The United Kingdom is preparing for a significant shift in how economic decisions are made, with Chancellor John Healey expected to use his first Budget on October 28, 2026, to introduce a major package of devolved funding and borrowing powers for local leaders in England. The proposals aim to move investment decisions closer to communities, encourage regional business development and reduce dependence on central government grants.
At the centre of the proposed package are £285 million in initial Good Growth funding, a planned £1.5 billion borrowing facility for regional authorities and another £150 million to strengthen the expertise of local government bodies. The measures are intended to help mayors and strategic authorities invest in housing, transport, high-street regeneration and other local priorities.
The proposals form part of a broader economic strategy associated with Prime Minister Andy Burnham and Healey, which seeks to distribute economic opportunity more widely rather than concentrate investment in London and a handful of major centres.
For years, regional leaders have argued that they understand local economic challenges better than officials working in Whitehall. A transport bottleneck in one city, a shortage of affordable housing in another or an underused industrial site in a struggling town may require a different solution from the one that works elsewhere.
The proposed reforms aim to give local authorities more flexibility to respond to these differences.
However, transferring responsibility is only the beginning. The success of the package will depend on whether local leaders receive sufficient funding, whether projects are delivered efficiently and whether residents experience tangible improvements in employment, transport, housing and public services.
As Britain approaches this important Budget, the central question is whether greater local control can help turn economic growth into a reality for more communities.
🏛️ What Is Devolution, and Why Is It Important?
Devolution means transferring certain decision-making powers and resources from central government to regional or local authorities. Instead of requiring ministers and departments in London to approve every major investment decision, local leaders receive greater responsibility for identifying priorities and delivering projects.
In England, devolution has increasingly involved elected mayors and combined authorities that coordinate policies across several neighbouring councils. These bodies can help plan transport networks, support economic development and coordinate housing and employment strategies across wider urban areas.
The principle behind the proposed Budget package is straightforward: people who understand local conditions should have greater influence over how public money is invested.
For example, a region experiencing rapid population growth might need more homes and improved public transport. An area with a declining industrial base might prioritise employment training, business premises and investment in modern manufacturing. A town struggling to attract visitors could focus on restoring its high street and improving access to local attractions.
A central government department may recognise these needs, but local authorities are often better positioned to understand the practical details and relationships between different projects.
Devolution can also encourage accountability. When regional leaders control more resources, voters can more directly assess whether those leaders have delivered on their promises.
Nevertheless, decentralisation does not automatically guarantee better decisions. Some authorities may have stronger financial teams, more experienced planners and better relationships with private investors than others. Without appropriate oversight and support, greater autonomy could produce uneven results.
Healey’s proposed approach therefore combines new funding and borrowing arrangements with investment in local administrative capacity.
The broader objective is to establish a system in which regional authorities can plan for the long term instead of repeatedly applying for individual grants from central government.
💷 The £285 Million Good Growth Fund: Supporting Local Priorities
One of the headline measures expected in the Budget is £285 million in initial funding through a new Good Growth scheme.
The money is intended to give local leaders greater freedom to direct investment towards projects that support economic development. Rather than relying entirely on separate funding competitions, authorities would have more scope to identify local priorities and plan how resources should be used.
The government has identified housing, transport and high-street regeneration as important potential areas for investment.
For struggling town centres, this could mean improving public spaces, bringing vacant buildings back into use, upgrading pedestrian areas and making high streets more attractive to residents and visitors.
For growing cities, investment could support transport connections that help workers reach employment centres and allow businesses to recruit from a wider area.
In places facing housing shortages, local funding could help prepare development sites, improve infrastructure and remove obstacles that prevent new homes from being built.
The scheme’s flexibility is potentially significant. Different regions have different economic circumstances, and a funding model that recognises these differences may produce better results than a uniform national approach.
However, the £285 million should be understood as initial funding rather than a guarantee that every authority will receive a particular amount. The distribution and effectiveness of the money will depend on the final arrangements and the projects selected.
Local leaders will also need to demonstrate that spending produces meaningful benefits. Renovating a public square may improve the appearance of a town, but the wider economic case becomes stronger when the investment also attracts businesses, increases footfall or supports sustainable employment.
