Mayors gain direct access to 1.5bn pound fund
Chancellor John Healey plans to give regional leaders control over a new borrowing facility and 285m in growth funding next week.
By Yuki Melnyk ·
Regional mayors in England will gain direct control of a 1.5 billion pound borrowing facility when Chancellor John Healey delivers the budget on Wednesday. The new package is designed to reduce the need for local authorities to seek approval from the central government for individual capital projects.
Prime Minister Andy Burnham announced the details on Friday. He stated that the changes would end the practice of local leaders having to ask Westminster for permission on every project. Burnham said, "I'm calling time on local leaders going cap in hand to Westminster. That is no way to run a country."
The borrowing facility will be developed with mayors over the next two years. Regional leaders have previously argued that limited borrowing powers restricted their ability to invest. The new structure aims to mirror systems in the United States and parts of Europe, where local governments issue their own bonds.
The budget will also include an initial 285 million pound allocation for local priorities. Leaders can spend this money on housing, transport, or high street regeneration. This funding is intended to bridge the gap until 2028. By that date, a new system will pass a portion of income tax revenue directly to local areas.
Treasury officials have raised concerns about the capacity of some local authorities to manage larger budgets. To address this, Healey will announce a 150 million pound package to help local governments build expertise and scale up their operations. Healey said the government is providing leaders with more money, power, and capacity to make decisions for their areas.
The plan was developed in weekly meetings between No 10 North and local leaders. These discussions led to a change in the Treasury's Green Book guidance on project funding. The new rules allow combined projects, such as housing and transport schemes, to be assessed together. A white paper on reshaping the civil service will follow the budget.
The budget is also expected to include support for households facing higher energy costs and modest tax rises on banks. Healey will explain how the four-year defence investment plan will be funded. He is not expected to state when the UK will commit to spending 3 percent of GDP on defence.
Source: The Guardian
