing power constrains them, unlike local authorities in the US and some European countries, which commonly issue their own bonds. Andy Burnham experienced those constraints first-hand as mayor of Greater Manchester before becoming prime minister. The "good growth" fund idea was first mooted by Healey's predecessor, Rachel Reeves.

Key Perspectives

Andy Burnham, Prime Minister: says the plan means local leaders will no longer go "cap in hand to Westminster", adding that if a decision can be made closer to home, it should be, and that power is shifting "into the hands of the people who know their communities best". John Healey, Chancellor: says mayors and local leaders know what their communities need to grow, which is why the government is giving them "more money, more power and more capacity" to build homes and make the right decisions. The Treasury: has fears about whether some local authorities have the capacity to administer increasingly large budgets.

What to Watch

Full details of how the income tax revenue-sharing system will work, due to be announced at the budget.
The government white paper on "rewiring the state", due after the budget, which will set out how the civil service will be reshaped as powers pass down from Whitehall.
Whether Healey commits to a date for UK defence spending of 3% of GDP, expected to be delayed until a spending review next year.

Sources

Healey’s first budget to include big devolution package to boost growth · The Guardian
Healey’s first budget to include big devolution package to boost growth · The Guardian
Healey’s first budget to include big devolution package to boost growth · The Guardian

Checked

12 claims in this story checked against 1 source: 9 supported.

Show each claim

Partly supportedHealey's first budget will hand mayors £1.5bn of borrowing power.UK news | The Guardian: “In his statement on Wednesday, the chancellor, John Healey , will include plans for a new £1.5bn borrowing facility, to be drawn up in collaboration with mayors over the next two years.”
SupportedThe summary says the budget will unveil £285m of good-growth funding and £150m of capacity support.UK news | The Guardian: “This will also include the allocation of an initial £285m “good growth” funding next year ... Healey will also announce £150m of support to help them scale up and build expertise.”
Partly supportedThe budget announcement will include a new £1.5bn borrowing facility as part of a devolution package.UK news | The Guardian: “The chancellor, John Healey , will include plans for a new £1.5bn borrowing facility”
SupportedThe borrowing plan will be drawn up with mayors over the next two years.UK news | The Guardian: “to be drawn up in collaboration with mayors over the next two years.”
Partly supportedThe £285m funding will be spent on priorities such as housing, transport links or high-street regeneration.UK news | The Guardian: “to be spent on local leaders’ priorities – which could include housing, transport links or high street regeneration.”
SupportedHealey will announce £150m to help local authorities scale up amid Treasury concerns about their capacity.UK news | The Guardian: “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.”
SupportedAndy Burnham said: “I'm calling time on local leaders going cap in hand to Westminster. That is no way to run a country. When I became prime minister, I said that if a decision can be made closer to home, it should be.”UK news | The Guardian: ““I’m calling time on local leaders going cap in hand to Westminster. That is no way to run a country. When I became prime minister, I said that if a decision can be made closer to home, it should be.””
SupportedHealey 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 to get projects moving, build homes and make the right decisions for their areas.”UK news | The Guardian: “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 to get projects moving, build homes and make the right decisions for their areas.””
SupportedThe £285m funding is intended to tide local authorities over until 2028, when some income-tax revenue will go directly to their areas; Reeves first mooted the idea.UK news | The Guardian: “The £285m in “good growth” funding is intended to tide local authorities over until a new system comes into force in 2028 whereby some income tax revenue will be handed directly to their areas ... an idea first mooted by Healey’s predecessor, Rachel Reeves”
SupportedThe budget is expected to include support for poorer households hit by rising energy costs and modest tax rises, including on banks.UK news | The Guardian: “Alongside the devolution plans, Healey’s first budget is expected to include support for poorer households hit by rising energy costs; and modest tax rises, including on banks.”
SupportedHealey will set out how he plans to fully fund the four-year defence investment plan announced in the final days of Starmer's premiership.UK news | The Guardian: “He will set out how he plans to fully fund the four-year defence investment plan announced in the dying days of Keir Starmer’s premiership.”
SupportedHealey is not expected to say when the UK will commit to spending 3% of GDP on defence, and that decision is likely to be delayed until a spending review next year.UK news | The Guardian: “Healey is not expected to say when the UK will commit to spending 3% of GDP on defence ... This is likely to be delayed until a spending review due at some point next year.”