The challenge is to move beyond short-term improvements and build a lasting foundation for local prosperity.
🏗️ A Planned £1.5 Billion Borrowing Facility for Regional Investment
The proposed £1.5 billion borrowing facility is another central element of Healey’s devolution agenda.
The plan is to work with mayors to establish a mechanism through which regional authorities can access capital for growth projects. The intention is to make it easier for local leaders to finance worthwhile investments without depending exclusively on annual grants.
Borrowing can be useful when an infrastructure project requires substantial upfront spending but delivers benefits over many years.
Consider a new public transport connection. Building the route may require considerable investment at the beginning, while the benefits emerge gradually through shorter journeys, improved access to jobs and greater commercial activity.
A borrowing facility could help local authorities finance such projects and spread the cost over time, subject to the final terms and safeguards.
The same principle may apply to infrastructure that unlocks housing development. A site might be suitable for hundreds of homes, but construction could be delayed because roads, drainage or other essential facilities are missing.
By investing in enabling infrastructure, a local authority may make it possible for private developers to proceed with projects that would otherwise remain stalled.
Yet borrowing is not free money. Loans create repayment obligations, and projects may not deliver the expected economic returns. Authorities must assess affordability, future revenues, construction costs and risks before committing public resources.
Strong financial management will therefore be essential. The borrowing facility should support productive investment rather than encourage authorities to take on liabilities without a credible plan for meeting them.
If managed responsibly, it could give local leaders a more reliable way to finance long-term economic development.
🏙️ Revitalising High Streets and Town Centres
High streets remain important to the economic and social life of many British communities. They provide space for independent retailers, cafés, restaurants, professional services and cultural activities.
However, some town centres have struggled with vacant shops, changing consumer habits, online competition and a lack of investment in public spaces.
A stronger local funding model could help authorities respond to these problems with plans tailored to their communities.
One town might prioritise affordable premises for start-up businesses. Another could convert disused buildings into workspaces, cultural venues or housing. A third might improve public transport connections and pedestrian facilities to make the centre easier to reach.
The advantage of local decision-making is that authorities can coordinate these investments rather than treating each project as an isolated initiative.
For example, renovating a building may have limited economic impact if the surrounding streets remain difficult to navigate. But combining building improvements with better lighting, accessible pavements, public transport and community events may create a more attractive destination.
Local councils can also work with business associations and property owners to identify barriers to investment.
The benefits are not limited to large companies. Small businesses often depend heavily on local footfall, and improvements to a town centre can create opportunities for entrepreneurs who serve nearby residents.
Still, regeneration should not be measured solely by the amount of construction completed. Authorities should consider whether local businesses survive, whether new jobs are created and whether residents can afford to remain in the area.
A successful high street is not simply a collection of attractive buildings. It is a place where people can work, shop, socialise and access services.
The Good Growth approach could help towns pursue this broader vision if funding is combined with realistic plans and meaningful community involvement.
🚆 Better Transport Links Could Unlock Regional Growth
Transport infrastructure is one of the strongest links between devolution and economic growth.
Businesses need reliable ways to move goods, connect with suppliers and bring employees to work. Residents need affordable and convenient transport to reach schools, hospitals, universities and employment centres.
When transport systems are poorly connected, these everyday journeys become more expensive and time-consuming. Employers may find it harder to recruit workers, while residents can miss opportunities simply because they cannot travel easily.
Regional authorities could use greater financial flexibility to address these problems through coordinated investment in rail, buses, local roads and connections between residential areas and employment centres.
The government has already set out a broader programme for giving mayors greater influence over local transport, including bus and rail integration and large transport schemes.
One potential benefit is better coordination between transport and housing policy. A new residential development is more likely to succeed when it has reliable connections to existing jobs and services.
Similarly, an industrial area may attract more investment if workers can reach it without depending entirely on private cars.
Integrated ticketing and better coordination between different transport operators can also make public transport easier to use. For passengers, a simpler journey can improve access to employment and education.
However, transport projects can be expensive and time-consuming. Construction delays, rising material costs, land acquisition and planning disputes can all undermine projected benefits.
Local authorities will need to choose projects based on evidence rather than political visibility. Improvements to an existing bus network may deliver better value in one area than a costly new transport system.
