1.5 Billion Pounds: The New Local Borrowing Fund

Local leaders in England face a significant shift in how they secure funding for major projects. Prime Minister Andy Burnham stated that officials will no longer need to seek permission from Westminster for every individual initiative. This change aims to end what he described as a process where local figures go "cap in hand" to the center. The new measures are set to be detailed in Chancellor John Healey's budget statement scheduled for Wednesday.

The core of the proposal is a new borrowing facility worth £1.5bn. This fund will be structured with regional mayors over the next two years. Mayors have long argued that limited access to credit holds back their regions. In contrast, local authorities in the United States and parts of Europe routinely issue their own bonds. This new mechanism seeks to close that gap by giving local bodies more financial independence.

The package also allocates an initial £285m for what the government calls good growth. Local leaders can spend this money on priorities such as housing, transport links, or high street regeneration. This funding is designed to bridge the gap until 2028. By then, a new system is expected to pass some income tax revenue directly to local areas. This long-term security was first proposed by Rachel Reeves, Healey’s predecessor, earlier this year.

Reactions to the plan highlight the desire for greater local control. Burnham said he is calling time on the current approval process, noting it is no way to run a country. He recalled that when he took office, he promised that decisions made closer to home should be handled locally. Healey added that local leaders know their communities' needs best. He stated the government is providing more money, power, and capacity to help build homes and support growth.

There are internal concerns within the Treasury about whether some local authorities can manage larger budgets. To address this, Healey will announce £150m to help these bodies build expertise and scale up operations. The package was developed in consultation with No 10 North. This group holds weekly meetings with local leaders to identify barriers to economic growth. Recent changes to the Treasury's green book now allow combined projects, like housing and transport, to be assessed together for taxpayer funding.

The budget is expected to include other key elements for working families. Healey plans to offer support for poorer households affected by rising energy costs. Modest tax rises, including on banks, are also anticipated. The Chancellor has sought to provide breathing space after the Middle East conflict pushed up bills and increased government borrowing costs. He will also explain how to fund the four-year defence investment plan announced under Keir Starmer. However, a decision on the 3% of GDP defence spending target is likely to wait for a spending review next year.