Healey Allocates 1.5 Billion Pounds for Direct Mayoral Borrowing

Chancellor John Healey will announce a 1.5 billion pound borrowing facility for English regional leaders in his budget statement next Wednesday. The new instrument allows mayors to issue debt directly without seeking permission from the Treasury for each individual project. Prime Minister Andy Burnham described the change as an end to local officials seeking approval in London for every initiative.

The borrowing mechanism will be structured over the coming two years. Regional mayors have previously cited limited access to capital markets as a primary constraint on economic development. The government notes that local authorities in the United States and several European nations regularly issue their own bonds, a practice now being replicated in England.

The package also includes 285 million pounds in immediate funding allocated for the next fiscal year. Local leaders will determine how to distribute these resources, with potential uses including housing construction, transport infrastructure, and high street regeneration. This initial capital is intended to bridge the financial gap until 2028. That timeline aligns with the introduction of a new revenue model that directs a portion of income tax directly to local areas.

The revenue-sharing approach was initially proposed by former Chancellor Rachel Reeves earlier this year. Detailed rules for the model will appear in the upcoming budget. Under the proposed system, local authorities would retain a share of additional tax revenue generated by local economic growth. This structure aims to incentivize officials to support policies that expand the local tax base.

Treasury officials have raised concerns regarding the capacity of some local bodies to manage larger financial portfolios. To address these concerns, Healey will announce a separate 150 million pound allocation designed to help authorities build internal expertise and administrative scale. This investment is intended to ensure that local governments can effectively manage their expanded financial responsibilities.

Burnham stated that the reforms reflect his commitment to devolving decision-making to local levels. He noted that he experienced the limitations of centralized spending firsthand while serving as mayor of Greater Manchester. "I am calling time on local leaders going cap in hand to Westminster. That is no way to run a country," he said. The Prime Minister added that decisions should be made closer to home whenever possible.

Healey emphasized that local leaders possess detailed knowledge of their communities' specific needs. The Chancellor stated that the government is providing officials with increased resources and authority to advance construction projects and housing developments. The budget is the result of ongoing consultations between No 10 North and local leaders, which have met weekly to identify barriers to growth.

These consultations led to a change in the Treasury's green book guidance this week. The updated rules allow for the joint assessment of projects that combine multiple elements, such as housing and transport schemes. A white paper on reshaping the civil service is scheduled for release following the budget. The document will outline how administrative functions will shift from central government departments to local levels as more powers are devolved.