The most effective strategy will be one that links transport spending to measurable improvements in accessibility, productivity and the quality of life for residents.
🏠 Housing Investment and the Challenge of Affordability
Housing is another major area in which local decision-making could make a difference.
Many British communities face pressure from rising rents, limited housing supply and the difficulty of finding suitable homes near employment opportunities. At the same time, some areas have land available for development but lack the infrastructure needed to make construction viable.
Local authorities often understand these conditions better than central departments because they work directly with planning applications, housing providers, developers and residents.
Greater control over investment could help them coordinate site preparation, transport access, utilities and regeneration projects.
For example, an authority might identify land near a railway station that could accommodate new housing. Before construction begins, it may need to improve roads, drainage or other infrastructure. A well-designed investment plan could bring these elements together and reduce delays.
Regional leaders could also coordinate housing development with employment strategies. Building homes near growing industries can reduce commuting times and help businesses attract staff.
But increased housing supply alone will not solve every affordability problem. The type, location and cost of homes matter just as much as the number completed.
Authorities need to consider affordable housing, social housing, accessible homes for older residents and suitable accommodation for young people starting their careers.
There is also a need to involve existing communities in decisions about new development. Residents may support additional housing but raise legitimate concerns about pressure on schools, healthcare, roads and green spaces.
Good planning must balance these considerations rather than treating development as an isolated construction target.
If devolution enables local leaders to coordinate housing, transport and public services, it could help communities grow in a more balanced and sustainable way.
👷 Creating Jobs and Supporting Local Businesses
Economic growth becomes meaningful to households when it creates secure jobs, improves wages and opens opportunities for people who have struggled to enter the labour market.
The proposed devolution package is intended to help regions identify and support their own economic strengths.
Some areas have established manufacturing industries. Others have growing technology sectors, universities, logistics networks, creative businesses or tourism industries. A locally informed economic strategy can help build on these strengths.
Regional authorities can bring together employers, colleges, training providers and investors to identify the skills businesses need.
If a region expects demand for construction workers, for example, local training programmes can prepare residents for jobs connected to housing and infrastructure projects.
Similarly, areas seeking to attract advanced manufacturing businesses may need technical training, suitable industrial premises and reliable transport connections.
The government has also announced broader plans to support regional businesses. In a September 2026 growth speech, Healey outlined £150 million through the British Business Bank for scale-up companies in the North, alongside a proposed Northern 500 community bringing together ambitious mid-sized businesses.
Such measures could complement the devolution package by connecting local infrastructure investment with business development.
However, public funding should not be judged simply by the amount distributed. The important questions are whether it helps viable companies grow, whether new jobs are created and whether private investment follows.
Support must also reach smaller businesses that may lack the financial resources or administrative capacity of larger firms.
Local enterprise networks, accessible business advice and well-designed training programmes can help more companies benefit from economic opportunities.
Ultimately, the objective should be to create an environment in which businesses can invest confidently and residents can develop skills that lead to sustainable employment.
🧠 Why the Government Is Investing in Local Authorities’ Expertise
Devolution requires more than transferring money. It also requires people with the skills to evaluate projects, manage budgets, negotiate contracts and measure results.
For this reason, the proposed package includes a further £150 million to help strategic authorities build the capacity needed to manage larger budgets and responsibilities.
This element is important because local government bodies do not all have the same resources or experience.
Some authorities already manage complex transport programmes and large development schemes. Others may have smaller teams and limited access to specialist expertise in finance, infrastructure or commercial negotiations.
Without adequate capacity, additional funding may not translate into faster delivery. Authorities could struggle to prepare projects, manage procurement or demonstrate that spending offers good value for money.
Investment in expertise could support the recruitment and training of planners, economists, engineers, financial specialists and project managers.
It could also help authorities develop stronger systems for monitoring costs, assessing risks and reporting progress to the public.
Collaboration between neighbouring authorities may provide further benefits. Regional projects often cross council boundaries, making coordination essential.
A shared team of specialists could help several councils develop a common transport strategy, coordinate housing investment or negotiate with private investors.
The challenge is to build lasting expertise rather than create temporary teams that disappear when individual funding programmes end.
