Healey to Give English Mayors Control of New Borrowing and Growth Funds

English mayors and local leaders will be able to set their own borrowing terms and decide how to spend growth money under plans Chancellor John Healey will detail on Wednesday. The package removes the requirement for local leaders to seek Treasury approval for each individual project.

Central to the plan is a £1.5bn borrowing facility, to be designed alongside mayors over the next two years. The government will also provide £285m in 'good growth' funding next year, which local leaders can direct toward housing, transport links or high street regeneration. From 2028, a new system will route part of income tax revenue directly to local areas.

Chancellor John Healey said mayors and local leaders understand what their communities need to grow. He said the government would give them 'more money, more power and more capacity to get projects moving, build homes and make the right decisions for their areas.'

Prime Minister Andy Burnham said the changes end the need for local leaders to seek Treasury approval for individual projects. 'I'm calling time on local leaders going cap in hand to Westminster. That is no way to run a country,' he said. Burnham has previously served as mayor of Greater Manchester, where he dealt with the limits of UK centralisation first-hand.

Concerns inside the Treasury about whether some councils can manage larger budgets have led Healey to announce £150m to help authorities build expertise. The package was developed with No 10 North, which holds weekly meetings with local leaders on barriers to growth. That work led to a change in the Treasury's 'green book' guidance, allowing related projects such as housing and transport schemes to be assessed together.

Healey's first budget will also address support for poorer households facing higher energy costs, alongside modest tax increases including on banks. He has said he wants to give households and businesses 'breathing space' after the war in the Middle East pushed up bills. The chancellor will also explain how he plans to 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, a decision likely to wait for a spending review next year.

A white paper on 'rewiring the state', due after the budget, will set out how the civil service will be reshaped as powers move down from Whitehall.