Comprehensive Growth Measures for Local and Regional Development
This Budget introduces an extensive array of initiatives aimed at fostering local and regional growth, placing local leaders at the forefront of development across all areas. The proposed measures focus on empowering communities through devolution, bolstering local strengths in cities and towns to stimulate reindustrialisation, and unlocking the potential of urban centres and growth corridors to extend opportunities to neighbouring regions.
Devolved Powers and Support Across England
The government is committed to collaborating with all remaining areas to forge local consensus on establishing a Strategic Authority, with the goal of achieving complete devolution coverage by the end of 2028. This initiative, spearheaded by the Ministry of Housing, Communities and Local Government (MHCLG) and No.10 North, aims to ensure that over 90% of England’s populace benefits from devolution, marking a significant milestone by encompassing the entire Northern region for the first time. The implications of this are substantial, as it entails transferring greater authority over critical areas such as transportation, housing, and skills from central government to local jurisdictions.
Additionally, local authorities will experience a significant boost in their flexible revenue streams, with plans to transition business rates into a fully locally retained tax by the decade’s end. Mayors are set to receive 20% of these rates starting in April 2027, with the local authorities’ share projected to rise to at least 70% in the forthcoming years. This shift is intended to provide local and strategic authorities with greater long-term certainty and enable them to benefit from the economic growth generated within their regions.
Investment in Housing and Community Development
The Budget also allocates an additional £1.5 billion aimed at constructing 10,000 homes across England, with a primary focus on social rent, particularly council housing. This investment elevates the total commitment to the Social and Affordable Homes Programme to over £40 billion over a 10-year period, while also extending preferential borrowing rates for council housing projects through the Public Works Loan Board for another year.
In an effort to ease the administrative load on local authorities, there is a commitment to reduce the number of grants during the Spending Review, streamline reporting processes, and empower local governments to make decisions that better serve their communities. Furthermore, £125 million will be allocated to assist 60 English local authorities in repurposing buildings to meet community needs, ranging from health facilities to civic spaces, alongside initiatives to rejuvenate local high streets through the High Streets Strategy.
Support for Local Economic Initiatives
To bolster local projects across the UK, the Budget introduces £80 million in new funding for the Local Renewal Fund. This investment aims to create jobs, support local economic regeneration, preserve heritage assets, and promote initiatives that stimulate economic growth in both mayoral and non-mayoral areas.
Recognising the financial strain on households due to escalating energy costs, the government plans to implement a £100 Household Energy Payment for residents in council tax bands A to D starting January 2027. This measure is expected to provide relief to up to 20 million households in England. Additionally, £100 million will be designated for local authorities to offer supplementary assistance to those most affected by rising energy bills.
Empowering Strategic Authorities for Local Growth
In an effort to further empower strategic authorities in England, the government will release the Fiscal Devolution Roadmap, which outlines a new funding model for regional and local governance. This model includes the assignment of income tax for all mayors starting in 2028, an increase in business rates retention, and plans to legislate an Overnight Visitor Levy for all Strategic Authorities.
The first wave of new Mayoral Strategic Authority Business Rates Retention Zones is set to be launched, involving nine authorities pending Full Business Case approval and legislative action. This initiative aims to facilitate commercial development, support the execution of Mayors’ Local Growth Plans, and ensure that tax revenue is reinvested in the areas where it is generated.
Strategic Authority Development and Future Initiatives
Confirming the final stages of negotiation for 10 new devolution arrangements, the government aims to ensure that over 90% of the population in England is covered by a devolution agreement, thereby transferring authority over essential services from Whitehall to local regions.
A £120 million allocation from the Good Growth Fund will be made available for areas progressing towards a devolution deal or achieving Strategic Authority status, aimed at unlocking projects that promote local growth. The No10 North Priority Projects Programme will be extended to include regions that have newly signed devolution agreements and those poised to elect mayors for the first time in 2027 and 2028. This extension includes support for developing robust business cases where necessary.
Plans are also in place to allow Foundational Strategic Authorities and local governments to propose Business Rates Retention Zones as they navigate the establishment of Strategic Authorities, further enhancing regional empowerment and governance.