Local authorities need stable institutions and predictable resources if they are to plan effectively over many years.
The £150 million allocation could therefore be a crucial part of the wider strategy, helping ensure that new powers are matched by the ability to use them responsibly.
📊 Fiscal Devolution: A Longer-Term Change to Local Funding
The Budget proposals form part of a longer-term plan to change how regional authorities finance economic development.
Under the government’s broader roadmap, mayoral strategic authorities are expected to gain greater retention of local revenues, including business rates, while a system allowing them to receive a share of income-tax revenues is planned from 2028.
The underlying principle is to give local areas a more direct financial interest in their economic performance.
If a region attracts more businesses, creates jobs and increases economic activity, its public finances could benefit from some of that growth. Local leaders would then have stronger incentives to support investment and remove obstacles that prevent businesses from expanding.
This approach differs from a system that relies predominantly on central government grants.
Grant-based funding can support national priorities and help redistribute resources towards areas with greater needs. However, repeated bidding processes can make local planning difficult, especially when funding is short-term or uncertain.
A more predictable revenue framework could give regional authorities greater confidence to develop long-term strategies.
There are, however, important risks.
Regions differ in their existing tax bases, population structures and economic strengths. Wealthier areas may be better positioned to generate revenue than places facing deeper economic difficulties.
A fair system will therefore need to balance local incentives with the national government’s responsibility to support communities that lack the same resources.
Fiscal devolution must also be designed carefully to avoid creating unnecessary complexity for businesses operating across several regions.
The objective should be to combine greater local autonomy with transparent national safeguards and a fair distribution of opportunities.
If that balance can be achieved, regional authorities may gain the stability needed to invest strategically rather than focus primarily on short-term funding cycles.
⚖️ The Economic Challenges Healey Must Overcome
Although the devolution package offers opportunities, Healey faces a difficult economic balancing act.
The government’s ambition to encourage investment must be reconciled with the need to manage public borrowing, maintain fiscal discipline and address pressures on household budgets.
The wider Budget is expected to include measures aimed at helping households facing higher energy bills, alongside some tax increases. The final details and their impact will depend on the announcements made on October 28.
Public finances matter because regional development depends on more than a single funding announcement. Long-term growth requires investment in infrastructure, education, healthcare, research and other services that support a productive economy.
If the government commits more money than it can sustainably finance, higher borrowing costs could reduce the resources available for future public investment.
On the other hand, insufficient investment can leave transport networks congested, housing projects stalled and businesses unable to expand.
The challenge is to distinguish between spending that produces lasting economic benefits and expenditure that delivers limited value.
The same principle applies to local authorities. Devolved powers should allow them to make better decisions, but they must also demonstrate that their projects are financially sound.
There are additional challenges relating to planning approvals, construction capacity and the availability of skilled workers. Even when funding is secured, major projects can take years to complete.
Regional leaders will need realistic schedules, effective procurement and strong partnerships with businesses and community organisations.
The package’s success will therefore depend on implementation as much as funding.
🏭 Can Devolution Reduce Britain’s Regional Economic Divide?
One of the biggest questions surrounding the package is whether it can help narrow the economic differences between British regions.
London remains a major centre for finance, professional services, technology and international business. Other cities and regions have considerable strengths, but many communities have struggled to attract comparable levels of investment and create enough high-quality jobs.
Regional inequality is not simply a difference in income. It can also involve access to transport, educational opportunities, housing, cultural facilities and the services that make a place attractive to live and work in.
Devolution offers one way to address these differences by allowing regions to develop strategies suited to their economic circumstances.
Northern cities, for example, may seek to build on manufacturing, engineering, research and advanced technology. University towns may focus on scientific innovation and the commercial development of research. Coastal communities may explore tourism, renewable energy and marine industries.
Smaller towns may benefit from support for local manufacturing, digital services, logistics and independent businesses.
However, successful regional development requires more than identifying an attractive industry. Businesses need skilled workers, reliable infrastructure, access to finance and predictable regulation.
Public investment can help create these conditions, but private companies ultimately make their own decisions about where to establish operations and expand.
There is also no guarantee that every investment will succeed. Some projects may fail to attract businesses, while others may take longer than expected to produce benefits.
The government will need to evaluate results honestly and adjust its approach when projects fail to meet their objectives.
The real measure of success will be whether more regions can sustain productive businesses, improve wages and offer residents better opportunities without relying indefinitely on emergency support.
🌱 Building Sustainable and Inclusive Regional Growth
Economic growth should not be measured only by the amount of money invested or the number of buildings constructed.
For communities to benefit over the long term, regional development must also consider environmental sustainability, social inclusion and the quality of public services.
Transport investment, for example, can reduce congestion and improve access to jobs, but projects should also consider emissions, accessibility and the needs of people who cannot drive.
Housing development can expand supply, yet successful neighbourhoods also need schools, healthcare facilities, green spaces and safe routes for walking and cycling.
High-street regeneration can attract visitors and businesses, but local leaders should consider whether existing residents and independent traders can continue to benefit from the changes.
These questions are particularly important when public investment increases property values. Regeneration should create wider opportunities rather than simply make an area more expensive for the people who already live there.
Inclusive growth also requires attention to groups that may face additional barriers to employment, including young people without qualifications, disabled residents and workers seeking to retrain after changes in their industries.
Local authorities can help address these barriers by coordinating employment support, education and skills programmes with the needs of local employers.
A long-term approach should include clear measures of success: job creation, wage growth, housing affordability, transport access, business survival and improvements in residents’ quality of life.
By using these measures, regional authorities can demonstrate whether their spending is producing meaningful outcomes.
🔍 What Businesses, Investors and Residents Should Watch For
The upcoming Budget will provide an important indication of how quickly the government intends to move from its devolution ambitions to practical implementation.
Businesses should watch for clarity on how the new funding and borrowing arrangements will operate, which authorities will qualify and what financial conditions will apply.
For investors, the key questions include whether regional leaders will have predictable resources, whether planning decisions can be made efficiently and whether infrastructure projects have credible delivery schedules.
Companies considering expansion need more than announcements. They need confidence that roads, transport connections, utilities, premises and skilled workers will be available when required.
Small businesses may be particularly interested in whether local regeneration plans improve footfall, reduce barriers to opening premises and make town centres more attractive.
Residents should focus on how authorities intend to involve communities in decisions about public spending. Greater devolution should make decision-making more accessible, not simply transfer power from one set of officials to another.
Local leaders should explain which projects they intend to prioritise, how decisions will be made and what results residents can expect.
They should also publish progress reports and provide clear information about delays, cost increases and changes to project plans.
For the public, transparency is essential. It allows residents to compare promises with results and hold elected representatives accountable.
The most useful Budget announcements will therefore be those that explain not only how much money is available but also how the money will reach local projects, when investment can begin and how success will be measured.
🚀 Conclusion: Can Healey’s Devolution Budget Deliver Growth Across Britain?
Healey’s first Budget could mark an important step towards changing how Britain approaches regional economic development. By proposing £285 million in initial Good Growth funding, a £1.5 billion borrowing facility and £150 million to strengthen local authorities’ expertise, the government aims to give regional leaders more flexibility to invest in their communities.
The broader strategy goes beyond transferring money. It seeks to establish a system in which local authorities can coordinate housing, transport, business development and employment opportunities while taking greater responsibility for economic outcomes.
If implemented effectively, the proposals could help revitalise town centres, unlock housing development, improve transport connections and encourage businesses to invest outside traditional economic centres.
However, there are no guaranteed results. Borrowing must remain affordable, public money must be spent effectively and local authorities need the expertise to manage complex projects. The government must also ensure that regions with weaker economies are not left behind.
The planned shift towards greater local revenue retention could provide a longer-term incentive for regional growth, but it will require a fair balance between local financial autonomy and national economic responsibilities.
Ultimately, the package should be judged by what it delivers for ordinary people: more secure jobs, better-connected communities, affordable homes, stronger local businesses and improved public services.
The real test of Healey’s Budget will be whether devolution turns promises of regional growth into measurable improvements in people’s everyday lives. The October 28 announcement will be an important milestone, but sustained investment, effective delivery and public accountability will determine whether the ambition becomes reality.